FIRST AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
Exhibit 10.4
FIRST AMENDED AND RESTATED
EXECUTIVE SEVERANCE AGREEMENT
EXECUTIVE SEVERANCE AGREEMENT
THIS FIRST AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT (this “Agreement”) is
entered into as of the 24th day of November, 2008 by and between Sysco Corporation, a Delaware
corporation (the “Company”), and Xxxxxxx X. Xxxxxxxxxx (“Executive”).
WITNESSETH
WHEREAS, the Company and Executive are parties to that certain Executive Severance Agreement
dated as of July 14, 2004, as amended by that certain First Amendment to the Executive Severance
Agreement dated as of September 3, 2004, (the “Current Agreement”); and
WHEREAS, the American Jobs Creation Act of 2004 added Section 409A to the Internal Revenue
Code of 1986, as amended (the “Code”), and Section 409A of the Code (“Section
409A”) imposes certain restrictions on compensation deferred on and after January 1, 2005; and
WHEREAS, the Treasury Regulations promulgated under Section 409A which become effective as of
January 1, 2009, require all deferred compensation arrangements, including certain provisions of
the Current Agreement, to be in documentary compliance with the requirements of Section 409A on or
before December 31, 2008; and
WHEREAS, the Company and Executive desire to amend and restate the Current Agreement to comply
with Section 409A and to make certain other changes and clarifications to the Current Agreement;
and
WHEREAS, the Compensation Committee of the Board has authorized the Company to enter into this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements herein contained, the Company and Executive hereby agree as follows:
1. Definitions: As used in this Agreement, the following terms shall have the
respective meanings set forth below:
(a) “Board” means the Board of Directors of the Company.
(b) “Cause” as determined by the Board in good faith, means: (1) a material breach by
Executive of the duties and responsibilities of Executive or any written policies or directives of
the Company (other than as a result of incapacity due to physical or mental illness) which is (i)
willful or involves gross negligence, and (ii) not remedied within fifteen (15) days after receipt
of written notice from the Company which specifically identifies the manner in which such breach
has occurred; (2) Executive
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commits any felony or any misdemeanor involving willful misconduct (other than minor
violations such as traffic violations) that causes damage to the property, business or reputation
of the Company, as determined in good faith by the Board; (3) Executive engages in a fraudulent or
dishonest act, as determined in good faith by the Board; (4) Executive engages in habitual
insobriety or the use of illegal drugs or substances; or (5) Executive breaches his fiduciary
duties to the Company, as determined in good faith by the Board. The Company must notify Executive
of any event constituting Cause within ninety (90) days following the Company’s knowledge of its
existence or such event shall not constitute Cause under this Agreement.
(c) “Date of Termination” means the effective date on which Executive’s employment by the
Company is terminated as specified in a prior written notice from the Company to Executive or from
Executive to the Company, as the case may be, pursuant to Section 11(b) hereof.
(d) “Good Reason” means (i) (A) for periods prior to January 1, 2009, the Company’s demotion
of the Executive to a lesser position than the position in which he is serving prior to such
demotion or (B) for periods on or after January 1, 2009, the Company’s demotion of the Executive to
a materially lesser position than the position in which he is serving prior to such demotion, (ii)
the assignment to Executive of duties materially inconsistent with his position or material
reduction of the Executive’s duties, responsibilities or authority, in either case without the
Executive’s prior written consent; (iii) (A) for periods prior to January 1, 2009, any reduction in
Executive’s base salary without the Executive’s prior consent unless other executives who are
parties to agreements similar to this one also suffer a comparable reduction in their base
salaries, or (B) for periods on or after January 1, 2009, any material reduction in Executive’s
base salary without the Executive’s prior consent unless other executives who are parties to
agreements similar to this one also suffer a comparable reduction in their base salaries; or (iv)
unless agreed to by Executive, the relocation of Executive’s principal place of business outside of
the metropolitan area of Houston, Texas, in each case not remedied by the Company within thirty
(30) days after receipt by the Company of written notification from Executive as provided in
Section 11(b) which specifically identifies the Good Reason. The Executive must notify Company of
any event that constitutes Good Reason within ninety (90) days following Executive’s knowledge of
its existence or such event shall not constitute Good Reason under this Agreement.
(e) “Management Incentive Plan” means the Sysco Corporation 2000 Management Incentive Plan,
the Sysco Corporation 2005 Management Incentive Plan or such plan’s successor or replacement plan;
as such plans may be amended from time to time.
(e) “Permanent Disability” means the failure of the Executive to perform the Executive’s
duties with the Company on a full-time basis as a result of an incapacity due to mental or physical
illness and such incapacity results in Executive being eligible for and entitled to receive
disability payments under the Disability Income Plan sponsored by the Company.
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(g) “Short-Term Deferral Period” means the period ending on the later of (i) the
15th day of the third month following the end of the Executive’s taxable year in which
the Date of Termination occurs; or (ii) the 15th day of the third month following the
end of the Company’s fiscal year in which the Date of Termination occurs.
(h) “Specified Employee” means a “specified employee” as defined in Section 409A(a)(2)(B)(i)
of the Code. By way of clarification, “specified employee” means a “key employee” (as defined in
Section 416(i) of the Code, disregarding Section 416(i)(5) of the Code) of the Company. Executive
shall be treated as a key employee if the Executive meets the requirement of Section
416(i)(1)(A)(i), (ii), or (iii) of the Code at any time during the twelve (12) month period ending
on an “identification date”. If Executive is a key employee as of an identification date, he shall
be treated as a Specified Employee for the twelve (12) month period beginning on the first day of
the fourth month following such identification date. For purposes of any “Specified Employee”
determination hereunder, the “identification date” shall mean the last day of the calendar year.
2. Payments Upon Termination of Employment by Death, Permanent Disability, for Cause or
Executive’s Resignation without Good Reason.
(a) The Executive’s employment shall terminate automatically upon the Executive’s death during
the period of his employment or resignation without Good Reason.
(b) If Executive resigns as an employee without Good Reason prior to reaching age 60,
notwithstanding anything contained in the Sysco Corporation Supplemental Executive Retirement Plan
(the “SERP”) to the contrary, Executive shall forfeit all benefits under the SERP. For
purposes of this Section 2(b), Executive’s termination of employment by reason of death or
Permanent Disability shall not be deemed a “resignation.”
(c) If the Company determines in good faith that a Permanent Disability of the Executive has
occurred while Executive is employed, it may give the Executive written notice in accordance with
Section 11(b) of its intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate effective on the day specified in such
notice to the Executive.
(d) In the event the Executive dies, becomes Permanently Disabled during the period of his
employment, resigns without Good Reason or the Company terminates Executive’s employment for Cause
by giving written notice as provided in Section 11(b), the Company shall have no obligation to make
any severance payments or provide any severance benefits to Executive pursuant to this Agreement.
Executive shall be paid his base salary through the date of death or the effective date of the
resignation without Good Reason or the Date of Termination and the amounts that would be owed under
Section 3(a)(2) hereof.
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3. Payments Upon Termination of Employment by Company Without Cause.
(a) If the Company terminates the employment of Executive without Cause, Executive shall be
paid his base salary through the date of Termination. If Executive executes and provides to the
Company and does not revoke a release substantially in the form attached hereto as Exhibit
A, no later than sixty (60) days following Executive’s Date of Termination (the “Payment
Forfeiture Date”), the Company shall provide to the Executive the payments and benefits
described in paragraphs (1) through (5) below. Notwithstanding any provision in this Agreement to
the contrary, however, none of the payments or benefits described in paragraphs (1) through (5)
below shall be made prior to the Company’s receipt of such executed release and the lapse of any
revocation period provided for in such release, and if Executive does not provide to the Company
such executed release or revokes such executed release on or before the Payment Forfeiture Date,
Executive shall forfeit any and all rights to such payments:
(1) The Company shall pay to Executive (or Executive’s beneficiary or estate), subject to
Section 3(b) hereof, commencing thirty (30) days following the later of (A) the Date of
Termination; and (B) the date the Company receives the release described above executed by
Executive for which any revocation period in such release has lapsed, as compensation for services
rendered to the Company, a monthly payment for twenty-four (24) months equal to the sum of:
(i) Executive’s monthly base salary (before any elective deferrals under any Company plans) in
effect on the Date of Termination, plus;
(ii) An amount equal to one twelfth (1/12) of the average annual bonus paid to Executive under
the Management Incentive Plan (before any elective deferrals under any Company plans) for the
preceding five (5) fiscal years ended prior to the Date of Termination; and
(iii) An amount equal to the monthly cost to Executive for continued coverage under the
Company’s group health benefit insurance plans under Section 4980B of the Internal Revenue Code of
1986 (COBRA), regardless of whether Executive elects to be covered by COBRA.
(2) Within thirty (30) days of the receipt of the signed release required under Section 3(a)
for which any revocation period has lapsed, the Company shall pay to Executive any unpaid bonuses
earned in a fiscal year ended prior to the Date of Termination, accrued but unused vacation time
and any unreimbursed business expenses owed under the Company’s expense reimbursement policies.
(3) Upon the latter to occur of both (i) thirty (30) days after the receipt of the signed
release required under Section 3(a) for which any revocation period has lapsed and (ii) sixty (60)
days following the end of the fiscal year during which the Date of Termination occurs, the Company
shall pay to Executive a fraction of the bonus
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the Executive would have earned for such fiscal year (excluding any deferred or matching
amounts to which he would have been entitled) under the Management Incentive Plan had Executive not
been terminated, as determined by the Company, in its sole discretion, the numerator of such
fraction being the number of days in the fiscal year prior to the Date of Termination and the
denominator being 365.
(4) If the Date of Termination occurs before Executive has reached the age of sixty (60), then
for purposes of determining Executive’s vested percentage under the SERP and for no other reason,
notwithstanding Executive’s actual age, he shall be deemed to be sixty (60) years of age as of the
Date of Termination and entitled to the benefits under the SERP in the amounts and at the times
specified under the terms of the SERP then in effect.
(5) If the Date of Termination occurs before Executive has reached the age of sixty (60),
Executive shall be entitled to receive 100% of the unvested benefits (in addition to all vested
benefits) under the Sysco Corporation Executive Deferred Compensation Plan (“EDCP”) and
shall be entitled to receive the payment of such benefits at the time(s) specified under the terms
of the EDCP then in effect pursuant to Executive’s distribution election then in effect under the
EDCP.
(b) Notwithstanding the provisions of Section 3(a), if at any time within the two (2) years
following the Date of Termination, Executive, without the prior written consent of the Company,
directly or indirectly owns, operates, manages, controls or participates in the ownership,
management, operation or control of or is employed by, or is paid as a consultant or other
independent contractor to, a business which competes with the Company (or any subsidiary of the
Company) in a trade area served by the Company (or a subsidiary of the Company) as of the date of
this Agreement, and the Executive continues to be so engaged sixty (60) days after written notice
has been given to him to cease such activity, he shall forfeit all amounts thereafter due the
Executive under Section 3(a) hereof.
(c) Any amounts paid pursuant to Section 3(a) herein shall be in lieu of any other amount of
severance relating to salary or bonus continuation to be received by Executive upon termination of
employment of Executive under any severance plan or policy of the Company. For purposes of this
Agreement, benefits under the SERP and EDCP shall not be considered severance, salary or bonus
continuation payments.
(d) Notwithstanding anything to the contrary contained herein, to the extent any portion of
the bonuses payable to Executive pursuant to Sections 3(a)(2) or 3(a)(3) herein are subject to
bonus deferral elections under the EDCP such amounts shall continue to be deferred under the EDCP
and shall be paid to Executive at the time or times provided under the EDCP.
(e) The following rules shall apply with respect to the distribution of payments and benefits,
if any, to be provided to Executive under Section 3(a)(1) of this Agreement, as applicable:
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(1) Notwithstanding anything to the contrary contained herein, no payments shall be made to
Executive upon Executive’s termination of employment from the Company under this Agreement unless
such termination of employment is a “separation from service” under Section 409A. For purposes of
this Agreement, Executive shall have experienced a “separation from service” as a result of a
termination of employment if the level of bona fide services performed by Executive decreases to a
level equal to twenty-five percent (25%) or less of the average level of services performed by
Executive during the immediately preceding thirty-six (36) month period, taking into account any
periods of performance excluded by Section 409A.
(2) It is intended that each installment of the payments and benefits provided under Section
3(a)(1) shall be treated as a separate “payment” for purposes of Section 409A. Neither the Company
nor Executive shall have the right to accelerate or defer the delivery of any such payments or
benefits except to the extent specifically permitted or required by Section 409A;
(3) If, as of the date of the “separation from service” of the Executive from the Company, the
Executive is not a Specified Employee, then each installment of the payments and benefits shall be
made on the dates and terms set forth in Section 3(a)(1), as applicable;
(4) If, as of the date of the “separation from service” of the Executive from the Company,
Executive is a Specified Employee, then:
(i) Each installment of the payments and benefits due to Executive under Section 3(a)(1),
that, in accordance with the dates and terms set forth herein, will in all circumstances,
regardless of when the separation from service occurs, be paid within the Short Term Deferral
Period shall be treated as a short-term deferral within the meaning of Treasury Regulation Section
1.409A-1(b)(4) to the maximum extent permissible under Section 409A; and
(ii) Each installment of the payments and benefits under Section 3(a)(1) that is not paid
within the Short Term Deferral Period and that would, absent this subsection, be paid within the
six-month period following the separation from service of the Executive from the Company shall not
be paid until the date that is six months and one day after such separation from service (or, if
earlier, the Executive’s death), with any such installments that are required to be delayed being
accumulated during such six-month period and paid in a lump sum on the date that is six months and
one day following the Executive’s separation from service and any subsequent installments being
paid in accordance with the dates and terms set forth herein; provided however, that the preceding
provisions of this subparagraph shall not apply to any installment of payments and benefits, or any
portion thereof, if and to the maximum extent that such installment is deemed to be paid under a
separation pay plan that does not provide for a deferral of compensation by reason of the
application of Section 1.409A-1(b)(9)(iii) of the Treasury Regulations (relating to separation pay
upon an involuntary separation from service). Any installments that qualify for the exception under
Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last
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day of the Executive’s second taxable year following the taxable year in which the separation
from service occurs.
4. Requirement of an Additional Payment in Certain Circumstances.
(a) In the event all or any portion of a payment or acceleration right pursuant to this
Agreement, or any other agreement, plan, instrument or obligation to which Executive is a party or
of which Executive is a beneficiary (an “Other Company Obligation”) is treated as an
“excess parachute payment” (as defined in Section 280G(b)(1) of the Code) which is subject to the
excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, the Company shall make
the Additional Payment (defined below) either directly to Executive in cash or, with respect to
Excise Taxes or other taxes subject to withholding, by payment of such taxes to the appropriate
taxing authority on Executive’s behalf, notwithstanding any contrary provision in this Agreement or
any Other Company Obligation.
(b) The term “Additional Payment” means a payment in an amount equal to the sum of (1)
the Excise Taxes payable by Executive on any payment or acceleration right pursuant to this
Agreement or any Other Company Obligation which is treated as an excess parachute payment, plus (2)
the additional Excise Taxes, federal and state income taxes and employment taxes to the extent such
taxes are imposed in respect of the Additional Payment, such that Executive shall be in the same
after-tax position and shall have received the same benefits that he would have received if the
Excise Taxes had not been imposed. For purposes of calculating the income taxes attributable to
the Additional Payment, the maximum state and federal income tax rates applicable to Executive’s
actual income, net of the maximum reduction in federal income taxes that could be obtained from
deduction of such state taxes, shall be used. An example of the calculation of an Additional
Payment is set forth below. Assume that the Excise Tax rate is 20%, the highest marginal federal
income tax rate is 40%, Executive is subject to federal employment taxes at a rate of 2.9% and
Executive is not subject to state income taxes. Further assume that Executive has received an
excess parachute payment in the amount of $200,000, on which $40,000 ($200,000 x 20%) in Excise
Taxes are payable. The amount of the required Additional Payment is thus computed to be $107,817,
i.e., the Additional Payment of $107,817, less additional Excise Taxes on the Additional Payment of
$21,563 (i.e., 20% x $107,817), income taxes of $43,127 (i.e., 40% x $107,817), employment taxes of
$3,127 (i.e., 2.9% x $107,817) yields $40,000, the amount of the Excise Taxes payable in respect of
the original excess parachute payment.
(c) Executive agrees to reasonably cooperate with the Company to minimize the amount of
parachute payments or excess parachute payments, including, without limitation, assisting the
Company in establishing that some or all of the payments received by Executive are not “contingent
on a change,” as described in Section 280G(b)(2)(A)(i) of the Code and the regulations thereunder,
or that some or all of such payments are reasonable compensation for personal services actually
rendered by Executive before the date of such change or to be rendered by Executive on or after the
date of such change if such arguments are reasonably available. In the event that the Company is
able to establish that the amount of an excess parachute payment is less than
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originally anticipated by Executive, or if Executive becomes entitled to receive a tax refund
with respect to Excise Taxes or Additional Payments, Executive shall refund to the Company any
excess Additional Payment to the extent not required to pay Excise Taxes, income or employment
taxes (including those incurred in respect of receipt of any Additional Payment). Notwithstanding
the foregoing, except as otherwise required by Section 4(g) hereof, Executive shall not be required
to take any action which his attorney or tax advisor advises him in writing that exposes him to any
penalties imposed by the Code. Executive may require the Company to deliver to Executive an
indemnification agreement in form and substance reasonably satisfactory to Executive as a condition
to taking any action required by this subsection (c).
(d) The Company shall make the Additional Payments required to be made under this Section 4
not less than thirty (30) days before the Excise Tax with respect to any excess parachute payment
to which Section 4(a) is applicable is due and in no event later than the end of Executive’s
taxable year next following the taxable year in which Executive (or, if applicable, the Company)
remits the related taxes. Any Additional Payment required to be paid by the Company under this
Section 4 which is not paid within thirty (30) days of receipt by the Company of Executive’s
written demand therefor shall thereafter be deemed delinquent, and the Company shall pay to
Executive immediately upon demand interest at a variable rate equal to the prime rate, as reported
in the Wall Street Journal “Money Rates” from time to time (the “Prime Rate”) from
the date such Additional Payment becomes delinquent to the date of payment of such delinquent sum
with interest.
(e) In the event that there is any change to the Code which results in the recodification of
Section 280G or Section 4999 of the Code, or in the event that either such sections of the Code is
amended, replaced or supplemented by other provisions of the Code having a similar effect
(“Successor Provisions”), then this Agreement shall be applied and enforced with respect to
such new Code provisions in a manner consistent with the intent of the parties as expressed herein,
which is to assure that Executive is in the same after-tax position and has received the same
benefits that he would have been in and received if any taxes imposed by Section 4999 (or any
Successor Provisions) had not been imposed on any payments due him pursuant to this Agreement and
any Other Company Obligation.
(f) All determinations required to be made under this Section 4 including, without limitation,
whether an Additional Payment is required, and the amount of such Additional Payment and the
assumptions to be utilized in arriving at such determinations, unless otherwise expressly set forth
in this Agreement, shall be made within forty-five (45) days from the date of the Change of Control
by the independent tax consultant(s) selected by the Company and reasonably acceptable to Executive
(“Tax Consultant”). The Tax Consultant must be a qualified tax attorney or certified
public accountant. All fees and expenses of the Tax Consultant shall be paid in full by the
Company.
(g) The Company and Executive shall report the federal and state tax consequences of any
payment or acceleration right subject to Section 4(a) above in good
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faith and in a manner reasonably consistent with determinations made by the Tax Consultant.
Executive shall not take a position inconsistent with such determinations by Tax Consultant in any
proceeding related to the determination of any tax unless otherwise agreed to in writing by the
Company. If Executive’s tax advisor reasonably believes that a position with respect to any
payment or acceleration right subject to Section 4(a) could expose Executive to penalties under the
Code, Executive shall not be required to report such payment or acceleration right consistent with
such position unless the Company causes the Tax Consultant to provide Executive with a “more likely
than not” opinion reasonably satisfactory to Executive’s tax advisor. Upon receipt of such tax
opinion, Executive shall report the federal and state income tax consequences of the payment or
acceleration right subject to the opinion in a manner consistent with the opinion, and shall take
no position inconsistent with the opinion in any proceeding related to the determination of any tax
unless otherwise agreed to in writing by the Company.
(h) The Company shall indemnify and hold harmless the Executive, on an after-tax basis, from
any costs, expenses, penalties, fines, interest or other liabilities (“Losses”) incurred by
Executive with respect to the exercise by the Company of any of its rights under this Section 4,
including, without limitation, any Losses related to the Company’s decision to contest a claim of
any imputed income, or otherwise with respect to Executive’s liability for any Excise Tax, or any
losses related to any erroneous determination made by the Tax Consultant pursuant of subsection (f)
of this Section 4. The Company shall pay all fees and expenses incurred under this Section 4, and
shall promptly reimburse Executive for the reasonable expenses incurred by Executive in connection
with any actions taken by the Company or required to be taken by Executive hereunder. Any payments
owing to Executive and not made within thirty (30) days of delivery to the Company of evidence of
Executive’s entitlement thereto shall be paid to Executive together with interest at the Prime
Rate; provided that all such amounts are paid to Executive not later than the end of Executive’s
taxable year following the taxable year in which the taxes that are the subject of any such audit
or litigation are remitted to the taxing authority or the end of the taxable year immediately
following the taxable year in which such audit is completed or there is a final and non-appealable
settlement or other resolution of the litigation.
5. Payments Upon Termination of Employment by Executive for Good Reason.
(a) The Executive’s employment may be terminated by Executive for Good Reason by providing
written notice as required by Section 11(b) within ninety (90) days following Executive’s knowledge
of the initial existence of the condition giving rise to Good Reason, setting forth a Date of
Termination not less than thirty (30) days or more than sixty (60) days from receipt of such
notice, provided that the Company has not remedied the event creating the Good Reason within thirty
(30) days of receipt of such notice.
(b) Termination of employment by the Executive for Good Reason shall be deemed, for purposes
of this Agreement, as a termination of employment by the
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Company without Cause and Executive shall be entitled to the benefits and subject to the
obligations of Section 3 hereof.
(c) The Executive’s mental or physical incapacity following the occurrence of an event
described in the definition of Good Reason shall not affect Executive’s ability to terminate
employment for Good Reason.
6. Waiver of “Cut Back” Provisions in SERP and Deferred Comp Plan. This Agreement has
been approved by the Compensation Committee of the Board of Directors of the Company and is
intended to constitute an agreement which is exempt from the provisions of Section 7.5 of the SERP
and Section 6.11 of the EDCP.
7. Withholding Taxes. The Company may withhold from all payments due to Executive (or
his beneficiary or estate) hereunder all taxes that, by applicable federal, state, local or other
law, the Company is required to withhold therefrom.
8. Term of Agreement. This Agreement shall be effective on December 31, 2008, and
shall continue in effect until the employment of the Executive terminates, provided that the
obligations under Section 3 shall survive without such limitation.
9. Employment with the Company. Executive agrees that he is an employee-at-will and
that nothing in this Agreement shall create any express or implied right of continued employment by
the Company. Executive’s employment may be terminated at any time by the Company with or without
Cause.
10. Successors; Binding Agreement.
(a) This Agreement shall be binding on the Company, its successors and assigns.
(b) This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or
legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive shall die while any amounts remain to be payable to Executive hereunder had
Executive continued to live, all such amounts shall be paid in accordance with the terms of this
Agreement to such person or persons appointed in writing by Executive to receive such amounts or,
if no person is so appointed, to Executive’s estate.
11. Notice.
(a) For purposes of this Agreement, all notices and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when delivered or five
(5) days after deposit in the United States mail, certified and return receipt requested, postage
prepaid, addressed as follows:
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If to the Executive: At the last known address shown in the Company’s personnel records.
| If to the Company: | Sysco Corporation | |||
| 0000 Xxxxxxx Xxxxxxx | ||||
| Xxxxxxx, XX 00000-0000 | ||||
| Attention: General Counsel |
or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
(b) A written notice terminating Executive’s employment shall set forth the Date of
Termination and shall (1) indicate the specific termination provision in this Agreement relied
upon, (2) set forth in reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive’s employment under the provision so indicated and (3) specify the
termination date (which date shall be not less than fifteen (15) (thirty (30) days if the Executive
is terminating his employment for Good Reason) nor more than sixty (60) days after the giving of
such notice). The failure by the Company or Executive to set forth in such notice any fact or
circumstance which contributes to a showing of Cause, Good Reason, or Permanent Disability shall
not waive any right of the Company or Executive from asserting such fact or circumstances in
enforcing the Company’s or Executive’s rights hereunder.
12. Post Termination Employment. Executive shall not be obligated to seek or accept
other employment or take other action to mitigate of the amounts payable to Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether or not Executive
obtains other employment.
13. Reimbursement of Legal and Advisory Expenses. The Company will reimburse
Executive for the legal and advisory fees incurred by Executive in connection with the negotiation
and execution of this Agreement.
14. Resolution of Disputes.
(a) If a legally cognizable dispute arises out of or relates to this Agreement or the breach,
termination, or validity thereof, and if said dispute cannot be settled through direct discussions,
the parties agree to resolve the dispute by binding arbitration before the American Arbitration
Association (“AAA”). Arbitration proceedings shall be held in Houston, Texas, or at such
other place as may be selected by the mutual agreement of the parties. The arbitration shall
proceed in accordance with the Employment Dispute Resolution Rules of the AAA in effect on the date
of this Agreement, and judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.
(b) Disputes subject to binding arbitration pursuant to this section include all tort and
contract claims, as well as claims brought under all applicable federal, state or local statutes,
laws, regulations or ordinances, including but not limited to, Title VII of the Civil Rights Act of
1964, as amended, the Family and Medical Leave Act; the Americans with Disabilities Act; the
Rehabilitation Act of 1973, as amended; the Fair
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Labor Standards Act of 1938, as amended; the Age Discrimination in Employment Act, as amended;
the Equal Pay Act; the Civil Rights Act of 1866, as amended; and the Employee Retirement Income
Security Act of 1974. Disputes subject to binding arbitration pursuant to this section also
include claims against the Company’s parent and subsidiaries, and affiliated and successor
companies, and claims against the Company that include claims against the Company’s agents and
employees, in their capacity as such and otherwise.
(c) The arbitration award shall be in writing and shall specify the factual and legal bases
for the award. In rendering the award, the arbitrator shall determine the respective rights and
obligations of the parties according to the laws of the State of Delaware or, if applicable,
federal law. The arbitrator shall have the authority to award any remedy or relief that a federal
or state court within the State of Delaware could order or grant, including without limitation,
specific performance of any obligation created under this Agreement; an award of punitive,
exemplary, statutory, or compensatory damages; the issuance of an injunction or other provisional
relief; or the imposition of sanctions for abuse or frustration of the arbitration process.
(d) Each party shall pay for its own fees and expenses of arbitration including the expense of
its own counsel, experts, witnesses and preparation and presentation of evidence, except that the
cost of the arbitrator and any filing fee exceeding the applicable filing fee in federal court
shall be paid by the Company; provided, however, that all reasonable costs and fees necessarily
incurred by any party are subject to reimbursement from the other party as part of any award of the
arbitrator.
(e) By initialing below, Executive and the Company acknowledge that each has read the
provisions of this Section 14 and agree to arbitration as provided herein. (A duly authorized
officer of the Company shall provide his or her initials on behalf of the Company.)
| SYSCO CORPORATION | EXECUTIVE | |||||
BY:
|
/s/ MCN
|
/s/ RJS
|
||||
15. Cooperation and Non-Disparagement.
(a) If Executive’s employment is terminated with or without Cause, Executive agrees to
cooperate to the extent and in the manner requested by the Company at the Company’s expense, in the
prosecution or defense of any actual, threatened or potential claims, litigation or other
proceeding involving the Company including meeting with the Company and its counsel at their
request for interviews. The Company, its management and its counsel shall cooperate fully with
Executive as to the level of interference with Executive’s other business and personal commitments
so as to minimize the level of inconvenience to Executive. To the extent reasonably possible,
Executive’s services shall be rendered by personal consultation at Executive’s residence or office,
wherever maintained, or by correspondence through the mails, telephone,
12
facsimile or electronic mail, including weekends and evenings, as may be most convenient to
Executive. Executive shall not be obligated to (i) occupy any office of the Company or any of its
subsidiaries, or (ii) render any services whatsoever to the Company or any of its subsidiaries
other than those specified in this Section 15. The Company shall reimburse Executive for all
documented out-of-pocket expenses reasonably incurred by Executive in complying with Executive’s
obligations hereunder, in accordance with the Company’s normal expense reimbursement policies for
senior executives.
(b) If Executive’s employment is terminated with or without Cause, Executive and the Company
agree that neither shall make any disparaging comments or accusations detrimental to the
reputation, business, or business relationships of the other except in connection with legal
proceedings. In the event that Executive becomes legally compelled to disclose information that
may be disparaging to the Company, or detrimental to the business or business relationships of the
Company, he shall provide the Company with prompt notice so that it may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the
event that such protective order remedy is not obtained, or that the party about whom the
disclosure is to be made waives compliance with the provisions of this Agreement, Executive will
furnish only such information that he is advised by written opinion of counsel (such counsel’s
opinion to be obtained at the expense of the party seeking the protective order) is legally
required and will exercise his best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded any confidential information. This Section
15 shall not apply to disparaging comments or accusations made in testimony or pleadings in
connection with any claims asserted by Executive in a court of law. If Executive shall violate
this Section 15(b) he shall forfeit all amounts thereafter due under Sections 3(a) and (b) hereof.
16. Governing Law. The interpretation, construction and performance of this Agreement
shall be governed by and construed and enforced in accordance with the internal laws of the state
of Delaware without regard to the principle of conflicts of laws.
17. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original and all of which together shall constitute one and the same instrument.
18. Severability. Provided the other provisions of this Agreement do not frustrate
the purpose and intent of the law, in the event that any portion of this Agreement shall be
determined to be invalid or unenforceable to any extent, the same shall to that extent be deemed
severable from this Agreement and the invalidity or unenforceability thereof shall not affect the
validity and enforceability of the remaining portion of this Agreement.
13
19. Section 409A Compliance.
(a) This Agreement is intended to comply with, or otherwise be exempt from Section 409A and
any regulations and Treasury guidance promulgated thereunder.
(b) The Company and Executive agree that they will execute any and all amendments to this
Agreement as they mutually agree in good faith may be necessary to ensure compliance with the
provisions of Section 409A.
(c) The Company makes no representation or warranty as to the tax effect of any of the
preceding provisions and the provisions of this Agreement shall not be construed as a guarantee by
the Company of any particular tax effect to Executive under this Agreement. The Company shall not
be liable to Executive or any other person for any payment made under this Agreement, which is
determined to result in an additional tax, penalty or interest under Section 409A, nor for
reporting in good faith any payment made under this Agreement as an amount includible in gross
income under Section 409A.
20. Miscellaneous. No provision of this Agreement may be modified or waived unless
such modification or waiver is agreed to in writing and signed by Executive and by a duly
authorized officer of the Company. No waiver by either party hereto at any time of any breach by
the other party hereto of, or 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. Failure by Executive or the Company to
insist upon strict compliance with any provision of this Agreement or to assert any right Executive
or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement. Except as otherwise specifically provided herein,
the rights of, and benefits payable to, Executive, Executive’s estate or Executive’s beneficiaries
pursuant to this Agreement are in addition to any rights of, or benefits payable to, Executive,
Executive’s estate or Executive’s beneficiaries under any other employee benefit plan or
compensation program of the Company, except as herein specifically provided.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized
officer of the Company and Executive has executed this Agreement as of the day and year first above
written.
| SYSCO CORPORATION | EXECUTIVE | |||||
By:
|
/s/ Xxxxxxx X. Xxxxxxx
|
/s/ Xxxxxxx X. Xxxxxxxxxx
|
||||
| Xxxxxxx X. Xxxxxxx | ||||||
| Xx. Vice President & General Counsel | ||||||
14
EXHIBIT A
FORM OF
MUTUAL RELEASE
MUTUAL RELEASE
THIS MUTUAL RELEASE (the “Agreement”) is entered into by and between SYSCO
Corporation, a Delaware corporation (the “Company”) and , a resident of
the state of (“Executive”), as of the Effective Date of the Agreement, as
defined below.
WITNESSETH
Executive and Company are parties to that certain First Amended and Restated Executive
Severance Agreement dated (“Severance Agreement”).
Executive and Company are terminating their employment relationship, subject to the terms
hereof; and
NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein and
other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Termination of Employment. The parties hereto hereby acknowledge and agree that
Executive’s employment with Company will automatically terminate as of the close of business on
.
2. Specific Consideration. In exchange for the releases provided hereunder and other
good and valuable consideration, and upon the execution of this Agreement, Executive shall be paid
the amounts and receive the benefits as provided under the Severance Agreement. Executive agrees
that no further amount is or shall be due or claimed to be due from Company and/or from any other
person or entity released in paragraph 4 below except for any payments and benefits due under the
Severance Agreement and under any other written Company benefit plans, such as the Sysco
Corporation Supplemental Executive Retirement Plan, the Sysco Corporation Executive Deferred
Compensation Plan, any 401(k) plan, any pension plan and any similar plan, to the extent Executive
is entitled to benefits under the respective terms thereof.
3. Acknowledgment. Executive acknowledges that he has thoroughly discussed all
aspects of this Agreement with his attorney, that he has carefully read and fully understands all
of the provisions of this Agreement, and that he is voluntarily entering into this Agreement.
Executive hereby waives the requirement under the Older Worker’s Benefits Protection Act that
Executive has twenty-one (21) days to review and consider this Agreement before executing it.
Executive acknowledges and understands that he shall have seven (7) days after signing this
Agreement during which he may revoke this Agreement by providing written notice to Company within
seven (7) days following its execution. Any notice of revocation of this Agreement shall not be
effective unless given in writing and received by Company within the seven-day revocation period
via personal delivery, overnight courier, or certified U.S. mail, return receipt requested, to
SYSCO Corporation, 0000 Xxxxxxx Xxxxxxx, Xxxxxxx, XX 00000-0000, Attention: General Counsel.
THIS AGREEMENT SHALL NOT BECOME EFFECTIVE AND
15
ENFORCEABLE UNTIL SUCH SEVEN (7) DAY PERIOD HAS EXPIRED. IF EMPLOYEE REVOKES THIS AGREEMENT
WITHIN SUCH SEVEN (7) DAY PERIOD, EMPLOYEE WILL NOT BE ENTITLED TO RECEIVE ANY OF THE RIGHTS AND
BENEFITS DESCRIBED HEREIN OR UNDER THE SEVERANCE AGREEMENT.
4. Release of Claims by Executive. In consideration of the covenants from Company to
Executive set forth herein and in the Severance Agreement, the receipt and sufficiency of which is
hereby acknowledged, Executive, on his behalf and on behalf of his heirs, devisees, legatees,
executors, administrators, personal and legal representatives, assigns and successors in interest
(collectively, the “Derivative Claimants” and each a “Derivative Claimant”), hereby
IRREVOCABLY, UNCONDITIONALLY AND GENERALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES, to the
fullest extent permitted by law, Company and each of Company’s directors, officers, employees,
representatives, stockholders, predecessors, successors, assigns, agents, attorneys, divisions,
subsidiaries and affiliates (and agents, directors, officers, employees, representatives and
attorneys of such stockholders, predecessors, successors, assigns, divisions, subsidiaries and
affiliates), and all persons acting by, through, under or in concert with any of them
(collectively, the “Releasees” and each a “Releasee”), or any of them, from any and
all charges, complaints, claims, damages, actions, causes of action, suits, rights, demands,
grievances, costs, losses, debts, and expenses (including attorneys’ fees and costs incurred), of
any nature whatsoever, known or unknown, that Executive now has, owns, or holds, or claims to have,
own, or hold, or which Executive at any time heretofore had, owned, or held, or claimed to have,
own, or hold from the beginning of time to the date that Executive signs this Agreement, including,
but not limited to, those claims arising out of or relating to (i) any agreement, commitment,
contract, mortgage, deed of trust, bond, indenture, lease, license, note, franchise, certificate,
option, warrant, right or other instrument, document, obligation or arrangement, whether written or
oral, or any other relationship, involving Executive and/or any Releasee, (ii) breach of any
express or implied contract, breach of implied covenant of good faith and fair dealing,
misrepresentation, interference with contractual or business relations, personal injury, slander,
libel, assault, battery, negligence, negligent or intentional infliction of emotional distress or
mental suffering, false imprisonment, wrongful termination, wrongful demotion, wrongful failure to
promote, wrongful deprivation of a career opportunity, discrimination (including disparate
treatment and disparate impact), hostile work environment, sexual harassment, retaliation, any
request to submit to a drug or polygraph test, and/or whistleblowing, whether said claim(s) are
brought pursuant to the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of
1964, as amended, the Equal Pay Act, 42 U.S.C. Sections 1981, 1983, or 1985, the Vocational
Rehabilitation Act of 1977, the Americans with Disabilities Act, the Family and Medical Leave Act
or the Fair Credit Reporting Act or any other constitutional, federal, regulatory, state or local
law, or under the common law or in equity, and (iii) any other matter (each of which is referred to
herein as a “Claim”); provided, however, that nothing contained herein shall operate to
release any obligations of Company, its successors or assigns (x) arising under any claims under
the Severance Agreement or under any other written Company benefit plans, such as the Sysco
Corporation Supplemental Executive Retirement Plan, the Sysco Corporation Executive Deferred
Compensation Plan, any 401(k) plan, any pension plan and any similar plan, to the extent Executive
is entitled to benefits under the respective terms thereof or (y) to defend and indemnify Executive
to the maximum extent that directors and officers of corporations are
16
permitted to be indemnified under Delaware law for all costs of litigation and any judgment or
settlement amount paid.
5. Release of Unknown Claims by Executive. Executive recognizes that he may have some
claim, demand, or cause of action against the Releasees relating to any Claim of which he is
totally unaware and unsuspecting and which is given up by the execution of this Agreement. It is
Executive’s intention in executing this Agreement with the advice of legal counsel that this
Agreement will deprive him of any such Claim and prevent Executive or any Derivative Claimant from
asserting the same. The provisions of any local, state, federal, or foreign law, statute, or
judicial decision providing in substance that this Agreement shall not extend to such unknown or
unsuspecting claims, demands, or damages, are hereby expressly waived.
6. Release of Executive by Company. In consideration of the covenants from Executive
to Company set forth herein and in the Severance Agreement, the receipt and sufficiency of which is
hereby acknowledged, the Company, its assigns and successors in interest, hereby IRREVOCABLY,
UNCONDITIONALLY AND GENERALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES, to the fullest extent
permitted by law, Executive, his heirs, devisees, legatees, executors, administrations, personal
and legal representatives, or any of them, from any and all charges, complaints, claims, damages,
actions, causes of action, suits, rights, demands, grievances, costs, losses, debts, and expenses
(including attorneys’ fees and costs incurred), of any nature whatsoever (a “Claim”), arising prior
to the date hereof out of events, occurrences or omissions actually known to the Company on the
date hereof. The burden of proving the actual knowledge of the Company of such events, occurrences
or omissions giving rise to a Claim against Executive shall be the Executive’s burden, and shall
only be established by the actual, conscious knowledge of an officer of the Company who is an
Executive Vice President of the Company or higher.
7. No Assignment. Executive represents and warrants that he has not assigned or
transferred, or purported to assign or transfer, to any person, entity, or individual whatsoever,
any of the Claims released herein. Executive agrees to indemnify and hold harmless the Releasees
against any Claim based on, arising out of, or due to any such assignment or transfer.
8. Indemnification. In furtherance of the foregoing, Executive agrees on behalf of
himself and the Derivative Claimants not to xxx or prosecute any matter against any Releasee with
respect to any Claim and agrees to hold each Releasee harmless with respect to any such suit or
prosecution in contravention of this Section 8. The Company agrees on behalf of itself and its
successors and assigns not to xxx or prosecute any matter against Executive with respect to any
Claim and agrees to hold Executive harmless with respect to any such suit or prosecution in
contravention of this Section 8. Executive understands that if this Agreement were not signed, he
would have the right voluntarily to assist other individuals or entities in bringing Claims against
the Releasees. Executive hereby waives that right and hereby agrees that he will not voluntarily
provide any such assistance. To the extent that applicable law prohibits Executive from waiving
his right to bring and/or participate in the investigation of a Claim, Executive nevertheless
waives his right to seek or accept any damages or relief in any such proceeding.
17
9. Representation Regarding Knowledge of Trade Secrets and/or Inventions. Executive
hereby acknowledges and confirms that he has no right, claim or interest to any property,
invention, trade secret, information or other asset used in the business of Company and that all
such property, inventions, trade secrets, information and other assets used in the business of
Company are owned by Company or its affiliates or licensed to Company or its affiliates by third
parties not affiliated with Executive.
10. Return of Company Property and Proprietary Information. (a) Executive further
promises, represents and warrants that Executive has returned or will return to
[identify designee] by no later than upon the execution of this Agreement by Executive: (a) all
property of Company, including, but not limited to, any and all files, records, credit cards, keys,
identification cards/badges, computer access codes, computer programs, instruction manuals,
equipment (including computers) and business plans; (b) any other property which Executive prepared
or helped to prepare in connection with Executive’s employment with Company; and (c) all documents,
including logs or diaries, all tangible materials, including audio and video tapes, all intangible
materials (including computer files), and any and all copies or duplicates of any such tangible or
intangible materials, including any duplicates, copies, or transcriptions made of audio or video
tapes, whether in handwriting or typewritten, that are in the possession, custody or control of
Executive or his attorneys, agents, family members, or other representatives, which are alleged to
support in any way any of the claims Executive has released under this Agreement.
(b) The foregoing representation shall include all Proprietary Information of Company and
Company. With respect to Proprietary Information, Executive warrants, represents, and covenants to
return such Proprietary Information on or before the close of business on . As
used herein, “Proprietary Information” means information in written form or electronic media,
including but not limited to technical and non-technical data, lists, training manuals, training
systems, computer based training modules, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes and plans regarding Company or its affiliates, clients,
prospective clients, methods of operation, billing rates, billing procedures, suppliers, business
methods, finances, management, or any other business information relating to Company or its
affiliates (whether constituting a trade secret or proprietary or otherwise) which has value to
Company or its affiliates and is treated by Company or its affiliates as being confidential;
provided; however, that Proprietary Information shall not include any information that has been
voluntarily disclosed to the public by Company or its affiliates (except where such public
disclosure has been made without authorization) or that has been independently developed and
disclosed by others, or that otherwise enters the public domain through lawful means. Proprietary
Information does include information which has been disclosed to Company or its affiliates by a
third party and which Company or its affiliates are obligated to treat as confidential.
Proprietary Information may or may not be marked by Company or its affiliates as “proprietary” or
“secret” or with other words or markings of similar meaning, and the failure of Company to make
such notations upon the physical embodiments of any Proprietary Information shall not affect the
status of such information as Proprietary Information.
18
11. COBRA. Company will provide Executive with a separate notification about his
rights under COBRA to elect to continue group health insurance benefits for a specified time as
provided under Section 4980B of the Internal Revenue Code of 1986, as amended (“COBRA”).
12. General Provisions.
(a) This Agreement and the covenants, representations, warranties and releases contained
herein shall inure to the benefit of and be binding upon Executive and Company and each of their
respective successors, heirs, assigns, agents, affiliates, parents, subsidiaries and
representatives.
(b) Each party acknowledges that no one has made any representation whatsoever not contained
herein concerning the subject matter hereof to induce the execution of this Agreement. Executive
acknowledges that the consideration for signing this Agreement is a benefit to which Executive
would not have been entitled had Executive not signed this Agreement.
(c) Except in the event that Company publicly files this Agreement or otherwise publicly
discloses its terms and conditions, Executive agrees that the terms and conditions of this
Agreement, including the consideration hereunder shall not be disclosed to anyone and shall remain
confidential and not disseminated to any person or entity not a party to this Agreement except to
family members, legal counsel, an accountant for purposes of securing tax advice; the Internal
Revenue Service, or the state taxing agencies.
(d) The “Effective Date” of this Agreement shall be the eighth (8th) day
after the execution of the Agreement by Executive.
(e) This Agreement does not constitute an admission of any liability.
(f) The parties hereto and each of them agrees and acknowledges that if any portion of this
Agreement is declared invalid or unenforceable by a final judgment of any court of competent
jurisdiction, such determination shall not affect the balance of this Agreement, which shall remain
in full force and effect. Any such invalid portion shall be deemed severable.
(g) Neither this Agreement nor any provision hereof may be modified or waived in any way
except by an agreement in writing signed by each of the parties hereto consenting to such
modification or waiver.
(h) Except for the Severance Agreement, the other agreements specified herein and other than
as expressly provided herein, the parties hereto acknowledge and agree that this Agreement
supercedes all prior agreements or other arrangements by and between Company and Executive with
respect to compensation and benefits payable by Company to Executive, including all of Company’s
payment obligations for compensation set forth in any employment agreement between the parties, and
that such prior agreements or arrangements with respect to compensation and benefits payable by
Company to Executive shall upon the execution and delivery hereof by the parties hereto be null and
void and of no force and effect whatsoever.
This Agreement shall in all respects be interpreted, enforced and governed under the internal laws
(and not the conflicts of laws and rules) of Delaware.
19
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.
EXECUTIVE ATTESTS THAT HE UNDERSTANDS THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.
NOTICE — THIS AGREEMENT CONTAINS A WAIVER OF RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT. EXECUTIVE IS ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS AGREEMENT
EXECUTED THIS DAY OF , 200__.
EXECUTIVE:
Print Name:
Sworn to and subscribed before me this day of , 200__.
Notary Public
EXECUTED THIS DAY OF , 200__.
Company: SYSCO Corporation
By:
Its:
20
