EXHIBIT 10.15
THIRD AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIRD AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT, dated as of
the 10th day of June, 1997 (this "Agreement"), between Xxxxxx-Xxxxxx, Inc., a
Delaware corporation (the "Company"), and Xxxx Xxx Xxxxxxxxxxxx (the
"Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success of the
Company and its subsidiaries has been and is expected to continue to be
substantial;
WHEREAS, the Company recognizes that, as is the case for most
publicly-held companies, the possibility of a Change in Control (as defined
below) exists;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management and desires to establish certain minimum
severance benefits for certain of its senior executives and key employees,
including the Executive, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior executives
and key employees are not practically disabled from discharging their duties
in respect of a proposed or actual transaction involving a Change in Control;
WHEREAS, the Board has determined that it is appropriate and in the
best interests of the Company and its stockholders to reinforce and encourage
the continued attention and dedication of members of the Company's
management, including the Executive, to their assigned duties;
WHEREAS, the Company and the Executive have entered into the Second
Amended and Restated Change in Control Agreement, dated as of February 2,
1996 (as amended by a letter agreement, dated as of May 9, 1997, the "Prior
Change in Control Agreement"); and
WHEREAS, the Company desires to modify and make certain clarifying
changes to the definition of "Change in Control" set forth in the Prior
Change in Control Agreement and certain other changes as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained and in further consideration of services
performed and to be performed by the Executive for the Company, the Company
and the Executive do
hereby amend and restate the Prior Change in Control Agreement in its
entirety as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) CHANGE IN CONTROL. A "Change in Control" of the Company shall
occur upon:
(i) any person (as defined in Sections 3(a)(9) and 13(d)(3) of
the '34 Act) ("Person") (other than an Excluded Person (as hereinafter
defined), the Company or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any subsidiary of the
Company) becoming the "beneficial owner" (as defined in Rule 13d-3
promulgated pursuant to the '34 Act), directly or indirectly, of 25%
or more of combined voting power of the then outstanding securities
entitled to vote generally in the election of directors ("Voting
Securities") of the Company, other than pursuant to a Business
Combination (as hereinafter defined) that complies with clauses (I),
(II), (III) and (IV) of subsection (iii) of this Section 1(a); or
(ii) the occurrence within any twelve-month period during the
term of the Agreement of a change in the Board with the result that
the Incumbent Members do not constitute a majority of the Board; or
(iii) consummation of (A) a reorganization, merger or
consolidation of the Company or any subsidiary of the Company, or (B)
a sale or other disposition of all or substantially all of the assets
of the Company (each, a "Business Combination"), unless, in each case,
immediately following such Business Combination, (I) all or
substantially all of the individuals and entities who were the
beneficial owners of Voting Securities of the Company immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than two-thirds of the then outstanding shares of
common stock and the combined voting power of the then outstanding
Voting Securities of the entity resulting from such Business
Combination (including, without limitation, an entity which as a
result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions relative to each
other as their ownership, immediately prior to such Business
Combination, of the Voting Securities of the Company, (II) no Person
(other than an Excluded Person, the Company, such entity resulting
from such Business Combination, or any employee benefit plan (or
related
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trust) sponsored or maintained by the Company, any subsidiary or such
entity resulting from such Business Combination), beneficially owns,
directly or indirectly, 25% or more of the then outstanding shares
of Voting Securities of the entity resulting from such Business
Combination, (III) at least a majority of the members of the Board of
Directors of the entity resulting from such Business Combination were
Incumbent Members of the Board at the time of the execution of the
initial agreement and of the action of the Board providing for such
Business Combination, and (IV) the Chief Executive Officer of the
Company immediately prior to the commencement of discussions (the
"Commencement Date") with the third party that results in the Business
Combination remains the Chief Executive Officer of the Company and the
entity resulting from such Business Combination (unless such Chief
Executive Officer ceases to constitute such by reason of death,
Disability (as defined in such Chief Executive Officer's Employment
Agreement with the Company, as it may be amended and restated from
time to time (the "Employment Agreement")), termination for Cause (as
defined in the Employment Agreement) or voluntary termination by such
Chief Executive Officer under circumstances that are not treated as an
involuntary termination under the Employment Agreement) during the
period commencing on the Commencement Date and throughout the twelve-
month period following the consummation of the Business Combination
(any Change in Control that may arise from the failure to satisfy the
condition specified in this clause (IV) to be effective as of the date
the Chief Executive Officer ceases to constitute such); or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a
Business Combination that complies with clauses (I), (II), (III) and
(IV) of subsection (iii) of this Section 1(a).
"Excluded Person" shall mean (x) Xxxxxxx Xxxxx Capital Partners,
Inc., Xxxxxxx Xxxxx Capital Appreciation Partnership No. B-XVIII,
L.P., Xxxxxxx Xxxxx Kecalp L.P. 1994, ML Offshore LBO Partnership No.
B-XVIII, ML IBK Positions, Inc., MLCP Associates L.P. No. II, MLCP
Associates L.P. No. IV, Xxxxxxx Xxxxx Kecalp L.P. 1991, Xxxxxxx Xxxxx
Capital Appreciation Partnership No. XIII, L.P., ML Offshore LBO
Partnership No. XIII, ML Employees LBO Partnership No. I, L.P.,
Xxxxxxx Xxxxx Kecalp L.P. 1987, and Merchant Banking L.P. No. II
(each, an "ML Entity" and collectively the "ML Entities"), if the ML
Entities shall have executed a written agreement with the Company (and
approved by the Company's Board of Directors) on or prior to the
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date on which the ML Entities (together with its Affiliates) became
the beneficial owner of 25% or more of the shares of Voting Securities
then outstanding (the "Standstill Agreement"), which Standstill
Agreement imposes one or more limitations on the amount of the ML
Entities' beneficial ownership of shares of Common Stock, and if, and
so long as, such Standstill Agreement (or any amendment thereto
approved by the Company's Board of Directors by the vote of a majority
of the Present Directors) continues to be in effect and binding on the
ML Entities and the ML Entities are in compliance (as determined by
the Company's Board of Directors in its discretion by the vote of a
majority of the Present Directors) with the terms of such Standstill
Agreement (including any such amendment); or (y) any other Person
acquiring Voting Securities from an ML Entity if (i) such Voting
Securities were acquired by an ML Entity pursuant to the transactions
contemplated by the Letter of Intent dated December 5, 1995 ("Letter
of Intent") from the Company to US Foodservice Inc. ("Excluded
Shares") and (ii) if, prior to such acquisition by such other Person,
a majority of the Present Directors has expressly determined in good
faith that such acquisition is not a "Change in Control" for purposes
of this Agreement ("ML Successor"); PROVIDED, HOWEVER, that a Change
in Control shall occur if, prior to July 17, 1997, either (A) the
Chief Executive Officer of the Company immediately prior to the
execution of the Letter of Intent ceases to constitute the Chief
Executive Officer of the Company (or any successor to the Company)
("CEO Termination") (unless such Chief Executive Officer ceases to
constitute the Chief Executive Officer of the Company by reason of
death, Disability (as defined in the Employment Agreement),
termination for Cause (as defined in the Employment Agreement) or
voluntary termination by such Chief Executive Officer under
circumstances that are not treated as an involuntary termination under
the Employment Agreement), or (B) the directors of the Company in
office immediately prior to the execution of the Letter of Intent,
together with any successors of such directors (provided that any such
successors qualify as Present Directors), cease to constitute at least
a majority of the Board ("Board Change"), such Change in Control to be
effective as of the date of the CEO Termination or Board Change, as
the case may be.
"Present Director" shall mean a member of the Board who (1) is
not designated as a member of the Board by any ML Entity or ML
Successor, (2) does not otherwise have any agreement, arrangement or
understanding with any ML Entity or ML Successor for the purpose of
serving as a member of the Board, and
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(3) is not an Affiliate or an Associate (as hereinafter defined) of
any ML Entity or ML Successor.
"Affiliate" and "Associate" shall have the meanings set forth in
Rule 12b-2 of the '34 Act.
The Board shall have the power to determine, for purposes of this
Agreement, on the basis of information known to the Board by a vote
taken in good faith by a majority of Present Directors, (1) whether
any Person is an Excluded Person, (2) the percentage of the Company's
Voting Securities beneficially owned by an Excluded Person, and (3)
any determination to be made pursuant to clause (x) of the definition
of Excluded Person. Any such determination shall be conclusive and
binding for all purposes of this Agreement.
(b) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) DATE OF TERMINATION. "Date of Termination" shall mean the date
on which the Executive's employment is terminated by the Company or the
Executive.
(d) INCUMBENT MEMBERS. "Incumbent Members" shall mean (i) in respect
of any twelve-month period the members of the Board on the date immediately
preceding the commencement of such twelve-month period, PROVIDED THAT any
person becoming a Director during such twelve-month period whose election
or nomination for election was supported by a majority of the Directors
who, on the date of such election or nomination for election, comprised the
Incumbent Members shall be considered one of the Incumbent Members in
respect of such twelve-month period, and (ii) in respect of Clause (III) of
Section 1(b)(iii), members of the Board on the date hereof, provided that
any person (other than an Affiliate, Associate, nominee, representative or
employee of any person (other than the Company) that is a party to a
Business Combination) becoming a Director and whose election or nomination
for election was supported by a majority of the Directors who, on the date
of such election or nomination for election, comprised the Incumbent
Members shall be considered one of the Incumbent Members.
(e) '34 ACT. "'34 Act" shall mean the Securities Exchange Act of
1934, as amended.
2. TERM. This Agreement shall commence on the date first above written
and shall continue in effect until December 31, 1999; provided, however, that on
December 31, 1997 and on each December 31 (the "anniversary date") thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless, not later than 90 days prior to such anniversary date, the Company
shall have given the Executive written notice that
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the Company does not wish to extend the term of this Agreement (by way of
illustration, on December 31, 1997, assuming no notice to the contrary has
been given, the term will automatically be extended to December 31, 2000);
and provided further that this Agreement shall continue in effect beyond the
term provided herein if such continuation is provided for in a contract of
employment between the Company and the Executive, or if a Change of Control
shall have occurred during such term or if any obligation of the Company
hereunder remains unpaid as of such time.
3. SEVERANCE COMPENSATION UPON A CHANGE IN CONTROL AND TERMINATION OF
EMPLOYMENT. If (a) a Change in Control of the Company shall have occurred
while the Executive is an employee of the Company, and (b) within two (2)
years from the date of such Change in Control (i) the Company shall terminate
the Executive's employment for any or no reason (except for the death of the
Executive) or (ii) the Executive shall elect to terminate his employment for
any or no reason, then
(A) the Company shall pay the Executive any earned and accrued but
unpaid installment of base salary through the Date of Termination at the
rate in effect on the Date of Termination and all other unpaid amounts to
which the Executive is entitled as of the Date of Termination under any
compensation plan or program of the Company, including, without limitation,
all accrued vacation time; all such payments shall be made in a lump sum on
or before the fifth day following the Date of Termination;
(B) in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay to the
Executive an amount equal to the product of (i) the sum of (a) the
Executive's annual base salary in effect as of the Date of Termination and
(b) the amount that otherwise would be earned under the Senior Management
Incentive Plan and any other executive compensation plan in which the
Executive is then participating for the year in which such Date of
Termination occurs (assuming all such amounts under such plan had been
earned) and (ii) the number 2.99; such payment shall be made in a lump sum
on or before the fifth calendar day following the Date of Termination;
(C) for a period of not less than twenty-four (24) months
following the Executive's Date of Termination, the Company will reimburse
the Executive for all reasonable expenses incurred by him (but not
including any arrangement by which the Executive prepays expenses for a
period of greater than thirty (30) days) in seeking employment with another
employer including the fees of a reputable outplacement organization;
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(D) if the payment provided under paragraph (B) above (the
"Contract Payment") or any other portion of the Total Payments (as defined
below) will be subject to the tax (the "Excise Tax") imposed by Section
4999 of the Code, the Company shall pay the Executive on or before the
fifth calendar day following the Date of Termination, an additional amount
(the "Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Contract Payment and
such other Total Payments and any federal and state and local income tax
and Excise Tax upon the payment provided for by this paragraph, shall be
equal to the Contract Payment and such other Total Payments. For purposes
of determining whether any of the payments will be subject to the Excise
Tax and the amount of such Excise Tax, (i) any other payments or benefits
received or to be received by the Executive in connection with a Change in
Control of the Company or the Executive's termination of employment,
whether payable pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, its successors, any person whose
actions result in a Change in Control of the Company or any corporation
affiliated (or which, as a result of the completion of a transaction
causing a Change in Control, will become affiliated) with the Company
within the meaning of Section 1504 of the Code (together with the Contract
Payment, the "Total Payments") shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) shall be
treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Company's independent auditors and acceptable to the
Executive the Total Payments (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code either in their entirety or in
excess of the base amount within the meaning of Section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax, (ii) the amount of
the Total Payments that shall be treated as subject to the Excise Tax shall
be equal to the lesser of (a) the total amount of the Total Payments or (b)
the amount of excess parachute payments within the meaning of Section
280G(b)(1) (after applying clause (i), above), and (iii) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payment, the Executive shall be deemed to pay
federal income taxes at the highest marginal rate of taxation in the
calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state
and locality of the Executive's residence on the Date of Termination, net
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of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. In the event
that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the Company at the
time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the
Excise Tax and federal and state and local income tax imposed on the
Gross-Up Payment being repaid by the Executive of such repayment results
in a reduction in Excise Tax and/or a federal and state and local income
tax deduction) plus interest on the amount of such repayment at the rate
provided in Section 1274(d) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder at
the time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall made
an additional gross-up payment in respect of such excess at the time
that the amount of such excess is finally determined; and
(E) for two (2) years following the Executive's Date of
Termination, the Company shall maintain in full force and effect for the
continued benefit of the Executive, all employee welfare benefit plans and
perquisite programs in which the Executive was entitled to participate
immediately prior to the Date of Termination (provided that the Executive's
continued participation is possible under the general terms and provisions
of such plans and programs). In the event that the Executive's
participation in any such plan or program is barred, the Company shall, at
its sole cost and expense, arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise have
been entitled to receive under such plans and programs from which his
continued participation is barred.
Anything in this Agreement to the contrary notwithstanding, if a Change
in Control occurs and the Executive's employment with the Company is
terminated by the Company or the Executive terminates his employment for any
or no reason prior to the date on which the Change in Control occurs, such
termination of employment shall be deemed to be a termination of employment
after a Change in Control for purposes of this Agreement, including, without
limitation, this Section 3, if the Executive shall have reasonably
demonstrated that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change in
Control, or (ii) otherwise arose in connection with or in anticipation of a
Change in Control.
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4. NO OBLIGATIONS TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL
RIGHTS. (a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any benefit plan, incentive plan or
securities plan, employment agreement or other contract, plan or arrangement,
except to the extent that such other contract, plan or arrangement expressly
provides that amounts paid hereunder shall be offset against the amounts
otherwise payable under such contract, plan or arrangement.
5. SUCCESSOR TO THE COMPANY. (a) The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance satisfactory
to the Executive, expressly, absolutely and unconditionally to assume 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 or
assignment had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor or assign to its
business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section 5 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law. If at any time
during the term of the Agreement the Executive is employed by any
corporation, a majority of the voting securities of which is then owned by
the Company, "Company" as used in this Agreement shall in addition include
such employer. In such event, the Company agrees that it shall pay or shall
cause such employer to pay any amounts owed to the Executive pursuant to
Section 3 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amounts are still payable to him
hereunder, all such amounts unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the
Executive's estate.
6. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when
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delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, as follows:
If to the Company:
Xxxxxx-Xxxxxx, Inc.
000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxxx Xxxxxxxxx Center
Xxxxxx-Xxxxx, Pennsylvania 18702-6980
If to the Executive:
Xx. Xxxx Xxx Xxxxxxxxxxxx
XX #0 Xxx 000-0
Xxxxxx, XX 00000
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.
7. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by the Executive and such officer of the Company as may
be specifically designated by the Board. 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 any similar or dissimilar provision 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 set forth
expressly in this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
8. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
10. FEES AND EXPENSES. The Company shall pay all reasonable fees and
expenses (including attorneys' fees) that the Executive may incur as a result
of the Company's contesting the validity, enforceability or the Executive's
interpretation of, or determinations under, this Agreement.
11. CONFIDENTIALITY. The Executive shall retain in confidence any and
all confidential information known to the
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Executive concerning the Company and its business so long as such information
is not otherwise publicly disclosed.
12. COMPANY'S RIGHT TO TERMINATE. Notwithstanding anything contained
in this Agreement to the contrary, except to the extent that the Executive
has a written employment agreement with the Company, or as otherwise provided
in the final sentence of Section 3, the Company may terminate the Executive's
employment at any time, for any reason or no reason, and no provision
contained herein shall affect the Company's ability to terminate the
Executive's employment at any time, with or without cause. Except as
provided in the final sentence of Section 3, (a) nothing in this Agreement
shall in any way require the Company to provide any of the benefits specified
in this Agreement prior to a Change in Control, and (b) this Agreement shall
not be construed in any way to establish any policies or other benefits for
the Executive or any other employee of the Company whose employment with the
Company is terminated prior to a Change in Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
Attest: XXXXXX-XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx. By: /s/ Xxxxxxx X. Xxxxxx
------------------------- -------------------------
Xxxxxx X. Xxxxxx, Xx. Xxxxxxx X. Xxxxxx
Senior Vice President Senior Vice President
Administration, General Corporate Development
Counsel & Secretary
/s/ Xxxx Xxx Xxxxxxxxxxxx
-------------------------------
Xxxx Xxx Xxxxxxxxxxxx
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