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EXHIBIT 10.22
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT is made as of the 11th day of August, 2000, by and
between Vlasic Foods International Inc. (the "Company") and Xxxxxx X.
Xxxxxxxxx (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change in Control (as hereinafter defined) exists and
that the threat of or the occurrence of a Change in Control can result in
significant distractions of its key management personnel because of the
uncertainties inherent in such a situation;
WHEREAS, the Board has, as recommended and approved by the Compensation
and Organization Committee, determined that it is essential and in the best
interest of the Company and its shareowners to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure Executive's continued dedication and efforts in such event without undue
concern for Executive's personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
provide the Executive with certain benefits in the event Executive's employment
is terminated as a result of, or in connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the date
specified above, and shall continue in effect until the third anniversary of
such date; provided however, that commencing on the second anniversary of such
date and on each anniversary thereafter, the term of this Agreement shall
automatically be extended for one (1) year unless either the Company or the
Executive shall have given written notice to the other at least ninety (90) days
prior thereto that the term of this Agreement shall not be so extended; and
provided further, that notwithstanding any such notice by the Company not to
extend, the term of this Agreement shall not expire prior to the expiration of
twenty-four (24) months after the occurrence of a Change in Control.
2. Definitions.
2.1. Cause. For purposes of this Agreement only, a termination for
"Cause" is a termination evidenced by a resolution adopted in good faith by
two-thirds of the Board that: (a) the Executive intentionally and continually
failed to substantially perform Executive's duties with the Company (other than
a failure resulting from the Executive's incapacity due to physical or mental
illness) which failure continued for a period of at least thirty (30) days after
a written notice of demand for substantial performance had been delivered to the
Executive specifying the manner in which the Executive had failed to
substantially perform; or (b) the Executive engaged in conduct that constituted
willful gross misconduct that was demonstrably and materially injurious to the
Company, monetarily or otherwise, misappropriated funds, made one or more
willful and material misrepresentations to the directors or officers of the
Company, was grossly negligent in the performance of the Executive's duties
having a material adverse effect on the business, operations, assets, properties
or financial condition of the Company, or entered into competition with the
Company; provided however, that no termination of the Executive's employment
shall be for Cause as set forth in clause (b) above until (x) there shall have
been delivered to the Executive a copy of a written notice setting forth that
the Executive was guilty of the conduct set forth in clause (b) and specifying
the particulars thereof in detail, and (y) the Executive shall have been
provided an opportunity to be heard by the Board (with the assistance of the
Executive's counsel if the Executive so desires). No act, nor failure to act, on
the Executive's part, shall be considered "willful" unless Executive acted, or
failed to act, with an absence of good faith and without a reasonable belief
that Executive's action or failure to act was in the best interest of the
Company.
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Notwithstanding anything contained in this Agreement to the contrary, no failure
to perform by the Executive after a Notice of Termination is given by the
Executive shall constitute Cause for purposes of this Agreement.
2.2. Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following events:
(a) The acquisition in one or more transactions by any
"Person" (as the term person is used for purposes of Section 13(d) or Section
14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) of
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the
0000 Xxx) of twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding voting securities (the "Voting Securities"),
provided however, that for purposes of this Section 2.2(a), the Voting
Securities acquired directly from the Company by any Person shall be excluded
from the determination of such Person's Beneficial Ownership of Voting
Securities (but such Voting Securities shall be included in the calculation of
the total number of Voting Securities then outstanding); or
(b) The individuals who, as of the later of April 1, 1998 or
the first date that the membership of the Board reaches seven (7), are members
of the Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the Board; provided however, that if the election, or
nomination for election by the Company's shareowners, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered as a member of the
Incumbent Board; or
(c) Approval by shareowners of the Company of: (i) a merger
or consolidation involving the Company if the shareowners of the Company,
immediately before such merger or consolidation, do not own, directly or
indirectly, immediately following such merger or consolidation, more than eighty
percent (80%) of the combined voting power of the outstanding Voting Securities
of the corporation resulting from such merger or consolidation in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger or consolidation; or (ii) a complete liquidation or
dissolution of the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company; or
(d) Acceptance by shareowners of the Company of shares in a
share exchange if the shareowners of the Company, immediately before such share
exchange, do not own, directly or indirectly, immediately following such share
exchange, more than eighty percent (80%) of the combined voting power of the
outstanding Voting Securities of the corporation resulting from such share
exchange in substantially the same proportion as their ownership of the Voting
Securities outstanding immediately before such share exchange.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because twenty-five percent (25%) or more of the then outstanding Voting
Securities is acquired by: (i) a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained by the Company or any of its
subsidiaries; (ii) any entity that, immediately prior to such acquisition, is
entirely owned (directly or indirectly) by shareowners of the Company in the
same proportions as their ownership of stock in the Company immediately prior to
such acquisition; (iii) any "Grandfathered Xxxxxxxx Family shareowner" (as
hereinafter defined); or (iv) any Person who has acquired such Voting Securities
directly from any Grandfathered Xxxxxxxx Family shareowner but only if such
Person has executed an agreement that is approved by two-thirds of the Board and
pursuant to which such Person has agreed that he or she (or they) will not
increase his or her (or their) Beneficial Ownership (directly or indirectly) to
thirty percent (30%) or more of the outstanding Voting Securities (the
"Standstill Agreement") and only for the period during which the Standstill
Agreement is effective and fully honored by such Person. For purposes of this
Section, "Grandfathered Xxxxxxxx Family shareowner" means at any time a
"Xxxxxxxx Family shareowner" (as hereinafter defined) who or which is at the
time in question the Beneficial Owner solely of (v) Voting Securities
beneficially owned by such individual on April 1, 1998, (w) Voting Securities
acquired directly from the Company, (x) Voting Securities acquired directly from
another Grandfathered Xxxxxxxx Family shareowner, (y) Voting Securities that are
also Beneficially Owned by other Grandfathered Xxxxxxxx Family shareowners at
the time in question, and (z) Voting Securities acquired after April 1, 1998
other than directly from the Company or from another Grandfathered Xxxxxxxx
Family shareowner by any "Xxxxxxxx Grandchild" (as hereinafter defined);
provided that the aggregate
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amount of Voting Securities so acquired by each such Xxxxxxxx Grandchild shall
not exceed five percent (5%) of the Voting Securities outstanding at the time of
such acquisition. A "Xxxxxxxx Family shareowner" who or which is at the time in
question the Beneficial Owner of Voting Securities that are not specified in
clauses (v), (w), (x), (y) and (z) of the immediately preceding sentence shall
not be a Grandfathered Xxxxxxxx Family shareowner at the time in question. For
purposes of this Section, "Xxxxxxxx Family shareowners" means individuals who
are descendants of the late Xx. Xxxx X. Xxxxxxxx, Xx. and/or the spouses,
fiduciaries and foundations of such descendants. A "Xxxxxxxx Grandchild" means
as to each particular grandchild of the late Xx. Xxxx X. Xxxxxxxx, Xx., all of
the following taken collectively: such grandchild, such grandchild's descendants
and/or the spouses, fiduciaries and foundations of such grandchild and such
grandchild's descendants.
Moreover, notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company that, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person; provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities that increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
(e) Notwithstanding anything contained in this Agreement to
the contrary, if the Executive's Termination Date (as defined in Section 8) is
within one year prior to a Change in Control and the Executive reasonably
demonstrates that such termination (i) was at the request of a Third Party (as
defined in Section 2.4(b)) who effectuates a Change in Control or (ii) otherwise
occurred in connection with or in anticipation of, a Change in Control, then for
all purposes of this Agreement, the date of a Change in Control shall mean the
date immediately prior to the Executive's Termination Date.
2.3. Disability. For purposes of this Agreement only, "Disability"
shall mean a physical or mental infirmity which impairs the Executive's ability
to substantially perform the Executive's duties under this Agreement for a
period of one-hundred-eighty (180) consecutive days.
2.4. (a) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence after a Change in Control of any of the events
or conditions described in Subsections (1) through (10) hereof:
(1) an assignment to the Executive of any duties
materially inconsistent with, or a reduction or change by the Company in the
nature or scope of the authority, duties or responsibilities of the Executive
from those assigned to or held by the Executive immediately prior thereto;
(2) any removal of the Executive from the positions
held immediately prior to the Change in Control, except in connection with
promotions to positions of greater responsibility and prestige;
(3) any reduction by the Company in the Executive's
compensation as in effect immediately prior to the Change in Control or as
the same may be increased thereafter;
(4) revocation or any modification of any employee
benefit plan, or any action taken pursuant to the terms of any such plan, that
materially reduces the opportunity of the Executive to receive benefits under
any such plan;
(5) a transfer or relocation of the site of
employment of the Executive immediately preceding the Change in Control, without
the Executive's express written consent, to a location more than fifty (50)
miles distant therefrom, or that is otherwise an unacceptable commuting distance
from the Executive's principal residence at the date of the Change in Control;
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(6) a requirement that the Executive undertake
business travel to an extent substantially greater than the Executive's business
travel obligations immediately prior to the Change in Control;
(7) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the Company;
(8) any material breach by the Company of any
provision of this Agreement;
(9) any purported termination of the Executive's
employment for Cause by the Company which does not comply with the terms of
Section 2.1; or
(10) the failure of the Company to obtain an
agreement, satisfactory to the Executive, from any successor or assign of the
Company to assume and agree to perform this Agreement, as contemplated in
Section 9.1 hereof.
(b) Any event or condition described in Section
2.4(a)(1) through (10) which occurs prior to a Change in Control but which the
Executive reasonably demonstrates: (i) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change in Control (a "Third Party"); or (ii) otherwise arose in connection with
or in anticipation of a Change in Control, shall constitute Good Reason for
purposes of this Agreement notwithstanding that it occurred prior to the Change
in Control.
(c) The Executive's right to terminate his employment
pursuant to this Section 2.4 shall not be affected by his incapacity due to
physical or mental illness.
2.5. Window Period. For purposes of this Agreement, "Window Period"
shall mean the thirty (30) day period beginning one year after a Change in
Control.
3. Obligations of the Executive. The Executive agrees that in the event
any person or group attempts a Change in Control, the Executive will not
voluntarily terminate employment with the Company without Good Reason: (a) until
such attempted Change in Control terminates; or (b) if a Change in Control shall
occur, until ninety (90) days following such Change in Control. For purposes of
this Section, Good Reason shall be determined as if a Change in Control had
occurred when such attempted Change in Control became known to the Board.
4. Severance Benefits.
4.1. If, during the term of this Agreement, the Executive's
employment with the Company shall be terminated within twenty-four (24) months
following a Change in Control, the Executive shall be entitled to the following
compensation and benefits:
(a) If the Executive's employment with the Company shall be
terminated (1) by the Company for Cause or Disability, (2) by reason of the
Executive's death, or (3) by the Executive other than for Good Reason or other
than during the Window Period, the Company shall pay the Executive all amounts
earned or accrued through the Termination Date but not paid as of the
Termination Date, including: (i) base salary; (ii) reimbursement for reasonable
and necessary expenses incurred by the Executive on behalf of the Company during
the period ending on the Termination Date; and (iii) vacation pay (collectively,
"Accrued Compensation"). In addition to the foregoing, if the Executive's
employment is terminated by the Company for Disability or by reason of the
Executive's death, the Company shall pay to the Executive or his beneficiaries
an amount equal to the "Pro Rata Bonus" (as hereinafter defined). The "Pro Rata
Bonus" is an amount equal to the Bonus Amount (as hereinafter defined)
multiplied by a fraction the numerator of which is the number of days in such
fiscal year through the Termination Date (as defined in Section 8) and the
denominator of which is 365. The term "Bonus Amount" shall mean the greater of
(x) the Executive's target bonus under the Annual Incentive Plan for the fiscal
year in which the Termination Date occurs; or (y) the average of the annual
bonuses paid or payable during the two full fiscal years ended prior to the
Termination Date.
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(b) If the Executive's employment with the Company shall be
terminated (other than by reason of death): (1) by the Company other than for
Cause or Disability; (2) by the Executive for Good Reason; or (3) by the
Executive for any reason whatsoever (other than death) during the Window Period,
the Executive shall be entitled to the following:
(i) The Company shall pay the Executive all Accrued
Compensation.
(ii) The Company shall pay the Executive a single
amount in cash equal to $500,000 (the "Severance Amount").
(c) The amounts provided for in Sections 4.1(a) and 4.1(b)
shall be paid within thirty (30) days after the Executive's Termination Date.
The Company shall withhold from all payments due to Executive under this
Agreement all taxes or other withholdings which the Company reasonably believes
are required to be withheld under applicable federal, state or local law.
(d) The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
5. Limit on Payments by the Company.
5.1. Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise) would be
subject to the excise tax imposed by Section 4999 of the Code, then the
Severance Amount under Section 4.1(b) shall be reduced to the extent necessary
so that no such payments are subject to such excise tax. Any payments made
pursuant to the "Confidential Information and Non-Competition Agreement" between
the Company and the Executive, dated August 11, 2000 shall be disregarded in
making the determination described in the immediately preceding sentence.
5.2. All determinations required to be made under Section 5.1 and
the assumptions to be utilized in arriving at such determinations, shall be made
by the Company's certified public accounting firm (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and the
Executive within 10 business days of the receipt of notice from the Executive or
the Company that there will be a payment potentially subject to the excise tax
imposed by Section 4999 of the Code, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change in Control, the
Company shall appoint another nationally recognized certified public accounting
firm reasonably acceptable to Executive to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive.
5.3. The Company shall have no obligation to reimburse Executive
for any excise taxes Executive incurs under Section 4999 of the Code based on
payments made under this Agreement or otherwise. Further, the Company shall have
no obligation to assist Executive in any governmental investigation, audit,
proceeding or litigation related to excise taxes potentially owed by Executive
under Section 4999 of the Code.
6. Effect on Other Benefits.
6.1. If the Executive's employment with the Company is terminated
in the manner specified in Section 4.1(b):
(a) the Executive shall not be entitled to any severance
benefits from the Company except as specifically provided in this Agreement, and
therefore, Executive shall not be entitled to any benefits under generally
applicable severance plans, policies, programs or arrangements maintained by the
Company, and
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(b) the Executive shall not be entitled to any payments
under the Company's Annual Incentive Plan for the fiscal year in which such
termination occurs.
6.2. Except as otherwise provided in Section 6.1, this Agreement
shall not affect any other benefits Executive may be entitled to under the
Company's 1998 Long-Term Incentive Plan, Deferred Compensation Plan,
Supplemental Executive Retirement Plan, Mid-Career Hire Agreement, and other
retirement and welfare plans.
7. Notice of Termination. Following a Change in Control, any purported
termination of the Executive's employment by the Company or by the Executive
shall be communicated by written Notice of Termination to the other. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
indicates the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of Termination.
8. Termination Date. "Termination Date" shall mean in the case of the
Executive's death, his date of death, and in all other cases, the date specified
in the Notice of Termination, subject to the following:
8.1. If the Executive's employment is terminated by the Company for
Cause or due to Disability, the date specified in the Notice of Termination
shall be at least thirty (30) days from the date the Notice of Termination is
given to the Executive, provided that in the case of Disability the Executive
shall not have returned to the full-time performance of his duties during such
period of at least thirty (30) days; and
8.2. If the Executive's employment is terminated for Good Reason or
during the Window Period, the date specified in the Notice of Termination shall
not be more than sixty (60) days from the date the Notice of Termination is
given to the Company.
9. Successors; Binding Agreement.
9.1. This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the Company shall require
any successor or assign to expressly 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. The term "the
Company" as used herein shall include such successors and assigns. The term
"successors and assigns" as used herein shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the Company
(including this Agreement) whether by operation of law or otherwise.
9.2. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
11. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
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12. Litigation Expenses. If the Company or the Executive institutes
litigation related to their respective rights or obligations under this
Agreement, the losing party shall reimburse the prevailing party for expenses
incurred in such litigation, including reasonable attorney fees.
13. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and 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. No agreement 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.
14. Employment Status. This Agreement does not constitute a contract of
employment or impose on the Company any obligation to retain the Executive, or
any obligation on the Executive to remain in the employment of the Company.
15. Indemnification. Notwithstanding anything to the contrary in this
Agreement or elsewhere, and despite the termination of Executive's Company
employment, Executive will continue to be eligible for coverage under the
Company's indemnification plans, policies and its by-laws (as applicable to
indemnification) as determined by the terms of those plans, policies and
by-laws.
16. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Jersey without giving
effect to the conflict of laws principles thereof. Each party hereto consents to
the subject matter and in personam jurisdiction and venue in the United States
District Court of New Jersey. In the event it is determined that the United
States District Court of New Jersey should lack subject matter jurisdiction for
any reason, the parties consent to the jurisdiction and venue in a court of
competent jurisdiction in Camden County in the State of New Jersey.
17. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
18. Entire Agreement; Prior Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersede all prior agreements,
if any, understandings and arrangements, oral or written, between the parties
hereto, with respect to the subject matter hereof. The Company and the Executive
hereby agree that this Agreement supersedes in full the "Severance Protection
Agreement" dated June 22, 1998 between the Company and the Executive (the "Prior
Agreement"). The parties acknowledge that the provisions of the Prior Agreement
shall have no further force and effect on and after the date of this Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officers and the Executive has executed this Agreement,
as of the day and year first above written.
ATTEST: VLASIC FOODS INTERNATIONAL INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxx
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Secretary
XXXXXX X. XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxxxx
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