MANAGEMENT CONTINUITY AGREEMENT
-------------------------------
MANAGEMENT CONTINUITY AGREEMENT by and between ▇▇▇▇▇▇▇ Purina Company
("▇▇▇▇▇▇▇"), a Missouri corporation, and _______________, (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors has authorized ▇▇▇▇▇▇▇ to enter into a
Management Continuity Agreement (the "Agreement") with certain key executives of
▇▇▇▇▇▇▇; and
WHEREAS, the Board of Directors believes it is imperative, in the event of an
attempted Change in Control, that key executives continue employment with
▇▇▇▇▇▇▇ or one of its Affiliates, and that ▇▇▇▇▇▇▇ be able to receive and rely
upon the advice from such executives as to the best interests of ▇▇▇▇▇▇▇ and its
shareholders, without concern that the executives may be distracted by personal
employment uncertainties or influenced by conflicting interests; and
WHEREAS, the Executive is a key executive of ▇▇▇▇▇▇▇ and has been selected by
the Board of Directors to be offered this Agreement; and
WHEREAS, the Board of Directors believes that the payments which may be made
under this Agreement constitute additional reasonable compensation for services
to be rendered by the Executive in connection with a Change in Control;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, ▇▇▇▇▇▇▇ and the Executive agree as follows:
ARTICLE 1. DEFINITIONS: For purposes of this Agreement, the following terms
-----------
shall have the meanings set forth below:
a. AFFILIATE: An Affiliate shall mean any Person who, directly or
indirectly or through one or more intermediaries, Controls another Person, is
Controlled by another Person, or is under common Control with another Person.
b. BASE AMOUNT: The Base Amount shall mean the "base amount" as defined and
determined pursuant to Section 280G of the Code applicable at the time of the
Executive's Qualifying Termination.
c. BASE COMPENSATION: The Base Compensation shall mean:
(i) the Executive's monthly gross salary, whether paid or
deferred, for the last full month preceding the Executive's Qualifying
Termination or for the last full month preceding the Change in Control,
whichever is higher; and
(ii) one-twelfth (1/12th) of the Executive's last annual bonus,
--
whether paid or deferred, preceding the Executive's Qualifying Termination or
the Change in Control, whichever is higher; and
(iii) the higher of the following:
(A) one-thirty-sixth (1/36th) of the Executive's bonus payment (base
--
and peer group award, if applicable) most recently earned, whether paid or
deferred, prior to a Change in Control under a completed Incentive Plan; or
(B) a one (1) month pro rata portion of any amounts earned by the Executive
under any of the Incentive Plans in effect at the time of the Change in Control,
calculated for the last full month preceding the Change in Control or, if
applicable, preceding the Executive's Qualifying Termination, whichever is
greater.
d. BENEFICIAL OWNERSHIP: Beneficial Ownership shall mean "beneficial
ownership" as defined in Rule 13d-3 promulgated under Section 13(d) of the
Exchange Act.
e. BOARD OF DIRECTORS: The Board of Directors shall mean the Board of
Directors of ▇▇▇▇▇▇▇.
f. BUYER: A Person which purchased business operations and assets which
previously were conducted or owned by ▇▇▇▇▇▇▇ or its Affiliates during the term
of this Agreement.
g. CHANGE IN CONTROL: A Change in Control shall mean an occurrence set
forth in Article 2.
h. CONTROL: Control (including the terms "controlling," "controlled by" and
"under common control with") shall mean the possession of a power, directly or
indirectly, whether through ownership of securities, by contract or otherwise:
(i) to elect a majority of the Board of Directors of a Person; or
(ii) to direct the business, management and policies of a Person
or direct the sale of a substantial portion of its assets.
i. CODE: The Code shall mean the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
j. COMMON STOCK: Common Stock shall mean the $.10 par value common stock of
▇▇▇▇▇▇▇, and such other ▇▇▇▇▇▇▇ voting stock that may be issued in lieu of, or
in addition to, the Common Stock as a result of a merger or consolidation of
▇▇▇▇▇▇▇, the creation of a class or classes of tracking stock, or the
reclassification of any of the foregoing.
k. CONTINUING DIRECTOR: A Continuing Director shall mean a member of the
Board of Directors as of the date hereof, and any other director who was
appointed or nominated for election to the Board of Directors by a majority of
the Continuing Directors then in office.
l. DISABILITY: A Disability shall mean a condition where the Executive
suffers a complete inability to perform the Executive's work assignments because
of injury or sickness, and such inability is expected to continue indefinitely.
To determine Disability, ▇▇▇▇▇▇▇ shall rely on a determination with respect to
disability of the Executive made under the Purina Benefit Association Long Term
Disability Plan or any successor disability plan. If no such determination has
been made within seven (7) months after the Executive's last day worked, or if
the Executive is not enrolled in the Long Term Disability Plan, the
determination shall be made by a licensed physician jointly selected by ▇▇▇▇▇▇▇
and the Executive. Fees and expenses of any physician, and all costs of
examinations of the Executive, shall be paid by ▇▇▇▇▇▇▇.
m. DISCOUNT RATE: The Discount Rate shall mean the "applicable interest
rate" (and the mortality tables, if applicable) prescribed under Section
417(e)(3) of the Code at the time of the Executive's Qualifying Termination.
n. EXCHANGE ACT: The Exchange Act shall mean the Securities Exchange Act of
1934, as amended.
o. FORMER ▇▇▇▇▇▇▇ AFFILIATE: A Person which is no longer an Affiliate of
▇▇▇▇▇▇▇ but which owns (directly or indirectly) business operations and assets
which were conducted or owned by ▇▇▇▇▇▇▇ or a ▇▇▇▇▇▇▇ Affiliate during the term
of this Agreement.
p. INCENTIVE PLAN: An Incentive Plan shall mean any cash bonus plan with a
term of more than two (2) years but less than five (5) years, including the
1994, 1996 and 1998 Leveraged Incentive Plans and all similar plans adopted
during the term of this Agreement.
q. PARACHUTE PAYMENT: Parachute Payment shall mean a "parachute payment" as
defined and determined pursuant to Section 280G of the Code applicable at the
time of the Executive's Qualifying Termination.
r. PAYMENT PERIOD: The Payment Period shall mean the period commencing with
the first day of the month following the month in which a Qualifying Termination
occurs and continuing:
(i) for thirty-six (36) months if the Qualifying Termination
occurs at any time during the first year following the Change in Control; or
(ii) for twenty-four (24) months if the Qualifying Termination
occurs at any time during the second year following the Change in Control; or
(iii) for twelve (12) months if the Qualifying Termination occurs
at any time during the third year following the Change in Control.
s. PERSON: Person shall mean any natural person, firm, individual, company,
corporation, partnership, joint venture, joint stock company, limited liability
company, business trust, trust, association or any other business organization
or entity, whether incorporated or unincorporated.
t. QUALIFYING TERMINATION: A Qualifying Termination shall mean the
Executive's voluntary or involuntary termination of employment within three (3)
years after a Change in Control under the following circumstances:
(i) upon or after a Change in Control as described in Article 2(a) or
2(b), the Executive's termination of employment from ▇▇▇▇▇▇▇, its Successor, or
an Affiliate of either.
(ii) upon or after a Change in Control as described in Article 2(c),
the Executive's termination of employment from ▇▇▇▇▇▇▇, its Successor, or an
Affiliate of either; or the Executive's being employed by a Buyer or Former
▇▇▇▇▇▇▇ Affiliate, or an Affiliate of either, and ceasing to be employed by
▇▇▇▇▇▇▇, its Successor or an Affiliate of either.
Notwithstanding the foregoing, in no event shall a Qualifying Termination be
deemed to occur on account of the Executive's transfer of employment, at any
time during the term of this Agreement, between any two Persons within a group
of Persons comprised of ▇▇▇▇▇▇▇ or its Successor, and any of their Affiliates;
or because of the Executive's death.
u. RETIREMENT PLAN: The Retirement Plan shall mean the ▇▇▇▇▇▇▇ Purina
Retirement Plan, as amended, or any successor retirement plan adopted by
▇▇▇▇▇▇▇.
v. SPIN-OFF: A Spin-off shall mean a spin-off, reverse spin-off or
similar type of transaction, including a management-led leveraged buyout,
resulting in the disposition to ▇▇▇▇▇▇▇'▇ shareholders, or to a management-led
leveraged buyout group, of all or substantially all of the stock and/or assets
of a business conducted by ▇▇▇▇▇▇▇ and/or its Affiliates.
w. SUCCESSOR: A Successor shall mean the continuing, surviving or
successor Person which is created, or remains in existence, upon the merger or
consolidation of two Persons.
x. SUPPLEMENTAL PLAN: The Supplemental Plan shall mean the ▇▇▇▇▇▇▇ Purina
Supplemental Retirement Plan, as amended, or any successor supplemental
retirement plan adopted by ▇▇▇▇▇▇▇.
ARTICLE 2. CHANGE IN CONTROL: A Change in Control will occur if there is:
-------------------
a. A change in the membership of the Board of Directors such that
Continuing Directors shall have ceased (for any reason) to constitute at least a
majority of the Board of Directors; or
b. An acquisition by any Person and its Affiliates of the Beneficial
Ownership of fifty percent (50%) or more of the then outstanding Common Stock of
▇▇▇▇▇▇▇ (other than acquisitions by ▇▇▇▇▇▇▇, a ▇▇▇▇▇▇▇ Affiliate, any Person
acting on behalf of ▇▇▇▇▇▇▇ as an underwriter pursuant to an offering, or any
trustee or other fiduciary holding ▇▇▇▇▇▇▇ Common Stock pursuant to the terms of
any ▇▇▇▇▇▇▇ benefit plan); or
c. A sale of all or substantially all of the pet products business of
▇▇▇▇▇▇▇ and its Affiliates, to a Person which is not an Affiliate of ▇▇▇▇▇▇▇.
In no event shall a Spin-off, including, but not limited to, a management-led
buyout, be deemed to constitute a Change in Control.
ARTICLE 3. OPERATION OF AGREEMENT: This Agreement shall not create any
------------------------
obligation on the part of ▇▇▇▇▇▇▇ or its subsidiaries, or the Executive, to
continue the Executive's employment relationship. Anything in this Agreement to
the contrary notwithstanding, the Executive shall not be entitled to Severance
Benefits, as defined below, under this Agreement unless and until there has been
a Change in Control and the Executive has had a Qualifying Termination. Except
as hereinafter provided, this Agreement shall not affect any other benefit
program (as such programs may be amended) applicable to the Executive; provided,
that, by execution of this Agreement, the Executive hereby waives any and all
claims to benefits under any termination or severance plan or similar severance
arrangement offered by ▇▇▇▇▇▇▇ or its Affiliates to all or some of their
employees during the term of this Agreement, that would otherwise be payable to
the Executive on account of, or coincident with, a Change in Control.
ARTICLE 4. SEVERANCE BENEFITS: If the Executive remains in the employ of
-------------------
▇▇▇▇▇▇▇ or one of its Affiliates until a Change in Control has occurred, then
upon the Executive's Qualifying Termination within three (3) years after a
Change in Control, the Executive shall be entitled to the following benefits
("Severance Benefits"), subject to withholding of any federal, state or local
taxes which, in the opinion of counsel for the payor of the Severance Benefits,
are required to be withheld:
a. Payment in a lump sum in cash, within sixty (60) days of the Executive's
Qualifying Termination, of the present value, calculated using the Discount
Rate, of an income stream equal to the Executive's Base Compensation as if it
were to be paid each month throughout the applicable Payment Period; and
b. Continuation during the Payment Period of life, health, accident and
disability benefits no less favorable than those provided to the Executive under
life, health, accident and disability plans and programs in effect immediately
prior to the Change in Control, subject to all terms and conditions of such
plans immediately prior to such Change in Control including, but not limited to,
provisions regarding the extent and duration of spouse and dependent coverage,
and subject to payment of premiums, if any, charged at rates no greater than
those rates in effect immediately prior to the Change in Control; and
c. Payment in a lump sum in cash, within sixty (60) days of the Executive's
Qualifying Termination, of the present value (calculated using the Discount
Rate) of the difference as of the date of the Qualifying Termination between the
actual benefits, if any, to which the Executive, or the Executive's beneficiary,
is entitled under the Retirement Plan and the Supplemental Plan (excluding
amounts accrued in the PensionPlus Match Account in the Retirement Plan) and the
benefits, if any, under the Retirement Plan and the Supplemental Plan (excluding
amounts accrued in the aforesaid PensionPlus Match Account) which the Executive,
or the Executive's beneficiary, would have been entitled to receive if the
Executive had remained employed by ▇▇▇▇▇▇▇ or one of its Affiliates during the
applicable Payment Period at a compensation level equal to the Executive's Base
Compensation; and
d. If the Executive, at the time of the Qualifying Termination, is at least
48 years old but not yet age 55, monthly payments equal in amount to those the
Executive would be entitled to receive pursuant to the Retirement Plan and the
Supplemental Plan (excluding amounts accrued in the PensionPlus Match Account)
if paid in the form of a single life annuity. The payments shall be calculated
as if the Executive were age 55 but with years of service equal to the
Executive's "credited service" (as defined in the Retirement Plan) as of the
Qualifying Termination. Such payments shall commence upon the first day of the
month following the later to occur of the Qualifying Termination or the
attainment of age 50, and shall be paid to the Executive (or his or her
beneficiary designated under Article 6) until the date the Executive attains or
would have attained age 55. If the Executive dies without having designated a
beneficiary, amounts payable under this Article 4(d) shall be paid to the
Executive's estate in a lump sum equal to the present value of such amounts as
of the date of death, calculated using the Discount Rate.
ARTICLE 5. PARACHUTE PAYMENTS: Notwithstanding anything to the contrary
-------------------
contained in this Agreement, the Executive may elect to reduce the Severance
Benefits under Article 4 so that the present value of such Severance Benefits,
if they constitute Parachute Payments, together with the present value of all
Parachute Payments paid to the Executive, are less than three (3) times the
Employee's Base Amount. For purposes of this Article 5, present value shall be
determined by application of a discount rate equal to 120% of the applicable
Federal rate (determined under Section 1274(d) of the Code), compounded
semi-annually. Whether or not such Severance Benefits shall be reduced (and the
identity of the Severance Benefits to be reduced), and the amount by which each
Severance Benefit shall be reduced, shall be within the sole discretion of the
Executive. Any such election, if made, shall be made by the Executive's written
notice to ▇▇▇▇▇▇▇, in accordance with Article 11 hereof, not later than
forty-five (45) days following such Executive's Qualifying Termination.
ARTICLE 6. DESIGNATED BENEFICIARY: The Executive, by notice in accordance with
----------------------
Article 11 hereof, may designate a beneficiary or contingent beneficiaries to
receive the Severance Benefits described in Article 4 in the event of the
Executive's death following the Executive's Qualifying Termination but prior to
payment in full by ▇▇▇▇▇▇▇, its Successor or assigns. The Executive may, from
time to time, revoke or change any such designation of beneficiary. Any
designation of beneficiary made pursuant to this Agreement shall be controlling
over any other designation made by the Executive, testamentary or otherwise;
provided, that if ▇▇▇▇▇▇▇ shall be in doubt as to the right of a beneficiary to
receive payments, it may determine in its sole discretion to pay such amounts to
the legal representative of the Executive's estate.
ARTICLE 7. EARLY SEPARATION: In the event that, prior to a Change in Control,
----------------
the Executive executes a separation agreement with ▇▇▇▇▇▇▇ or any of its
Affiliates during the term of this Agreement which, by its terms, specifically
addresses issues related to the Executive's termination of employment and
benefits to be paid upon such termination, all of the Executive's rights, claims
and entitlements under this Agreement shall terminate even if, under the terms
of such separation agreement, the Executive remains employed by ▇▇▇▇▇▇▇ or one
of its Affiliates for a period of time after execution of such separation
agreement.
ARTICLE 8. SUCCESSORS AND ASSIGNS: This Agreement shall inure to the benefit
----------------------
of, and be binding upon, ▇▇▇▇▇▇▇ and its Successors. ▇▇▇▇▇▇▇ may not assign
this Agreement without the Executive's prior written consent. ▇▇▇▇▇▇▇ will
require any Person to which it assigns this Agreement to assume expressly the
Agreement and agree to perform this Agreement in the same manner and to the same
extent that ▇▇▇▇▇▇▇ would be required to perform it if no such assignment had
taken place. No assignment of this Agreement shall relieve ▇▇▇▇▇▇▇ from
liability for any of its obligations hereunder, and in the event of any such
assignment, ▇▇▇▇▇▇▇ shall continue to remain primarily liable for payment of the
Severance Benefits promised under Article 4 and for the performance and
observance of the agreements provided herein to be performed and observed by
▇▇▇▇▇▇▇. The Executive shall have no right to transfer or assign the right to
receive any Severance Benefits under Article 4 of this Agreement, except as
permitted under Article 6.
ARTICLE 9. COSTS: Irrespective of the success of the Executive's claim, ▇▇▇▇▇▇▇
-----
will reimburse the Executive, or the legal representative of the Executive's
estate, for reasonable attorney's fees and costs in the event that the Executive
brings legal action to enforce payment by ▇▇▇▇▇▇▇, its Affiliates or assigns, or
Successors to any of the foregoing, of the Severance Benefits promised under
Article 4 (plus interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code on payments of Severance Benefits due but not timely
made) after the Executive's Qualifying Termination.
ARTICLE 10. TERM OF AGREEMENT: This Agreement shall expire upon the earliest
-----------------
of the following to occur:
(i) five (5) years from its effective date, unless extended by the Board of
Directors on or before such expiration date;
(ii) if a determination of the Executive's Disability is made before a
Change in Control while this Agreement is in effect, the day following such
determination;
(iii) if the Executive ceases to be employed with ▇▇▇▇▇▇▇ and any of its
Affiliates prior to a Change in Control, the last day of such employment;
provided that, if the Executive and ▇▇▇▇▇▇▇ or one of its Affiliates enters into
a separation agreement as described in Article 7 while this Agreement is in
effect, the effective date of such separation agreement; or
(iv) the effective date of a Spin-off of all or substantially all of the pet
products business of ▇▇▇▇▇▇▇ and its Affiliates.
After the expiration of this Agreement, the Executive shall have no rights to
any Severance Benefits under Article 4, provided, if a Change in Control occurs
prior to the expiration or termination of this Agreement, then upon a subsequent
Qualifying Termination, the Executive shall be entitled to the Severance
Benefits under Article 4, and the term of this Agreement shall be extended until
the later of the expiration of the applicable Payment Period or, if the
Executive is eligible for monthly payments pursuant to Article 4(d), the date of
the final payment thereunder.
ARTICLE 11. NOTICE: Any notice or other communication required or permitted
------
hereunder is deemed delivered when delivered in person; on the next business day
when sent by an overnight delivery service; or on the third business day when
sent by U.S. mail service, as follows:
TO ▇▇▇▇▇▇▇: Corporate Secretary
▇▇▇▇▇▇▇ Purina Company
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TO THE EXECUTIVE: ________________________
________________________
________________________
ARTICLE 12. VENUE: ANY ACTION OR LEGAL PROCEEDING TO ENFORCE PAYMENT OF
-----
SEVERANCE BENEFITS UNDER ARTICLE 4 OF THIS AGREEMENT SHALL BE BROUGHT IN A
FEDERAL OR STATE COURT LOCATED WITHIN THE EASTERN DISTRICT OF MISSOURI, AND THE
PARTIES TO THIS AGREEMENT CONSENT TO THE JURISDICTION AND VENUE OF SUCH COURT.
ARTICLE 13. MISSOURI LAW TO GOVERN: This Agreement shall be governed by the
----------------------
laws of the State of Missouri without regard to its conflict of laws provisions.
ARTICLE 14. ENTIRE AGREEMENT: This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof, and
supersedes and replaces any previous management continuity agreement or any
employment contract (oral or written) between ▇▇▇▇▇▇▇ and the Executive relating
to severance payments after a Change in Control, and upon the execution of this
Agreement, both parties agree that any prior agreement or employment contract
covering severance payments (or other severance-type payments) after a Change in
Control shall be considered null and void and of no further effect.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇ and the Executive have executed this Agreement
effective as of the __________ day of _______, 1999.
ATTEST: ▇▇▇▇▇▇▇ PURINA COMPANY
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇
VP & Corporate Secretary Co-Chief Executive Officer
WITNESS:
________________________
Executive