Exhibit 10.1
AGRILINK FOODS, INC.
KEY EXECUTIVE SEVERANCE PLAN - A
1. Preamble and Statement of Purpose. The purpose of this Plan is to assure
Agrilink Foods, Inc. ("Agrilink") that it will have the continued dedication and
availability of the services of, and the objective advice and counsel from, key
executives of Agrilink notwithstanding the probability, threat or occurrence of
a change of control of Agrilink.
In the event there is a probable change of control of Agrilink, the Board
of Directors of Agrilink Foods, Inc. (the "Board") believes it is imperative
that Agrilink and the Board be able to rely upon key executives to continue in
their positions without concern that those individuals might be distracted by
the personal uncertainties and risks created by the possibility of a change of
control. Should there be a proposed change of control of Agrilink, such key
executives may be called upon, in addition to their regular duties, to assist in
the assessment of proposals, advise the Board as to whether such proposals would
be in the best interest of Agrilink and its owners, and to take such other
actions as the Board might determine to be appropriate.
2. Eligible Employees. Participants under this Plan shall consist of those
key executives of Agrilink and its Subsidiaries (as hereinafter defined) who are
from time to time designated as key executives to be included within this Plan
by the Board. The Board shall designate key executives as Participants, and the
key executives, under circumstances described in this Plan, shall be entitled to
severance under this Plan in lieu of any and all other severance benefits as
described in Section 8 herein. The Board's initial designation of key executives
as a Participant is set forth in Exhibit A.
An executive who the Board determines has ceased to be a key executive for
purposes of the Plan shall cease to be a Participant in the Plan when notified
by the Board of such determination;
except that no such determination that an executive has ceased to be such a
Participant shall be made, and if made shall have no effect if such
determination occurs, (i) within two years after the Change of Control (as
hereinafter defined) in question or (ii) during any period of time when Agrilink
has knowledge that any third person or entity has taken steps reasonably
calculated to effect a Change of Control until, in the opinion of the Board, the
third person or entity has abandoned or terminated its efforts to effect a
Change of Control. Any reasonable decision by the Board that the third person or
entity has abandoned or terminated its efforts to effect a Change of Control
shall be binding on the executives.
3. Benefits. Any key executive designated as a Participant in this Plan by
the Board as provided above shall, for so long as such executive participates in
the Plan, be entitled to the following benefits:
(a) In the event of a "Termination" (as hereinafter defined) of a
Participant's employment with Agrilink at any time when a Change of Control
is anticipated as determined by a majority of the Board (as defined in
Section 2) or within two years after a Change of Control, the Participant
shall receive the following salary continuance payments and benefits:
(i) Two years (104 weeks) of salary continuance payments at the
Participant's current annual base salary rate in effect at the date of
Termination, less all normal payroll deductions, payable on regular
bi-weekly payroll intervals.
(ii) The Participant's participation in health insurance plans
(medical, dental and or vision as previously elected by the
Participant) shall be continued during any period in which salary
continuance payments are being paid hereunder at no additional cost to
the Participant in excess of such cost as might apply for these
benefits if the Participant remained employed with Agrilink.
The salary continuance payments and the full value of the
continuance of other benefits payable to a Participant under this plan
may be paid to the Participant in the form of a single sum, at the
sole discretion of Agrilink. The single sum shall equal the present
value of the payments using the then current applicable federal
mid-term rate.
(b) Anything in this Plan to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by Agrilink
to, or for the benefit of, a Participant (whether paid or payable or
distributed or distributable pursuant to the terms of this Plan or
otherwise) would be considered an "excess parachute payment" subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, the benefits under this plan shall be reduced to the maximum
amount payable that assures that the payments hereunder are not considered
an excess parachute payment. For purposes of this subparagraph (c), the
determination of the presence of a potential excess parachute payment, and
the corresponding reduction in benefits shall be determined in the first
instance by Agrilink. Within 45 days of being provided with written notice
of any such determination and reduction in benefits, the Participant(s) may
provide written notice to the Chairman of the Board of Agrilink of any
disagreement, in which event the calculation of the "excess parachute
payment" and the reduction in benefits shall be determined by independent
tax counsel selected by Agrilink's independent auditors. The determination
of Agrilink (or, in the event of a disagreement, the tax counsel selected)
shall be final.
4. Nonassignability. Each Participant's rights under this Plan shall inure
only to the benefit of the Participant and his or her estate. No rights arising
under this Plan may be assigned or pledged by the Participant.
5. Definitions.
(a) Change of Control. A Change of Control shall be deemed to have
occurred if (i) anyone other than Pro-Fac Cooperative, Inc. or any of its
affiliates, including a "group" (as defined in Section 13(d)(3) of the
Securities and Exchange Act of 1934 (the "1934 Act") becomes the
"beneficial owner" (within the meaning of Section 13(d)(3) under the 1934
Act) of a majority of the common stock of Agrilink; or (ii) Agrilink is a
party to a merger, consolidation, or other business combination in which it
is not the surviving corporation, or sells or transfers all or a major
portion of its assets to any other person (any of the foregoing
constituting a "Business Combination"); or (iii) as a result of, or in
connection with, any cash tender or exchange offer, purchase of stock,
Business Combination, or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of
Agrilink before the Transaction shall cease to constitute a majority of the
Board of Directors of Agrilink or any Successor Corporation. "Successor
Corporation" means the surviving, resulting or transferee corporation in a
Business Combination, or if such corporation is a direct or indirect
subsidiary of another corporation, the parent corporation of such
surviving, resulting or transferee corporation.
(b) "Termination" shall mean termination by Agrilink of the employment
of the Participant with Agrilink for any reason other than death,
Disability (as defined below) or Cause (as defined below), or resignation
of the Participant for Good Reason (as defined below).
(i) "Disability" shall mean a mental or physical condition or
impairment which precludes the Participant's ability to perform or to
resume his or her usual and customary duties, if such impairment or
condition is likely to last for a period of more than six (6) months.
For purposes of this Section 5(b)(i), the Participant shall be deemed
disabled if the Board shall in good faith find, on the basis of
medical evidence submitted to it, that the Participant suffers from
such a condition or impairment.
(ii) "Cause" shall mean (a) the willful and continued failure or
refusal by the Participant to substantially perform his or her duties
with Agrilink (other than any such failure resulting from termination
for Good Reason), after a demand for substantial performance is
delivered to the Participant that specifically identifies the manner
in which Agrilink believes that the Participant has not substantially
performed his or her duties, if the Participant fails to resume
substantial performance of his or her duties on a continuous basis
within fourteen (14) days on receiving such demand, (b) willful and
gross misconduct on the part of the Participant that is materially and
demonstrably detrimental to Agrilink; or (c) the commission by the
Participant of one or more acts which constitute an indictable felony
under United States federal, state, or local law. "Cause" under (a),
(b) or (c) shall be determined in good faith by a written resolution
duly adopted by the affirmative vote of not less than two-thirds (2/3)
of the Board at a meeting duly called and held for that purpose after
reasonable notice to the Participant and opportunity for the
Participant and his or her legal counsel to be heard. In the event the
Participant is terminated for cause, Agrilink shall have no further
obligation under this Agreement.
(iii) "Good Reason" shall mean the occurrence of one of the
following events:
(1) Without the express written consent of the Participant,
reduction in the Participant's annual salary level, unless such
reduction is the result of an across-the-board change in
compensation policy or practice which affects the compensation of
all eligible salaried exempt employees of Agrilink in a manner or
percentage that is consistent with the reduction made to the
Participant's annual salary level.
(2) Without the express written consent of the Participant,
the elimination of the Participant's participation in, or a
reduction in the percentage opportunity for incentive
compensation through, any annual or long-term incentive plan,
unless such elimination or reduction is the result of an
across-the-board change in the incentive plan which affects the
incentive participation in, or percentage
opportunity for incentive compensation of, other participants in
such incentive plans in a manner or percentage that is consistent
with the change made to the Participant's participation level or
incentive opportunity percentage.
(3) Without the express written consent of the Participant,
the elimination of the Participant's participation in, or
reduction in benefit level of, any benefit plan, vacation or
other paid time off policy, unless such elimination or reduction
is the result of an action taken by Agrilink relating to its need
to comply with a tax or benefit law, or unless the elimination or
reduction is the result of an across-the-board change in policy
or practice which affects the participation or benefit levels of
all eligible salaried exempt employees of Agrilink in manner or
percentage consistent with the elimination or reduction made to
the Participant's benefits or vacation or other paid time off
policy.
(4) Without the express written consent of the Participant,
Agrilink requires as a condition of continued employment the
Participant to be based anywhere other than: (a) his or her
office location as of the execution of this Plan; or (b) another
location, provided that such office or location is located within
fifty (50) miles of the location specified in the preceding
clause (a), in order for the Participant to retain employment
with Agrilink.
(5) The liquidation, dissolution, consolidation, or merger
of Agrilink or transfer of all or a significant portion of its
assets, unless a successor or successors (by merger,
consolidation or otherwise) to which all or a significant portion
of its assets have been transferred assumes all duties and
obligations of Agrilink under this Plan.
The Participant's continued employment shall not constitute consent to, or
a waiver of, rights with respect to any circumstances constituting Good Reason
herein. Such waiver or consent shall be evidenced only by a written statement of
consent or waiver from the Participant within thirty days of the event defined
in Section 5(b)(iii). A Participant must notify Agrilink's chief executive
officer in writing within 30 days of the effective date of the event he or she
believes has occurred that falls under
the definition of Section 5(b)(iii) Good Reason. Upon receiving such written
notification, Agrilink must respond to the Participant in writing within 30 days
of its opinion on, or its intention to immediately remedy, the situation that
the Participant believes is an event under Section 5(b)(iii).
(c) "Subsidiary" shall mean any domestic or foreign corporation a
majority of whose shares normally entitled to vote in electing directors is
owned directly or indirectly by Agrilink or by other Subsidiaries.
6. Unfunded Plan. The Plan shall be unfunded. Neither Agrilink nor the
Board shall be required to segregate any assets with respect to benefits under
this Plan. Neither Agrilink nor the Board shall be deemed to be a trustee of any
amounts to be paid under this Plan. Any liability of Agrilink to any Participant
with respect to any benefit shall be based solely upon any contractual
obligations created by this Plan; no such obligation shall be deemed to be
secured by any pledge or any encumbrance on any property of Agrilink.
7. Termination and Amendment of this Plan. The Board shall have power at
any time, in its discretion, to amend, abandon or terminate this Plan, in whole
or in part; except that no amendment, abandonment or termination shall impair or
abridge the obligations in this Plan if such amendment, abandonment or
termination is made within two years following a Change of Control or during any
period of time when Agrilink has knowledge that any third person has taken steps
reasonably calculated to effect a Change of Control (until, in the opinion of
the Board, the third person or entity has abandoned or terminated efforts to
effect a Change of Control.)
8. Other Benefits. Payments under this Plan are in lieu of any severance or
benefit continuation payments which a Participant would otherwise receive from
Agrilink or Pro-Fac
Cooperative under any and all other severance pay policies and/or individual
severance arrangements or agreements heretofore agreed to by Agrilink, its
subsidiaries, predecessors, or by Pro-Fac Cooperative.
9. Effective Date. This Plan shall become effective upon approval by the
Special Committee of the Agrilink Foods, Inc. Board of Directors appointed
November 14, 2001 as evidenced by the execution of this Plan and the
ratification of this Plan by the full Agrilink Foods, Inc. Board of Directors,
and shall remain in effect until it is terminated by the Agrilink Foods, Inc.
Board of Directors, provided, however, that in the event of a Change of Control,
as defined in Section 5, before the Plan otherwise ceases to be effective, this
Plan shall remain in existence for two years the date of such Change of Control.
IN WITNESS WHEREOF, this Plan has been executed on this 16th day of
January, 2002.
AGRILINK FOODS, INC.
By: /s/Bruce Fox
-----------------------------------------
Bruce Fox, Chairman of the Board
Agrilink Foods, Inc
Agrilink Foods, Inc.
Key Executive Severance Plan A
Exhibit A
The following key executives are designated as Participants as of January
11, 2002.
Earl Powers
Carl Caughran
David Mehalick
Stephen Wright
Bernhard Frega