AGREEMENT
(for Key Executives)
This Agreement is entered into as of the 29th day of October, 29
1997, by and between Performance Food Group Company
("Employer"), a Tennessee corporation with its principal place of
business at 6800 Paragon Place, Suite 500, Richmond, Virginia 23230
and ______________ ("Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently employed by Employer
or one of its affiliates and Employer and Executive desire to set forth
certain rights and obligations of Employer and Executive in the event
of a change in control of Employer.
NOW, THEREFORE, in consideration of the premises hereof
and of the mutual promises and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Benefits Upon Termination of Employment Following
a Change in Control. If at any time within two years following the
occurrence of a Change in Control (as defined in Section 14 below) (i)
the employment of Executive with Employer is terminated by
Employer for any reason other than Good Cause (as defined in Section
14 below), or (ii) Executive terminates his employment with Employer
for Good Reason (as defined in Section 14 below), the following
provisions will apply:
(a) Employer shall pay Executive an amount equal to:
(i) 299.9% of Executive's Base Salary (as
defined in Section 14 below);
(ii) 299.9% of Executive's Bonus (as defined
in Section 14 below); and
(iii) The amount required to reimburse Executive on an after-tax basis as
described in Section 15 hereof for any excise tax payable by Executive
under Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any successor provision thereto, on account of any
payment, distribution or other compensation to Executive
hereunder or under any employee stock plan or other compensatory
arrangement constituting (individually or when aggregated with all other
such payments, distributions and compensation) an "excess parachute
payment" as defined in Section 280G of the Code, or any successor
provision thereto.
The amounts described in clauses (i) and (ii) above will be paid to
Executive as follows: (1) one-third of the total amount due shall be
paid in substantially equal semi-monthly installments, over the twelve
months immediately following termination of employment and (2) the
remaining two-thirds shall be paid in a lump sum within five business
days after the expiration of such twelve month period. The amount
described in clause (iii) above will be paid within thirty (30) days
following termination of Executive's employment.
(b) Executive shall receive any and all benefits
accrued under any Incentive Plans (as defined in Section 14 below) to
the date of termination of employment, the amount, form and time of
payment of such accrued benefits to be determined by the terms of such
Incentive Plans.
(c) For purposes of any Incentive Plans, Executive
shall be given service credit for all purposes for, and shall be deemed
to be an employee of Employer during the Coverage Period (as defined
in Section 14 below), notwithstanding the fact that he is not an
employee of Employer or any Affiliate (as defined in Section 14 below)
thereof during the Coverage Period; provided that, if the terms of any
of such Incentive Plans do not permit such credit or deemed employee
treatment, Employer will make payments and distributions to Executive
outside of the Incentive Plans in amounts substantially equivalent to the
payments and distributions Executive would have received pursuant to
the terms of the Incentive Plans and attributable to such credit or
deemed employee treatment, had such credit or deemed employee
treatment been permitted pursuant to the terms of the Incentive Plans.
(d) During the Coverage Period Executive and his
spouse and family will continue to be covered by all Welfare Plans (as
defined in Section 14 below), maintained by Employer in which he or
his spouse or family were participating immediately prior to the date of
his termination as if he continued to be an employee of Employer;
provided that, if participation in any one or more of such Welfare
Plans is not possible under the terms thereof, Employer will provide
substantially identical benefits. If, however, Executive obtains
employment with another employer during the Coverage Period, such
coverage shall be provided until the earlier of: (i) the end of the
Coverage Period or (ii) the date on which the Executive and his spouse
and family can be covered under the plans of a new employer without
being excluded from full coverage because of any actual pre-existing
condition.
Compensation under Section 1(a), (b), (c) and (d) hereof is
contingent upon Executive's compliance with Section 4 hereof.
2. Setoff.
(a) With respect to Section 1, no payments or
benefits payable to or with respect to Executive or his spouse pursuant
to this Agreement shall be reduced by the amount of any claim of
Employer against Executive or his spouse or any debt or obligation of
Executive or his spouse owing to Employer.
(b) With respect to Section 1, no payments or
benefits payable to or with respect to Executive pursuant to this
Agreement shall be reduced by any amount Executive or his spouse
may earn or receive from employment with another employer or from
any other source, except as expressly provided in Section 1(d).
(c) With respect to Section 1, the amounts payable
under Sections 1(a)(i) and (ii) shall be reduced, on a dollar for dollar
basis, by amounts actually paid to Executive (to the extent such
amounts paid represent future salary or cash bonuses) on account of
any termination of employment of Executive if such amounts are paid
pursuant to the provisions of any written agreement for ongoing
employment with Employer in existence prior to the Change in
Control.
3. Death. If Executive dies during the Coverage Period:
(a) All amounts not theretofore paid described in
Section 1(a) shall be paid to his estate.
(b) The spouse and family of Executive shall, during
the remainder of the Coverage Period, be covered under all Welfare
Plans made available by Employer to Executive or his spouse
immediately prior to the date of his death; provided that, if
participation in any one or more of such plans and arrangements is not
possible under the terms thereof, Employer will provide substantially
identical benefits.
Any benefits payable under this Section 4 are in addition to any
other benefit due to Executive or his spouse or beneficiaries from
Employer, including, but not limited to, payments under any Incentive
Plans.
4. Restrictive Covenants.
(a) Confidential Information. Executive agrees not
(i) to disclose, following termination of his employment, to any person
(other than to any person specifically authorized by the Board of
Directors of Employer) any material confidential information
concerning the Employer or any of its Affiliates, including, but not
limited to, strategic plans, customer lists, contract terms, financial
costs, pricing terms, sales data or business opportunities whether for
existing, new or developing businesses or (ii) to use such information
in any way detrimental to the Employer.
(b) Non-Competition. For a period of one year
following termination of employment under the circumstances
described in Section 1 hereof, Executive will not directly or indirectly
own, manage, operate, control or participate in the ownership,
management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial
interest in, or aid or assist anyone else in the conduct of, any business
which is in competition with any business conducted by the Employer
or any Affiliate of Employer in any state in which the Employer or any
Affiliate of Employer is conducting business on the date of the Change
in Control, provided that ownership of 5% or less of the voting stock
of any public corporation shall not constitute a violation hereof.
(c) Enforcement. Executive and the Employer
acknowledge and agree that any of the covenants contained in this
Section 4 may be specifically enforced through injunctive relief but
such right to injunctive relief shall not preclude the Employer from
other remedies which may be available to it.
5. Executive Assignment. No interest of Executive or his
spouse or any other beneficiary under this Agreement, or any right to
receive any payment or distribution hereunder, shall be subject in any
manner to sale, transfer, assignment, pledge, attachment, garnishment,
or other alienation or encumbrance of any kind, nor may such interest
or right to receive a payment or distribution be taken, voluntarily or
involuntarily, for the satisfaction of the obligations or debts of, or
other claims against, Executive or his spouse or other beneficiary,
including claims for alimony, support, separate maintenance, and
claims in bankruptcy proceedings.
6. Benefits Unfunded. All rights of Executive and his
spouse or other beneficiary under this Agreement shall at all times be
entirely unfunded and no provision shall at any time be made with
respect to segregating any assets of Employer for payment of any
amounts due hereunder. Neither Executive nor his spouse or other
beneficiary shall have any interest in or rights against any specific
assets of Employer, and Executive and his spouse or other beneficiary
shall have only the rights of a general unsecured creditor of Employer.
7. Cost of Enforcement; Interest. In the event that
Executive collects any part or all of the payments or benefits due
hereunder or otherwise enforces the terms of this Agreement following
a dispute with Employer regarding the terms of this Agreement by or
through a lawyer or lawyers, Employer will pay all costs of such
collection or enforcement, including reasonable attorneys' and
accountants' fees and other out-of-pocket expenses incurred by the
Executive, up to that point when Employer offers to settle the dispute
for an amount equal to the amount which the Executive actually
recovers; provided, however, that if the Executive violates any
provision of Section 4, this Section 7 shall be void and of no further
force and effect.
8. Notices. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and sent by
registered or certified mail to his residence in the case of Executive, or
to its principal office in the case of the Employer and the date of
mailing shall be deemed the date which such notice has been provided.
9. Waiver of Breach. The waiver by either party of any
provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by the other party.
10. Assignment; Successors. The rights and obligations of
the Employer under this Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of the Employer,
including the surviving entity in any merger, consolidation, share
exchange or other transaction described in Section 14(d)(ii) hereof or
any person, entity or group that has acquired a majority of the
outstanding shares of Common Stock (or securities convertible into
Common Stock) of Employer or all, or substantially all, of the assets of
Employer. The Executive acknowledges that the services to be
rendered by him are unique and personal, and Executive may not
assign any of his rights or delegate any of his duties or obligations
under this Agreement.
11. Entire Agreement. This instrument contains the entire
agreement of the parties and supersedes all other prior agreements,
employment contracts and understandings, both written and oral,
express or implied with respect to the subject matter of this Agreement
and may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
12. Applicable Law. This Agreement shall be governed by
the laws of the State of Tennessee, without giving effect to the
principles of conflicts of law thereof.
13. Headings. The sections, subjects and headings of this
Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
14. Definitions. For purposes of this Agreement:
(a) "Affiliate" shall have the meaning set forth in the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" means the higher of (i)
Executive's annual base salary in effect immediately prior to the
occurrence of the Change in Control giving rise of an obligation on the
part of Employer to make any payments under this Agreement or (ii)
Executive's annual base salary in effect immediately prior to the
termination of Executive's employment under the circumstances
described in Section 1 above.
(c) "Bonus" shall mean the higher of: (i) an amount
determined by multiplying (A) Executive's annual base salary in effect
immediately prior to the Change in Control giving rise to the obligation
of Employer to make any payment under this Agreement by (B) a
percentage that is the average percentage of such base salary
represented by the annual bonus paid to Executive in the three full
calendar years of employment immediately preceding the date of such
Change in Control (or if Executive was employed by Employer for less
than three full calendar years prior to such Change in Control, such
shorter period as Executive was employed by Employer prior to such
Change in Control) or (ii) an amount determined by multiplying (A) the
Executive's annual base salary in effect immediately prior to
termination of employment under the circumstances described in
Section 1 by (B) the average percentage of Executive's annual base
salary in effect immediately prior to such termination of employment
represented by the annual bonus received by Executive following the
occurrence of such Change in Control giving rise to an obligation on
the part of Employer to make any payment under this Agreement.
Bonus amounts received in respect of less than a full year of service
shall be recomputed on an annualized basis for purposes of any
determination of annual bonus hereunder.
(d) "Change in Control" shall mean the occurrence of any of the following:
(i) the acquisition of at least a majority of the outstanding shares of
Common Stock (or securities convertible into Common Stock)
of Employer by any person, entity or group (as used in Section 13(d)
(3) and Rule 13d-5(b)(1) under the Exchange Act);
(ii) the merger or consolidation of Employer with or into another
corporation or other entity, or any share exchange or similar
transaction involving Employer and another corporation or other
entity, if as a result of such merger, consolidation,
share exchange or other transaction, the persons who owned at least
a majority of the Common Stock of Employer prior to
the consummation of such transaction do not own at least a majority
of the Common Stock of the surviving entity after the consummation
of such transaction;
(iii) the sale of all, or substantially all, of the assets of Employer; or
(iv) any change in the composition of the Board of Directors of Employer,
such that persons who at the beginning of any period of up to two years
constituted at least a majority of the Board of Directors
of Employer, or persons whose nomination was approved by such
majority, cease to constitute at least a majority of the Board of
Directors of Employer at the end of such period.
(e) "Coverage Period" shall mean the period
beginning on the date the Executive's employment with Employer
terminates under circumstances described in Section 1 and ending on
the date that is twelve (12) months thereafter.
(f) "Good Cause" shall be deemed to exist if, and
only if after the occurrence of a Change in Control:
(i) Executive engages in material acts or omissions constituting
dishonesty, breach of fiduciary obligation or intentional
wrongdoing or malfeasance which are demonstrably injurious to the
Employer;
(ii) Executive is convicted of a violation involving fraud or dishonesty; or
(iii) Executive materially fails to satisfy the conditions and requirements
of his employment with Employer, and such breach or failure by its
nature is incapable of being cured, or such breach or failure
remains uncured for more than 30 days following receipt by Executive
of written notice from Employer specifying the nature of the breach
or failure and demanding the cure thereof.
Without limiting the generality of the foregoing, if Executive
acted in good faith and in a manner he reasonably believed to be in,
and not opposed to, the best interest of Employer and had no
reasonable cause to believe his conduct was unlawful in connection
with any action taken by Executive in connection with his duties, it
shall not constitute Good Cause.
Notwithstanding anything herein to the contrary, in the event
Employer shall terminate the employment of Executive for Good Cause
hereunder, Employer shall give at least 30 days prior written notice to
Executive specifying in detail the reason or reasons for Executive's
termination.
(g) "Good Reason" shall exist if after the occurrence
of a Change of Control:
(i) there is a significant change in the nature
or the scope of Executive's authority;
(ii) there is a reduction in Executive's rate of
base salary;
(iii) Employer changes the principal location
in which Executive is required to perform
services outside a thirty-five mile radius
of such location without Executive's
consent;
(iv) there is a reasonable determination by
Executive that, as a result of a change in
circumstances significantly affecting his
position, he is unable to exercise the
authority, powers, function or duties
attached to his position; or
(v) Employer terminates or amends any
Incentive Plan so that, when considered in
the aggregate with any substitute plan or
other substitute compensation, the
Incentive Plan in which he is participating
fails to provide him with a level of
benefits equivalent to at least 75% of the
value of the level of benefits provided in
the aggregate by the terminated or
amended Incentive Plan at the date of
such termination or amendment;
provided, however, that Good Reason
shall not be deemed to exist under this
clause (v) if the decline in Incentive Plan
compensation is related to a decline in
performance.
(h) "Incentive Plans" shall mean any incentive,
bonus, deferred compensation or similar plan or arrangement currently
or hereafter made available by Employer in which Executive is eligible
to participate.
(i) "Welfare Plans" shall mean any health and dental
plan, disability plan, survivor income plan and life insurance plan or
arrangement currently or hereafter made available by Employer in
which Executive is eligible to participate.
15. Reimbursement for Excise Taxes. For purposes of
determining the amount of any payment described in clause (iii) of
Section 1(a) hereof, Executive shall be deemed to have been
reimbursed on an after-tax basis for any excise tax described therein if
Executive has received (a) the amount of such excise tax and (b) the
amount of any taxes (including federal, state and local income taxes as
well as any excise tax under Section 4999 of the Code, or any
successor provision thereto) payable on account of the reimbursement
for such excise tax and any such income and excise taxes payable on
account of such reimbursement for income and excise taxes. In the
event that Executive and Employer fail to agree as to the amount
described in clause (iii) of Section 1(a) hereof within ten (10) days
following the date of termination of employment, such amount will be
determined by a firm of independent accountants mutually agreed upon
by Executive and Employer within thirty (30) days following the date
of termination of employment. Employer shall reimburse Executive
for any additional income and/or excise taxes (and any penalties and
interest thereon) as may be determined to be payable by any taxing
authority in respect of any excise tax imposed under Section 4999 of
the Code, or any successor provision thereto, and any reimbursement
described in clause (iii) of Section 1(a) or in this Section 15.
16. Employment Rights. Nothing expressed or implied in
this Agreement shall create any right or duty on the part of Employer
or the Executive to have the Executive remain in the employment of
Employer prior to any Change in Control, provided, however, that any
termination of employment of the Executive or the removal of the
Executive from the office or position in Employer following the
commencement of any discussion with a third person that ultimately
results in a Change in Control shall be deemed to be a termination or
removal of the Executive after a Change in Control for purposes of this
Agreement.
17. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original.
18. Severability; Construction. In the event any provision
of this Agreement is held illegal or invalid, the remaining provisions of
this Agreement shall not be affected thereby. In the event that Section
4(b) is deemed by any court of competent jurisdiction to be invalid due
to overbreadth, such Section 4(b) shall be construed as narrowly as
necessary to be enforceable.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first written above.
[Executive]
PERFORMANCE FOOD
GROUP COMPANY
By:
Title: