EXHIBIT 10.3
CHANGE OF CONTROL AGREEMENT
This Agreement is made as of _________, ____, between Lifecore Biomedical,
Inc. a Minnesota corporation (the "Company"), and _________ ("Employee"),
residing at __________________________________________.
WITNESSETH THAT:
WHEREAS, the Company believes that it is in the best interests of the
Company to maintain management capable of protecting and enhancing the best
interests of the Company and its shareholders; and
WHEREAS, in connection therewith, the Company believes that it is important
for Employee to be available to assist and advise the Company and its board of
directors in the event the Company or its shareholders receives a proposal for
or considers a transfer of control of the Company, without being influenced by
any uncertainties which may exist with regard to Employee's future employment.
NOW, THEREFORE, to assure the Company that it will have continued access to
the dedicated services of Employee notwithstanding the possibility, threat or
occurrence of a change in control of the Company, and to induce Employee to
remain in the employ of the Company, the Company and Employee agree as follows:
1. Definitions.
As used herein, the following terms shall have the meanings set forth
below:
(i) A "Change in Control" shall mean the occurrence of any of the
following events:
(a) a change in control of the Company of a nature required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), whether or not the Company is then subject to such
reporting requirement; or
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing (a) at least 15%
but no more than 50% of the combined voting power of the Company's
then outstanding securities unless the transaction is approved by the
Board of Directors of the Company in advance of the event, or
by a majority of the Continuing Directors within 30 days after the
event, or (b) more than 50% of the combined voting power of the
Company's then outstanding securities (regardless of any approval of
the Board of Directors); or
(c) individuals who at the date hereof constitute the Board of
Directors of the Company cease to constitute a majority thereof,
provided that such change is the direct or indirect result of a proxy
fight and contested election for positions on the Board; or
(d) the sale, lease, exchange or other transfer, directly or
indirectly, of all or substantially all of the assets of the Company,
in one transaction or in a series of related transactions; or
(e) a merger or consolidation to which the Company is a party if
the shareholders of the Company immediately prior to the effective
date of such merger or consolidation have "beneficial ownership" (as
defined in Rule 13d-3 promulgated under the Exchange Act) immediately
following the effective date of such merger or consolidation of
securities of the surviving company representing (a) 50 percent or
more, but not more than 85 percent, of the combined voting power of
the surviving corporation's then outstanding securities, unless such
merger or consolidation has been approved in advance by the Board of
Directors of the Company in advance of the event, or by a majority of
the Continuing Directors within 30 days after the event or (b) less
than 50 percent of the combined voting power of the surviving
corporation's then outstanding securities (regardless of any approval
by the continuity directors); or
(f) the Board of Directors of the Company determines, in its sole
and absolute discretion, that there has been a change in control of
the Company.
(ii) "Continuing Directors" shall include only those directors of the
Company on the date hereof and those directors, as of a date 30 days prior
to an event that would otherwise be considered a "Change in Control," who
were nominated by Continuing Directors and duly elected by shareholders at
an annual meeting thereof or nominated and elected by directors who were
"Continuing Directors."
(iii) "Good Reason" shall mean the occurrence of any of the following
events:
(a) the assignment to Employee of responsibilities with the
Company inconsistent with Employee's status as an executive of the
Company or a substantial alteration in the nature of Employee's
responsibilities from those in effect immediately prior to a Change in
Control;
(b) a reduction by the Company in Employee's base salary as in
effect immediately prior to a Change in Control;
(c) relocation of Employee to an office located more than fifty
(50) miles of Employee's office location immediately prior to a Change
in Control, except for requirements of temporary travel on the
Company's business to an
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extent substantially consistent with Employee's business travel
obligations immediately prior to a Change in Control;
(d) except to the extent otherwise required by applicable law,
the failure by the Company to continue in effect any material benefit
or compensation plan in which Employee is participating immediately
prior to a Change in Control (or plans providing Employee with
substantially similar benefits), the taking of any action by the
Company or the Subsidiary which would adversely affect Employee's
participation in, or materially reduce Employee's benefits under, any
of such plans or deprive Employee of any material fringe benefit
enjoyed by Employee immediately prior to such Change in Control, or
the failure by the Company to provide employee with the number of paid
vacation days to which Employee is entitled immediately prior to such
Change in Control in accordance with the Company's vacation policy as
then in effect; or
(e) the failure by the Company to obtain, as specified in Section
5(i) hereof, an assumption of the obligations of the Company to
perform this Agreement by any successor to the Company.
Notwithstanding the foregoing, none of the forgoing events shall be
considered "Good Reason" if it occurs in connection with the Employee's
death or disability.
(iv) "Cause" shall mean termination by the Company of Employee's
employment based upon (a) the willful and continued failure by Employee
substantially to perform his duties and obligations (other than any such
failure resulting from his incapacity due to physical or mental illness) or
(b) the willful misconduct of Employee which is materially injurious to the
Company or any of its subsidiaries, monetarily or otherwise. For purposes
of this paragraph, an act, or failure to act, shall be considered "willful"
if done, or omitted to be done, by Employee in bad faith and without
reasonable belief that the action or omission was in the best interests of
the Company.
(v) "Disability" shall mean any physical or mental condition which
would qualify Employee for a disability benefit under the long-term
disability plan of the Company.
2. Term of Agreement.
This Agreement shall commence on the date hereof and shall continue in
effect until (i) Employee and the Company mutually agree in writing to terminate
this Agreement, (ii) termination of Employee's employment with the Company in a
manner other than as set forth in Section 3(i) hereof or (iii) Employee reaches
the age of sixty-five (65).
3. Termination of Employment.
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(i) Employee shall be entitled to receive the cash payment and other
benefits provided in Section 4 hereof if any of the following events occur
following a Change in Control which occurs during the term of this
Agreement:
(a) the Company shall have terminated Employee without Cause
within eighteen (18) months of a Change in Control; or
(b) Employee shall have voluntarily terminated his employment
with the Company for Good Reason within eighteen (18) months of a
Change in Control.
(ii) Nothing contained herein shall be deemed to constitute a
guarantee of employment or limit the Company's right to terminate Employee
prior to a Change in Control or for Cause following a Change in Control.
Employee's rights upon termination of employment prior to a Change in
Control or after the expiration of the term of this Agreement or after the
expiration of the prescribed periods following a Change in Control set
forth in Section 3(i) shall be governed by the standard employment
termination policy applicable to Employee in effect at the time of
termination.
4. Benefits Upon Termination Under Section 3(i).
Upon the termination of Employee pursuant to Section 3(i) hereof, Employee
shall be entitled to receive the benefits specified in this Section 4. The
amounts due to Employee under this Section 4 shall be paid to Employee not later
than Employee's last day of employment. All payments to Employee pursuant to
this Section 4 shall be subject to any applicable payroll or other taxes
required by law to be withheld.
(i) The Company shall pay to Employee (a) the full base salary earned
by him and unpaid through the effective date of Employee's termination, at
the rate in effect at the time notice of termination (voluntary or
involuntary) was given, plus (b) an amount representing credit for any
vacation earned by him in the current calendar year, but not taken.
(ii) In lieu of any further base salary payments to Employee for
periods subsequent to the date that the termination of Employee's
employment becomes effective, the Company shall pay as severance pay to
Employee a lump sum amount in cash equal to (i) the product of twelve
multiplied by Employee's monthly base salary at the highest rate in effect
during the twelve months immediately preceding the effective date of
Employee's termination plus (ii) an amount equal to the amount of the most
recent annual bonus and commission received by Employee.
(iii) All options to purchase the Company's Common Stock and all other
incentive awards granted to Employee under the Company's stock option or
incentive compensation plans adopted by the Company (each, a "Plan" and,
together, the "Plans") shall become immediately exercisable or vested, as
the case may be; provided, however, such options or awards shall be
exercisable or payable, as the case may be, only in a
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manner consistent with the terms of the Plans and related stock option or
other agreements, as applicable and as in effect upon the date of
termination.
(iv) For the twenty-four (24) month period immediately following the
date of termination, the Company shall arrange to provide Employee with,
and shall pay for, life, disability, accident and health insurance coverage
benefits substantially similar to those the Employee was receiving under
the Company's health and welfare benefit plans as in effect immediately
prior to the date of the Change in Control. Benefits otherwise due to
Employee pursuant to this clause (iv) shall be reduced to the extent
comparable benefits are actually received from another source during the
twenty-four (24) month period following the date of termination.
(v) In addition to all other amounts payable to Employee under this
Section 4, Employee shall be entitled to receive all benefits payable or
distributable to Employee under any Company pension plan and any other plan
or agreement relating to retirement benefits in accordance with the
policies in respect thereof in effect as of the date of the Change in
Control.
(vi) The Company shall pay to Employee all legal fees and expenses
incurred by Employee in seeking to obtain or enforce any right or benefit
provided to Employee by this Agreement.
(vii) The Company shall pay directly all fees and expenses of an
outplacement service provider for outplacement services to Employee for a
period of one year following the date of termination.
Notwithstanding anything contained in this Agreement to the contrary,
the maximum amount to be paid by Company to Employee pursuant to the terms of
this Agreement and this Section 4 shall be limited to an amount which does not
constitute an "excess parachute payment" within the meaning of Section 2806 of
the Internal Revenue Code of 1954, as amended, or any successor provision or
regulations promulgated thereunder.
Employee shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise. Other
then as provided in Section 4(iv), the amount of any payment or benefit provided
in this Section 4 shall not be reduced by any compensation earned by Employee as
a result of any employment by another employer.
5. Successors; and Binding Agreement.
(i) The Company will require any successor (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 written
agreement in form and substance satisfactory to Employee, expressly to
assume and agree to perform the Company's obligations under this Agreement
arising out of any such succession in the same manner and to the same
extent that the Company would be required to perform this Agreement.
Failure of the
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Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Employee
to compensation from the Company in the same amount and on the same terms
as Employee would be entitled hereunder if Employee terminated his
employment after a Change in Control for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date of termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 5(i) or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(ii) This Agreement is personal to Employee and Employee may not
assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of and be enforceable
by Employee's personal or legal representatives, executors, administrators,
heirs, distributees, devisees and legatees.
6. Modification; Waiver.
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in a writing signed
by Employee and such officer as may be specifically designated by the Board of
Directors of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of any condition or provision shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
7. Notice.
All notices, requests, demands and all other communications required or
permitted by either party to the other party by this Agreement (including,
without limitation, any notice of termination of employment) shall be in writing
and shall be deemed to have been duly given when delivered personally or mailed
by regular, certified or registered mail, return receipt requested, at the
address of the other party, as follows:
If to the Company, to:
Lifecore Biomedical, Inc.
Attn: Chief Executive Officer
3515 Lyman Blvd.
Chaska, MN 55318
If to Employee, to:
[Address]
8. Severability.
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If any term or provision of this Agreement or the application hereof to
any person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each term and provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
9. Headings.
The headings in this Agreement are inserted for convenience or reference
only and shall not be a part of or control or affect the meaning of this
Agreement.
10. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
11. Governing Law.
This Agreement has been executed and delivered in the State of
Minnesota and shall in all respects be governed by, and construed and enforced
in accordance with, the laws of the State of Minnesota, including all matters of
construction, validity and performance, but without giving effect to the choice
of law provisions thereof.
12. Entire Agreement.
This Agreement supersedes any and all other oral or written agreements
or policies made relating to the subject matter hereof; provided that, this
Agreement shall not supersede or limit in any way Employee's rights under any
benefit plan, program or arrangements in accordance with their terms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement all as
of the date set forth in the first paragraph.
LIFECORE BIOMEDICAL, INC.
By _____________________________________
Name:
Title:
EMPLOYEE
________________________________________
[Employee Name]
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