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Exhibit 10(a)xiv
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT made as of the 24th day of September, 1999 by and
between the "Company" (as hereinafter defined) and ______________ (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 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 determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure his continued dedication and efforts in such event without undue concern
for his 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 of 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 his employment is
terminated as a result of, or in connection with, a Change in Control and
certain other benefits whether or not the Executive's employment is terminated.
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 September 24,
1999 and shall continue in effect until September 23, 2001; provided, however,
that commencing on September 23, 2000 and on each September 23rd 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, however, that notwithstanding any
such notice by the Company not to extend, if a Change in Control occurs during
the term of this Agreement, the term of this Agreement shall not expire before
the expiration of 24 months after the occurrence of a Change in Control.
2. Definitions.
2.1. Accrued Compensation. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all
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amounts earned or accrued through the "Termination Date" (as hereinafter
defined) 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, (iii)
vacation pay, and (iv) bonuses and incentive compensation (other than the "Pro
Rata Bonus" (as hereinafter defined)).
2.2. Base Amount. For purposes of this Agreement, "Base
Amount" shall mean the greater of the Executive's annual base salary (a) at the
rate in effect on the Termination Date or (b) at the highest rate in effect at
any time during the ninety (90) day period before the Change in Control, and
shall include all amounts of his base salary that are deferred under the
qualified and non-qualified employee benefit plans of the Company or any other
agreement or arrangement.
2.3. Bonus Amount. For purposes of this Agreement, "Bonus
Amount" shall mean the greater of (x) the most recent annual bonus paid or
payable to the Executive, or, if greater, the annual bonus paid or payable for
the full fiscal year ended before the fiscal year during which a Change in
Control occurred, or (y) the annual bonus which would be paid or payable for the
fiscal year during which the Change in Control occurred if all performance goals
or other criteria established with respect to bonuses for such fiscal year were
fully satisfied, or (z) the average of the annual bonuses paid or payable during
the three full fiscal years ended before the Termination Date or, if greater,
the three full fiscal years ended before the Change in Control (or, in each
case, such lesser period for which annual bonuses were paid or payable to the
Executive).
2.4. Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive has been convicted of a felony that
results in a material and demonstrable financial harm to the Company or the
termination is evidenced by a resolution adopted in good faith by two-thirds of
the Board that the Executive (a) intentionally and continually failed
substantially to perform his reasonably assigned duties with the Company (other
than a failure resulting from the Executive's incapacity due to physical or
mental illness or from the Executive's assignment of duties that would
constitute "Good Reason" as hereinafter defined) which failure continued for a
period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Executive specifying the
manner in which the Executive has failed substantially to perform, or (b)
intentionally engaged in conduct which is demonstrably and materially injurious
to 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 in person by the Board (with the
assistance of the Executive's counsel if the Executive so desires). No
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act, nor failure to act, on the Executive's part, shall be considered
"intentional" unless the Executive has acted, or failed to act, with a lack of
good faith and with a lack of reasonable belief that the Executive's action or
failure to act was in the best interest of the Company.
2.5. Change in Control. For purposes of this Agreement:
(a) A "Change in Control" shall mean any of the following
events:
(1) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of
twenty percent (20%) or more of the combined voting power of
the Company's then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition
by (i) an employee benefit plan (or a trust forming a part
thereof) maintained by (x) the Company or (y) any corporation
or other Person of which a majority of its voting power or its
equity securities or equity interest is owned directly or
indirectly by the Company (a "Subsidiary"), (ii) the Company
or any Subsidiary, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined).
(2) The individuals who, as of July 14, 1999, 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 stockholders, 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;
provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or
threatened "Election Consent" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest;
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(3) A merger, consolidation or reorganization
involving the Company or a subsidiary of the Company, unless
(i) the Voting Securities of the Company,
immediately before such merger, consolidation or
reorganization, continue immediately following such
merger, consolidation or reorganization to represent,
either by remaining outstanding or by being converted
into voting securities of the surviving corporation
resulting from such merger, consolidation or
reorganization or its parent (the "Surviving
Corporation"), at least sixty percent (60%) of the
combined voting power of the outstanding voting
securities of the Surviving Corporation;
(ii) the individuals who were members of the
Incumbent Board immediately before the execution of
the agreement providing for such merger,
consolidation or reorganization constitute more than
one-half of the members of the board of directors of
the Surviving Corporation; and
(iii) no person (other than the Company, any
Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by the Company,
the Surviving Corporation or any Subsidiary, or any
Person who, immediately before such merger,
consolidation or reorganization had Beneficial
Ownership of fifteen percent (15%) or more of the
then outstanding Voting Securities) has Beneficial
Ownership of fifteen percent (15%) or more of the
combined voting power of the Surviving Corporation's
then outstanding voting securities.
(a transaction described in clauses (i) through (iii) shall
herein be referred to as a "Non-Control Transaction");
(4) A complete liquidation or dissolution of the
Company; or
(5) Approval by stockholders of the Company of an
agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
(b) 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
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by the Company which, 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 which increases
the percentage of the then outstanding Voting Securities Beneficially Owned by
the Subject Person, then a Change in Control shall occur.
(c) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's employment is terminated before a
Change in Control and the Executive reasonably demonstrates that such
termination (1) was at the request of a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change in Control and
who effectuates a Change in Control (a "Third Party") or (2) otherwise occurred
in connection with, or in anticipation of, a Change in Control which actually
occurs, then for all purposes of this Agreement, the date of a Change in Control
with respect to the Executive shall mean the date immediately before the date of
such termination of the Executive's employment.
2.6. Company. For purposes of this Agreement, the "Company"
shall mean H. J. Heinz Company, a Pennsylvania corporation with its principal
offices at Pittsburgh, Pennsylvania, and shall include its "Successors and
Assigns" (as hereinafter defined).
2.7. Disability. For purposes of this Agreement, "Disability"
shall mean a physical or mental infirmity which impairs the Executive's ability
to substantially perform his duties with the Company for a period of one hundred
eighty (180) consecutive days and the Executive has not returned to his full
time employment before the Termination Date as stated in the "Notice of
Termination" (as hereinafter defined).
2.8. Good Reason. For purposes of this Agreement:
(a) "Good Reason" shall mean the occurrence after a
Change in Control of any of the events or conditions described in subsections
(l) through (7) hereof:
(1) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable
judgment, represents an adverse change from his status, title,
position or responsibilities as in effect at any time within
ninety (90) days preceding the date of a Change in Control or
at any time thereafter; the assignment to the Executive of any
duties or responsibilities which, in the Executive's
reasonable judgment, are inconsistent with his status, title,
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position or responsibilities as in effect at any time within
ninety (90) days preceding the date of a Change in Control or
at any time thereafter; or any removal of the Executive from
or failure to reappoint or reelect him to any one of such
offices or positions, except in connection with the
termination of his employment for Disability, Cause, as a
result of his death or by the Executive other than for Good
Reason;
(2) a reduction in the Executive's base salary or any
failure to pay the Executive any compensation or benefits to
which he is entitled within five (5) days of the date due;
(3) the Executive being required by the Company to
perform his regular duties at any place outside a 30-mile
radius from the place where his regular duties were performed
immediately before the Change in Control, except for
reasonably required travel on the Company's business which is
not materially greater than such travel requirements in effect
immediately before the Change in Control;
(4) the failure by the Company to (A) continue in
effect (without reduction in benefit level, and/or reward
opportunities) any material compensation or employee benefit
plan in which the Executive was participating at any time
within ninety (90) days preceding the date of a Change in
Control or at any time thereafter, including, but not limited
to, the plans listed on Appendix A, unless such plan is
replaced with a plan that provides substantially equivalent
compensation or benefits to the Executive or (B) provide the
Executive with compensation and benefits, in the aggregate, at
least equal (in opportunities) to those provided for under
each other employee benefit plan, program and practice in
which the Executive was participating at any time within
ninety (90) days preceding the date of a Change in Control or
at any time thereafter;
(5) any material breach by the Company of any
provision of this Agreement;
(6) any purported termination of the Executive's
employment for Cause by the Company which does not comply with
the terms of Section 2.4; or
(7) the failure of the Company to obtain an
agreement, satisfactory to the Executive, from any Successors
and Assigns to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof.
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(b) Any event or condition described in this Section
2.8(a)(1) through (7) which occurs before a Change in Control but which the
Executive reasonably demonstrates (1) was at the request of a Third Party, or
(2) otherwise arose in connection with, or in anticipation of, a Change in
Control which actually occurs, shall constitute Good Reason for purposes of this
Agreement notwithstanding that it occurred before the Change in Control.
(c) The Executive's right to terminate his employment
pursuant to this Section 2.8 shall not be affected by his incapacity due to
physical or mental illness.
2.9. Notice of Termination. For purposes of this Agreement,
following a Change in Control, "Notice of Termination" shall mean a written
notice of termination from the Company of the Executive's employment which
indicates the specific termination provision in this Agreement relied upon and
which sets 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.
2.10. Pro Rata Bonus. For purposes of this Agreement, "Pro
Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied by a
fraction the numerator of which is the number of days in the fiscal year through
the Termination Date and the denominator of which is 365.
2.11. Successors and Assigns. For purposes of this Agreement,
"Successor and Assigns" shall mean a corporation or other entity which has
acquired or succeeded to all or substantially all or the assets and business of
the Company (including this Agreement) whether by operation of law or otherwise.
2.12. Termination Date. For purposes of this Agreement,
"Termination Date" shall mean in the case of the Executive's death, his date of
death, in the case of Good Reason, the last day of his employment, and in all
other cases, the date specified in the Notice of Termination; provided, however,
that 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
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 30 days.
3. Termination of Employment.
3.1. Amount of Compensation and Benefits. 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:
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(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 for other than Good Reason, the
Company shall pay to the Executive the Accrued Compensation and, if such
termination is other than by the Company for Cause, a Pro Rata Bonus.
(b) If the Executive's employment with the Company
shall be terminated for any reason other than as specified in Section 3.1(a),
the Executive shall be entitled to the following:
(i) the Company shall pay the Executive all
Accrued Compensation and a Pro-Rata Bonus; and
(ii) the Company shall pay the Executive as
severance pay in lieu of any further compensation for
periods subsequent to the Termination Date, in a
single payment an amount in cash equal to three (3)
times the sum of (A) the Base Amount and (B) the
Bonus Amount; and
(iii) for a number of months equal to
thirty-six (36) (the "Continuation Period"), the
Company shall at its expense continue on behalf of
the Executive and his dependents and beneficiaries
the life insurance, disability, medical, dental and
hospitalization benefits provided (x) to the
Executive at any time during the 90-day period before
the Change in Control or at any time thereafter or
(y) to other similarly situated executives who
continue in the employ of the Company during the
Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this
Section 3.1(b)(iii) during the Continuation Period
shall be no less favorable to the Executive and his
dependents and beneficiaries, than the most favorable
of such coverages and benefits during any of the
periods referred to in clauses (x) and (y) above. The
Company's obligation hereunder with respect to the
foregoing benefits shall be limited to the extent
that the Executive obtains any such benefits pursuant
to a subsequent employer's benefit plans, in which
case the Company may reduce the coverage of any
benefits it is required to provide the Executive
hereunder as long as the aggregate coverages and
benefits of the combined benefit plans is no less
favorable to the Executive than the coverages and
benefits required to be provided hereunder. This
subsection (iii) shall not be interpreted so as to
limit any benefits to which the Executive, his
dependents or beneficiaries may be entitled under any
of the Company's employee benefit plans, programs or
practices following the Executive's termination
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of employment, including without limitation, retiree
medical and life insurance benefits; and
(iv) the Company shall pay in a single
payment an amount in cash equal to the excess of (A)
the lump sum actuarial equivalent of the aggregate
retirement benefit the Executive would have been
entitled to receive under the Company's supplemental
and other retirement plans including, but not limited
to, the retirement plans listed in Appendix A, had
(w) the Executive remained employed by the Company
for an additional three complete years of credited
service, (x) his annual compensation during such
period been equal to his Base Salary and the Bonus
Amount, (y) the Company made employer contributions
to each defined contribution plan in which the
Executive was a participant at the Termination Date
(in the amount that would have been contributed based
on the assumptions in (w) and (x) above) and (z) he
been fully (100%) vested in his benefit under each
retirement plan in which the Executive was a
participant, over (B) the lump sum actuarial
equivalent of the aggregate retirement benefit the
Executive is actually entitled to receive under such
retirement plans. For purposes of this subsection
(iv), the "lump sum actuarial equivalent" shall be
determined in accordance with the "Lump Sum Factors"
as prescribed under the terms of the Employees'
Retirement System of H. J. Heinz Company Plan "A" -
For Salaried Employees immediately before the Change
in Control; and
(v) the restrictions on any outstanding
incentive awards (including restricted stock and
granted performance shares or units) granted to the
Executive under any other incentive plan or
arrangement shall lapse and such incentive award
shall become 100% vested, all stock options and stock
appreciation rights granted to the Executive shall
become immediately exercisable and shall become 100%
vested, and all performance units granted to the
Executive shall become 100% vested.
(c) The amounts provided for in Sections 3.1(a) and
3.1(b)(i), (ii) and (iv) shall be paid in a single lump sum cash payment within
five (5) days after the Executive's Termination Date (or earlier, if required by
applicable 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
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the amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Section 3.1(b)(iii).
(e) Notwithstanding the foregoing, the payments
otherwise due hereunder may be limited to the extent provided in Section 5 and
Section 12(b) hereof.
3.2. Coordination with other Compensation and Benefits.
(a) The severance pay and benefits provided for in
this Section 3 shall be in lieu of any other severance or termination pay to
which the Executive may be entitled under any other Company plan, program,
practice or arrangement providing severance benefits.
(b) The Executive's entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans (including, the plans listed on Appendix A) and other
applicable programs, policies and practices then in effect.
4. Notice of Termination. Following a Change in Control, any purported
termination of the Executive's employment by the Company and/or the Employer
shall be communicated by Notice of Termination to the Executive. For purposes of
this Agreement, no such purported termination shall be effective without such
Notice of Termination.
5. Excise Tax Limitation.
(a) Notwithstanding anything contained in this Agreement to
the contrary, to the extent that the payments and benefits provided under this
Agreement and benefits provided to, or for the benefit of, the Executive under
any other Company plan or agreement (such payments or benefits are collectively
referred to as the "Payments") would be subject to the excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of l986, as
amended (the "Code"), the Payments shall be reduced (but not below zero) if and
to the extent necessary so that no Payment to be made or benefit to be provided
to the Executive shall be subject to the Excise Tax (such reduced amount is
hereinafter referred to as the "Limited Payment Amount"). The reduction provided
for in the preceding sentence shall not apply, and Section 6 below shall apply,
if the Payments, prior to any reduction in accordance with the preceding
sentence, exceed one hundred and ten percent (110%) of the maximum amount which
could be received without incurring the Excise Tax.
(b) If a reduction is required pursuant to Section 5(a),
unless the Executive shall have given prior written notice specifying a
different order to the Company to effectuate the Limited Payment Amount, the
Company shall reduce or eliminate the Payments by first reducing or eliminating
those
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payments or benefits which are not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning with payments
or benefits which are to be paid the farthest in time for the Determination (as
hereinafter defined). Any notice given by the Executive pursuant to the
preceding sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Executive's rights and entitlements to
any benefits or compensation.
(c) An initial determination as to whether the Payments shall
be reduced to the Limited Payment Amount pursuant to the Plan and the
calculation of such Limited Payment Amount shall be made at the Company's
expense by an accounting firm selected by the Company which is designated as one
of the five largest accounting firms in the United States (the "Accounting
Firm"). The Accounting Firm shall provide its determination (the
"Determination") together with detailed supporting calculations and
documentation to the Company and the Executive within five (5) days of the
Termination Date if applicable, or such other time as requested by the Company
or by the Executive (provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax) and, if the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to a
Payment or Payments, it shall furnish to the Executive an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect to
any such Payment or Payments. Within ten (10) days of the delivery of the
Determination to the Executive, the Executive shall have the right to dispute
the Determination (the "Dispute"). If there is no Dispute, the Determination
shall be binding, final and conclusive upon the Company and the Executive
subject to the application of Section 5(d) below.
(d) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that the Payments to be made
to, or provided for the benefit of, the Executive either have been made or will
not be made by the Company which, in either case, will be inconsistent with the
limitations provided in Section 5(a) (hereinafter referred to as an "Excess
Payment" or "Underpayment" respectively). If it is established, pursuant to a
final determination of a court or an Internal Revenue Service (the "IRS")
proceeding which has been finally and conclusively resolved, that an Excess
Payment has been made, such Excess Payment shall be deemed for all purposes to
be a loan to the Executive made on the date the Executive received the Excess
Payment and the Executive shall repay the Excess Payment to the Company on
demand (but not less than ten (10) days after written notice is received by the
Executive) together with interest on the Excess Payment at the applicable
"federal short term rate" prescribed pursuant to Code section 1274(d)(1)(C)(i)
(hereinafter the "Applicable Federal Rate") from the date of the Executive's
receipt of such Excess Payment until the date of such repayment. In the event
that it is determined (i) by the Accounting Firm, the Company (which shall
include the position taken by the Company, or together with its consolidated
group, on its federal income tax return) or the IRS,
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(ii) pursuant to a determination by a court, or (iii) upon the resolution to the
Executive's satisfaction of the Dispute, that an Underpayment has occurred, the
Company shall pay an amount equal to the Underpayment to the Executive within
ten (10) days of such determination or resolution together with interest on such
amount at the Applicable Federal Rate from the date such amount would have been
paid to the Executive until the date of payment.
6. Excise Tax Indemnification. If the payments and benefits provided
under this Agreement and benefits provided to, or for the benefit of, the
Executive under any other Company plan or agreement are subject to the excise
tax imposed under Section 4999 of the Internal Revenue Code of l986, as amended
(the "Code"), or under any other similar provision of the laws of any state or
local jurisdiction within the United States (the "Excise Tax"), the Company
shall indemnify and hold harmless the Executive and his heirs, executors,
administrators and permitted assigns (all such aforesaid parties shall be
referred to as "Indemnified Parties") from and against any loss ("the Loss")
incurred by imposition on the Executive of the Excise Tax, such indemnification
to be implemented by paying to the Indemnified Parties an amount
("Indemnification Payment") as hereinafter provided. The intent of this Section
6 is to provide for payments or reimbursements on a grossed-up basis which are
sufficient, but not more than sufficient, to make the Indemnified Parties
economically whole with respect to any Excise Tax imposed on the Executive's
Share, any costs of contesting any such Excise Tax and any other taxes imposed
by reason of a loan to the Indemnified Parties pending resolution of any such
contest, and the foregoing provisions are to be interpreted accordingly.
6.1. Amount of Indemnification Payment. The Indemnification
Payment shall be the amount which, after deduction of all income taxes and
additional federal, state and local taxes (including, without limitation, any
additional Excise Tax) required to be paid by the Executive in respect of
receipt of the Indemnification Payment (assuming, for this purpose, that the
Executive is subject to the highest marginal rate of federal income taxation in
effect during the calendar year in which the Indemnification Payment is to be
made and that state and local income taxes are due for such year at the highest
marginal rates of taxation in effect in the state and locality of the
Executive's residence on the date of payment, and applying the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes, but assuming that the Executive has no other deductions or credits
available to reduce such taxes), shall be equal to the sum of (i) the Excise Tax
resulting in the Loss and (ii) the net amount of any interest, penalties or
additions to tax payable to any taxing authority (after allowing for the
deduction of such amounts, to the extent properly deductible, for federal, state
or local income tax purposes) as a result of the Loss. The amount determined
above shall be adjusted to take into account on a grossed-up basis any expenses
described in Section 6.3(a) and any additional taxes incurred by reason of the
inclusion in income of, or imputation of, interest on any advance pursuant to
Section 6.3(b).
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6.2. Time of Indemnification Payment. The Indemnification
Payment (or each applicable portion thereof) shall be made within thirty (30)
days after the compensation or benefits (or each applicable portion thereof) to
which the Excise Tax (as determined by the Company) relates is received by the
Executive. Additional Indemnification Payments shall be made within thirty (30)
days after receipt by the Company of written notice from the Executive of any
claim by a taxing authority that any additional Excise Tax is due, which notice
by the Executive shall include a copy of the written statement from the taxing
authority setting forth the amount of additional tax, interest, penalties or
additions to tax claimed to be due in respect thereof; provided that, if a
contest is being conducted pursuant to Section 6.3 below, any additional
Indemnification Payments (or applicable portion thereof) shall not be required
to be made shall until 30 days after the completion or termination of such
contest except as provided in Section 6.3(b) below. Any Indemnification Payment
required hereunder and not timely made shall accrue interest until paid at the
Applicable Federal Rate.
6.3. Management of Tax Contests. The Company shall have the
sole and exclusive right to initiate and to conduct on behalf of the Indemnified
Parties all aspects of any contest or appeal of any tax controversy relating to
the Excise Tax. The Indemnified Parties shall cooperate with the Company in the
conduct of any such contest or appeal (at the expense of the Company). The
indemnifications provided for in this Section 6 are conditional on the Company
receiving from the Indemnified Parties timely notice of any actual or threatened
tax controversy relating to the Excise Tax (including, without limitation, an
inquiry or notice of audit by a taxing authority with respect to the years
involved or any request for extension of the period for assessment or collection
of taxes for such years) and upon the continuing cooperation of the Indemnified
Parties during the course of any such contest or appeal.
(a) During the course of any such contest or appeal the
Company shall promptly defray any and all expenses that the Indemnified Parties
may incur as a result of contesting such proposed Excise Tax, including, without
limitation, indemnification and prompt payment of all costs, legal and
accounting fees and disbursements, bonding fees, or other litigation related
expenses so incurred.
(b) If the Company shall elect to contest a proposed Excise
Tax by causing the Indemnified Parties to make payment and then seek a refund,
then the Company shall advance to the Indemnified Parties, on an interest-free
basis, the aggregate amount of the required payment. If as a result of such
contest a refund becomes payable to the Indemnified Parties, upon receipt of
such refund the Indemnified Parties shall promptly pay over to the Company the
amount of such refund (and included interest) received by the Indemnified
Parties (which amount shall be deemed to be in repayment of the loan
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advanced by the Company to the extent fairly attributable thereto), subject to
offset of any Indemnification Payment then due and owing by the Company to the
Indemnified Parties pursuant to this Section 6. Upon final denial of any such
refund or a portion thereof, the Company shall forgive the amount of such
advance fairly attributable to the amount not refunded (which forgiveness shall
be applied against the Indemnification Payment determined under Section 6.1.
7. Successors; Nonalienation.
7.1. Successors.
(a) 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 and Assigns 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.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7.2. Nonalienation. 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.
8. Settlement of Claims and Resolution of Disputes. 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. Any
disputes arising under or in connection with this Agreement shall, at the
discretion of the Executive or the Company, be resolved by binding arbitration,
to be held in Pittsburgh, Pennsylvania, in accordance with the rules and
procedures of the American Arbitration Association. Judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. If arbitration is not requested by either party, any action brought by
any party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in Pittsburgh, Pennsylvania.
9. Fees and Expenses.
(a) Subject to Section 9(b) below, the Company shall pay all
reasonable legal fees and related expenses (including the costs of experts,
evidence and counsel) incurred by the Executive as they become due as a result
of (1) the Executive's termination of employment (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination of
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employment), (2) the Executive seeking to obtain or enforce any right or benefit
provided by this Agreement or by any other plan or arrangement maintained by the
Company under which the Executive is or may be entitled to receive benefits, and
(3) the Executive's hearing before the Board as contemplated in Section 2.4 of
this Agreement; provided, however, that the circumstances set forth in clauses
(1) and (2) (other than as a result of the Executive's termination of employment
under circumstances described in Sections 2.5(c) and 2.8(b)) occurred on or
after a Change in Control.
(b) Section 9(a) shall not apply, and all legal fees and related
expenses incurred by the Executive shall remain the responsibility of the
Executive, if none of the adjudicating authorities (the Board, an arbitrator or
a court of law) called upon to address the contest or dispute shall uphold the
position of the Executive on any single matter in dispute.
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. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company (except for
any severance or termination policies, plans, programs or practices) and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any other agreements with the Company
(except for any severance or termination agreement). Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
12. Miscellaneous.
(a) 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
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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.
(b) Notwithstanding Section 12(a) or any other provision of this
Agreement to the contrary, if consummation of a transaction may be contingent on
the parties' ability to use pooling of interests accounting and the Company
reasonably determines (after consultation with its independent auditors) that a
provision of this Agreement would preclude the use of pooling of interests
accounting with respect to such transaction, the Company may, with or without
the acquiescence of the Executive, eliminate or modify that provision to the
extent required to allow pooling of interests accounting.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to the conflict of laws principles thereof.
14. 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.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
H. J. HEINZ COMPANY
ATTEST: By:
---------------------------------
Name:
Title:
---------------------------------
Secretary
By:
---------------------------------
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APPENDIX A
COMPENSATION AND BENEFIT PLANS
Retirement Plans
----------------
H. J. Heinz Company Employees Retirement and Savings Plan
Employees' Retirement System of H. J. Heinz Company Plan "A" - For
Salaried Employees
H. J. Heinz Company Supplemental Executive Retirement Plan
H. J. Heinz Company Employees Retirement and Savings Excess Plan
Welfare Plans
-------------
H. J. Heinz Company Nonbargaining Employees Welfare Benefit Program
H. J. Heinz Company Voluntary Employees' Beneficiary Association Long
Term Disability Plan
H. J. Heinz Company Severance Pay Plan
Other Compensation and Benefit Plans
------------------------------------
Incentive Compensation Plan ("SSP")
1986 Deferred Compensation program for Executives of H. J. Heinz Company
and Affiliated Companies
Executive Deferred Compensation Plan
H. J. Heinz Company 1984 Stock Option Plan
H. J. Heinz Company 1987 Stock Option Plan
H. J. Heinz Company 1990 Stock Option Plan
H. J. Heinz Company 1994 Stock Option Plan
H. J. Heinz Company 1996 Stock Option Plan
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