Weider Nutrition International Inc. Contracts
Sample Business Contracts
Change In Control Agreement - Weider Nutrition Group Inc. and Bruce J. Wood
Free Change in Control Forms
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") dated as of
August 1, 2000 (the "Effective Date") is entered by and between Bruce J. Wood,
3983 East Alta Approach Road, Sandy, Utah 84092 ("Executive") and Weider
Nutrition Group, Inc., a Utah corporation (the "Company").
WITNESSETH:
WHEREAS, Executive is a senior executive of the Company and
has made and is expected to continue to make major contributions to the short
and long term profitability, growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for
most publicly held companies, the possibility of a Change in Control (as defined
below) exists;
WHEREAS, the Company desires to assure itself of both
present and future continuity of management;
WHEREAS, the Company wishes to ensure that Executive is not
practically disabled from discharging his duties in respect of a proposed or
actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional
inducement for Executive to continue to remain in the employ of the Company.
NOW, THEREFORE, in exchange for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined
elsewhere herein, the following terms have the following meanings when used in
this Agreement with initial capital letters:
(a) "Affiliate" shall mean a domestic or foreign business
entity controlled by, controlling, under common control with, or in a joint
venture with, the applicable person or entity.
(b) "Aggregate Spread" shall mean the product of (i) the
aggregate number of shares of Common Stock subject to all Options held by
Executive as of the Effective Date or granted to Executive following the
Effective Date and on or prior to the Closing Date and (ii) the excess of (A)
the Change in Control Value over (B) the Exercise Price of such Options.
(c) "Board" shall mean the Board of Directors of the
Company.
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(d) "Cause" shall mean Executive's:
(i) Fraud, misappropriation, embezzlement, or other act
of material misconduct against the Company or any of its Affiliates;
(ii) Substantial and willful failure to perform
specific and lawful directives of the Board, as reasonably determined by the
Board;
(iii) Willful and knowing violation of any rules or
regulations of any governmental or regulatory body, which is materially
injurious to the financial condition of the Company; or
(iv) Conviction of or plea of guilty or nolo contendere
to a felony.
(e) "Change in Control" shall mean the occurrence during the
Term of this Agreement (as set forth in Section 2) of both (i) and (ii), below:
(i) Change in the Board. A change in the composition of
the Board over a period of twelve consecutive months (or less) such that a
majority of the Board members (rounded up to the nearest whole number) ceases to
be comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time such
election or nomination was approved by the Board; and
(ii) One of:
(A) Sale of Assets. The sale of all or substantially
all of the assets and business of the Company in substantially a single
transaction;
(B) Merger. The merger or consolidation of the Company
with and into another corporation if, following such merger or consolidation,
persons who were not direct or indirect shareholders of the Company immediately
prior to such event (other than persons in which such original shareholders
themselves have an interest) ("New Shareholders"), will collectively own stock
in the surviving corporation representing both (A) more than 30% of the
surviving corporation's total equity value and (B) more than that percentage of
the surviving corporation's total equity value owned by the Weider Group,
provided, however, that such merger or consolidation shall not be covered by
this paragraph (ii) if the Weider Group owns 30% or more of the surviving
corporation's total equity value and no New Shareholders who constitute a
"group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, own more than that percentage of the surviving corporation's
total equity value owned by the Weider Group; or
(C) Sale of Stock. Acquisition of 50% or more of the
fair market value of the outstanding capital stock of the Company by one or more
other persons if, following such acquisition, persons who were not direct or
indirect shareholders of the
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Company immediately prior to such event (other than persons in which such
original shareholders themselves have an interest), will collectively own stock
of the Company representing more than 50% of the Company's total equity value.
(f) "Change in Control Value" shall mean the value per
share of Common Stock as of the effective time of any Change in Control, as
determined in good faith by the Board or any committee thereof.
(g) "Closing Date" shall mean the effective date of a
Change in Control.
(h) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(i) "Common Stock" shall mean the Company's Class A
Common Stock, par value $0.01 per share.
(j) "Employment Agreement" shall mean that certain
employment agreement entered into by and between Executive and Weider Nutrition
Group, Inc., a Utah corporation, as of June 3, 1999, as such agreement may be
amended from time to time.
(k) "Exercise Price" shall mean the exercise price per
share of Common Stock subject to an Option.
(l) "Good Reason" shall mean any of the following
events which is not cured by the Company within 15 days after written notice
thereof is provided to the Company by Executive: (i) any material reduction in
the total amount of Executive's base salary or bonus; (ii) any material adverse
change in Executive's job titles, duties, responsibilities, perquisites or
authority without Executive's consent; or (iii) any involuntary relocation of
Executive's principal place of business to a location more than 50 miles from
Executive's current principal place of business.
(m) "Option" shall mean an option to purchase shares of
Common Stock granted by the Company to Executive.
(n) "Transaction Target Percentage" shall mean: (i) if
the Change in Control Value is $6.00 per share or less, .63%; (ii) if the Change
in Control Value is $7.00 per share, .75%; (iii) if the Change in Control Value
is $8.00 per share, .85%; (iv) if the Change in Control Value is $9.00 per
share, .90%; (v) if the Change in Control Value is $10.00 per share, .95%; (vi)
if the Change in Control Value is $11.00 per share or more, 1.00%. In the event
the Change in Control Value is between any two Change in Control Values
described in subsections (i) - (vi) above, the Transaction Target Percentage
shall be determined by means of linear interpolation between the two applicable
Change in Control Values.
(o) "Transaction Value" shall mean the aggregate fair
market value of Company, as determined based upon the consideration received by
the Company's stockholders in connection with the Change in Control. The
Transaction Value shall be determined in good
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faith by the Board in its discretion, taking into account the value of any
non-cash consideration (including any debt assumed by the purchaser) and any
anticipated post-Closing Date adjustments. In the event that the Company's
stockholders retain any portion of their interests in the Company following the
Change in Control, the post-Closing Date fair market value of such portion (as
determined in connection with the Change in Control) shall be taken into account
as "consideration received" for purposes of calculating the Transaction Value.
(p) "Weider Group" shall mean Weider Heath and Fitness,
a Nevada corporation (or its successor) and its Affiliates.
2. Term of Agreement. This Agreement shall be effective with respect to
any Change in Control that is both (i) subject to a definitive written purchase,
sale, merger or similar agreement entered into during the period beginning on
the Effective Date and ending on the expiration of 12 months following the
Effective Date and (ii) consummated on or prior to the expiration of 18 months
following the Effective Date.
3. Retention Bonus. In the event that:
(a) Executive continues his employment with the Company through the
effective date of a Change in Control,
(b) Executive's employment is terminated by the Company without
Cause prior to the effective date of a Change in Control, or
(c) Executive terminates his employment with the Company for Good
Reason,
the Company shall pay to Executive a lump-sum cash bonus (the "Retention Bonus")
in the amount of the excess of:
(x) The product of (i) the Transaction Value, and (ii) Transaction
Target Percentage,
over
(y) The Aggregate Spread, if any.
The Retention Bonus shall be payable by the Company to
Executive within 30 days following the Closing Date.
4. Severance Payment. In addition to any severance payments Executive
may be entitled to receive under the Employment Agreement or otherwise, in the
event Executive's employment with the Company is terminated pursuant to Section
5.2 or 5.3 of the Employment Agreement during the period beginning on the
Closing Date, the Company shall pay to Executive an amount equal to his Base
Salary (as defined in the Employment Agreement). Such amount shall be payable to
Executive in 12 equal monthly installments, beginning on the
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month following the last month Executive receives any payments under Section 6
of the Employment Agreement.
5. Parachute Payments.
(a) If it is determined (as hereafter provided) that Executive would be
subject to the excise tax imposed by Code Section 4999 to which Executive would
not have been subject but for any payment or Option vesting (collectively a
"Payment") occurring pursuant to the terms of this Agreement or otherwise upon a
Change in Control (a "Parachute Tax"), then Executive shall be entitled to
receive an additional payment or payments (a "Gross-Up Payment") in an amount
such that, after payment by Executive of all taxes (including any Parachute Tax)
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Parachute Tax imposed upon the Payment.
(b) Subject to the provisions of Section 5(a) hereof, all
determinations required to be made under this Section 5, including whether a
Parachute Tax is payable by Executive and the amount of such Parachute Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change in Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Company). For purposes of making the calculations required by this Section, the
Accounting Firm may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code, provided that
the Accounting Firm's determinations must be made with substantial authority
(within the meaning of Section 6662 of the Code). The Accounting Firm shall be
directed by the Company or Executive to submit its preliminary determination and
detailed supporting calculations to both the Company and Executive within 15
calendar days after the determination date, if applicable, and any other such
time or times as may be requested by the Company or Executive. If the Accounting
Firm determines that any Parachute Tax is payable by Executive, the Company
shall pay the required Gross-Up Payment to, or for the benefit of, Executive
within five business days after receipt of such determination and calculations.
If the Accounting Firm determines that no Parachute Tax is payable by Executive,
it shall, at the same time as it makes such determination, furnish Executive
with an opinion that he has substantial authority not to report any Parachute
Tax on his federal tax return. Any good faith determination by the Accounting
Firm as to the amount of the Gross-Up Payment shall be binding upon the Company
and Executive absent a contrary determination by the Internal Revenue Service or
a court of competent jurisdiction; provided, however, that no such determination
shall eliminate or reduce the Company's obligation to provide any Gross-Up
Payments that shall be due as a result of such contrary determination. As a
result of the uncertainty in the application of Code Section 4999 at the time of
any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts or fails to
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pursue its remedies pursuant to Section 5(f) hereof and Executive thereafter is
required to make a payment of any Parachute Tax, Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has occurred
and to submit its determination and detailed supporting calculations to both the
Company and Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, Executive within five
business days after receipt of such determination and calculations.
(c) The Company and Executive shall each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
the Company or Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determination contemplated by Section
5(b) hereof.
(d) The federal tax returns filed by Executive (or any filing made by a
consolidated tax group which includes the Company) shall be prepared and filed
on a basis consistent with the determination of the Accounting Firm with respect
to the Parachute Tax payable by Executive. Executive shall make proper payment
of the amount of any Parachute Tax, and at the request of the Company, provide
to the Company true and correct copies (with any amendments) of his federal
income tax return as filed with the Internal Revenue Service, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of Executive's federal income tax return, the Accounting Firm
determines in good faith that the amount of the Gross-Up Payment should be
reduced, Executive shall within five business days pay to the Company the amount
of such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Sections
5(b) and (d) hereof shall be borne by the Company. If such fees and expenses are
initially advanced by Executive, the Company shall reimburse Executive the full
amount of such fees and expenses within five business days after receipt from
Executive of a statement therefor and reasonable evidence of his payment
thereof.
(f) In the event that the Internal Revenue Service claims that any
payment or benefit received under this Agreement constitutes an "excess
parachute payment" within the meaning of Code Section 280G(b)(1), Executive
shall notify the Company in writing of such claim. Such notification shall be
given as soon as practicable but not later than 10 business days after Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the 30 day period
following the date on which Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive shall
(i) give the Company any information reasonably requested by the Company
relating to such claim; (ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including without limitation, accepting legal
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representation with respect to such claim by an attorney reasonably selected by
the Company and reasonably satisfactory to Executive; (iii) cooperate with the
Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold Executive harmless, on an after-tax
basis, for and against for any Parachute Tax or income tax or other tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses.
(g) The Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive on an interest-free basis, and shall indemnify and hold Executive
harmless, on an after tax basis, from any Parachute Tax (or other tax including
interest and penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
provided, further, that if Executive is required to extend the statue of
limitations to enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company's control of the
contest shall be limited to issues with respect to which a corporate deduction
would be disallowed pursuant to Code Section 280G and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority. In addition, no position
may be taken nor any final resolution be agreed to by the Company without
Executive's consent if such position or resolution could reasonably be expected
to adversely affect Executive unrelated to matters covered hereto.
(h) If, after the receipt by Executive of an amount advanced by the
Company in connection with the contest of the Parachute Tax claim, Executive
receives any refund with respect to such claim, Executive shall promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto); provided, however, if the
amount of that refund exceeds the amount advanced by the Company Executive may
retain such excess. If, after the receipt by Executive of an amount advanced by
the Company in connection with a Parachute Tax claim, a determination is made
that Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify Executive in writing of its intent to contest
the denial of such refund prior to the expiration of 30 days after such
determination such advance shall be deemed to be in consideration for services
rendered after the Date of Termination.
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6. Successors and Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise,
including, without limitation, any successor due to a Change in Control) to the
business or assets of the Company, by agreement in form and substance reasonably
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including, without limitation, any persons directly or indirectly
acquiring the business or assets of the Company in a transaction constituting a
Change in Control (and such successor shall thereafter be deemed the "Company"
for the purpose of this Agreement), but will not otherwise be assignable,
transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Sections 6(a) and 6(b). Without limiting the generality or effect of
the foregoing, Executive's right to receive payments hereunder will not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by Executive's will or by the
laws of descent and distribution and, in the event of any attempted assignment
or transfer contrary to this Section 6(c), the Company shall have no liability
to pay any amount so attempted to be assigned, transferred or delegated.
7. Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as FedEx, UPS, or
DHL, addressed to the Company (to the attention of the Secretary of the Company)
at its principal executive office and to Executive at his principal residence,
or to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
8. Validity. If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it
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enforceable, valid or legal.
9. Governing Law; Jurisdiction. The laws of the state of [Utah] shall
govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under principles of
conflicts of law. Any suit, action or proceeding against Executive, with respect
to this Agreement, or any judgment entered by any court in respect of any of
such, may be brought in any court of competent jurisdiction in the State of
[Utah], and Executive hereby submits to the jurisdiction of such courts for the
purpose of any such suit, action, proceeding or judgment.
10. Confidentiality. Executive agrees that, without the prior written
consent of the Chairman of the Board of Directors of the Company or except as
required by law, Executive will not disclose to any person the existence or
contents of this Agreement or that discussions or negotiations are taking place
concerning a possible merger, sale or similar transaction between the Company
and a third party or any of the terms, conditions or other facts with respect to
any such possible transaction, including the status thereof.
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior agreements of the parties with respect to such
subject matter. No agreements or representations, oral or otherwise, expressed
or implied with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. References to
Sections are to references to Sections of this Agreement.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
[signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
WEIDER NUTRITION GROUP, INC.
By:
_______________________________________
Title:
_______________________________________
EXECUTIVE
_______________________________________
Bruce J. Wood
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