Exhibit 10.16
K RAFT F OODS I NC .
C HANGE IN C ONTROL P LAN FOR K EY E XECUTIVES
ADOPTED: APRIL 24,
2007
AMENDED: DECEMBER 31,
2008
K RAFT F OODS I NC .
C HANGE IN C ONTROL P LAN FOR K EY E XECUTIVES
1. Definitions
For purposes of the Change in
Control Plan for Key Executives, the following terms are defined as
set forth below (unless the context clearly indicates
otherwise):
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Affiliate
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Any entity
controlled by, controlling or under common control with the
Company.
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Annual Base
Salary
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Twelve times
the higher of (i) the highest monthly base salary paid or payable
to the Participant by the Company and its Affiliates in respect of
the twelve-month period immediately preceding the month in which
the Change in Control occurs, or (ii) the highest monthly base
salary in effect at any time thereafter, in each case including any
base salary that has been earned and deferred.
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Board
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The Board of
Directors of the Company.
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Annual
Incentive Target
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The annual
incentive award that the Key Executive would receive in a fiscal
year under the Management Incentive Plan or any comparable annual
incentive plan if the target goals are achieved.
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Annual
Incentive Target Percentage
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The Annual
Incentive Target as a percentage of Annual Base Salary.
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Cause
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As defined in
Section 3.2(b)(i) of this Plan.
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Change in
Control
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“Change in Control” means the
occurrence of any of the following events: (A) Acquisition of
20% or more of the outstanding voting securities of the Company by
another entity or group; excluding, however, the
following:
(1) any acquisition by the Company or any
of its Affiliates;
(2) any acquisition by an employee benefit
plan or related trust sponsored or maintained by the Company or any
of its Affiliates; or
(3) any acquisition pursuant to a merger or
consolidation described in clause (C) of this
definition.
(B) During any consecutive 24 month period,
persons who constitute the Board at the beginning of such period
cease to constitute at least 50% of the Board; provided that each
new Board member who is approved by a majority of the directors who
began such 24 month period shall be deemed to have been a member of
the Board at the beginning of such 24 month period;
(C) The consummation of a
merger or consolidation of the Company with another company, and
the Company is not the surviving company; or, if after such
transaction, the other entity owns, directly or indirectly, 50%
or
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more of the outstanding voting securities of the
Company; excluding, however, a transaction pursuant to which all or
substantially all of the individuals or entities who are the
beneficial owners of the outstanding voting securities of the
Company immediately prior to such transaction will beneficially
own, directly or indirectly, more than 50% of the combined voting
power of the outstanding securities entitled to vote generally in
the election of directors (or similar persons) of the entity
resulting from such transaction (including, without limitation, an
entity which as a result of such transaction owns the Company
either directly or indirectly) in substantially the same
proportions relative to each other as their ownership, immediately
prior to such transaction, of the outstanding voting securities of
the Company; or
(D) The consummation of a plan
of complete liquidation of the Company or the sale or disposition
of all or substantially all of the Company’s assets, other
than a sale or disposition pursuant to which all or substantially
all of the individuals or entities who are the beneficial owners of
the outstanding voting securities of the Company immediately prior
to such transaction will beneficially own, directly or indirectly,
more than 50% of the combined voting power of the outstanding
securities entitled to vote generally in the election of directors
(or similar persons) of the entity purchasing or acquiring the
Company’s assets in substantially the same proportions
relative to each other as their ownership, immediately prior to
such transaction, of the outstanding voting securities of the
Company.
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Code
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The Internal
Revenue Code of 1986, as amended from time to time.
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Committee
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The
Board’s Compensation Committee or a subcommittee thereof, any
successor thereto or such other committee or subcommittee as may be
designated by the Board to administer the Plan.
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Company
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Kraft
Foods Inc., a corporation organized under the laws of the
Commonwealth of Virginia, or any successor thereto.
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Date of
Termination
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If the
Participant’s employment is terminated by:
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(i)
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The Company for
Cause or by the Participant for Good Reason, the Date of
Termination shall be the date on which the Participant or the
Company, as the case may be, receives the Notice of Termination (as
described in Section 3.2(c)) or any later date specified therein,
as the case may be.
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(ii)
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The Company
other than for Cause, death or Disability, the Date of Termination
shall be the date on which the Company notifies the Participant of
such termination.
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(iii)
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Reason of death
or Disability, the Date of Termination shall be the date of death
of the Participant or the Disability Effective Date, as the case
may be.
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For the
avoidance of doubt, the Date of Termination shall in all events be
the date on which the Participant actually terminates
employment.
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Disability
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As defined in
Section 3.2(b) (ii).
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Disability
Effective Date
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As defined in
Section 3.2(b) (ii).
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Effective
Date
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April 24, 2007.
The plan is being amended effective December 31, 2008.
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Employer
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The Company or
any of its Affiliates.
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Excise
Tax
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The excise tax
imposed by Section 4999 of the Code, together with any interest or
penalties imposed with respect to such excise tax.
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Good
Reason
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As defined in
Section 3.2(a).
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Key
Executive
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An employee who
is employed on a regular basis by the Employer in a salary band D
or more senior position.
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Long-Term
Incentive Plan Award Target
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The long-term
cash award that the Participant would receive during a performance
cycle under the Long-Term Incentive Plan or any comparable annual
incentive plan if the target goals specified under the Long-Term
Incentive Plan or such annual incentive plan are
achieved.
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Long-Term
Incentive Plan Target Percentage
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The Long-Term
Incentive Plan Target as a percentage of Annual Base
Salary.
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Non-Competition Agreement
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The agreement
of a Participant, not to, without the Company’s prior written
consent, engage in any activity or provide any services, whether as
a director, manager, supervisor, employee, adviser, consultant or
otherwise, for a period of up to one (1) year following the
date of the Participant’s termination of employment with the
Company, with a company that is substantially competitive with a
business conducted by the Company.
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Non-Solicitation Agreement
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The agreement
of a Participant that he or she will not solicit, directly or
indirectly, any employee of the Company, or a surviving entity
following a Change in Control, to leave the Company and to work for
any other entity, whether as an employee, independent contractor or
in any other capacity, for a period of up to one (1) year following
the Participant’s Date of Termination of employment with the
Company.
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Non-U.S.
Executive
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A Key Executive
whose designated home country, for purposes of the Employer’s
personnel and benefits programs and policies, is other than the
United States.
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Participant
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A Key Executive
who meets the eligibility requirements of Section 2.1; provided,
however, that any Non-U.S. Executive who, under the laws of his or
her designated home country or the legally enforceable programs or
policies of the Employer in such designated home country, is
entitled to receive, in the event of termination of employment
(whether or not by reason of a Change in Control), separation
benefits at least equal in aggregate amount to the Separation Pay
prescribed under Section 3.3(b), of this Plan shall not be
considered a Participant for the purposes of this Plan.
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Payment
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Any payment or
distribution in the nature of compensation (within the meaning of
Section 280G (b) (2) of the Code) to or for the benefit of the
Participant, whether paid or payable pursuant to this Plan or
otherwise.
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Plan
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The Kraft Foods
Inc. Change in Control Plan for Key Executives, as set forth
herein.
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Plan
Administrator
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The third-party
accounting, actuarial, consulting or similar firm retained by the
Company prior to a Change in Control to administer this Plan
following a Change in Control.
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Separation
Benefits
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The amounts and
benefits payable or required to be provided in accordance with
Section 3.3 of this Plan.
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Separation
Pay
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The amount or
amounts payable in accordance with Section 3.3(b) of this
Plan.
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U.S.
Executive
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A Participant
whose designated home country, for purposes of the Employer’s
personnel and benefits programs and policies, is the United
States.
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2. Eligibility
2.1. Participation . Except
as set forth in the definition of Participant above, each employee
who is a Key Executive on the Effective Date shall be a Participant
in the Plan effective as of the Effective Date and each other
employee shall become a Participant in the Plan effective as of the
date of the employee’s promotion or hire as a Key
Executive.
2.2. Duration of
Participation . A Participant shall cease to be a Participant
in the Plan if (i) the Participant terminates employment with
the Employer under circumstances not entitling him or her to
Separation Benefits or (ii) the Participant otherwise ceases
to be a Key Executive, provided that no Key Executive may be so
removed from Plan participation in connection with or in
anticipation of a Change in Control that actually occurs. However,
a Participant who is entitled, as a result of ceasing to be a Key
Executive of the Employer, to receive benefits under the Plan shall
remain a Participant in the Plan until the amounts and benefits
payable under the Plan have been paid or provided to the
Participant in full.
3. Separation
Benefits
3.1. Right to Separation
Benefits . A Participant shall be entitled to receive from the
Company the Separation Benefits as provided in Section 3.3, if
a Change in Control has occurred and the Participant’s
employment by the Employer is terminated under circumstances
specified in Section 3.2(a), whether the termination is
voluntary or involuntary, and if (i) such termination occurs
after such Change in Control and on or
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before the second anniversary thereof, or
(ii) such termination is reasonably demonstrated by the
Participant to have been initiated by a third party that has taken
steps reasonably calculated to effect a Change in Control or
otherwise to have arisen in connection with or in anticipation of
such Change in Control and such Change in Control occurs within 90
days of the termination. Termination of employment shall have the
same meaning as “separation from service” within the
meaning of Treasury Regulation § 1.409A-1(h).
3.2. Termination of
Employment .
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(a)
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Terminations which give rise to Separation
Benefits under this Plan. The circumstances specified in this
Section 3.2(a) are any termination of employment with the
Employer by action of the Company or any of its Affiliates or by a
Participant for Good Reason, other than as set forth in
Section 3.2(b) below. For purposes of this Plan, “Good
Reason” shall mean:
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(i)
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the assignment
to the Participant of any duties substantially inconsistent with
the Participant’s position, authority, duties or
responsibilities in effect immediately prior to the Change in
Control, or any other action by the Company or the Employer that
results in a marked diminution in the Participant’s position,
authority, duties or responsibilities, excluding for this
purpose:
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a.
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changes in the
Participant’s position, authority, duties or responsibilities
which are consistent with the Participant’s education,
experience, etc.;
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b.
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an isolated,
insubstantial and inadvertent action not taken in bad faith and
that is remedied by the Company and/or the Employer promptly after
receipt of notice thereof given by the Participant;
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(ii)
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any material
reduction in the Participant’s base salary, annual incentive
or long-term incentive opportunity as in effect immediately prior
to the Change in Control;
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(iii)
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the Employer
requiring the Participant to be based at any office or location
other than any other location which does not extend the
Participant’s home to work location commute as of the time of
the Change in Control by more than 50 miles;
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(iv)
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the Employer
requiring the Participant to travel on business to a substantially
greater extent than required immediately prior to the Change in
Control; or
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(v)
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any failure by
the Company to 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 to
assume expressly and agree to perform this Plan in the same manner
and to the same extent that the Company would be required to
perform it if no such succession had taken place, as required by
Article 5.
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The Participant must notify the
Company of any event purporting to constitute Good Reason within 45
days following the Participant’s knowledge of its existence,
and the Company shall have 20 days in which to correct or remove
such Good Reason, or such event shall not constitute Good
Reason.
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(b)
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Terminations which DO NOT give rise to
Separation Benefits under this Plan. Notwithstanding Section 3.2(a), if a
Participant’s employment is terminated for Cause or
Disability (as those terms are defined below) or as a result of the
Participant’s death, or the Participant terminates his or her
own employment other than for Good Reason, the Participant shall
not be entitled to Separation Benefits under the Plan, regardless
of the occurrence of a Change in Control.
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(i)
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A termination
for “Cause” shall have occurred where a Participant is
terminated because of:
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a.
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Continued
failure to substantially perform the Participant’s
job’s duties (other than resulting from incapacity due to
disability);
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b.
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Gross
negligence, dishonesty, or violation of any reasonable rule or
regulation of the Company where the violation results in
significant damage to the Company; or
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c.
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Engaging in
other conduct which adversely reflects on the Company in any
material respect.
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(ii)
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A termination
upon Disability shall have occurred where a Participant is absent
from the Participant’s duties with the Employer on a
full-time basis for 180 consecutive days as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Participant or the
Participant’s legal representative. In such event, the
Participant’s employment with the Employer shall terminate
effective on the 30th day after receipt of such notice by the
Participant (the “Disability Effective Date”), provided
that, within the 30 days after such receipt, the Participant shall
not have returned to full-time performance of the
Participant’s duties.
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(c)
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Notice of
termination. Any
termination of employment initiated by the Employer for Cause, or
by the Participant for Good Reason, shall be communicated by a
Notice of Termination to the other party. For purposes of this
Plan, a “Notice of Termination” means a written notice
which (i) indicates the specific termination provision in this
Plan relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts an
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