Exhibit 10.1
SEVERANCE
AGREEMENT
THIS AGREEMENT, dated
, 200 is made by and between
Chiquita Brands International, Inc., a New Jersey corporation (the
“Company”), and
(the “Executive”).
WHEREAS, the Company considers it
essential to the best interests of its stockholders to foster the
continued employment of key management personnel; and
WHEREAS, the Board recognizes that,
as is the case with many publicly held corporations, the
possibility of a Change in Control exists and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders; and
WHEREAS, the Board has determined
that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the
Company’s management, including the Executive, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change
in Control;
NOW, THEREFORE, in consideration of
the premises and the mutual covenants herein contained, the Company
and the Executive hereby agree as follows:
1. Defined Terms . The
definitions of capitalized terms used in this Agreement are
provided in the last Section hereof.
2. Term of Agreement . The
Term of this Agreement shall commence on the date hereof and shall
continue in effect through the third anniversary of the date
hereof; provided, however, that if a Change in Control shall have
occurred during the Term, the Term shall not expire before the
second anniversary of such Change in Control.
3. Company’s Covenants
Summarized .
3.1 In order to induce the Executive
to remain in the employ of the Company and in consideration of the
Executive’s covenants set forth in Section 4 hereof, the
Company agrees, under the conditions described herein, to pay the
Executive the Severance Payments and the other payments and
benefits described herein. Except as provided in Section 9.1
hereof, no Severance Payments shall be payable under this Agreement
unless there shall have been a termination of the Executive’s
employment with the Company during the Term and following a Change
in Control described in Section 6.1 hereof.
3.2 This Agreement shall not be
construed as creating an express or implied contract of employment
and, except as otherwise agreed in writing between the Executive
and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
3.3 If the Executive materially
breaches any of the terms of this Agreement, the Company shall
immediately be entitled, in its sole discretion, to terminate its
obligations to the Executive under this Agreement.
3.4 If Executive is now, or at any
time during the term of this Agreement becomes, employed by a
subsidiary of the Company (including an indirect subsidiary of the
Company), (a) all references herein to his employment, or
termination of employment, by or with the Company shall, except
where the context otherwise indicates, be deemed to be references
to his employment, or termination of employment, by or with such
subsidiary and (b) the Company shall have the right to cause
such subsidiary to pay amounts and provide other benefits due to
the Executive under this Agreement on the Company’s behalf,
provided that nothing in this clause (b) shall relieve the
Company of its obligation to cause all such amounts to be paid and
such benefits to be provided to the Executive when due. The
transfer of the Executive to the employ of the Company or any
subsidiary of the Company shall not constitute a termination of his
employment for purposes of this Agreement.
4. The Executive’s
Covenants .
4.1 The Executive shall execute a
release of claims against the Company substantially in the form set
forth as Exhibit A hereto, at such time and in such manner as may
reasonably be requested by the Company, in connection with the
Executive’s termination of employment under the terms of this
Agreement and as a condition to any payment or other provision of
benefits by the Company hereunder.
4.2 Following termination of his
employment with the Company, the Executive shall not use or
disclose confidential information with respect to the Company or
any of its subsidiaries to any person not authorized by the Company
to receive such information, and the Executive shall assist the
Company, in such manner as may reasonably be requested by the
Company, in any litigation in which the Company or any of its
subsidiaries is or may become involved. The Executive’s
obligations under this Section 4.2 shall not be limited by the
Term of this Agreement and shall continue in full force following
the expiration of this Agreement.
4.3 For a period extending until
twenty-four (24) months after a termination of the
Executive’s employment during the Term and following a Change
in Control, the Executive shall not directly or indirectly
(a) solicit or attempt to solicit any employee to leave the
employ of the Company; (b) engage or hold an interest in any
company listed in Exhibit B hereto or any subsidiary or affiliate
of such business (the “Competing Businesses”), or
directly or indirectly have any interest in, own, manage, operate,
control, be connected with as a stockholder (other than as a
stockholder of less than five percent (5%)), joint venturer,
officer, director, partner, employee or consultant, or otherwise
engage or invest or participate in, any business conducted by a
Competing Business; or (c) indirectly interfere with or
disrupt any relationship, contractual or otherwise, between the
Company and its customers, suppliers, distributors or other similar
parties or contact any customer for the purpose of influencing the
directing or transferring of any business or patronage away from
the Company.
5. Compensation Other Than
Severance Payments; Adjustment of Long-Term Performance Awards
.
5.1 If the Executive’s
employment shall be terminated for any reason during the Term and
following a Change in Control, the Company shall pay the
Executive’s full salary to the Executive through the Date of
Termination at the rate in effect immediately prior to the Date of
Termination or, if higher, the rate in effect immediately prior to
the Change in Control, together with all compensation and benefits
(including without limitation, pay for accrued but unused vacation)
payable to the Executive through the Date of Termination under the
terms of the Company’s compensation and benefit plans,
programs or arrangements as in effect immediately prior to the Date
of Termination.
5.2 If the Executive’s
employment shall be terminated for any reason during the Term and
following a Change in Control, the Company shall provide to the
Executive the Executive’s normal post-termination
compensation and benefits (including but not limited to
outplacement services and, if the Executive’s place of
employment was outside the United States, all benefits under the
Company’s repatriation policy to which the Executive would be
entitled if there were approval by all Company departments whose
approval is required under such policy) as such payments and
benefits become due. Such post-termination compensation and
benefits shall be determined under, and paid in accordance with,
the Company’s retirement, insurance and other compensation or
benefit plans, programs, policies and arrangements as in effect
immediately prior to the Date of Termination.
5.3 If, at the time of a Change in
Control, the Executive holds any cash or equity-based awards the
vesting of which was made contingent upon the attainment of
performance goals with respect to a performance period of greater
than one year (“LTIP Awards”), upon the occurrence of a
Change in Control, notwithstanding the terms of any such award (or
any plan under which the award is made), the performance goals with
respect to each such LTIP Award shall be deemed attained at the
target level and the vesting of each such award shall, subject to
Section 6.1 (C) hereof, be conditioned solely upon the
Executive’s continued employment through the remainder of the
applicable performance period, upon which date such LTIP Award
shall be immediately paid in full, unless a later payment date is
required in order to comply with Section 409A of the Code, in
which case such LTIP Award shall be paid out upon the earliest date
permissible without violation of Section 409A of the
Code.
6. Severance Payments
.
6.1 Subject to Section 6.2
hereof, if (1) a Change in Control occurs during the Term, and
(2) the Executive’s employment is terminated (other than
(A) by the Company for Cause, (B) by reason of death or
Disability, or (C) by the Executive without Good Reason) and
the Date of Termination in connection therewith occurs within two
(2) years after such Change in Control then the Company shall
pay the Executive the amounts, and provide the Executive the
benefits, hereinafter described in this Section 6.1
(“Severance Payments”), together with any payments that
may be due under Section 6.2 hereof, in addition to any
payments and benefits to which the Executive is entitled under
Section 5 hereof.
(A) In lieu of any further salary
payments to the Executive for periods subsequent to the Date of
Termination and in lieu of any severance benefit otherwise payable
by the Company or any of its subsidiaries to the Executive, the
Company shall pay to the Executive a lump sum severance payment, in
cash, equal to two (2.0) times the sum of (i) the
Executive’s base salary as in effect immediately prior to the
Date of Termination or, if higher, in effect immediately prior to
the Change in Control (the “Base Salary”), plus
(ii) the target annual bonus established for the Executive
under the bonus plan maintained by the Company in respect of the
fiscal year in which occurs the Date of Termination (or, if higher,
in respect of the fiscal year in which occurs the Change in
Control). If, notwithstanding the foregoing provision that the lump
sum severance is to be in lieu of any severance benefit otherwise
payable, the Company or any of its subsidiaries is required by
applicable law to pay such a benefit, the Company’s
obligation to pay such lump sum severance hereunder shall be offset
and reduced by the amount of the benefit required to be paid by
applicable law. The amounts payable under this Section 6.1(A)
shall be reduced dollar-for-dollar for any salary and other
compensation payments made pursuant to Section 7.4
hereof.
(B) For the 24-month period
immediately following the Date of Termination, the Company shall
arrange to provide the Executive and his dependents with life,
disability, accident and health insurance benefits substantially
similar to those provided to the Executive and his dependents
immediately prior to the Date of Termination (or, if more favorable
to the Executive, those provided to the Executive and his
dependents immediately prior to the Change in Control), at no
greater cost to the Executive on an after-tax basis than the cost
to the Executive immediately prior to such date or occurrence.
Benefits otherwise receivable by the Executive pursuant to this
Section 6.1(B) shall cease if benefits of the same type are
received by or made available to the Executive by a subsequent
employer during the applicable period set forth above (and any such
benefits received by or made available to the Executive shall be
reported to the Company by the Executive). If the Severance
Payments shall be decreased pursuant to Section 6.2(B) hereof,
and the Section 6.1(B) benefits which remain payable after the
application of Section 6.2 hereof are thereafter discontinued
pursuant to the immediately preceding sentence, the Company shall,
no later than five (5) business days following such
discontinuation, pay to the Executive the least of (a) the
amount of the decrease made in the Severance Payments pursuant to
Section 6.2 hereof, (b) the value of the discontinued
Section 6.1(B) benefits, or (c) the maximum amount which
can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of Section 280G of the
Code. The time period during which benefits are payable under this
Section 6.1(B) shall be reduced by the amount of time benefits
are paid to Executive pursuant to Section 7.4
hereof.
(C) Notwithstanding any provision of
any incentive, stock, retirement, savings or other plan to the
contrary, as of the Date of Termination, (i) the Executive
shall be fully vested in (1) all then outstanding options to
acquire stock of the Company (or if such options have been assumed
by, or replaced with options for shares of, a parent, surviving or
acquiring company, such assumed or replacement options), and all
then outstanding restricted shares of stock of the Company (or the
stock of any parent, surviving or acquiring company into which such
restricted shares have been converted or for which they have been
exchanged) and all other equity or equity-based awards held by the
Executive immediately prior to termination, other than LTIP Awards,
which are governed by the last sentence of this
Section 6.1(C), (2) all accrued basic match and
incremental match employer contributions under the Company’s
Capital Appreciation Plan, and (3) to the extent permissible
under the Code and the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), all amounts credited to his
account under the Company’s 401(k) Savings and Investment
Plan which are attributable to employer contributions; and
(ii) all stock options referred to in clause (i) above
shall remain exercisable until the earlier of (x) the 1st
anniversary of the Date of Termination or (y) the otherwise
applicable expiration date of such option; provided, however, that
if the Date of Termination is more than one year after the date of
a Change of Control, then the foregoing provisions of this
(ii) shall apply only to the extent such application would not
cause the stock option to be subject to Section 409A of the
Code, and if any stock options would be subject to
Section 409A of the Code, such options shall remain
exercisable in accordance with the terms of the applicable award
agreement and stock option plan rather than the terms of this
Agreement. To the extent that the full vesting of the Executive
under clause (i)(3) of the preceding
sentence would violate either ERISA or the Code,
the Company shall pay to the Executive a lump sum amount, in cash,
equal to the amount which cannot become fully vested. With respect
to LTIP Awards held by the Executive upon the Date of Termination,
the Executive will become fully vested (and paid in accordance with
Section 5.3) in a pro-rata portion of each such award upon the
Date of Termination, determined by multiplying the total amount of
shares or cash the Executive would have been entitled to had the
Executive remained employed through the entire applicable
performance period (giving effect to Section 5.3) by a
fraction, the numerator of which will be the number of days in such
performance period which have elapsed as of the Date of Termination
and the denominator of which is the total number of days in the
performance period.
(D) The Company shall pay to the
Executive a lump sum amount, in cash, equal to the
Executive’s target annual bonus under the bonus plan
maintained by the Company in respect of the fiscal year in which
occurs the Date of Termination (or, if higher, in respect of the
fiscal year in which occurs the Change of Control) multiplied by a
fraction, the numerator of which is the number of days in such
fiscal year through and including the Date of Termination, and the
denominator of which is 365.
6.2 (A) Except as otherwise
provided in Section 6.2(B), if the Severance Payments together
with any payment or benefit received or to be received by the
Executive in connection with a Change in Control or the termination
of the Executive’s employment (whether pursuant to the terms
of this Agreement or otherwise) (all such payments and benefits,
excluding the Gross-Up Payment, being hereinafter called
“Total Payments”) will be subject (in whole or part) to
the Excise Tax, then the Company shall pay to the Executive an
additional amount (the “Gross-Up Payment”) such that
the net amount retained by the Executive, after deduction of any
Excise Tax on the Total Payments and any federal, state and local
income and employment taxes and Excise Tax upon the Gross-Up
Payment, shall be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay federal income taxes at the highest marginal rate
of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and localities
of the Executive’s residence and employment, as applicable,
on the Date of Termination, net of the maximum reduction in federal
income tax which could be obtained from deduction of such state and
local taxes.
(B) If the Total Payments would (but
for this Section 6.2(B)) be subject (in whole or part) to the
Excise Tax, but the aggregate value of the portion of the Total
Payments which are considered “parachute payments”
within the meaning of Section 280G(b)(2) of the Code is less
than 330 percent of the Executive’s Base Amount, then
subsection (A) of this Section 6.2 shall not apply, no
Gross-Up Payment shall be made to Executive and the cash Severance
Payments shall be reduced (if necessary, to zero), and all other
Severance Payments shall thereafter be reduced (if necessary, to
zero), to the extent necessary to cause the Total Payments not to
be subject to the Excise Tax.
(C) For purposes of determining
whether any of the Total Payments will be subject to the Excise Tax
and the amount of such Excise Tax, (i) all of the Total
Payments shall be treated as “parachute payments”
within the meaning of Section 280G(b)(2) of the Code, unless
in the opinion of tax counsel (“Tax Counsel”)
reasonably acceptable to the Executive and selected by the Company,
such other payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of
Section 280G(b)(4)(A) of the Code, (ii) all “excess
parachute payments” within the meaning of
Section 280G(b)(l) of the Code shall be treated as subject to
the Excise Tax unless, in the opinion of the Tax Counsel, such
excess parachute payments (in whole or in part) represent
reasonabl
