Document:

Unassociated Document

Exhibit 10.4

SMART BALANCE, INC.

SECOND AMENDED AND RESTATED STOCK AND AWARDS PLAN

STOCK OPTION GRANT NOTICE AND AGREEMENT

To:  «Name» (“you”)

 

Smart Balance, Inc. (the “Company”) is pleased to confirm that you have been granted a stock option award (the “Option”), effective «Grant_Date» (the “Grant Date”).  Your Option is subject to the terms of this Stock Option Grant Notice and Agreement (this “Agreement”) and the Second Amended and Restated Smart Balance, Inc. Stock and Awards Plan (the “Plan”), which is incorporated into this Agreement by reference.  Initially capitalized terms used in this Agreement and defined in the Plan shall have the meanings given to such terms in the Plan.  Copies of the Plan are available from the Compensation Committee of the Company’s Board of Directors (“Committee”).

 

1.      Option Grant.

 

Your Option permits you to purchase, on the terms and conditions set forth in this Agreement, the number of shares (the “Option Shares”) of the Company’s common stock (the “Common Stock”), at the exercise price (the “Exercise Price”) set forth in the following table.

 

	
Number of Option Shares

	  	
Exercise Price Per Option Share

	
«Total_Options»

	  	
«Exercise_Price»

2.      Option Type.

 

Your Option is a non-qualified stock option and is intended to conform in all respects with the Plan. This Option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

3.      Term of Option.

 

As a general matter, your right to exercise the Option will expire on the tenth anniversary of the Grant Date (the “Expiration Date”).  As provided below, your right to exercise the Option may expire prior to the Expiration Date, if you die or your employment with the Company terminates.

 

4.      Vesting.

 

Your right to exercise the Option with respect to the Option Shares will vest over time in accordance with the following schedule, provided you are employed with the Company or any of its Subsidiaries (collectively, the “Smart Balance Companies”) on the applicable Anniversaries of the Grant Date listed below.

 

  

 

  

 

	
Anniversary of Grant

Date

	  	
Vested Percentage of Option

	
1st Anniversary

	  	
25%

	
2nd Anniversary

	  	
50%

	
3rd Anniversary

	  	
75%

	
4th Anniversary

	  	
100%

 

Except as otherwise provided in Section 7 below, if your employment with the Smart Balance Companies terminates you will forfeit that portion of the Option that is not vested on the date of your termination.

 

5.      Change in Control Vesting.

 

In the event that a Change of Control occurs with respect to the Company, any portion of your Option that is not vested shall vest, and become exercisable, upon such Change in Control.

 

6.      Exercise.

 

Prior to the Expiration Date and at any time during your employment with the Smart Balance Companies, you may exercise all or a portion of your Option, to the extent vested, by designating the number of Option Shares to be acquired in accordance with the exercise procedures established by the Committee from time to time.  Your right to exercise the Option to the extent vested following the date your employment terminates will depend on the reason for such termination, as described in Section 7 below.

 

You must pay to the Company at the time of exercise the sum of (i) the full amount of the Exercise Price for the number of Option Shares to be acquired and (ii) an amount equal to the aggregate minimum federal, state and local income and employment taxes that the Company is required to withhold and deposit on behalf of you with respect to your exercise (“Tax Obligation”).

 

You may elect to pay the Exercise Price or your Tax Obligation by having the Company reduce the number of Option Shares you receive upon such exercise.  Alternatively, you may pay the Exercise Price or your Tax Obligation:

 

a.           in cash;

 

b.           by surrendering to the Company previously acquired shares of Common Stock having a Fair Market Value at the time of exercise equal to the Exercise Price or Tax Obligation; or

 

c.           to the extent permitted by applicable law, by delivery of irrevocable instructions to a broker to (1) promptly deliver to the Company the amount of sale proceeds from the Option Shares or other proceeds to pay the Exercise Price or the Tax Obligation, and (2) deliver to you the balance of the Option Share proceeds in the form of cash or shares of Common Stock.

 

  

- 2 -

  

 

If you pay the Exercise Price or your Tax Obligation by surrender of shares of Common Stock, you must also submit proof acceptable to the Company substantiating your ownership of those shares.  The value of previously acquired shares of Common Stock used to pay the Exercise Price (either directly or by attestation) of the Option Shares to be acquired or your Tax Obligation shall be equal to the aggregate Fair Market Value  of such previously acquired shares of Common Stock on the date of the exercise.  Your Option will be considered finally exercised on the date on which your payment of the Exercise Price and Tax Obligation is received by the Company.  By exercising any portion of the Option, you are accepting all of the terms and conditions specified in this Agreement.

 

7.      Impact of Termination of Employment on Option.

 

Except as otherwise expressly provided in this Section 7 or otherwise agreed to by the Committee, if your employment with the Smart Balance Companies terminates, (i) you will forfeit that portion of your Option that is not vested on the date of your termination and (ii) you will have a limited period in which to exercise such portion of any Option as was vested on the date of your termination.  The Committee, in its sole discretion, shall be authorized to determine the nature of any termination of employment and your rights under this Section 7 as a result of such termination and such determination shall be binding for all purposes under this Section 7.

 

(a)           Death or Disability. If you die or if the Company elects to terminate your employment with the Smart Balance Companies due to your Disability, (i) your Option to the extent not previously vested will vest and become non-forfeitable as of the date of your death or the date your employment terminates due to your Disability and (ii) your Option may be exercised thereafter at any time that is both before the Expiration Date and within one year of the date of your death or termination.  To the extent not previously exercised, your Option will terminate and may not be exercised after the earlier of the Expiration Date or the first anniversary of the termination of your employment due to your death or Disability.

 

Your employment will be considered to have been terminated due to your Disability if the Board determines, in its sole discretion, that at the time your employment terminates you were unable to perform any material portion of your assigned duties and responsibilities, with or without accommodation, due to a mental or physical condition that is expected to last indefinitely.  In making this determination, the Committee may rely upon such information as it deems necessary or appropriate.

 

(b)           Voluntary Termination.  If you voluntarily terminate your employment with the Smart Balance Companies, (i) your Option to the extent not previously vested will terminate and be forfeited as of the date your employment terminates and (ii) your Option, to the extent vested, may be exercised during the 90 day period immediately following the date your employment terminates.  Any vested portion of the Option which remains unexercised will be forfeited, and your right to exercise that portion of the Option shall terminate, on the 91st day following the date your employment terminates.

 

  

- 3 -

  

 

(c)           Involuntary Termination.  If your employment with the Smart Balance Companies is terminated by the Company other than for Cause, (i) your Option to the extent not previously vested will terminate and be forfeited as of the date your employment terminates and (ii) your Option, to the extent vested, may be exercised during the 90 day period immediately following the date your employment terminates.  Any vested portion of the Option which remains unexercised will be forfeited, and your right to exercise that portion of the Option shall terminate, on the 91st day following the date your employment terminates.

 

d)           Termination for Cause.  If your employment with the Smart Balance Companies is terminated for Cause, your Option will be forfeited and your right to exercise the Option, whether or not vested, shall terminate as of the date your employment terminates.

 

(e)           Non-Employee Option Holders. For purposes of this Agreement, (i) with respect to an individual who is an independent member of the Board, the terms “employee”, “employed” or “employment” shall refer to your service as a member of the Board and (ii) with respect to option holders who are independent service providers to the Company, the terms “employed” or “employment” shall refer to the term of the service relationship between you and the Company.

 

8.      Adjustments In Capitalization.

 

In the event of any dividend or other distribution (in whatever form), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar transaction or event that affects the Common Stock, the Committee shall adjust the terms of the Option, to the extent necessary, in its sole discretion, in order to prevent dilution or enlargement of the benefits or potential benefits of the Option.    However,  in no event shall the Committee adjust the terms of the Option in a manner which could cause the Option  to be treated as the grant of a new Option for purposes of Section 409A of the Code and Treas. Reg. §§1.409A-2 through 1.409A-6 or cause the Company to incur a new compensation charge for financial reporting purposes.

 

9.      Rights as a Stockholder.

 

You will have no rights as a stockholder with respect to any Option Shares until and unless you exercise the Option and shares of Common Stock have been transferred to you.

 

10.      Public Offer Waiver.

 

By executing this Agreement, you acknowledge and confirm your understanding that your rights under the Plan arise strictly from your status as an employee of or service provider to the Smart Balance Companies and that the Company’s grant of the Option to you is not an offer of securities made to the general public.

 

  

- 4 -

  

11.      Transferability of Option Shares.

 

You hereby agree not to offer, sell or otherwise attempt to dispose of any Common Stock covered by the Option Shares in a way which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law or the laws of any other country) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, any other state or federal law, or the laws of any other country.  The Company reserves the right to place restrictions on any Common Stock you may receive as a result of your exercise of the Option.

 

12.      Conformity with the Plan.

 

This Option is intended to conform in all respects with, and is subject to, all applicable provisions of the Plan.  Inconsistencies between this Agreement and the Plan shall be resolved in accordance with the terms of the Plan.  By accepting your Option, you agree to be bound by the terms and conditions of this Agreement, the Plan, and any and all conditions established by the Company in connection with Options issued under the Plan. You also understand that this Agreement does not give you any legal or equitable right (other than those rights constituting the Agreement itself) against the Smart Balance Companies directly or indirectly, or give rise to any cause of action at law or in equity against the Smart Balance Companies.

 

13.      Interpretations.

 

Any dispute, disagreement or question which arises under, or as a result of, or in any way relates to the interpretation, construction or application of terms of this Agreement or the Plan will be determined and resolved by the Committee or its authorized delegate.  The Committee’s determination or resolution will be final, binding and conclusive for all purposes.

 

14.      No Rights to Continued Employment or Future Awards.

 

You hereby acknowledge and understand that this Option shall not form part of any contract of employment between you and any of the Smart Balance Companies.  Nothing in the Agreement or the Plan confers on you any right to continue in the employ of the Smart Balance Companies or in any way affects the Smart Balance Companies’ right to terminate your employment without prior notice at any time or for any reason.  You further acknowledge that the Option is being granted to you in consideration of your performance of future services for the Smart Balance Companies and is not under any circumstances to be considered compensation for services you performed for the Smart Balance Companies in the past.

 

You acknowledge and agree that the granting of your Option is at the discretion of the Committee and that acceptance of your Option is no guarantee that future Options will be granted under the Plan.  Notwithstanding anything in this Agreement or the Plan to the contrary, the Company may amend this Agreement or the Plan, including but not limited to modifications to any of the rights granted to you under this Agreement, without your consent, at such time and in such manner as the  Company may consider necessary or desirable, to reflect changes in law.  You also understand that the Company may amend, resubmit, alter, change, suspend, cancel, or discontinue the Plan at any time without limitation.

 

  

- 5 -

  

15.      Consent to Transfer Personal Data.

 

You hereby acknowledge and consent to the collection, use, processing and transfer of your personal data as described in this Section 15.  You are not obliged to consent to such collection, use, processing and transfer of personal data.  However, failure to provide your consent may affect your ability to participate in the Plan.  As part of your employment with the Smart Balance Companies, the Company may maintain certain personal information about you, that may include your name, home address and telephone number, fax number, email address, family size, marital status, sex, beneficiary information, emergency contacts, passport / visa information, age, language skills, drivers license information, date of birth, birth certificate, social security number or other employee identification number, nationality, C.V. (or resume), wage history, employment references, job title, employment or severance contract, current wage and benefit information, personal bank account number, tax related information, plan or benefit enrollment forms and elections, option or benefit statements, any shares of stock or directorships in the Company, and details of all options or any other entitlements to shares of stock awarded, canceled, purchased, vested, unvested or outstanding in your favor (the “Data”).  The Company maintains the Data for the purpose of managing and administering the Plan.  The Smart Balance Companies may transfer Data amongst themselves as needed to implement, administer and manage your participation in the Plan, and the Company may also transfer Data to third parties assisting the Company in the implementation, administration and management of the Plan.  These third parties may be located throughout the world, including within the United States.  By voluntarily acknowledging receipt of the Option Shares, you are authorizing these third parties to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any transfer of the Data that may be required to administer the Plan and/or  to permit a broker, or other third party you have chosen, to hold any shares of Company Common Stock you may acquire pursuant to the Plan.  You may, at any time, review the Data, require any necessary amendments to it or withdraw your consent to its collection by contacting the Company in writing; however, withdrawing your consent may affect your ability to participate in the Plan.

 

16.      Miscellaneous.

 

a)           Modification.  The Committee (or its authorized delegate) shall make all determinations regarding the number of Option Shares granted to you and the conditions set forth in this Agreement.  The Committee shall maintain a copy of your Agreement in its records.  The Committee may amend or modify this Agreement in any manner, provided that the Committee would have had the authority to do so under the Plan.  However, no amendment or modification of this Agreement shall impair your rights under this Agreement without your express consent.  Any such amendment, modification or supplementation of this Agreement must be in writing and signed by both you and a representative of the Company.

 

b)           Governing Law.  This Agreement and the Plan shall be construed in accordance with the laws of the State of Delaware, without reference to any conflict of law principals.

 

  

- 6 -

  

 

c)           Successors and Assigns.  Except as otherwise provided herein, this Agreement will bind and inure to the benefit of the respective successors and permitted assigns of you and the Company, whether so expressed or not.

 

d)           Waiver.  The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or any other provision hereof.

 

e)           Severability.  Whenever feasible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

 

IN WITNESS WHEREOF, the undersigned have executed this Stock Option Grant Notice and Agreement effective as of the day and year first above written.

 

	  	
COMPANY:

	  	  	  	  
	  	  	
SMART BALANCE, INC.

	  	  	  	  
	  	  	
By: 

	  
	  	  	  	  
	  	

GRANTEE:

	  	  	  	  
	  	  	  	  
	  	  	  	
«Name»

 

  

- 7 -Unassociated Document

Exhibit 10.5

 

SMART BALANCE, INC.

SEVERANCE AGREEMENT

 

This Smart Balance, Inc. Severance Agreement (the “Agreement”) is made and entered into as of January 1, 2012 (the “Effective Date”) by and between Smart Balance, Inc., a Delaware corporation (the “Company”), and «Name» (“Employee”).

 

Recitals

 

A.           The Employee is a key employee of the Company or a Company Entity;

 

B.           The Board of Directors of the Company (“Board”) has determined that it is essential and in the best interest of the Company and its stockholders to retain the services of the Employee and to ensure the Employee’s continued dedication and efforts, without undue distraction or concern, and

 

C.           The Company and Employee are entering into this Agreement to provide certain incentives and protections to the Employee and certain covenants to the Company in the event of a termination of the Employee's employment with the Company.

 

D.           The Company and Employee are simultaneously entering into a Restricted Stock Unit Grant Notice and Agreement (the "Restricted Stock Unit Agreement") [and a Stock Option Grant Notice and Agreement (the "Stock Option Agreement")] to be effective as of January 1, 2012.

 

Agreement

 

In consideration of the respective agreements of the parties contained herein, as well as the benefits and mutual covenants contained in the Restricted Stock Unit Agreement [,the Stock Option Agreement] and for other good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, it is hereby agreed as follows:

 

1.           Term of Agreement.  This Agreement shall commence as of the Effective Date and shall continue in effect until the fourth anniversary of the Effective Date (the “Expiration Date”); provided, however, that commencing on the Expiration Date and on each anniversary of the Expiration Date thereafter, the term of this Agreement shall automatically be extended for one (1) year following such date unless the Company or the Employee shall have provided written notice to the other at least ninety (90) days prior to such date that the term of this Agreement shall not be so extended.

 

2.           Definitions.

 

(a)           Accrued Compensation.  “Accrued Compensation” means an amount which shall include all amounts earned, accrued, payable to or awarded through the Termination Date (as hereinafter defined) but not paid as of the Termination Date, including (a) base salary, (b) reimbursement for reasonable and necessary expenses incurred by the Employee on behalf of the Company during the period ending on the Termination Date, (c) accrued but unused vacation pay, and (d) bonuses, commissions and incentive compensation (other than the Target Bonus (as hereinafter defined)).  References to Accrued Compensation under this Agreement shall not obligate the Company or Company Entity to pay such amounts twice (e.g., under this Agreement and under another agreement or obligation) and such references are meant only to clarify obligations outside the scope of this Agreement and not to create additional rights hereunder.

  

  

  

 

(b)           Base Amount.  “Base Amount” means the greater of the Employee’s annual base salary (i) at the rate in effect immediately prior to the Termination Date or (ii) at the highest rate in effect at any time during the three (3) year period prior to the Termination Date, and shall include all amounts of base salary that are deferred under the employee benefit plans of the Company or any other agreement or arrangement.

 

(c)           Bonus Amount.  “Bonus Amount” means the greater of (i) the actual bonus amount earned by the Employee under the Company’s Amended and Restated Financial Performance Incentive Program for the fiscal year prior to the fiscal year in which the Termination Date occurs (ii) the actual bonus amount earned by the Employee under the Company’s Amended and Restated Financial Performance Incentive Program for the fiscal year in which the Termination Date occurs; or (iii) [     ]% of the greater of the Employee’s annual base salary (x) at the rate in effect immediately prior to the Termination Date or (y) at the highest rate in effect at any time during the three (3) year period prior to the Termination Date.

 

(d)           Board.  “Board” means the Board of Directors of the Company as from time to time constituted.

 

(e)           Cause.  “Cause” means with respect to the Employee any of the following as determined by the Board, in its sole discretion, (a) fraud or intentional misrepresentation, (b) embezzlement, misappropriation or conversion of assets or opportunities of the Company or any Company Entity, (c) acts or omissions that are in bad faith or constitute gross negligence, or willful or reckless misconduct, or (d) conviction, plea of guilty or nolo contendere, or judicial determination of civil liability, based on a federal or state felony or serious criminal or civil offense.

 

(f)           Change of Control.  “Change of Control” means the occurrence of any of the following: events with respect to the Company:

 

(i)           any Person (other than an Exempt Person) acquires securities of the Company representing fifty percent (50 percent) or more of the combined voting power of the Company’s then outstanding voting securities;

 

(ii)           any Person acquires, during the twelve (12) month period ending on the date of the most recent acquisition, securities of Company representing thirty percent (30) percent of Company’s then outstanding voting securities;

 

(iii)          a majority of the members of the  Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board serving immediately prior to such appointment or election; or

  

2

  

 

(iv)         any Person, during the twelve (12) month period ending on the date of the most recent acquisition, acquires assets of Company having a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of Company’s assets immediately before such acquisition or acquisitions;

 

but only if the applicable transaction otherwise constitutes a “change in control event” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and Treas. Reg. §1.409A-3(i)(5).

 

(g)          Change of Control Agreement.  "Change of Control Agreement" means the Amended and Restated Smart Balance, Inc. Change of Control Agreement between the Company and the Employee, dated as of April 1, 2010.

 

(h)          Company.  “Company” means Smart Balance, Inc., a corporation organized under the laws of the State of Delaware.

 

(i)           Company Entity.  “Company Entity” means any other entities that along with the Company is considered a single employer pursuant to Section 414(b) or (c) of the Code and the Treasury regulations promulgated thereunder, determined by applying the phrase “at least 50 percent” in place of the phrase “at least 80 percent” each place it appears in such Treasury regulations or Section 1563(a) of the Code.  The term “Company Entity” shall also include any entity so designated by the Board for legitimate business reasons in which the Company holds a controlling interest under Treas. Reg. § 1.414(c)-2(b)(2)(i), determined by applying the phrase “at least 20%” in the place of the phrase “at least 80 percent” each place it appears in such Treasury Regulation or Section 1563(a) of the Code.

 

(j)           Disability.  “Disability” means the Employee’s inability to perform any material portion of his or her assigned duties and responsibilities, with or without accommodation, due to a mental or physical condition that is expected to last indefinitely.

 

(k)           Exempt Person.  “Exempt Person” means (a) a trustee or other fiduciary holding securities under an employee benefit plan of the Company in such capacity, (b) a corporation or other entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, or (c) any Person beneficial stockholder or group, as defined by Rule 13d-5 of the Exchange Act, which holds as of the date hereof securities possessing more than twenty-five percent (25%) of the total combined voting power of the Company’s outstanding securities.

 

(l)           Good Reason. “Good Reason” means any one or more of the following conditions, but only if (x) such condition was not consented to by the Employee in advance or subsequently ratified by the Employee in writing, (y) such condition remains in effect thirty (30) days after the Employee gives written notice to the Board of the Employee’s intention to terminate his or her employment for Good Reason, which notice specifically identifies such condition, and (z) the Employee gives the notice referred to in (y) above within ninety (90) days of the initial existence of such condition:

 

(i)           any material diminution of the Employee’s authority, duties or responsibilities;

  

3

  

 

(ii)           any material diminution in the authority, duties, or responsibilities of the officer to whom the Employee is required to report, including the requirement that the Employee report to a corporate officer or employee rather than reporting to the Board of Directors of the Company.

 

(iii)          a material diminution of the Employee’s base compensation;

 

(iv)          a material diminution in the budget over which the Employee retains authority;

 

(v)           a material change in the geographic location at which the Employee must perform the Employee’s duties and responsibilities; or

 

(vi)          any other action or inaction by the Company or Company Entity that constitutes a material breach of this Agreement or any other agreement pursuant to which the Employee provides services to the Company or a Company Entity.

 

(m)           Person.  “Person” means a "person" as used in Sections 3(a)(9) and 13(d) of the Exchange Act or any group of Persons acting in concert that would be considered “persons acting as a group” within the meaning of Treas. Reg. §1.409A-3(i)(5).

 

(n)           Separation From Service.  “Separation from Service” means the termination of the Employee’s employment with the Company and all Company Entities, provided that, notwithstanding such termination of the employment relationship between the Employee and the Company and all Company Entities, the Employee shall not be deemed to have had a Separation from Service where it is reasonably anticipated that the level of bona fide services that the Employee will perform (whether as an employee or independent contractor) for the Company and all Company Entities following such termination would be twenty percent (20%) or more of the average level of bona fide services performed by the Employee (whether as an employee or independent contractor) for the Company and all Company Entities over the immediately preceding thirty-six (36) month period (or such lesser period of actual service).  In such event, Separation from Service shall mean the permanent reduction of the level of bona fide services to be performed by the Employee (whether as an employee or independent contractor) to a level that is less than twenty percent (20%) of the average level of bona fide services performed by the Employee (whether as an employee or independent contractor) during the thirty-six (36) month period (or such lesser period of actual service) immediately prior to the termination of the Employee’s employment relationship.  A Separation from Service shall not be deemed to have occurred if the Employee is absent from active employment due to military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed the greater of (i) six months or (ii) the period during which the Employee’s right to reemployment by the Company or any Company Entity is provided either by statute or contract.

 

(o)           Severance Multiplier.  "Severance Multiplier" means [1.5][2].

 

(p)           Specified Employee  “Specified Employee” means an employee of the Company or any Company Entity who is a “specified employee” as defined in Section 409A(a)(2)(b)(i) of the Code and Treas. Reg. §1.409A-1(i).  If the Employee is a key Employee as of the applicable identification date, the Employee shall be treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following such identification date.  The applicable identification date for purposes of this Agreement shall be September 30 of each year.

  

4

  

 

(q)           Target Bonus Amount.  “Target Bonus Amount” means with respect to the Employee for the fiscal year during which the Employee’s employment terminated [     ]% of the greater of the Employee’s annual base salary (i) at the rate in effect immediately prior to the Termination Date or (ii) at the highest rate in effect at any time during the three (3) year period prior to the Termination Date.

 

(r)           Termination Date.  For purposes of this Agreement, “Termination Date” shall mean (a) in the case of Employee’s death, Employee’s date of death, (b) in the case of Good Reason, the last day of Employee’s employment and, (c) in all other cases, the date specified in the Notice of Termination; provided, that if Employee’s employment is to be terminated by the Company due to Disability, such employment shall not be terminated if Employee returns to the full-time performance of his or her material duties prior to the date specified in the Notice of Termination.

 

3.           Termination of Employment.  If, during the term of this Agreement, Employee’s employment with the Company and all Company Entities terminates, and conditioned upon and subject to Employee’s execution of a release agreement referred to in Section 14 hereof, Employee shall be entitled to the following compensation and benefits following such termination:

 

(a)           If Employee’s employment with the Company and all Company Entities is terminated for Cause or by Employee other than for Good Reason, the Company shall pay to Employee only the Accrued Compensation.

 

(b)           If Employee’s employment with the Company and all Company Entities is terminated due to death or Disability, then the Company shall pay to Employee the Accrued Compensation, the Target Bonus Amount, and in the event that the Employee (or his beneficiary, if applicable) makes a timely election of COBRA continuation coverage for the Employee or his spouse or dependants under any group health plan provided by the Company, the Company shall either pay directly or reimburse Employee for the cost of all premiums for such coverage.

 

(c)           If Employee’s employment with the Company and all Company Entities shall be terminated without Cause or by the Employee for Good Reason, Employee shall be entitled to the following:

 

(i)           the Company shall pay Employee all Accrued Compensation;

 

(ii)           the Company shall pay Employee as severance pay, in lieu of any further compensation for periods subsequent to the Termination Date, an amount in cash equal to the sum of (A) the product of the Base Amount and the Severance Multiplier and (B) the product of the Bonus Amount and the Severance Multiplier; and

 

(iii)           in the event that the Employee makes a timely election of COBRA continuation coverage for the Employee or his spouse or dependants under any group health plan provided by the Company, the Company shall either pay directly or reimburse Employee for the cost of all premiums for such coverage.

  

5

  

 

(d)           Employee’s rights under any Company sponsored employee benefit plan, program or arrangement or with respect to any equity based incentives awarded to Employee shall be determined in accordance with the applicable plan or other operative document.

 

(e)           Following the later of the Termination Date or the Separation from Service, all cash amounts payable under Section 3(a), 3(b) or Section 3(c) shall be paid in a single lump sum on the tenth (10th) day following the date that the Employee has duly executed the release agreement referred to in Section 14 hereof, provided that the Employee has not revoked such agreement (or, if the Employee is subject to the six month delay in Section 3(j) below, the date it provides); provided further that  if the Termination Date or Separation from Service, whichever is later, occurs after November 15th of any calendar year, the payments shall be made on the later of (i) the tenth (10th) day following the date that the Employee has duly executed the release agreement referred to in Section 14 hereof, provided that the Employee has not revoked such agreement or (ii) January 1st of the following calendar year. Reimbursement payments of COBRA continuation premiums under Sections 3(b) or 3(c)(iii) above shall be made in a lump sum within fifteen (15) days of the date such premiums are paid by the Employee and in all events prior to the end of the Employee’s taxable year following the taxable year in which such premiums were paid by the Employee.

 

(f)           The Company shall be authorized to withhold from all payments to the Employee hereunder all amounts required to be withheld under applicable local, state or federal income and employment tax laws.

 

(g)           The Employee 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 the amount of any compensation or benefits provided to Employee in any subsequent employment.

 

(h)           The severance pay and other benefits provided for in this Section 3 shall be in lieu of any other severance or termination pay to which the Employee may be entitled under any general Company severance or termination plan, program, practice or arrangement, but shall be in addition to any other payments or benefits to which the Employee may become entitled (i) under any outstanding equity award agreements the Employee has with the Company or (ii) under the Change of Control Agreement, provided however, that in the event the Employee receives benefits pursuant to Sections 3(a) –(c) of the Change of Control Agreement, then Employee shall not be entitled to receive benefits pursuant to this Agreement, except to the extent of the excess, if any, of those benefits Employee would be entitled to receive under similar circumstances under Sections 3(a)-(c) hereof over the benefits to which Employee is entitled under Sections 3(a) – (c) of the Change of Control Agreement.

 

(i)           The Employee’s entitlement to any other benefits as a result of a termination of employment shall be determined in accordance with the Company’s employee benefit plans and other applicable programs, policies and practices then in effect, subject to Section 3(h) hereof.

  

6

  

 

(j)           Notwithstanding any other Section of this Agreement, if the Employee is a Specified Employee at the time of Employee’s Separation from Service, payments or distribution of property to Employee provided under this Agreement, to the extent considered amounts deferred under a non-qualified deferred compensation plan (as defined in Section 409A of the Code) shall be deferred until the six month anniversary of such Separation from Service and all such amounts that would have been paid during such period but for the deferral shall be paid immediately upon the six month anniversary of such Separation from Service to the extent required in order to comply with Section 409A of the Code and Treas. Reg. 1.409A-3(i)(2).

 

4.           Restrictive Covenants.  In consideration of the rights and benefits hereunder and the grants made to the Employee pursuant to the Restricted Stock Unit Agreement [and the Stock Option Agreement], which grants would not have been made but for Employee agreeing to be bound by this Section 4, the Company and the Employee hereby agree that the Employee will be bound by the following restrictive covenants.

 

(a)           Non-Competition.  In consideration of the rights and benefits hereunder and as provided in the Restricted Stock Unit Agreement [and the Stock Option Agreement], during the Restricted Period described below, the Employee shall not, directly or indirectly, without the prior written consent of the Company, own, manage, operate, join, control, be employed by, consult with or participate in the ownership, management, operation or control of, or be connected with (as a stockholder, partner, or otherwise), any business, individual, partner, firm, corporation, or other entity in the health and wellness sector of the packaged food and beverage industry within the United States or Canada that competes, directly or indirectly, with the Company or any subsidiary/affiliate of the Company; provided, however, that Employee may own any securities of any corporation which is engaged in such business and is publicly owned and traded, but in an amount not to exceed at any one time two percent (2%) of the class of a publicly traded stock or securities of such corporation.

 

The “Restricted Period” means the period the Employee is employed by the Company plus [eighteen (18) months] [two (2) years] from the Termination Date, provided however, that the Restricted Period shall terminate immediately upon a Change of Control.

 

(b)           Non-Solicitation.  In consideration of the rights and benefits hereunder and as provided in the Restricted Stock Unit Agreement [and the Stock Option Agreement], during the Restricted Period, the Employee shall not, either directly or indirectly, including, without limitation, by himself or by any other entity with which he is employed or affiliated (i) hire or solicit or in any manner attempt to influence or induce any employee or agent of the Company or any Company Entity to leave the employment of or modify its relationship with the Company or any Company Entity, provided however, that the foregoing shall not prevent the Employee from (x) placing a bona fide advertisement for employment not specifically targeted at employees of the Company or any Company Entity  or (y) hiring any employee of the Company or any Company Entity if such employee has been terminated by the Company or any Company Entity; (ii) influence or attempt to influence any of the vendors, prospective vendors, independent contractors, customers or prospective customers or agents of the Company or any Company Entity to stop doing business with the Company or any Company Entity or otherwise intentionally adversely affect the relationships with any such parties; or (iii) call upon any of the customers or prospective customers of the Company or any Company Entity or the purposes of soliciting or providing any products or services similar to those provided at the date hereof or hereafter by the Company or any Company Entity or which is known to be under development or actively considered by the Company or any Company Entity.

  

7

  

 

(c)              Nondisparagement; Cooperation.  The Employee shall not, at any time during the Restricted Period, make any public or private statement to the news media, to any Company competitor or client, or to any other individual or entity, if such statement would disparage any of the Company, any of their respective businesses or any director or officer of any of them or such businesses or would have a deleterious effect upon the interests of any of such businesses or the stockholders or other owners of any of them; provided, however, that the Employee shall not be in breach of this restriction if such statements consist solely of (i) private statements made to any officers, directors or employees of any of the Company by the Employee in the course of carrying out his duties pursuant to this Agreement or, to the extent applicable, his duties as a director or officer, or (ii) private statements made to persons other than clients or competitors of any of the Company (or their representatives) or members of the press or the financial community that do not have a material adverse effect upon any of the Company; and provided further that nothing contained in this Section 4(d) or in any other provision of this Agreement shall preclude the Employee from making any statement in good faith that is required by law, regulation or order of any court or regulatory commission, department or agency.

 

(d)              Enforcement.  The Employee acknowledges and agrees that the provisions of this Agreement, including Section 4, are reasonable and necessary for the successful operation of the Company.  The Employee further acknowledges that if the Employee breaches any provision of this Agreement, including Section 4, the Company will suffer irreparable injury.  The Employee and the Company further agree that the provisions of the covenants not to compete and solicit are reasonable and that the Company would not have entered into this Agreement or the Restricted Stock Unit Agreement but for the inclusion of such covenants herein.  It is therefore agreed that the Company shall have the right to enjoin any such breach or threatened breach, without posting any bond, if ordered by a court of competent jurisdiction.  The existence of this right to injunctive and other equitable relief shall not limit any other rights or remedies that the Company may have at law or in equity including, without limitation, the right to monetary, compensatory and punitive damages.  If any provision of this Agreement is determined by a court of competent jurisdiction to be not enforceable in the manner set forth herein, the Employee and the Company agree that it is the intention of the parties that such provision should be enforceable to the maximum extent possible under applicable law.

 

The provisions of this Section 4 shall survive any termination of this Agreement, and the existence of any claim or cause of action by the Employee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements of this Section 4; provided, however, that this paragraph shall not, in and of itself, preclude the Employee from defending himself against the enforceability of the covenants and agreements of this Section 4.

 

  

8

  

 

5.            Successors; Binding Agreement.

 

(a)           This Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns.  The Company shall require (i) any successors 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, and (ii) the parent entity, if any, of any such successors and assigns to guarantee the performance of any such successors and assigns hereunder.

 

(b)           Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by Employee or Employee’s beneficiaries or legal representatives, except by will or by the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Employee’s legal personal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

6.           Notice.  All notices, requests, demands, and other communications hereunder shall be in writing, and shall be delivered in person, by facsimile, or by certified or registered mail with return receipt requested.  Each such notice, request, demand, or other communication shall be effective: (a) if delivered by hand, when delivered at the address specified in this Section 6; (b) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 6 and confirmation is received; or (c) if given by certified or registered mail, three (3) days after the mailing thereof.  Notices to the Employee shall be delivered to the last mailing address that the Employee has provided to the Company for purposes of receiving tax statements and other notices.  Notices to the Company shall be delivered as follows:

 

Smart Balance, Inc.

115 West Century Road

Suite 260

Paramus, New Jersey 07625

Attn. General Counsel

Any party may change its address or other contact information for the purposes hereof by providing notice thereof to the other party in accordance with the foregoing provisions.

 

7.           Non-Exclusivity of Rights.  Nothing in this Agreement shall prevent or limit the Employee’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 as provided in Section 3(h)) and for which Employee may qualify, nor shall anything herein limit or reduce such rights as the Employee may have under any other agreements with the Company (except for any severance or termination agreement).  Amounts which are vested benefits or which the Employee 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.

 

8.           No Implied Employment Rights.  The Employee hereby acknowledges and agrees that nothing in this Agreement shall be construed to imply that his or her employment is guaranteed for any period of time.  The Employee understands and agrees that his or her employment is, unless otherwise specified in a written agreement signed by the Employee and a duly authorized officer of the Company or a Company Entity, “at will,” which means that either the Company or a Company Entity or the Employee can terminate the employment relationship at any time, with or without advance notice, for any reason or no reason, and with or without cause.  The Employee acknowledges and agrees that the only way that his or her “at will” employment relationship, if applicable, can be altered is by a written agreement signed by the Employee and a duly authorized officer of the Company or a Company Entity.

  

9

  

 

9.           Settlement Of Claims.  Employee hereby agrees that, to the extent permitted by law, the Company’s obligation to make payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be reduced by any amounts owed by the Employee to the Company including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee.

 

10.         Miscellaneous.  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 Employee 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 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 representation, oral or otherwise, express or implied, with respect to the subject matter hereof has been made by either party which is not expressly set forth in this Agreement.

 

11.         Governing Law.  This Agreement has been negotiated and executed in the State of New Jersey and is to be performed in New Jersey.  This Agreement shall be governed by and interpreted in accordance with the laws of the State of New Jersey, including all matters of construction, validity, performance, and enforcement, without giving effect to principles of conflict of laws.  Any dispute, action, litigation, or other proceeding concerning this Agreement shall be instituted, maintained, heard, and decided in the State of New Jersey.

 

12.         Severability.  If any provision of this Agreement, or the application thereof in any circumstance, is or becomes illegal, invalid or unenforceable, such provision shall be deemed severable and the invalidity or unenforceability of any such provision shall not affect the validity or enforceability of the other provisions hereof.

 

13.         Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements, if any, whether oral or written, between the parties hereto with respect to the subject matter hereof, including, but not limited to, any prior severance understandings or arrangements previously entered into between the Company and the Employee, but excluding the Change of Control Agreement or agreements evidencing any outstanding equity awards including, but not limited to, the Restricted Stock Unit Agreement [and the Stock Option Agreement].

 

14.         Severance and Release Agreement.  The Employee’s right to the severance payments under this Agreement shall be conditioned upon the Employee’s execution and delivery of a release agreement in a form attached hereto as Exhibit A.

  

10

  

 

15.           Remedies.  All rights, remedies, undertakings, obligations, options, covenants, conditions, and agreements contained in this Agreement shall be cumulative and no one of them shall be exclusive of any other.

 

16.           Legal Fees.  The Company shall pay directly or reimburse the Employee for all reasonable legal fees and expenses incurred by the Employee in disputing in good faith any issue under this Agreement relating to the termination of the Employee’s employment, or in seeking in good faith to obtain or enforce any benefit or right under this Agreement.  Such payments or reimbursements shall be made within five (5) business days after receipt by the Company of the Employee’s written request for payment or reimbursement accompanied by such evidence of the amount of fees and expenses incurred as the Company may reasonably request.  For purposes of this Section 16, any dispute by the Employee shall be presumed to be in good faith unless the Company establishes by clear and convincing evidence that the dispute was not in good faith.

 

17.           Interpretation.  The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any party.  Whenever the context requires, all words used in the singular will be construed to have been used in the plural, and vice versa.  The descriptive headings of the sections and subsections of this Agreement are inserted for convenience only and shall not control or affect the interpretation or construction of any of the provisions herein.

 

18.           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

19.           Further Documents and Acts. Each of the parties hereto agrees to cooperate in good faith with the other and to execute and deliver such further instruments and perform such other acts as may be reasonably necessary or appropriate to consummate and carry into effect the transactions contemplated under this Agreement.

 

20.           Consultation with Counsel.  Employee acknowledges (a) that he or she has been given the opportunity to consult with counsel of his or her own choice concerning this Agreement, and (b) that he or she has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based upon his or her own judgment with or without the advice of such counsel.

 

21.           Code Section 409A.  The intent of the parties is that payments and benefits under this Agreement comply with or be exempt from Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from Section 409A or in compliance therewith, as applicable.  All reimbursements as provided herein shall be payable in accordance with the Company’s policies in effect from time to time, but in any event shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Employee.

  

11

  

 

22.           Coordination with Change of Control Agreement.  Notwithstanding anything to contrary, in the event that the Employee is entitled to any benefits under Section 3(a) –(c) of the Change of Control Agreement, Employee shall not be entitled to any benefits under this Agreement, except to the extent of the excess, if any, of those benefits Employee would be entitled to receive under similar circumstances under Sections 3(a)-(c) hereof over the benefits to which Employee is entitled under Sections 3(a) – (c) of the Change of Control Agreement. There shall be no duplication of benefits under this Agreement and any other agreement with the Company.  Notwithstanding anything to the contrary, in the event that Employee is entitled to benefits under Section 3(a) – (c) of this Agreement, and the Company experiences a Change of Control within the one hundred and eighty day (180) period following the Termination Date such that Section 3(j) of the Change of Control Agreement becomes applicable, Employee shall only be entitled to the benefits under the Change of Control Agreement, if any, to the extent such benefits have not been provided to Employee under this Agreement.  In addition, upon the occurrence of a Change of Control, Section 4 of this Agreement shall no longer apply.

 

THE EMPLOYEE ACKNOWLEDGES THAT HE OR SHE HAS READ THIS AGREEMENT AND UNDERSTANDS ITS CONTENTS. THE EMPLOYEE FURTHER ACKNOWLEDGES THAT HE OR SHE HAS BEEN ADVISED BY THE COMPANY OF HIS OR HER RIGHT TO CONSULT WITH LEGAL COUNSEL OF HIS OR HER OWN CHOICE CONCERNING THIS AGREEMENT. BY SIGNING THIS AGREEMENT, THE EMPLOYEE AND THE COMPANY AGREE TO BE BOUND BY ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT.

  

12

  

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Employee has executed this Agreement as of the day and year first above written.

 

	  	
SMART BALANCE, INC.

	  	  
	  	
By:

	  
	  	  	
«Stephen B. Hughes»

	  	  
	  	  
	  	
«Name»

 

  

13

  

Exhibit A

 

RELEASE

 

Date:  ________________________

 

In consideration of the agreement of Smart Balance, Inc. (“Company”) to enter into that certain Smart Balance, Inc. Severance Agreement, dated as of January 1, 2012 (“Severance Agreement”), with the undersigned and the promises and covenants of the Company made thereunder, the undersigned, on behalf of himself and his respective heirs, representatives, executors, family members, and assigns hereby fully and forever releases and discharges the Company, Company Entities, and their past, present and future directors, officers, employees, agents, attorneys, investors, administrators, affiliates, divisions, subsidiaries, predecessors, successors and assigns from and against, and agrees not to sue or otherwise institute or cause to be instituted any legal, alternative dispute resolution or administrative proceeding concerning, any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that he may possess arising from any omissions, acts or facts that have occurred through the date his employment terminates, including without limitation:

 

1.           Any and all claims relating to or arising from his employment by Company or the Company Entities and the termination of such employment;

 

2.           Any and all claims under the Severance Agreement or any other agreement or understanding governing the service relationship between the Company or the Company Entities and the undersigned;

 

3           Any and all claims for wrongful discharge, termination in violation of good policy, discrimination, breach of contract, both expressed or implied, covenants of good faith or fair dealing, both expressed or implied, promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, unfair business practice, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment, or conversion;

 

4.           Any and all claims for violation of any federal, state or municipal statute, including, without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act, and all amendments to each such Act as well as the regulations issued there under;

 

5.           Any and all claims based on the violation of the federal or any state constitution;

 

6.           Any and all claims for attorneys’ fees and costs.

  

14

  

 

The foregoing release shall not apply with respect to (i) the Company’s payment obligations under the Severance Agreement, (ii) the Company’s payment obligations under the Change of Control Agreement, or any other agreement relating to a Change of Control, except as explicitly provided in under the Severance Agreement, (iii) any obligation, whether to pay money or otherwise, of a successor to the Company created under any agreement relating to a Change of Control with respect to the Company, or (iv) the undersigned’s rights under any “employee benefit plans” as that term is defined in the Employee Retirement Income Security Act of 1974, as amended, or any award made to the undersigned under the Smart Balance, Inc. Stock and Awards Plan, the Amended and Restated Smart Balance, Inc. Stock and Awards Plan or the Second Amended and Restated Smart Balance, Inc. Stock and Awards Plan.

 

The undersigned acknowledges that (i) he has been advised by Company to consult a lawyer of his own choice prior to executing this release and has done so or voluntarily declined to seek such counsel, (ii) he has read this release and understands the terms and conditions hereof and the binding nature hereof, (iii) he has had at least forty-five (45) days within which to consider the terms of this release and executed this release voluntarily and without duress or undue influence on the part of Company, (iv) he has seven (7) days to revoke his execution of this release and that such execution shall not be effective until seven (7) days following delivery to Company (“Effective Date”), and (v) he understands that his right to receive payments under Paragraph 3 of the Severance Agreement is subject to and conditioned on the undersigned’s signing and delivering this release to Company.

 

Initially capitalized terms used in this release and defined in the Severance Agreement shall have the meanings given to such terms under the Severance Agreement.

 

	  	  
	  	
Printed Name

	  	  
	  	  
	  	
Signature

	  	  
	  	
Date: 

	  

 

	  	  
	
Notary

	  
	  	  
	
My Commission expires 

	  	  

 

  

15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00197-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00197-of-00352.parquet"}]]