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EXHIBIT 10.11
SEPARATION AGREEMENT
AGREEMENT between Flowers Industries, Inc., a Georgia corporation (the
"Company"), and _______________ (the "Employee"), dated as of the 8th day of
March, 1999.
WHEREAS, the Company, on behalf of itself and its shareholders, wishes
to continue to attract and retain well-qualified executive and key personnel who
are an integral part of the management of the Company or of one or more of its
Subsidiaries, such as Employee, and to assure itself of continuity of management
in the event of any prospective or actual Change in Control (as defined in
Section 2 of this Agreement) of the Company; and
WHEREAS, the Company wishes to provide the Employee with appropriate
protection with respect to the Employee's continued employment in the event of a
prospective or actual Change in Control, in exchange for the Employee agreeing
to continue to serve as an executive employee of the Company or a Subsidiary in
the event of a prospective or actual Change in Control; and
WHEREAS, the Employee agrees to continue to serve as an executive
employee of the Company or a Subsidiary in the event of a prospective or actual
Change in Control as consideration for the employment rights set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Employee hereby agree as follows:
1. Operation of Agreement.
(a) The "Effective Date" shall be February 12, 1999.
(b) Certain capitalized terms shall have the meaning
indicated in Appendix I. In addition, the term "Employer" shall mean the Company
or a Subsidiary, as applicable.
(c) The "Coverage Period" is the period commencing on the
Effective Date and ending on the second anniversary of such date; provided,
however, that commencing on the date one year after the Effective Date (the
"Renewal Date"), and on each anniversary of the Renewal Date, the Coverage
Period shall be automatically extended so as to terminate two years from such
Renewal Date or Renewal Date anniversary, as the case may be, unless at least 60
days prior to the Renewal Date or Renewal Date anniversary, as the case may be,
either party shall give the other party written notice that the Coverage period
shall not be so extended. Notwithstanding the foregoing, in the event a Change
in Control (as defined below) occurs during the Coverage Period, the Coverage
period shall be automatically extended to terminate on the second anniversary of
the Change in Control.
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2. Change in Control. For the purpose of this Agreement, a "Change in Control"
shall be deemed to have occurred upon the first to occur of any of the following
events:
(a) the Company enters into an agreement which provides
(i) for the Company becoming a subsidiary of, or
being merged with or consolidated into, another corporation or entity
(other than (A) a corporation at least 80% of which is owned by the
Company or (B) Keebler Foods Company or any successor to Keebler Foods
Company so long as it is owned at least 50% by the Company (any of
which are referred to hereafter as a "Keebler Entity")) or
(ii) for substantially all of the assets of the
Company to be sold to another corporation or entity (other than (A) a
corporation at least 80% of which is owned by the Company or (B) a
Keebler Entity;
(b) any person, corporation, partnership or other entity,
either alone or in conjunction with its Affiliates, or any other group of
persons, corporations, partnerships or other entities who are not Affiliates but
who are acting in concert, are determined to own of record or beneficially
securities of the Company which represent fifteen percent (15%) or more of
the combined voting power of the Company's then outstanding securities entitled
to vote for the election of Directors, if such ownership was not approved in
advance by a vote of at least three-quarters of the Continuing Directors as
defined in Section 2(e) hereof; provided, however, that for purposes of
determining the ownership of any group as described above or any member thereof,
no such group or member shall be deemed to be the beneficial owner of shares of
Common Stock:
(i) which were beneficially owned by a member on
February 12, 1999, and continue to be beneficially owned by any member
or any Affiliate or Associate thereof as of the date of the formation
of the group;
(ii) initially acquired by a member or an
Affiliate or Associate thereof after February 12, 1999, by bona fide
gift, inheritance, or as a result of a stock dividend, split or in a
similar transaction in which no consideration was exchanged;
(iii) initially acquired by a member or an
Affiliate or Associate thereof after February 12, 1999 pursuant to the
exercise of any options, rights or warrants granted to such person by
the Company; or
(iv) beneficially owned by a member or an
Affiliate or Associate thereof pursuant to any employee benefit plan of
the Company or any Subsidiary of the Company;
(c) the first to occur of (x) the Board of Directors'
actual knowledge of, or (y) the reporting to the Securities and Exchange
Commission of, the tender, pursuant to a tender offer or exchange offer other
than by the Company, of shares representing fifteen percent (15%) or more of
the company's then outstanding securities entitled to vote for the election of
Directors, whether or not such percentage of tendered securities is subsequently
reduced;
(d) the Board of Directors of the Company adopts a
resolution approving the liquidation or dissolution of the Company;
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(e) Continuing Directors at any time fail to constitute a
majority of the Board of Directors of the Company or of any resulting company
into which the Employer was merged or to which substantially all of its assets
were transferred as described in paragraph 2(a) above (even though said merger
or transfer is made with or to an 80% owned subsidiary or a Keebler Entity), and
the term "Continuing Directors" shall mean the then current members of the Board
of Directors who were also members of the Board of Directors on February 12,
1999 plus any new directors whose nominations were approved by at least three
quarters of the Continuing Directors in office at the time of the election of
any such new directors, other than a nomination of an individual whose initial
assumption of office is in connection with an actual or threatened solicitation
with respect to the "election or removal of the Board of Directors," as such
terms are used in Rule 14a-11 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act");
(f) an event described in (a) above occurs with respect
to the Employer, if it is not also the Company; or
(g) any other event that a majority of the Continuing
Directors determines would be required to be reported in response to Item 6(e)
[Voting Securities and Principal Holders Thereof - change in control] of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, or any
successor provision thereof.
3. Employment Period. Subject to the provisions of Sections 6 and
7 of this Agreement, and provided (i) that the Employee is still employed by the
Employer immediately preceding the occurrence of a Change in Control, and (ii)
that this Agreement is in effect as provided in Section 1 above, the Employer
hereby agrees to continue the Employee in its employ, and the Employee hereby
agrees to remain in the employ of the Employer for the period commencing on the
effective date of such Change in Control (the "Commencement Date") and ending on
the second anniversary of the Commencement Date (the "Employment Period"). The
Employee also agrees to remain in the employ of the Employer in the event of any
anticipated Change in Control, so long as this Agreement is in effect as
provided in Section 1.
4. Position and Duties.
(a) During the Employment Period, the Employee's position
(including status, offices, titles and reporting requirements, authority, duties
and responsibilities) shall be at least commensurate in all material respects
with those held, exercised and assigned at any time during the 90-day period
immediately preceding the Commencement Date, and the Employee's principle place
of business shall be located within a 30 mile radius of the location of said
principle place of business immediately preceding the Commencement Date.
(b) Excluding periods of vacation and sick leave to which
the Employee is entitled, the Employee agrees during the Employment Period to
devote substantially all of his attention and time during normal business hours
to the business and affairs of the Employer and, to the extent necessary to
discharge the responsibilities assigned to the Employee hereunder, to use
reasonable best efforts to perform faithfully and efficiently such
responsibilities. The Employee may (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) manage personal investments, so long
as such activities do not interfere with the performance of the Employee's
responsibilities to the
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Employer. It is expressly understood and agreed that to the extent that any such
activities have been conducted by the Employee prior to the Commencement Date,
such prior conduct of activities, and any subsequent conduct of activities
similar in nature and scope, shall not thereafter be deemed to interfere with
the performance of the Employee's responsibilities to the Employer.
5. Compensation. The following provisions apply during such time
as the Employee is employed during the Employment Period:
(a) Base Salary. During the Employment Period, the
Employee shall receive a base salary as increased hereunder from time to time
("Base Salary") at a rate at least equal to the salary paid to the Employee by
the Employer, together with any of its Affiliates, immediately prior to the
Commencement Date. The Base Salary shall be reviewed periodically and may be
increased (but not decreased) in the course of each such review to reflect
increases in the cost of living and such other increases as shall be consistent
with increases in base salary awarded in the ordinary course of business to
other key executives. Under no circumstances shall any increase in the Base
Salary (i) limit or reduce any other obligation to the Employee under this
Agreement, or (ii) be later reduced or eliminated, once effective.
(b) Annual Bonus and Long-Term Incentive Compensation.
(i) In addition to the Base Salary, the Employee
shall be paid, for each fiscal year ending during the Employment
Period, an annual bonus (an "Annual Bonus") pursuant to the Company's
Annual Executive Bonus Plan, or a comparable successor plan, in cash,
the amount of which Annual Bonus shall be based on substantially the
same performance criteria and goals as were in effect in connection
with the Bonus Plan or a comparable successor plan to said Bonus Plan
immediately prior to the Commencement Date. In no event, however, shall
the Employee's Annual Bonus be reduced to a level which is less than
the average bonus paid by the Employer with respect to the Employee
under the Bonus Plan (or a comparable successor plan to the Bonus Plan)
for the three fiscal years of the Employer in which were paid the
highest bonuses during the five said years immediately preceding the
Commencement Date. Each such Annual Bonus shall be payable within three
months after the end of the fiscal year for which the Annual Bonus is
awarded, unless the Employee shall otherwise timely elect to defer the
receipt of such Annual Bonus under any deferred compensation plan of
the Employer then in effect.
(ii) For each fiscal year during the Employment
Period, the Employee shall also receive any long-term incentive
compensation to which he is entitled pursuant to the terms of
Restricted Stock Awards or Options or other stock-based awards granted
under the Company's Executive Stock Incentive Plan, and shall
furthermore continue to receive grants of said types of awards (other
than an extraordinary award) consistent with the prior practices of the
Company as determined in the two fiscal years of the Company ending
immediately prior to the Change in Control.
(c) Incentive Savings and Retirement Plans. In addition
to the Base Salary and Annual Bonus and Long-Term Incentive Compensation payable
as hereinabove provided, the Employee shall be entitled to participate, during
the Employment period, in all incentive, savings and retirement plans and
programs applicable to other key executives of the Employer in comparable
positions, but in no event shall such plans and programs, in the aggregate,
provide the Employee
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with compensation, benefits and reward opportunities less favorable than those
provided by the Employer under such plans and programs as in effect with respect
to the Employee at any time during the 90-day period immediately preceding the
Commencement Date.
(d) Welfare Benefit Plans. During the Employment Period,
the Employee and/or the Employee's dependents as the case may be, shall be
eligible to participate in and shall receive all benefits under each welfare
benefit plan of the Employer, including, without limitation, all medical,
dental, disability, group life, accidental death and travel accident insurance
plans and programs of the Employer, as in effect with respect to the Employee
and his dependents at any time during the 90-day period immediately preceding
the Commencement Date or, if more favorable to the Employee, as in effect at any
time thereafter with respect to other key executives of the Employer in
comparable positions.
(e) Expenses. During the Employment Period, the Employee
shall be entitled to receive prompt reimbursement for all reasonable
business-related expenses incurred by the Employee in accordance with the
policies and procedures of the Employer as in effect with respect to the
Employee at any time during the 90-day period immediately preceding the
Commencement Date or, if more favorable to the Employee, as in effect at any
time thereafter with respect to other key executives of the Employer in
comparable positions.
(f) Fringe Benefits. During the Employment Period, the
Employee shall be entitled to fringe benefits and perquisites in accordance with
the policies of the Employer as in effect with respect to the Employee at any
time during the 90-day period immediately preceding the Commencement Date or, if
more favorable to the Employee, as in effect at any time thereafter with respect
to other key executives of the Employer in comparable positions.
(g) Office and Support Staff. During the Employment
Period, the Employee shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to secretarial and other
assistance, at least equal to those provided to the Employee at any time during
the 90-day period immediately preceding the Commencement Date or, if more
favorable to the Employee, as provided at any time thereafter with respect to
other key executives of the Employer in comparable positions.
(h) Vacation. During the Employment Period, the Employee
shall be entitled to paid vacation in accordance with the policies of the
Employer as in effect with respect to the Employee at any time during the 90-day
period immediately preceding the Commencement Date or, if more favorable to the
Employee, as in effect at any time thereafter with respect to other key
executives of the Employer in comparable positions.
6. Termination. Prior to the Commencement Date, the employment of
the Employee may be terminated at any time by the Employee or the Employer, with
or without cause of any nature, in accordance with the Employer's usual policies
and practices, at which time this Agreement shall automatically terminate. The
following provisions relate solely to termination of the Employee's employment
during the Employment Period:
(a) Death or Disability.
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(i) Subject to Section 7 below, this Agreement
shall terminate automatically upon the Employee's death.
(ii) Subject to Section 7 below, the Company may
terminate this Agreement after having established the Employee's
Disability (pursuant to the definition of "Disability" set forth
below), by giving to the Employee written notice of its intention to
terminate the Employee's employment. In such a case, the Employee's
employment with the Employer shall terminate effective on the 90th day
after receipt of such notice (the "Disability Effective Date"), unless
within 90 days after such receipt, the Employee shall have returned to
the full-time performance of the Employee's duties. For purposes of
this Agreement, "Disability" means disability which, after the
expiration of more than 26 weeks after its commencement, is determined
to be total and permanent by a physician selected by the Company or its
insurers and acceptable to the Employee or the Employee's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Employer may terminate the Employee's
employment for "Cause." For purposes of this Agreement, "Cause" means (i) an act
or acts of dishonesty, moral turpitude or willful misconduct taken by the
Employee and intended to result in substantial personal enrichment of the
Employee at the expense of the Company or any Subsidiary or which have a
material adverse impact on the business or reputation of the Company or any
Subsidiary of the Company, or (ii) repeated violations by the Employee of the
Employee's obligations under Section 4 of this Agreement which are demonstrably
willful and deliberate on the Employee's part and which have a material adverse
impact on the business or reputation of the Company or any Subsidiary of the
Company, but specifically excluding alleged violations which are due to
disability or for "Good Reason" as defined below.
(c) Good Reason. The Employee's employment may be
terminated by the Employee for Good Reason. For purposes of this Agreement,
"Good Reason" means:
(i) (A) the Assignment to the Employee of any
duties inconsistent in any material respect with the Employee's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by
Section 4 of this Agreement or (B) any other action by the Employer
which results in a material diminishment in such position, authority,
duties or responsibilities, other than action or inaction which is
remedied by the Employer within 30 days after receipt of written notice
thereof given by the Employee;
(ii) any failure by the Company to comply with
any of the provisions of Section 5 of this Agreement, other than any
failure which is remedied by the Company within 30 days after receipt
of written notice thereof given by the Employee;
(iii) the Employer's requiring the Employee to be
based at any office or location more than 30 miles away from that at
which the Employee is based at the Commencement Date, except for travel
reasonably required consistent with past practices, in the performance
of the Employee's responsibilities;
(iv) any purported termination by the Employer of
the Employee's employment otherwise than as permitted by this
Agreement; or
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(v) any failure by the Company to comply with
and satisfy Section 12(c) of this Agreement.
(d) Notice of Termination. Any termination by the
Employer for Cause or by the Employee for Good Reason shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
14(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after the giving of
such notice).
(e) Date of Termination. "Date of Termination" means the
date of receipt of the Notice of Termination or any later date specified
therein, as the case may be. If the Employee's employment is terminated by the
Employer in breach of this Agreement, the Date of Termination shall be the date
on which the Employer notifies the Employee of such termination.
7. Obligations of the Company Upon Termination. The following
provisions apply only in the event the Employee is terminated during the
Employment Period:
(a) Death. If the Employee's employment is terminated by
reason of the Employee's death, this Agreement shall terminate without further
obligation to the Employee's legal representatives under this Agreement other
than those payment amounts accrued and payable hereunder at the date of the
Employee's death. Anything in this Agreement to the contrary notwithstanding,
the Employee's family shall be entitled to receive benefits at least equal to
those provided by the Employer to surviving families of executives of the
Employer in the same or comparable positions under such plans, programs and
policies relating to family death benefits, if any, as in effect at any time
during the 90-day period immediately preceding the Commencement Date or, if more
favorable to the Employee and/or the Employee's family, as in effect at the time
of Employee's death with respect to other key executives of the Employer in
comparable positions and their families.
(b) Disability. If the Employee's employment is
terminated by reason of the Employee's Disability, the Employee shall be
entitled after the Disability Effective Date to receive any amounts then accrued
and payable hereunder and to receive disability and other benefits at least
equal to those provided by the Employer to disabled employees and/or their
families in accordance with such plans, programs and policies relating to
disability, if any, as in effect with respect to executives of the Employer in
the same or comparable positions at any time during the 90-day period
immediately preceding the Commencement Date or, if more favorable to the
Employee and/or the Employee's family, as in effect at the time of the
disability termination with respect to other key executives of the Employer in
comparable positions and their families.
(c) Cause. If the Employee's employment shall be
terminated for Cause, the Employer shall pay the Employee his full Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and shall provide the Employee, through the Date of
Termination, such welfare benefits, fringe benefits, and other perquisites as
were provided to the
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Employee immediately prior to delivery to Employee of the Notice of Termination.
Subject to Section 8 below, the Company shall have no further obligation to the
Employee under this Agreement.
(d) Good-Reason; Other Than for Cause or Disability. If
the Employer shall terminate the Employee's employment with the Employer other
than for Cause or Disability, or the employment of the Employee with the
Employer shall be terminated by the Employee for Good Reason,
(i) the Employer shall pay to the Employee in a
lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
(A) if not theretofore paid, the
Employee's Base salary through the Date of Termination at the
rate in effect on the Date of Termination or, if higher, at
the rate in effect immediately prior to the Commencement Date;
and
(B) _____ times the sum of (x) the
Employee's annual Base Salary at the rate in effect at the
time Notice of Termination was given or, if higher, the rate
in effect immediately prior to the Commencement Date and (y) a
bonus equivalent equal to the Base Salary as determined in (x)
above multiplied by the Target Bonus Percentage most recently
applied to him for said purpose; and
(C) in the case of vested compensation
previously deferred by the Employee, all amounts, if any, of
such compensation previously deferred and not yet paid by the
Company;
(ii) the Employer shall, promptly upon submission
by the Employee of supporting documentation, pay or reimburse to the
Employee any business-related costs and expenses (including already
accrued moving and relocation expenses) paid or incurred by the
Employee on or before the Date of Termination or within 30 days after
the Date of Termination which would have been payable under Section
5(e) if the Employee's employment had not terminated;
(iii) until the first anniversary of the
Employee's Date of Termination (such number of months remaining until
such first anniversary is hereinafter sometimes referred to as the
"Unexpired Term"), the Employer shall continue benefits (or equivalent
coverage) to the Employee and/or the Employee's family at least equal
to those which would have been provided to them in accordance with the
plans, programs and policies described in Sections 5(d) and 5(f) of
this Agreement if the Employee's employment had not been terminated, if
and as in effect at any time during the 90-day period immediately
preceding the Commencement Date or, if more favorable to the Employee,
as in effect from time to time during the Unexpired Term with respect
to other key executives of the Employer in comparable positions and
their families; and
(iv) upon request by the Employee at any time
within one year following the Date of Termination, the Employer shall
pay any reasonable expenses incurred by the Employee in relocating
Employee and his dependents to any chosen location within the 48
contiguous United States which is more than 30 miles from the
Employee's residence on the
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Date of Termination, except to the extent (if any) that the expenses of
such relocation have been or will be reimbursed by a new employer of
Employee. Relocation expenses which shall be reimbursed pursuant to
this paragraph include (1) all closing costs and brokerage or
commission fees incurred by the Employee in connection with the sale of
his home, and (2) all costs of moving household goods and personal
effects to the new location (including costs of packing and unpacking,
and insurance for up to $100,000 coverage). In addition, upon the
written request of the Employee, the Employer shall make an offer to
purchase the Employee's home for cash in an amount equal to the greater
of (A) the reasonably estimated value of Employee's home six months
prior to the occurrence of the Change in Control or (B) the reasonably
estimated value on the Date of Termination (the greater of such values
is hereinafter referred to as the "Established Value"). For purposes of
determining the Established Value, the Employer and the Employee shall
each, at the Employer's expense, engage real estate appraisers who are
certified to evaluate professionally the reasonably estimated values of
the home as set forth above. The Established Value shall include the
land, buildings, improvements, and designated items of personal
property (limited to carpeting and draperies) which the Employee plans
to leave behind when he or s/he moves. Upon completion of the two
appraisals the two will be averaged to determine the Established Value.
If, however, the lower of the two appraisals varies by more than 10%
from the higher appraisal, a third appraisal will be made at the
Employer's expense by an appraiser to be chosen mutually by the first
two appraisers, and the average of all three appraisals will constitute
the Established Value. The Employer will then offer in writing to
purchase the home at the Established Value. The Employee will have 60
days from the date of the offer within which to accept the offer. The
Employee will have, at his option, up to 60 days from his acceptance of
the offer within which to close the sale and vacate the property.
Additionally, the Employer shall pay the Employee such additional
amount as is necessary in order to compensate the Employee for any
taxes which become payable with respect to the expenses reimbursed as
described in this subparagraph (iv), so that the covered relocation
expenses are fully reimbursed on an after-tax basis.
8. 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 Employer for
which the Employee may qualify, nor shall anything herein limit or otherwise
affect such rights as the Employee may have under any other agreements with the
Company or any of its Subsidiaries. Amounts which are vested benefits or which
the Employee is otherwise entitled to receive under any plan or program of the
Company or any of its Subsidiaries at or subsequent to the date of Termination
shall be in accordance with such plan or program.
9. Full Settlement. The Company's obligation to make the payment
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances including, without
limitation, any set-off, counter-claim, recoupment, defense (except as provided
in this Agreement) or other right which the Company or Employer may have against
the Employee or others. In no event shall the Employee be obligated to seek
other employment by way of mitigation of the amounts payable to the Employee
under any of the provisions of this Agreement, nor shall re-employment of the
Employee elsewhere in any way affect or offset the amounts payable pursuant to
this Agreement.
The Company agrees to pay, to the full extent permitted by law, all
legal fees and expenses which the Employee may incur as a result of any contest,
in which the Employee is successful in
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whole or in part, by the Company or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee of
performance thereof or as a result of any contest by the Employee, which is
successful in whole or in part, against the amount of any reduction pursuant to
Section 10 of this Agreement, plus in each case interest on the total unpaid
amount determined to be payable under this Agreement, payable at rates of
interest equal to the Standard & Poors' Corporate Composite AA Weekly Bond Yield
Index averaged over the period during which said amounts remained unpaid.
10. Tax Gross-Up for Payments by the Company.
(a) If a Change in Control of the Company occurs, and any
payment or benefit provided by the Company or any of its Subsidiaries to or for
the benefit of the Employee, whether paid or payable or provided or to be
provided pursuant to the terms of this Agreement or otherwise pursuant to or by
reason of any other agreement, policy, plan, program or arrangement, including
without limitation any stock option, performance share, performance unit, stock
appreciation right, restricted stock award, executive incentive award, or
similar right, or the lapse or termination of any restriction on, or the vesting
or exercisability of, any of the foregoing (a "Payment"), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor provision) by reason of being considered
"contingent on a change in ownership or control" of the Company, within the
meaning of Section 280G of the Code (or any successor provision) or to any
similar excise or penalty tax imposed by state or local law, or any interest or
penalties with respect to that tax (that tax or those taxes, together with any
interest and penalties, may be referred to as the "Excise Tax"), then, if the
Employee complies with the requirements of the policy contained in this Section
10, the Employee will be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); provided, however, that no Gross-Up
Payment will be made with respect to the Excise Tax, if any, attributable to (i)
any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to February 12, 1999 or (ii) any stock appreciation or similar
right, whether or not limited, granted in tandem with any ISO described in
clause (i). The Gross-Up Payment will be in an amount such that, after payment
by the Employee of all taxes (including any interest or penalties imposed with
respect to those taxes), including any Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payment.
(b) Subject to the provisions of subparagraph (f) below,
all determinations required to be made under this policy, including whether an
Excise Tax is payable by the Employee and the amount of that Excise Tax and
whether a Gross-Up Payment is required to be paid by the Company to the Employee
and the amount of that Gross-Up Payment, if any, will be made by a nationally
recognized accounting firm (the "Accounting Firm") selected by the Employee in
his sole discretion. The Employee will direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and the
Employee within thirty (30) calendar days after the Employee's receipt of the
first Payment upon or following the Change in Control, and any other time or
times as may be requested by the Company or the Employee. If the Accounting Firm
determines that any Excise Tax is payable by the Employee, the Company will pay
the required Gross-Up Payment to the Employee within five (5) business days
after receipt of the determination and calculations with respect to any Payment
to the Employee. If the Accounting Firm determines that no Excise Tax is payable
by the Employee, it will, at the same time as it makes that determination,
furnish the Company and the Employee an opinion that the Employee has
substantial authority not to report any Excise Tax on his federal, state or
local income or other tax return. As
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a result of the uncertainty in the application of Section 4999 of the Code (or
any successor provision) and the possibility of similar uncertainty regarding
applicable state or local tax law at the time of any determination by the
Accounting Firm, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (an "Underpayment"), consistent with
the calculations required to be made under this policy. If the Company exhausts
or fails to pursue its remedies pursuant to subparagraph (f) and the Employee
subsequently is required to make a payment of any Excise Tax, the Employee will
direct the Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations to
both the Company and the Employee as promptly as possible. Any such Underpayment
will be promptly paid by the Company to, or for the benefit of, the Employee
within five (5) business days after receipt of the determination and
calculations.
(c) The Company and the Employee will each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Employee, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by subparagraph (b). Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment will be binding upon
the Company and the Employee.
(d) The federal, state and local income or other tax
returns filed by the Employee will be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by the Employee. The Employee will make proper payment of the amount of
any Excise Payment, and at the request of the Company, provide to the Company
true and correct copies (with any amendments) of his federal income tax return
as filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and those
other documents reasonably requested by the Company, evidencing that payment. If
prior to the filing of the Employee's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting firm
determines that the amount of the Gross-Up Payment should be reduced, the
Employee shall within five (5) business days pay to the Company the amount of
that reduction.
(e) The reasonable fees and expenses of the Accounting
Firm for its services in connection with the determinations and calculations
contemplated by subparagraph (b) will be borne by the Company to the extent they
are reasonable by industry standards. If those fees and expenses are initially
paid by the Employee, the Company will reimburse the Employee the full amount of
those fees and expenses within five (5) business days after receipt from the
Employee of a statement for them and reasonable evidence of his payment of them.
(f) The Employee will notify the Company in writing of
any claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment. That
notification will be given as promptly as practicable but no later than ten (10)
business days after the Employee actually receives notice of that claim and the
Employee will further apprize the Company of the nature of that claim and the
date on which that claim is requested to be paid (in each case, to the extent
known by the Employee). The Employee will not pay that claim prior to the
earlier of (i) the expiration of the thirty (30) calendar-day period following
the date on which he gives that notice to the Company and (ii) the date that any
payment
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of an amount with respect to that claim is due. If the Company notifies the
Employee in writing prior to the expiration of that period that it desires to
contest the claim, the Employee will:
(i) provide the Company with any written records
or documents in his possession relating to that claim reasonably
requested by the Company;
(ii) take that action in connection with
contesting the claim as the Company reasonably requests in writing from
time to time, including without limitation accepting legal
representation with respect to that claim by an attorney competent in
respect of the subject matter and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest that claim; and
(iv) permit the Company to participate in any
proceedings related to that claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with that
contest and will indemnify and hold harmless the Employee, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect to the Excise Tax, imposed as a result of that
representation and payment of costs and expenses. Without limiting the foregoing
provisions of this subparagraph (f), the Company will control all proceedings
taken in connection with the contest of any claim contemplated by this
subparagraph (f) and, as its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of that claim (provided, however, that the Employee may
participate in them at his own cost and expense) and may, at its option, either
direct the Employee to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Employee will prosecute that contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company will determine;
provided, however, that if the Company directs the Employee to pay the tax
claimed and xxx for a refund, the Company will advance the amount of that
payment to the Employee on an interest-free basis and will indemnify and hold
harmless the Employee, on an after-tax basis, from any Excise Tax or income or
other tax, including interest or penalties with respect to the Excise Tax,
imposed with respect to that advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Employee with respect to which the contested amount is
claimed to be due is limited solely to that contested amount. Furthermore, the
Company's control of any contested claim will be limited to issues with respect
to which a Gross-Up Payment would be payable pursuant to this policy and the
Employee will be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
11. Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Company any and all secret or
confidential information, knowledge or data relating to the Company or any of
its Affiliates and their respective businesses, which (i) was obtained by the
Employee during the Employment Period or during the Employee's prior employment
by the Company or any of its Affiliates and (ii) is not public knowledge (other
than by acts by the Employee or his representatives in violation of this
Agreement). After termination of the Employee's employment with the Company, the
Employee shall not, without the prior written
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consent of the Company, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it, unless
required by legal process.
12. Successors.
(a) This Agreement is personal to the Employee and
without the prior written consent of the Company the benefits accrued and
payable hereunder shall not be assignable by the Employee otherwise than by will
or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors.
(c) In the event of a Change in Control of the Company,
any Parent Company or Successor (as such terms are defined in Appendix I hereof)
shall (i) in the case of a Successor, by an agreement in form and substance
reasonably satisfactory to the Employee, expressly assume and agree to perform
this Agreement and (ii) in the case of a Parent Company, by an agreement in form
and substance reasonably satisfactory to the Employee, guarantee and agree to
cause the performance of this Agreement, in each case, in the same manner and to
the same extent as the Company would be required to perform if no Change in
Control had taken place.
13. Coordination of Benefits. Notwithstanding any contrary
provision of this Agreement, any amounts paid to Employee pursuant to the
Company's Severance Policy shall reduce pro tanto the amounts payable to
Employee pursuant to this Agreement.
14. Indemnification. During the Coverage Period, and thereafter
with respect to any act occurring within said Coverage Period, the Company
agrees to continue in force any indemnification agreements or obligations which
are in effect as of the Effective Date, and which would provide indemnification
to Employee, including any such provisions of the Company's Articles of
Incorporation or By-laws.
15. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Employee:
---------------------------------
---------------------------------
---------------------------------
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If to the Company:
Flowers Industries, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: Secretary
with additional copy to the
General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) This Agreement contains the entire understanding of
the Company and the Employee with respect to the subject matter hereof.
(f) The Employee and the Company and any other Employer
acknowledge that the employment of the Employee by the Employer is "at will,"
and, prior to the Commencement Date, may be terminated by either the Employee or
the Employer at any time with or without cause of any nature.
(g) The Company may, without the consent of Employee,
amend at any time the definition of "Change in Control" set forth in Section 2,
above, by resolution adopted by the Compensation Committee of the Company's
Board of Directors, unless a Change in Control has previously occurred.
(h) The terms "Affiliate," "Associate," "Parent Company,"
"Subsidiary," and "Successor" are defined in Appendix I hereto, which is
incorporated by reference herein.
IN WITNESS WHEREOF, the Employee has hereunto set his hand,
and the Company has caused these presents to be executed in its name on its
behalf, all as of the day and year first above written.
FLOWERS INDUSTRIES, INC.
EMPLOYEE By:
-----------------------------------------
Title:
------------------------------ -----------------------------------
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APPENDIX I
DEFINITIONS OF CERTAIN TERMS
(1) The term "Affiliate," used to indicate a relationship to a
specified person, shall mean a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such specified person. For purposes of this term control means
50%.
(2) The term "Associate," used to indicate a relationship with a
specified person, shall mean (i) any corporation, partnership, or other
organization of which such specified person is an officer or partner, (ii) any
trust or other estate in which such specified person has a substantial
beneficial interest or as to which such specified person serves as trustee or in
a similar fiduciary capacity, (iii) any relative or spouse who has the same home
as such specified person, or who is a director or officer of the Company or any
of its parents or subsidiaries, and (iv) any person who is a director, officer,
or partner of such specified person or of any corporation (other than the
Company or any wholly-owned subsidiary of the Company), partnership or other
entity which is an Affiliate of such specified person.
(3) The term "Parent Company" shall mean a corporation or
corporations of which the Company becomes a direct or indirect subsidiary, or a
corporation or corporations, or unincorporated entity or entities, which
indirectly control the Company by controlling the greatest amount of equity (by
vote) of the Company.
(4) The term "Subsidiary" shall mean a corporation or other
business entity at least 50% of whose stock (or other applicable capital
interest) is owned directly or indirectly by the Company.
(5) The term "Successor" shall mean another corporation or
unincorporated entity or group of corporations or unincorporated entities which
acquires all or substantially all of the assets of the Company.
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