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EXHIBIT 10.28
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT between WSMP, Inc., a North Carolina corporation (the
"Company"), and X. Xxxx Xxxxxx (the "Employee") is dated as of January 29, 1998
(the "Effective Date").
W I T N E S S E T H:
WHEREAS, the Employee is a key employee of the Company, serving in an
executive capacity at the Company, having acquired an intimate knowledge of the
business and affairs of the Company's restaurants and having clearly
demonstrated the ability to perform valuable services for the Company; and
WHEREAS, the Company considers it to be in the best interests of its
shareholders to encourage the continued employment of key employees of the
Company in that the continuity of management is essential to protecting and
enhancing the best interests of the Company and its shareholders; and
WHEREAS, the Company believes that the possibility of the occurrence of
a Change in Control of the Company (as defined below) may result in the
termination of the Employee's employment by the Company or in the distraction of
the Employee from the performance of his duties to the Company, in either case
to the detriment of the Company and its shareholders; and
WHEREAS, the Company recognizes that the Employee could suffer adverse
financial and professional consequences if a Change in Control of the Company
were to occur; and
WHEREAS, the Company wishes to enter into this Agreement to protect the
Employee in the event that a Change in Control of the Company were to occur,
thereby encouraging the Employee to remain with the Company and not be
distracted from the performance of his duties to the Company;
NOW, THEREFORE, the parties agree as follows:
Section 1. Construction; Definitions. (a) In the event of the enactment
of any successor provision to any statute or rule cited in this Agreement,
references in this Agreement to such statute or rule shall be to such successor
provision. The headings of Sections of this Agreement shall not control the
meaning or interpretation of this Agreement. References in this Agreement to any
Section are to the corresponding Section of this Agreement unless the context
otherwise indicates.
(b) As used in this Agreement, the following terms shall have the
meanings indicated:
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(i) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date hereof.
(ii) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of securities of the Company constituting a
Substantial Block, but shall not include (A) the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company or any Person organized, appointed or
established by the Company or such Subsidiary as a fiduciary pursuant
to the terms of any such employee benefit plan, (B) any Person
consisting of or including any or all of Messrs. Xxxxx X. Xxxxxxxxxx,
Xx., Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxx, and X. Xxxx Xxxxxx, but only
if and so long as such Person consists of or includes at least one
full-time employee of the Company, and (C) any Person who or which,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of a Substantial Block solely as a result of a change
in the aggregate number of shares of Voting Stock or other voting
securities of the Company outstanding since the last date on which such
Person acquired Beneficial Ownership of any securities of the Company
included in such Substantial Block.
(iii) "After-Tax Payments" means payments to or for the
benefit of the Employee under this Agreement after reduction for any
and all federal, state and local income tax and excise tax liabilities
of the Employee resulting therefrom.
(iv) "Agreement" means this Change of Control Agreement as it
may be amended from time to time in accordance with Section 10.
(v) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(A) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (1) the
right or obligation to acquire (whether such right or
obligation is exercisable or effective immediately or
otherwise) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, rights, warrants or
options, or otherwise or (2) the right to vote or dispose of
or has "beneficial ownership" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement,
arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of or to "beneficially own" any security
under this clause (2) if the agreement, arrangement or
understanding to vote such security (x) arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and
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in accordance with, the applicable provisions of the General
Rules and Regulations of the Exchange Act and (y) is not also
then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(B) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in clause (2) of subparagraph (A) of this
paragraph (v)) or disposing of any voting securities of the
Company.
No part of this definition shall cause a Person ordinarily engaged in
business as an underwriter of securities to be the "Beneficial Owner"
of or to "beneficially own" any securities acquired in a bona fide firm
commitment underwriting pursuant to an underwriting agreement with the
Company until the expiration of forty days after the date of such
acquisition.
(vi) "Benefit Plans" means all of the Company's employee
benefit plans, including life insurance and medical, dental, health,
accident and disability plans, in which the Employee was a participant
on the Change in Control Date.
(vii) "Board of Directors" means the entire Board of
Directors of the Company.
(viii) A "Business Combination" shall occur when
(A) any Person (other than a Subsidiary of the
Company) combines or consolidates with, or merges with and
into, the Company, and the Company shall be the continuing or
surviving corporation of such combination, consolidation or
merger and, in connection with such combination, consolidation
or merger, all or part of the shares of Voting Stock shall be
changed into or exchanged for other securities of any Person
or cash or any other property;
(B) the Company combines or consolidates with, or
merges with and into, any other Person (other than a
Subsidiary of the Company), and the Company shall not be the
continuing or surviving corporation of such combination,
consolidation or merger; or
(C) the Company sells or otherwise transfers (or one
or more of its Subsidiaries sells or otherwise transfers), in
one or more transactions, assets, cash flow or earning power
aggregating more than 50 percent of the assets, cash
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flow or earning power of the Company and its Subsidiaries
(taken as a whole and calculated on the basis of the Company's
most recent regularly prepared financial statements) to any
other Person or Persons (other than the Company or any
Subsidiary of the Company).
(ix) A "Change in Control of the Company" shall have occurred
if, after the Effective Date,
(A) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of the
Board of Directors; provided, however, that any individual
becoming a director subsequent to the date hereof whose
election or nomination for election by the Company's
shareholders was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered a member of the Incumbent Board;
(B) any Person, alone or together with its Affiliates
and Associates, at any time after the Effective Date, shall
become an Acquiring Person;
(C) a Business Combination shall be consummated,
unless, immediately following such Business Combination, (1)
all or substantially all the Persons who were the beneficial
owners of the Voting Stock immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 50 percent of the shares of Voting Stock and the combined
voting power of the voting securities of the outstanding
voting securities entitled to vote generally in the election
of directors of the corporation resulting from such Business
Combination in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of
the Voting Stock, (2) no Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan of the Company or any corporation resulting from
such Business Combination) beneficially owns, directly or
indirectly, 15 percent or more of the Voting Stock of the
corporation resulting from such Business Combination or the
combined voting power of the voting securities then
outstanding of such corporation, and (3) at least one-half of
the members of the board of directors after such Business
Combination were members of the Incumbent Board at the time of
the approval of such Business Combination; or
(D) the Company is liquidated or dissolved.
(x) "Change in Control Date" means the date of occurrence
of a Change in Control of the Company.
(xi) "Company" has the meaning assigned to such term in the
recitals to this
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Agreement and shall include any Person with or into which such Person
shall have been merged or consolidated or to which such Person shall
have transferred all or substantially all of its assets.
(xii) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(xiii) "Expiration Date" means the end of the ten-year period
beginning on the Effective Date.
(xiv) "Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company, limited
partnership, limited liability company, trust, unincorporated
organization, government or agency or political subdivision of any
government. When the context of this Agreement so indicates, such term
also has the meaning assigned to it in Section 13(d) of the Exchange
Act.
(xv) "Relevant Period" means the life of the Employee and,
following the death of the Employee, throughout the life of the
Employee's spouse, if any.
(xvi) "Subsidiary" means any corporation or other legal
entity of which a majority of the voting power of the voting equity
securities or voting interest is owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(xvii) "Shares" means shares of capital stock of the Company.
(xviii) "Substantial Block" shall mean a number of shares of
the Voting Stock equal to or in excess of 15% of the number of shares
of the Voting Stock then outstanding.
(xix) "Voting Stock" means Shares the holders of which are
entitled to vote for the election of directors of the Company, but
excluding Shares entitled to vote only upon the occurrence of a
contingency unless that contingency shall have occurred.
Section 2. Term. If a Change in Control of the Company shall occur
before the expiration of the term of this Agreement, then, whether or not the
Employee's employment by the Company shall at any time be terminated, the
Employee shall be entitled to receive the benefits provided for in this
Agreement. The term of this Agreement shall begin on the Effective Date and,
unless extended pursuant to the third sentence of this Section or terminated
pursuant to the fourth sentence of this Section, shall expire at the Expiration
Date. If the Company shall not have given written notice to the Employee at
least 45 days before the Expiration Date that the term of this Agreement will
expire on the Expiration Date, then the term of this Agreement shall be extended
automatically for successive one-year periods (the first such period to begin on
the day immediately following the Expiration Date) unless and until the Company
shall give written notice to the Employee at least 45 days before the end of
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any one-year period for which the term of this Agreement shall have been
extended that such term will expire at the end of such one-year period,
whereupon the term of this Agreement shall expire at the end of such one-year
period. This Agreement shall in any event expire upon the termination by the
Employee or the Company of the Employee's employment by the Company, unless
there has been a Change in Control of the Company.
Section 3. Benefits Payable Upon Change in Control. If a Change in
Control of the Company shall occur before the expiration of the term of this
Agreement, then the Employee shall be entitled to the following benefits:
(i) The Company shall pay to the Employee, as a lump sum, an
amount equal to the sum of:
(A) three times the amount of the Employee's annual
base salary as in effect on the Change in Control Date, plus
(B) three times the amount of the largest annual cash
bonus paid or payable by the Company to the Employee for
services rendered during any one of the three most recent
fiscal years of the Company, regardless of when such bonus may
have been paid or payable, plus
(C) the amount, if positive, equal to the aggregate
spread between the exercise prices of all outstanding
unexercised options to purchase Shares and other rights whose
value derives from the value of Shares (including, without
limitation, "cash-only" stock appreciation rights), which
options or rights had been issued by the Company and are held
by the Employee on the Change in Control Date, whether or not
enough time had elapsed from the date of grant of such options
or rights so as to make them fully exercisable or vested on
the Change in Control Date, and the higher of
(1) the closing price of the Shares as
reported on the NASDAQ National Market System on the
Change in Control Date, or
(2) the highest price per Share actually
paid in connection with the Change in Control of the
Company, plus
(D) an additional amount equal to the aggregate of
any and all federal, state and local income tax and excise tax
liabilities of the Employee resulting from the payments due
pursuant to clauses (A), (B), (C) and (D) hereof; provided,
however, that, if the total of all After-Tax Payments would be
increased by the limitation or elimination of any payment
under this Section 3, then amounts payable under this Section
3 shall be reduced to the extent, and only to the extent,
necessary to maximize the After-Tax Payments. The
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determination as to whether and to what extent payments under
this Section 3 are required to be reduced in accordance with
the preceding sentence shall be made at the Company's expense
by Deloitte & Touche LLP or such other nationally recognized
certified public accounting firm as the Board of Directors may
designate as soon as practicable following a Change in Control
of the Company.
(ii) The Company (at its sole expense) shall take the
following actions:
(A) immediately following the Change in Control Date
and throughout the Relevant Period, the Company shall maintain
in effect, and not materially reduce the benefits provided by,
each of the Benefit Plans; and
(B) the Company shall arrange for uninterrupted
participation in each of the Benefit Plans by the Employee
(and, following the death of the Employee, by the Employee's
spouse, even if such person was not the Employee's spouse or
was otherwise ineligible to participate in a Benefit Plan on
the Change in Control Date or at any other time), provided
that, if such participation in any Benefit Plan is not
permitted at any time during the Relevant Period by the terms
of such Benefit Plan, then the Company (at its sole expense)
shall thereupon provide to the Employee (and, following the
death of the Employee, shall provide to the Employee's spouse)
substantially the same benefits as were provided to the
Employee pursuant to such Benefit Plan on the Change in
Control Date.
Each payment required to be made to the Employee pursuant to the foregoing
provisions of this Section 3 shall be made by check drawn on an account of the
Company at a bank located in the United States of America and shall be paid not
more than 10 days after the Change in Control Date. Upon payment in full to the
Employee of all amounts due under subsection (i) of this Section 3, all of the
options and other rights referred to in clause (C) of such subsection as to
which payment has been made shall be automatically cancelled.
Section 4. Notices. Notices required or permitted to be given by either
party pursuant to this Agreement shall be in writing and shall be deemed to have
been given when delivered personally to the other party or when deposited with
the United States Postal Service as registered mail with postage prepaid and
addressed:
(i) if to the Employee, at the Employee's address last shown
on the Company's records, and
(ii) if to the Company, at 0 XXXX Xxxxx, X.X. Xxx 000,
Xxxxxxxxx, XX 00000, directed to the attention of the Corporate
Secretary;
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or, in either case, to such other address as the party to whom or to which such
notice is to be given shall have specified by notice given to the other party.
Section 5. Withholding Taxes. The Company may withhold from all
payments to be paid to the Employee pursuant to this Agreement all taxes that,
by applicable federal, state or local law, the Company is required to so
withhold.
Section 6. Expenses of Enforcement. Upon demand by the Employee made to
the Company, the Company shall reimburse the Employee for all reasonable
expenses (including legal fees and expenses) incurred by the Employee in
enforcing or seeking to enforce the payment of any amount or other benefit to
which the Employee shall become entitled pursuant to this Agreement.
Section 7. Employment by Subsidiary. If, at the Effective Date, the
Employee is an employee of a subsidiary of the Company, then references in this
Agreement to the Employee's employment by the Company shall be understood as
references to the Employee's employment by the subsidiary.
Section 8. No Obligation to Mitigate. The Employee shall not be
required to mitigate the amount of any payment or other benefit required to be
paid to the Employee pursuant to this Agreement, whether by seeking other
employment or otherwise, nor shall the amount of any such payment or other
benefit be reduced on account of any compensation earned by the Employee as a
result of employment by another Person.
Section 9. Confidential Information. From the Effective Date until the
expiration of the term of this Agreement, the Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, that shall have been obtained by the Employee
during the Employee's employment by the Company or any of its affiliated
companies and that shall not have become public knowledge (other than as a
result of acts by the Employee in violation of this Section). The Company,
however, shall not withhold or reduce any amount or other benefit payable to the
Employee pursuant to the terms of this Agreement, or otherwise, on the ground
that the Employee has breached or threatened to breach the foregoing provisions
of this Section; the sole remedy of the Company for a breach or anticipated
breach of such provisions shall be injunctive relief.
Section 10. Amendment and Waiver. This Agreement may be amended or
waived only by a written instrument signed by both parties. No waiver by either
party of any breach of this Agreement shall be considered a waiver of any other
or subsequent breach.
Section 11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina.
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Section 12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, all of which shall remain in full force
and effect.
Section 13. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
Section 14. Assignment. This Agreement shall inure to the benefit of
and be enforceable by the Employee's legal representative. The Company shall not
assign any of its obligations under this Agreement, by operation of law or
otherwise, without the express prior written consent of the Employee; any
assignment supposedly effected absent such consent shall be void.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the Effective Date.
WSMP, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxxxxxx
Vice President of Finance
THE EMPLOYEE:
/s/ X. XXXX XXXXXX (L.S.)
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X. Xxxx Xxxxxx
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