FORM OF CONTINUATION OF EMPLOYMENT AGREEMENT
EXHIBIT 10.8
AGREEMENT between Flowers Foods, Inc., a Georgia corporation (the “Company”), and
(the “Employee”), dated as of the day of .
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
Appendix I 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 .
(b) Certain capitalized terms shall have the meaning indicated in Appendix I, which may
be amended by the Company as provided in Section 15(g) below. In addition, the term
“Employer” shall mean either the Company or a Subsidiary, as applicable, which is the direct
employer of the Employee.
2. Coverage Period. The “Coverage Period” is the period commencing on the Effective
Date and ending on the [ ] 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 [ ] 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 in Appendix I) occurs during the
Coverage Period, the Coverage period shall be automatically extended to terminate on the [ ]
anniversary of the Change in Control.
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 [ ]
anniversary of the Commencement Date or if earlier, the Employee’s attainment of age sixty-five
(65) (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 2.
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 50 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 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 rate 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 [ ] fiscal years of the Employer (or shorter actual period) in which were paid the highest bonuses during the five said years immediately preceding the Commencement Date. In the event that the period for the first annual bonus under said plan has not expired by the date of the Change in Control, the Employee shall be deemed to have received the target bonus for said period. 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 stock-based awards granted under the Company’s Equity and Performance Incentive Plan (“Long-Term Incentive Compensation”), 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 (or shorter actual period). |
(c) Incentive Savings and Retirement Plans. In addition to the Base Salary and
Annual Bonus and Long-term Incentive Compensation payable as herein above 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 with compensation, benefits and reward opportunities less favorable than
those provided by the Employer under such plans
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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 and accidental death 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. All
reimbursements under this subsection 5(e) shall be for expenses incurred by the Employee
during the Employee’s lifetime. All requests for reimbursement shall be submitted no later
than 90 days prior to the last day of the calendar year following the calendar year in which
the expense was incurred. In no event will the amount of expenses reimbursed in one year
affect the amount of expenses eligible for reimbursement, or in kind benefit to be provided,
in any other taxable year.
(f) Fringe Benefits. During the Employment Period, the Employee shall be
entitled to fringe benefits and perquisites, including travel accident insurance plans and
programs, 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.
| (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 |
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| 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 Employer to comply with any of the provisions of Section 5 of this Agreement, other than any failure which is remedied by the Employer 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 50 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 | ||
| (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 15(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 as of which the termination of employment will occur
specified therein (which shall consist of a separation from service within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)), 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.
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7. Obligations of the Company Upon Termination. The following provisions apply only in
the event the Employee is terminated during the Employment Period. In addition, in the event that
the Employee is a participant in any other compensation arrangement sponsored by the Company, the
terms of the particular arrangement shall govern the Employee’s rights thereunder in the event of a
separation from employment. All reimbursements under this Section 7 shall be for expenses incurred
by the Employee during the Employee’s lifetime. All requests for reimbursement shall be submitted
no later than 90 days prior to the last day of the calendar year following the calendar year in
which the expense was incurred. In no event will the amount of expenses reimbursed in one year
affect the amount of expenses eligible for reimbursement, or in kind benefit to be provided, in
any other taxable year.
(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 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 (except that if the Employee is a “Specified Employee” as said term is defined in Section 409A of the Code, said payment shall not be made prior to the date which is six (6) months after his or her Date of Termination, or if earlier, the Employee’s death) 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) | the sum of (x) (i) [ ] times 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 less (ii) the amount of Base Salary already paid to the Employee during the Employment Period and (y) a bonus equivalent equal to the Base Salary as of the time determined in (x) above multiplied by the Target Bonus Percentage most recently applied to him for said purpose with respect to any calendar year during the Employment Period for which the Employee has not already earned a bonus; provided, however, that the amount paid shall represent a period no longer than the period between |
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| the Date of Termination and the Employee’s attainment of age sixty-five (65) and shall be prorated on a monthly basis, if necessary; |
| (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 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) | for the Unexpired Term, the Employer shall either continue benefits (or equivalent coverage) (other than disability benefits) to the Employee and/or the Employee’s family or reimburse Employee for the cost of obtaining coverage for 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 Section 5(d) 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; | ||
| (iv) | for the Unexpired Term, the Employer shall reimburse Employee for the cost of obtaining coverage for 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 Section 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. The Employer shall pay to or reimburse the Employee for such amounts (x) for the first six (6) months of the Unexpired Term, in a lump sum in cash within 30 days after the date which is six (6) months after the Employee’s Date of Termination, or if earlier, the Employee’s death and (y) for the last six (6) months of the Unexpired Term, on a monthly basis; and | ||
| (v) | upon request by the Employee at any time subsequent to his Date of Termination but within the Unexpired Term, 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 50 miles from the Employee’s residence on the 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). 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 (v), so that the covered relocation expenses are fully reimbursed on an after-tax basis. The Employer shall pay to or reimburse the Employee for such relocation expenses in a lump sum in cash within 30 days after the receipt by Employer of the request (except that if the Employee is a “Specified Employee” as said term is defined in Section 409A of Code, said payment shall not be made prior to the date which is six (6) months after his or her Date of Termination, or if earlier, the Employee’s death). |
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.
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9. Full Settlement. The Company’s or Employer’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, counterclaim, 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, except as provided in Section 11 (b) below.
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
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, 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 Company’s borrowing rate under its senior bank credit facility (or its
equivalent), as determined by the Compensation Committee acting in good faith, on the first
business day in each such quarter which rate shall be expressed as a daily interest rate.
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 (i) if the payment or payments to be made pursuant
to this Agreement are less than 310% of the “base amount” (as defined in Section 280G
of the Code), then such payment or payments shall be reduced to equal 299% of the base
amount, and (ii) if the payment or payments to be made pursuant to this Agreement equal
310% or more of the base amount, and 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”). 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;
provided, however, that this and all other payments under this Section 10 are subject to any
requirement for a delay in said payment(s) pursuant to Section 409A of the Code. 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 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
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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 apprise 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 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, at 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 |
8
| 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; Noncompetition.
(a) 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 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.
(b) The Employee covenants and agrees with Company, its successors and assigns, that
during the period of [ ] years commencing on his Date of Termination, he shall not
engage directly or indirectly, or advance or lend any money to, or make or hold any
investment (other than non-controlling ownership of securities in publicly held corporations)
in or encourage participation by any member of his family, in any business (other than a
subsidiary or affiliate of Company) which is competitive with the business or activities
conducted by the Employee on behalf of the Company, in those market areas and in those areas
of responsibility in which he has transacted business or conducted himself on behalf of
Company prior to or at the time of execution of this Agreement. In the event that the
Employee breaches this covenant, he will forfeit any and all payments or benefits to which he
is otherwise entitled hereunder and which he has not received as of the date of commencement
of such competition.
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 any other plan or agreement on the part of the
Company or a Subsidiary which provides severance
9
compensation to the Employee under the circumstances which would result in payments under this
Agreement, 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: | ||||
| If to the Company: Flowers Foods, 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, and supersedes any prior agreement between the
Company and the Employee with respect to said subject matter.
(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 terms “Change in Control,” “Parent Company,” “Subsidiary,” and “Successor” are
defined in Appendix I hereto, which is incorporated by reference herein. Said definitions
may be amended unilaterally by the Company, which shall notify the Employee in writing of any
such change and provide the Employee with a current Appendix I.
(h) The terms of this Agreement are confidential, and not to be disclosed by the
Employee other than to Employee’s attorney, accountant, or spouse.
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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 FOODS, INC. |
||||
| By: | ||||
| Title: | ||||
EMPLOYEE |
||
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APPENDIX I
Definitions of Certain Terms
Definitions of Certain Terms
1. Change in Control—means the occurrence of any one or more of the following events,
subject to the provisions of subsection (g) hereof:
(a) The Company merges into itself, or is merged or consolidated with another entity,
and as a result of such merger or consolidation, less than 51% of the voting power of the
then-outstanding voting securities of the surviving or resulting entity immediately after
such transaction are directly or indirectly beneficially owned in the aggregate by the former
shareholders of the Company immediately prior to such transaction;
(b) all or substantially all the assets accounted for on the consolidated balance sheet
of the Company are sold or transferred to one or more entities or persons, and as a result of
such sale or transfer, less than 51% of the voting power of the then-outstanding voting
securities of such entity or person immediately after such sale or transfer is directly or
indirectly beneficially held in the aggregate by the former shareholders of the Company
immediately prior to such transaction or series of transactions;
(c) a person, within the meaning of Sections 3(a)(9) or 13(d)(3) (as in effect on the
effective date of this Agreement) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), becomes the beneficial owner (as defined in Rule 13d-3 of the Securities and
Exchange Commission pursuant to the Exchange Act) of (1) 15% or more, but less than 35%, of
the voting power of the then-outstanding voting securities of the Company without prior
approval of the Board of Directors, or (2) 35% or more of the voting power of the
then-outstanding voting securities of the Company; provided, however, that the foregoing does
not apply to any such acquisition that is made by (i) any subsidiary; (ii) any employee
benefit plan of the Company or any subsidiary; or (iii) any person or group of which
employees of the Company or of any subsidiary control a greater than 25% interest, unless the
Compensation Committee determines that such person or group is making a “hostile
acquisition”; or (iv) any person or group of which the Company is an affiliate;
(d) a majority of the members of the Board of Directors are not Continuing Directors,
where a “Continuing Director” is any member of the Board of Directors who (1) was a member of
the Board of Directors on the effective date of this Agreement or (2) was nominated for
election or elected to the Board of Directors with the affirmative vote of a majority of the
Continuing Directors who were members of the Board of Directors at the time of such
nomination or election; or
(e) the Board of Directors determines that (1) any particular actual or proposed merger,
consolidation, reorganization, sale or transfer of assets, accumulation of shares of the
Company or other transaction or event or series of transactions or events will, or is likely
to, if carried out, result in a Change in Control falling within subsections (a), (b), (c) or
(d) of this definition and (2) it is in the best interests of the Company and its
shareholders, and will serve the intended purposes of this definition, if such actual or
proposed transaction constitutes a Change in Control.
(f) an event described in subsections (a) through (e) above occurs with respect to the
Employer, if it is not also the Company.
(g) Notwithstanding the foregoing provisions hereof:
| (1) | if any such merger, consolidation, reorganization, sale or transfer of assets, or tender offer or other transaction or event or series of transactions or events mentioned in subsection (e) of this definition shall be abandoned, or any such accumulations of shares shall be dispersed or otherwise resolved, the Board of Directors may, by notice to the affected parties, nullify the effect thereof, but without prejudice to any action that may have been taken prior to such nullification; and | ||
| (2) | unless otherwise determined in a specific case by the Board of Directors, a “Change in Control” shall not be deemed to have occurred for purposes of subsection (c) of this definition solely because (i) the Company, (ii) a subsidiary or (iii) any the Company-sponsored employee stock ownership plan or any other employee benefit plan of the Company or any subsidiary either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, |
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| Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) under the Exchange Act disclosing beneficial ownership by it of shares of the then-outstanding voting securities of the Company, whether in excess of 20% or otherwise, or because the Company reports that a change in control of the Company has occurred or will occur in the future by reason of such beneficial ownership. |
2. 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.
3. 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.
4. 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.
5. The term “Unexpired Term” shall mean the period, if any, remaining from the Date of
Termination until the first to occur of (A) the first anniversary of the Date of Termination or
(B) the end of the Employment Period.
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