EXHIBIT 10.16
FORM OF SEPARATION AGREEMENT
AGREEMENT between Flowers Foods, Inc., a Georgia corporation
(the "Company"), and ______________ (the "Employee"), dated as of the __ day of
_____, 2001.
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 _____________.
(b) Certain capitalized terms shall have the meaning
indicated in Appendix I. In addition, the term "Employer"
shall mean either the Company or a Subsidiary, as applicable,
which is the direct employer of the Employee.
(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.
2. 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 Section 2, and (2) it is in the
best interests of the Company and its shareholders, and will
serve the intended purposes of this Section 2, if such actual
or proposed transaction constitutes a Change in Control.
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(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 of this
Section 2:
(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 Section 2
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 Section 2 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,
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.
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 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 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
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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 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 three
fiscal years of the Employer (or shorter actual
period) in which were paid the highest bonuses during
the five said
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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 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.
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(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.
(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).
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(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
(A) 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
(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
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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 Employee immediately prior to delivery to
Employee of the Notice of Termination. Subject to Section 8
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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; provided,
however, that the amount paid shall
represent a period no longer than
the period between the Date of
Termination and the Employee's
attainment of age sixty-five (65)
and shall be prorated on a monthly
basis, if necessary; 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
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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 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 she
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.
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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, 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.
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 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 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, if the Employee complies with the
requirements of the policy
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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. 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
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
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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;
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(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 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.
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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 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
any other plan or agreement on the part of the Company or a Subsidiary
which provides severance 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
15
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.
(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 "Parent Company," "Subsidiary," and
"Successor" are defined in Appendix I hereto, which is
incorporated by reference herein.
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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
(1) 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.
(2) 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.
(3) 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
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