Document:

flo-ex1028_819.htm

 

Exhibit 10.28

FLOWERS FOODS, INC.

2014 OMNIBUS EQUITY AND INCENTIVE COMPENSATION PLAN

2017 Performance Stock Agreement

WHEREAS, (the “Grantee”) is a Participant in the Flowers Foods, Inc. 2014 Omnibus Equity and Incentive Compensation Plan (the “Plan”) and is an employee of Flowers Foods, Inc. (the “Company”) or a Subsidiary; and

WHEREAS, a Target grant of Performance Stock (“Performance Stock”) to the Grantee has been duly authorized by a resolution of the Committee as effective on (the “Date of Grant”).

NOW, THEREFORE, pursuant to the Plan, the Company hereby grants to the Grantee as of the Date of Grant Performance Stock at Target pursuant to this 2017 Performance Stock Agreement (this “Agreement”) whereby one-half (1⁄2) or of such Performance Stock shall be designated “ROIC Shares” and one-half (1⁄2) or shall be designated “TSR Shares,” as both terms are defined in Section 1(b) and (c), respectively.

1. Vesting of Performance Stock.  a)  On the Vesting Date, the Performance Stock shall become nonforfeitable, subject to the Grantee having remained in the continuous employ of the Company and/or Subsidiary until said date and only to the extent that the Performance Criteria listed in sub-sections (b) and/or (c) below have been met as of said date.  For purposes of this Agreement, Grantee’s employment with the Company or Subsidiary will be deemed to have ceased as of the last day worked.  In the case of a Grantee having received short term disability benefits, employment will be deemed to have ceased on the last day for which such short term benefits are paid, unless the Grantee immediately returns to active employment.  For the purposes of this Agreement, the continuous employment of the Grantee with the Company or a Subsidiary will not be deemed to have been interrupted, and the Grantee will not be deemed to have ceased to be an employee of the Company or a Subsidiary, by reason of (i) the termination of his employment by the Company or a Subsidiary and immediate rehire by the Company (if the Company was not the original employer) or by another Subsidiary or (ii) an approved leave of absence.

(b) (i) In order for any portion of the “ROIC Shares” to become nonforfeitable as of the Vesting Date, the following Performance Criteria must be achieved during the period commencing January 1, 2017 and ending December 31, 2018:  the Company’s average return on invested capital (“ROIC”) calculated on continuing operations must exceed its weighted average cost of capital (“WACC”) by 175 basis points for said period.

 

 

	
 
	
(ii)
	
In the event that the requirements of subparagraph (b)(i) above are satisfied, the grant of Target ROIC Shares shall be earned as indicated below. For this purpose, the performance period is the eight fiscal quarters from January 2017 through December 2018.

 

	
Difference (or “Spread”)

ROIC minus WACC
	
Payment Percentage

(% of Target)

	
Less than 175 basis points
	
0%

	
175 basis points
	
50%

	
375 basis points
	
100%

	
475 basis points or above
	
125%

	
Straight-line interpolation between points

 

(c) (i) In order for any portion of Target “TSR Shares” to become nonforfeitable as of the Vesting Date, the following Performance Criteria must be achieved:  the relative performance of the Company’s “total return to shareholders” (“Flowers TSR”) determined for the period commencing January 1, 2017 and ending December 31, 2018 compared to the “total return to shareholders” of Flowers peer group companies (“Peer Group TSRs”) for the same period equals or exceeds the thirtieth percentile (30%) as follows:

	
 
	
(ii)
	
The final four hypothetical payouts relating to Flowers TSR, based on the table below, from January 1, 2017 through the quarter ending prices for March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018 will be averaged to determine the final percent of Target TSR Shares earned.

 

	
Percentile Flowers TSR

vs. Peer Group TSRs
	
Payment Percentage

(% of Target)

	
Less than 30th
	
0%

	
30th
	
50%

	
50th
	
100%

	
70th
	
150%

	
90th or above
	
200%

	
Straight-line interpolation between points

 

(d) ROIC Shares and TSR Shares that become nonforfeitable under Sections 1(b) and (c) shall be distributed within ten (10) business days after the Vesting Date.

(e) In the event that Grantee’s employment with the Company shall terminate prior to December 31, 2018 because of Retirement, a pro rata portion of Performance Stock shall become nonforfeitable on the Vesting Date based on the actual performance achieved under Section 1(b) and (c) whereby the pro rata portion shall be determined by dividing the number of complete fiscal quarters from the Date of Grant until Retirement compared with eight (8). The distribution of the nonforfeitable Performance Stock under this subsection (e) shall be made at the same time as Performance Stock under Section 1(d).

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(f) Notwithstanding the provisions of Section 1(a)-(e), in the event of an occurrence described below, all or a portion of the Grant of Performance Stock under this Agreement shall immediately become nonforfeitable as described below in subsections (i) and (ii) and such vested Performance Stock shall be distributed within ten (10) business days of the applicable occurrence:

	
 
	
(i)
	
in the event of a Change in Control where either (A) the Grantee is involuntarily terminated from employment prior to December 31, 2018 and such involuntary termination is for reasons other than for Cause or Grantee terminates his or her employment for Good Reason or (B) such Grant of Performance Stock is not assumed or converted into replacement awards after the Change in Control, (1) ROIC Shares shall pay out at Target, and (2) TSR Shares shall pay out as follows: (x) if twelve (12) months of the performance period have been completed, payout is based on TSR as of the Change in Control date without application of 4-quarter averaging, or (y) if twelve (12) months of the performance period have not been completed, payout is at Target; or

	
 
	
(ii)
	
in the event that Grantee’s employment with the Company shall terminate prior to December 31, 2018 because of Disability or death, the payout of ROIC Shares and TSR Shares shall be at Target, respectively.

(g) Section 1 Definitions.

	
 
	
(i)
	
“Retirement” means termination of employment after either (A) attainment of age sixty-five (65), or (B) attainment of age fifty-five (55) provided Grantee has accrued ten (10) years of service.

	
 
	
(ii)
	
“Vesting Date” means the date that the Company files its Annual Report on Form 10‐K with the Securities and Exchange Commission reflecting the certification of the Performance Criteria set forth in this Section 1.

	
 
	
(iii)
	
“Flowers TSR” means (A) the Company’s common stock price change plus dividends (which are assumed to be reinvested as paid out to shareholders) compared to (B) the price of Company common stock determined on the trading day immediately preceding the commencement of the performance period.

	
 
	
(iv)
	
“ROIC” means (A) GAAP net income as reported by the Company with the following adjustments:  (1) after-tax interest will be added back and (2) the Committee may adjust for extraordinary, infrequent or unusual items as defined by GAAP and as agreed to by the external auditors of the Company divided by (B) the average of the beginning and ending Company debt plus shareholder equity with the average calculated using the eight (8) full calendar quarters of financial data commencing January 1, 2017 and ending December 31, 2018. 

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(v)
	
“Peer Group TSRs” mean the total shareholder returns calculated as described in the definition of Flowers TSR but determined for each of the following twenty (20) peer group companies:  Mondelez International, Inc., Snyders-Lance, Inc., Hain Celestial Group, Inc., Hershey Company, Treehouse Foods, Inc., Smucker (J.M.) Company, McCormick & Company, Inc., B&G Foods, Inc., J and J Snack Foods Corp., Lancaster Colony Corp., Hormel Foods Corp., General Mills, Inc., Kellogg Company, Campbell Soup Company, ConAgra Foods, Inc., Dean Foods Company, The Kraft Heinz Company., Whitewave Foods Company, Post Holdings, Inc and Pinnacle Foods, Inc.  The Peer Group TSRs shall be adjusted as follows for the following events:  (x) peer group companies filing for bankruptcy during the performance period will be considered to have negative one hundred percent (-100%) TSR and (y) peer group companies that are acquired during the performance period shall (1) be excluded from all calculations if acquired during the first year of the performance period and (2) if acquired on or after such one-year period, the peer group company will be positioned relative to the Company’s TSR based on the acquired company’s TSR through the trading day which is twenty (20) trading days before the acquired company announces the transaction.

	
 
	
(vi)
	
“Percentile” means the rank order from the bottom of Flowers’ TSR vs. the Peer Group TSRs on a scale of 100, as calculated by Microsoft Excel®, with Flowers Foods included in the group for this purpose.

	
 
	
(vii)
	
“Performance Criteria” means the Management Objectives approved by the Committee which set forth the performance standards applicable to each of the ROIC Shares and the TSR Shares.

	
 
	
(viii)
	
“Target” means the payment percentage equaling 100% relative to a designated level of achievement of the applicable Performance Criteria set forth in the table providing the range of potential payment opportunities for each of the ROIC Shares and the TSR Shares. 

	
 
	
(ix)
	
“WACC” means the sum of the after-tax cost of each Company capital component times its weight.

	
 
	
(x)
	
“Cause” means:

	
 
	
(A)
	
any willful or negligent material violation of any applicable securities laws (including the Sarbanes-Oxley Act of 2002);

	
 
	
(B)
	
any act of fraud, intentional misrepresentation, embezzlement, acts of dishonesty, misappropriation or conversion of any asset or business opportunity of the Company;

	
 
	
(C)
	
conviction of, or entering into a plea of nolo contendere to, a felony;

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(D)
	
an intentional, repeated or continuing violation of any of the Company’s policies or procedures that occurs or continues after the Company has given notice to the Participant that he or she has materially violated a Company policy or procedure;

	
 
	
(E)
	
any breach of a written covenant or agreement with the Company, including the terms of this Plan (other than a failure to perform Participant’s duties with the Company resulting from the Participant’s incapacity due to physical or mental illness or from the assignment to the Participant of duties that would constitute Good Reason), which is material and which is not cured within thirty (30) days after written notice thereof from the Company to the Participant;

	
 
	
(F)
	
abuse of alcohol or drugs; or

	
 
	
(G)
	
failure to reasonably cooperate in a governmental or Board investigation.

	
 
	
(xi)
	
“Good Reason” means a timely termination of employment for any of the reasons set forth in (A) through (H) below but only if (I) is satisfied:

	
 
	
(A)
	
a material diminution in the participant’s duties, responsibilities or authority from that which exists on the Change in Control date (For the avoidance of doubt, a change in title or reporting alone does not constitute “Good Reason” under this Section (A).);

	
 
	
(B)
	
a material reduction by the Company of a participant’s base salary;

	
 
	
(C)
	
a material reduction by the Company of a participant’s target bonus opportunity;

	
 
	
(D)
	
a material reduction in long-term incentives from the year prior to the Change in Control, as measured by grant date economic values determined by a third-party compensation firm chosen by the Company and using generally accepted methodologies, which may include annualizing prior year long-term incentive grants over more than one year and ignoring prior special retention or sign-on grants;

	
 
	
(E)
	
a material failure of the successor entity to cover the participant under the savings and retirement plans provided to similarly situated executives;

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(F)
	
the relocation of the Company’s principal executive offices more than fifty (50) miles from their current location, if at the time of a Change in Control the participant is based at the Company’s principal executive offices, or the requirement of the participant to be based at a location more than fifty (50) miles from the participant’s location as of the Change of Control; 

	
 
	
(G)
	
any purported termination by the Company of the participant’s employment upon the occurrence of a Change in Control except for cause; or

	
 
	
(H)
	
any failure by a successor company to assume on behalf of its participants the Flowers Foods Inc, Change of Control Severance Plan (the “COC Severance Plan”) or to amend such COC Severance Plan in violation of its terms; 

but provided that,

	
 
	
(I)
	
the participant gives the Company timely notice of the “good reason” event and a reasonable amount of time to cure such “good reason” event.

For purposes of subsection (I) above, before a termination by a Grantee will constitute termination for Good Reason, the Grantee must give the Company a notice of termination of employment within thirty (30) calendar days following the occurrence of the event that constitutes Good Reason. For a Grantee terminated prior to and in anticipation of a Change in Control during the period that is six (6) months preceding the Change in Control date, the event that constitutes Good Reason is the consummation of the transaction. Failure to provide such notice of termination of employment within such 30-day period shall be conclusive proof that the Grantee shall not have Good Reason to terminate employment.

Good Reason shall exist only if (i) the Company fails to remedy the event or events constituting Good Reason within thirty (30) calendar days after receipt of the notice of termination of employment from the Grantee and (ii) the Grantee terminates his or her employment within ninety (90) days of the Grantee receiving notice of the existence of any event or condition described in clauses (A) through (H) above. 

2. Forfeiture of Performance Stock. (a) If the Grantee ceases to be continuously employed by the Company and/or Subsidiary at any time prior to the Vesting Date, any Performance Stock that have not theretofore become nonforfeitable in accordance with the terms of Section 1 shall be forfeited. 

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(b) In any event, if prior to the Performance Stock becoming nonforfeitable the Grantee is demoted from the position of employment held by the Grantee on the Date of Grant to a position which would not have been eligible for a Grant pursuant to the Committee’s guidelines as of the Date of Grant, then the Grantee shall forfeit a fraction of the initial Grant, but shall be entitled to retain the remaining fraction of the initial Grant, subject to the provisions of this Agreement, which fraction is equal to the number of the Company’s complete fiscal quarters in which the Grantee is employed in the position held by the Grantee on the Date of Grant (beginning with the Date of Grant and terminating with the quarter in which or with which demotion occurs) divided by eight (8).  Notwithstanding the foregoing, solely for purposes of this Agreement, the Committee may determine in its sole discretion that an apparent demotion (as opposed to an actual demotion) shall not cause a forfeiture.

3. Dividend, Voting and Other Rights.  Except as otherwise provided in this Section 3, the Grantee shall have none of the rights of a stockholder with respect to the Performance Stock.  A notional cash account for the Grantee shall be credited with an amount equal to any cash dividends paid by the Company on its common stock during the full or partial performance period as determined under Section 1.  Such notional cash dividends shall become non-forfeitable only with respect to the corresponding Performance Stock that ultimately vest in accordance with Section 1.  Non-forfeitable notional cash dividends will be distributed in cash, without interest, when the corresponding vested Performance Stock are paid out as set forth in Sections 1(d) or (e), unless there is an occurrence described in Section 1(f), in which case such nonforfeitable notional dividends shall be paid in cash, without interest, at the same time as the corresponding vested Performance Stock described in Section 1(f). 

4. Retention of Stock Certificate(s) by the Company.  The certificate(s) representing the Performance Stock ultimately earned and vested shall not be issued until payout. 

5. Restrictions on Transfer of Performance Stock.  Performance Stock may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by the Grantee, except to the Company, until such shares have been paid out. Any purported transfer, encumbrance or other disposition of the Performance Stock that is in violation of this Section 5 shall be null and void, and the other party to any such purported transaction shall not obtain any rights to or interest in the Performance Stock. 

6. Compliance with Law.  The Company will make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of this Agreement, the Company will not be obligated to issue any restricted or nonrestricted shares of Common Stock or other securities pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

7. Adjustments.  The Committee may make any adjustments in the number and kind of shares of stock or other securities covered by this Agreement that the Committee may determine to be equitably required to prevent dilution or enlargement of the Grantee’s rights under this Agreement that would otherwise result from any (a) stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities or 

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(c) other corporate transaction or event having an effect similar to any of the foregoing.  Furthermore, in the event of any transaction or event described or referred to in the immediately preceding sentence, the Committee may provide in substitution for any or all of the Grantee’s rights under this Agreement such alternative consideration as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all grants so replaced.

8. Taxes and Withholding.  To the extent that the Company or Subsidiary is required to withhold any federal, state, local or foreign tax in connection with the issuance or vesting of any Performance Stock or other amounts pursuant to this Agreement, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the delivery of the shares to the Grantee that the Grantee shall pay the tax in cash or make provisions that are satisfactory to the Company for the payment thereof.

9. No Employment Rights.  The Plan and this Agreement will not confer upon the Grantee any right with respect to the continuance of employment or other service with the Company or any Subsidiary and will not interfere in any way with any right that the Company or any Subsidiary would otherwise have to terminate any employment or other service of the Grantee at any time.

10. Relation to Other Benefits.  Any economic or other benefit to the Grantee under this Agreement will not be taken into account in determining any benefits to which the Grantee may be entitled under any profit‐sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and will not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or any Subsidiary, unless provided otherwise in any such plan.

11. Agreement Subject to the Plan.  The Performance Stock granted under this Agreement and all of the terms and conditions hereof are subject to all of the terms and conditions of the Plan.  Capitalized terms in this Agreement may be defined herein, defined in the Plan or in both places.  In the event of any inconsistency between this Agreement and the Plan, the terms of the Plan will govern.  The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the Performance Stock or its vesting.

12. Recoupment.  In the event the Board has reliable evidence of knowing misconduct by a Participant that resulted in the incorrect overstatement of the Company’s earnings or other financial measurements which were taken into consideration with respect to Management Objectives, and the Participant either received an award of Option Rights, Restricted Stock, Performance Shares, Performance Units or any other award granted under the Plan, or such awards vested or became nonforfeitable as a result of such overstatement, the Board shall require that the Participant reimburse the Company or forfeit, as applicable, the full amount of any awards granted pursuant to this Plan that resulted from such overstatement.  The remedy specified in this Section 12 shall not be exclusive, and shall be in addition to every other right or remedy at law or in equity that may be available to the Company.

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13. Amendments.  Subject to the terms of Section 17 of the Plan, any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment will adversely affect the rights of the Grantee under this Agreement without the Grantee’s consent.

14. Severability.  In the event that one or more of the provisions of this Agreement is invalidated for any reason by a court of competent jurisdiction, any provision so invalidated will be deemed to be separable from the other provisions hereof, and the remaining provisions hereof will continue to be valid and fully enforceable.

15. Successors and Assigns.  Without limiting Section 5 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.

16. Governing Law.  This Agreement will be construed and governed in accordance with the laws of the State of Georgia.

17. Notices.  Any notice to the Company provided for herein shall be in writing to the Company at the principal executive office of the Company, marked Attention:  Corporate Secretary, and any notice to the Grantee shall be addressed to said Grantee at his or her address currently on file with the Company.  Except as otherwise provided herein, any written notice shall be deemed to be duly given if and when delivered personally or deposited in the United States mail, first class registered mail, postage and fees prepaid, and addressed as aforesaid.  Any party may change the address to which notices are to be given hereunder by written notice to the other party as herein specified (provided that for this purpose any mailed notice shall be deemed given on the third business day following deposit of the same in the United States mail).

18. Certain Additional Defined Terms.  In addition to the following defined terms and terms defined elsewhere herein, when used in the Agreement, terms with initial capital letters have the meaning given such term under the Plan, as in effect from time to time.

(a) “Board” means the Board of Directors of the Company. 

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(b) “Change in Control” shall mean the the consummation of any Change in Control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as determined by the Board, in its sole discretion; provided that, without limitation, such a Change in Control shall be deemed to have occurred if:

	
 
	
(i)
	
any “Person” (as such term is defined in Sections 13(d) or 14(d)(2) of the Exchange Act; hereafter, a “Person”) is on the date hereof or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 35% or more of the Voting Power; provided, however, that for purposes of this Section 18(b), the following acquisitions shall not constitute a Change in Control:

	
 
	
A.
	
(1) any acquisition of Voting Power directly from the Company that is approved by a majority of those persons serving as directors of the Company on the date of this Plan (the “Original Directors”) or their Successors (as defined below), (2) any acquisition of Voting Power by the Company, or any Subsidiary, and (3) any acquisition of Voting Power by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company, or any Subsidiary (the term “Successors” shall mean those directors whose election or nomination for election by stockholders has been approved by the vote of at least two-thirds of the Original Directors and previously qualified Successors serving as directors of the Company as the case may be, at the time of such election or nomination for election);

	
 
	
B.
	
if any Person is or becomes the beneficial owner of 35% or more of the Voting Power as a result of a transaction described in clause (A) of this Section 18(b)(i) above and such Person thereafter becomes the beneficial owner of any additional shares of Voting Power representing 1% or more of the then-outstanding Voting Power other than in an acquisition directly from the Company that is approved by a majority of the Original Directors or their Successors or other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Voting Power are treated equally, such subsequent acquisition shall be treated as a Change in Control;

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C.
	
a Change in Control will not be deemed to have occurred if a Person is or becomes the beneficial owner of 35% or more of the Voting Power as a result of a reduction in the number of shares of Voting Power outstanding pursuant to a transaction or series of transactions that is approved by a majority of the Original Directors or their Successors unless and until such Person thereafter becomes the beneficial owner of any additional shares of Voting Power representing 1% or more of the then-outstanding Voting Power other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Voting Power are treated equally; or

	
 
	
D.
	
if at least a majority of the Original Directors or their Successors determine in good faith that a Person has acquired beneficial ownership of 35% or more of the Voting Power inadvertently, and such Person divests as promptly as practicable but no later than the date, if any, set by the Original Directors or their Successors a sufficient number of shares so that such Person beneficially owns less than 35% of the Voting Power then no Change in Control shall have occurred as a result of such Person’s acquisition.

	
 
	
(ii)
	
The Company consummates a merger or consolidation in which stockholders of the Company immediately prior to entering into such agreement will beneficially own immediately after the effective time of the merger or consolidation securities of the Company or any surviving or new corporation, as the case may be, having less than 60% of the Voting Power or any surviving or new corporation, as the case may be, including Voting Power exercisable on a contingent or deferred basis as well as immediately exercisable Voting Power, excluding any merger or combination of a wholly owned Subsidiary into the Company, or the Company into a wholly owned Subsidiary; or

	
 
	
(iii)
	
The Company consummates a sale, lease, exchange or other transfer or disposition of all or substantially all of its assets to any Person other than to a wholly owned Subsidiary, but not including (A) a mortgage or pledge of assets granted in connection with a financing or (B) a spin-off or sale of assets if the Company continues in existence and its common shares are listed on a national securities exchange, quoted on the automated quotation system of a national securities association or traded in the over-the-counter market; or

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(iv)
	
the Original Directors and/or their Successors as defined above in Section 18(b)(i)(A) of this definition do not constitute a majority of the whole Board as the case may be; or

	
 
	
(v)
	
approval by the stockholders of the Company of a complete liquidation or dissolution of the Company as the case may be.

(c) “Subsidiary” means a corporation, company or other entity (i) more than fifty percent (50%) of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than fifty percent (50%) of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company.

(d) “Voting Power” means at any time, the combined voting power of the then outstanding securities entitled to vote generally in the election of Directors in the case of the Company, or the members of the board of directors or similar body in the case of another entity.

19. Compliance with Section 409A of the Code.  To the extent applicable, it is intended that this Agreement and the Plan comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) do not apply to the Grantee.  This Agreement in conjunction with the terms of the Plan shall be administered in a manner consistent with this intent.

20. Data Protection.  By signing below, the Grantee consents that the Company may process the Grantee’s personal data, including name, Social Security number, address and number of shares of Performance Stock (“Data”) exclusively for the purpose of performing this Agreement, in particular in connection with the Performance Stock awarded to the Grantee.  For this purpose the Data may also be disclosed to and processed by companies outside the Company, e.g., banks involved.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and Grantee has also executed this Agreement in duplicate, as of the day and year first above written.

(Signatures follow on the next page)

 

 

 

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FLOWERS FOODS, INC.

	
 
	
 
	
 

	
By:
	
 
	
/s/ R. Steve Kinsey

	
 
	
 
	
R. Steve Kinsey

	
 
	
 
	
 

	
Grantee:Exhibit

Exhibit 10.1

February 16, 2017

Mr. John S. White
3 Pin Oak Drive
Chadds Ford, PA  19317

Personal and Confidential

Dear Jack:

We are pleased to extend an offer of employment to you as Executive Vice President - Operations of CSS Industries, Inc. (“CSS”) reporting to Christopher Munyan - President and Chief Executive Officer.  Your primary work location will be Plymouth Meeting, PA.

You acknowledge and agree that there are no other valid oral or written agreements relating to the terms and conditions of your employment with CSS as its Executive Vice President - Operations.  You further represent and covenant to CSS that you are not subject or a party to any employment agreement, non-competition covenant, understanding or restriction which would prohibit or restrict you from executing this letter and performing all duties and responsibilities incidental to the position of Executive Vice President - Operations of CSS.   

1.    Commencement Date - Your employment will commence on a date mutually agreed by you and CSS, but in no event later than Monday, March 13, 2017.  Your employment status with CSS will be that of an employee at-will, subject to termination by either you or CSS at any time.

2.    Compensation - The compensation package for this position will be as follows:

A.    Base Salary - A base salary in the gross amount of Three Hundred Thousand Dollars ($300,000) per annum payable at such times as CSS pays its executives.  There will be an annual performance review thereafter and you will then be considered for an increase in base salary, commencing April 1, 2018, consistent with the then current CSS policy. 

B.    Incentive Compensation - For CSS’ fiscal year ending March 31, 2018, you will be eligible to participate in the Management Incentive Plan (“MIP”).  For purposes of calculating your potential 2018 fiscal year incentive compensation, and depending on the extent of achievement of certain individual and CSS objectives, you will have the potential of earning incentive compensation based upon 60% of your base salary specified in Section 2.A.  You will not be eligible to participate in the MIP for CSS’ current fiscal year ending March 31, 2017.

For CSS’ subsequent fiscal years, depending on the extent of achievement of certain individual and CSS objectives, you will have the potential of earning for a full fiscal year period incentive 

compensation with a target opportunity of up to 60% of your then base salary.  The financial target objectives of your potential subsequent fiscal year incentive compensation will be determined based upon the applicable actual full fiscal year financial results of CSS.

C.    Equity Grants - We will recommend that you be granted a stock option to acquire 10,000 shares of CSS Common Stock (2,500 of which will vest on each anniversary of the grant until all of such shares are vested) and a time-vested stock bonus award of 10,000 restricted stock units of CSS Common Stock (5,000 of which will vest on the third anniversary of the grant and 5,000 of which will vest on the fourth anniversary of the grant), which recommendation will be provided to the Human Resources Committee (the “Committee”) of the Board of Directors of CSS for consideration at the next available date upon which the Committee considers equity grant recommendations after the date upon which you commence employment with CSS.  These grants will in all respects be subject to and in accordance with the provisions of the CSS 2013 Equity Compensation Plan, and the terms of the grant letters to be provided to you at the time of the grants.  

Thereafter, you will be eligible to be recommended to the Committee to receive annual equity grants, the specifics of which shall be determined at the Committee’s sole discretion.

D.    Company Automobile - You will be provided for your use a CSS-owned or leased automobile comparable to the owned or leased automobiles then made available by CSS to its Vice President-level officers.  

E.    Vacation - You will be eligible to accrue four (4) weeks vacation each calendar year, in accordance with the applicable terms of CSS’ then current vacation policy.

3.    Benefits Coverage -You will be entitled to participate in those CSS benefit programs available to its officer level personnel in accordance with the applicable terms of these programs.  

4.    Confidential Information.  

A.    Confidentiality Agreement. You recognize and acknowledge that by reason of employment by and service to CSS, you have had and will continue to have access to confidential information of CSS and its affiliates, including, without limitation, information and knowledge pertaining to products and services offered, inventions, innovations, designs, ideas, plans, trade secrets, proprietary information, computer systems and software, packaging, advertising, distribution and sales methods and systems, sales and profit figures, customer and client lists, and relationships between or among CSS and its affiliates and dealers, distributors, wholesalers, customers, clients, suppliers and others who have business dealings with CSS and such affiliates (“Confidential Information”).  You acknowledge that such Confidential Information is a valuable and unique asset of CSS and/or its affiliates, and covenant that you will not, either during or at any time after your employment with CSS, disclose any such Confidential Information to any person for any reason whatsoever (except as your duties described herein may require or except as provided in the Reports to Government Entities clause below) without the prior written consent of the Committee, unless such information is in the public domain through no fault of you or except as provided in the Reports to Government Entities clause as provided below or as may be required by law.

                 B.        Reports to Government Entities.  Nothing in this letter, including the Confidentiality Agreement clause above, restricts or prohibits you from initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, 

reporting possible violations of law or regulation to, or from filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the U.S. Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation.  You do not need the prior authorization of CSS to engage in conduct protected by this paragraph, and you do not need to notify CSS that you have engaged in such conduct.

                Please take notice that federal law provides criminal and civil immunity to federal and state claims for trade secret misappropriation to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law.

5.    Non-Competition.  During your employment with CSS, and for a period of one year thereafter, you will not, without the prior written consent of the Committee, directly or indirectly, own, manage, operate, join, control, finance or participate in the ownership, management, operation, control or financing of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with or use or permit your name to be used in connection with, any business or enterprise engaged within any portion of  the United States or Canada (collectively, the “Territory”) (whether or not such business is physically located within the Territory) that is engaged in the creation, design, manufacture, distribution or sale of any products or services that are the same or of a similar type then manufactured or otherwise provided by CSS or by any of its affiliates during your employment with CSS (the “Business”).   You recognize that you will be involved in the activity of the Business throughout the Territory, and that more limited geographical limitations on this non-competition covenant (and the non-solicitation covenant set forth in Section 6 of this letter agreement) are therefore not appropriate.  The foregoing restriction shall not be construed to prohibit your ownership of not more than five percent (5%) of any class of securities of any corporation which is engaged in any of the foregoing businesses having a class of securities registered pursuant to the Securities Act of 1933, provided that such ownership represents a passive investment and that neither you nor any group of persons including you in any way, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in business, other than exercising his rights as a shareholder, or seeks to do any of the foregoing.  We acknowledge and agree that if CSS fails to satisfy its material obligations to you under this letter agreement after you have provided CSS with at least thirty (30) days written notice of such failure, then your obligation to comply with the non-competition covenant set forth in this Section 5 shall be waived.

6.    No Solicitation.  During your employment with CSS, and for a period of one year thereafter, you agree not to, either directly or indirectly, (i) call on or solicit with respect to the Business any person, firm, corporation or other entity who or which at the time of termination of your employment with CSS was, or within two years prior thereto had been, a customer of CSS or any of its affiliates, or (ii) solicit the employment of any person who was employed by CSS or by any of its affiliates on a full or part-time basis at any time during the course of your employment with CSS, unless prior to such solicitation of employment, such person’s employment with CSS or any of its affiliates was terminated.  We acknowledge and agree that if CSS fails to satisfy its material obligations to you under this letter agreement after you have provided CSS with at least thirty (30) days written notice of such failure, then your obligation to comply with the non-solicitation covenant set forth in this Section 6 shall be waived.  

7.    Severance Payments.  Your employment status with CSS will be that of an employee at-will, and thus this employment status is subject to termination by either you or the Company at any time.  However, in the event that the Company terminates your employment without cause, and subject to your compliance with the terms and conditions of this letter agreement, you will be eligible for severance payments in an amount equal to the greater of fifty-two (52) weeks of your then-current annual base salary or an amount governed by the Company’s then-current severance policy applicable to you (less applicable tax withholdings and payroll deductions).  For purposes of this letter agreement, termination “without cause” means termination other than termination resulting from or related to your breach of any of your obligations under this letter agreement, your failure to comply with any lawful directive of the Company’s President and Chief Executive Officer, your failure to comply with CSS’ Code of Ethics, your conviction of a felony or of any moral turpitude crime, or your willful or intentional engagement in conduct injurious to the Company or any of its affiliates.

The foregoing payment obligation is contingent upon (x) receipt by CSS of a valid and fully effective release (in form and substance reasonably satisfactory to CSS) of all claims of any nature which you might have at such time against CSS, its affiliates and their respective officers, directors and agents, excepting therefrom only any payments due to you from CSS pursuant to this Section 7, and (y) your resignation from all positions of any nature which you may then hold with CSS and its affiliates.  If you are eligible to receive the foregoing payment, such amount will be paid to you in equal installments, with such installments being paid on the then-applicable paydays for CSS executives, commencing on or about the first such payday following the termination of your employment by CSS without cause and your satisfaction of the conditions specified in the immediately preceding sentence.   

8.    Equitable Relief.

A.      You acknowledge that the restrictions contained in Sections 4, 5, and 6 of this letter agreement are reasonable and necessary to protect the legitimate interests of CSS and its affiliates, that CSS would not have entered into this letter agreement in the absence of such restrictions, and that any violation of any provision of those Sections will result in irreparable injury to CSS and its affiliates.   You represent that your experience and capabilities are such that the restrictions contained in Sections 4 and 5 hereof will not prevent you from obtaining employment or otherwise earning a living at the same general level of economic benefit as is anticipated by this letter agreement.  YOU FURTHER REPRESENT AND ACKNOWLEDGE THAT (i) YOU HAVE BEEN ADVISED BY CSS TO CONSULT YOUR OWN LEGAL COUNSEL IN RESPECT OF THIS LETTER AGREEMENT, (ii) THAT YOU HAVE HAD FULL OPPORTUNITY, PRIOR TO EXECUTION OF THIS LETTER AGREEMENT, TO REVIEW THOROUGHLY THIS LETTER AGREEMENT WITH YOUR COUNSEL, AND (iii) YOU HAVE READ AND FULLY UNDERSTAND THE TERMS AND PROVISIONS OF THIS LETTER AGREEMENT.

B.      You agree that CSS shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as any other remedies provided by law arising from any violation of Sections 4, 5, and 6 of this letter agreement, which rights shall be cumulative and in addition to any other rights or remedies to which CSS may be entitled.  In the event that any of the provisions of Sections 4, 5, and 6 hereof should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable law.

C.      You and CSS irrevocably and unconditionally (i) agree that any suit, action or other legal proceeding arising out of Sections 4, 5, and 6 of this letter agreement, including without limitation, any action commenced by CSS for preliminary or permanent injunctive relief or other equitable relief, may be brought in the United States District Court for the Eastern District of Pennsylvania, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Philadelphia County, Pennsylvania, (ii) consent to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waive any objection to the laying of venue of any such suit, action or proceeding in any such court.  

D.      You agree that CSS may provide a copy of Sections 4, 5, and 6 of this letter agreement to any business or enterprise (i) which you may directly or indirectly own, manage, operate, finance, join, participate in the ownership, management, operation, financing, control or control of, or (ii) with which you may be connected with as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise, or in connection with which you may use or permit your name to be used.

9.      Governing Law.  This letter agreement shall be governed by and interpreted under the laws of the Commonwealth of Pennsylvania without giving effect to any conflict of laws provisions.

10.    Section 409A of the Code. 

A.        Interpretation.  Notwithstanding the other provisions hereof, this letter agreement is intended to comply with the requirements of Section 409A of the Code, to the extent applicable, and this letter agreement shall be interpreted to avoid any penalty sanctions under Section 409A of the Code.  Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with Section 409A of the Code and, if necessary, any such provision shall be deemed amended to comply with Section 409A of the Code and regulations thereunder.  If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed.  All payments to be made upon a termination of employment under this letter agreement that are deferred compensation may only be made upon a “separation from service” under Section 409A of the Code.  For purposes of Section 409A of the Code, each payment made under this letter agreement shall be treated as a separate payment.  In no event may you, directly or indirectly, designate the calendar year of payment.  While this letter agreement is intended to comply with the requirements of Section 409A of the Code, to the extent applicable, neither CSS nor any of its affiliates makes or has made any representation, warranty or guarantee of any federal, state or local tax consequences of your receipt of any benefit or payment hereunder, including but not limited to, under Section 409A of the Code, and you are solely responsible for all taxes that may result from your receipt of the amounts payable to you under this letter agreement.
B.    Payment Delay.  To the maximum extent permitted under Section 409A of the Code, the severance benefits payable under this letter agreement are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any amount payable to you during the six (6) month period following your separation date that does not qualify within either of the foregoing exceptions and constitutes deferred compensation subject to the requirements of Section 409A of the Code, then such amount shall hereinafter be referred to as the “Excess Amount.”  If at the time of your separation from service, CSS' (or any entity required to be aggregated with CSS under Section 409A of the Code) stock is publicly-traded on an established 

securities market or otherwise and you are a “specified employee” (as defined in Section 409A of the Code and determined in the sole discretion of CSS (or any successor thereto) in accordance with CSS’ (or any successor thereto) “specified employee” determination policy), then CSS shall postpone the commencement of the payment of the portion of the Excess Amount that is payable within the six (6) month period following your separation date with CSS (or any successor thereto) for six (6) months following your separation date with CSS (or any successor thereto).  The delayed Excess Amount shall be paid in a lump sum to you within thirty (30) days following the date that is six (6) months following your separation date with CSS (or any successor thereto).  If you die during such six (6) month period and prior to the payment of the portion of the Excess Amount that is required to be delayed on account of Section 409A of the Code, such Excess Amount shall be paid to the personal representative of your estate within sixty (60) days after your death.
 
C.    Reimbursements.  All reimbursements provided under this letter agreement shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during your lifetime (or during a shorter period of time specified in this letter agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.

Please confirm your understanding of the foregoing provisions by executing the enclosed counterpart of this letter and returning this executed counterpart to me.

Sincerely,
CSS Industries, Inc.

By /s/ Denise Andahazy    
Denise Andahazy
Vice President - Human Resources

Agreed to and acknowledged as correct:

/s/ John S. White                      19 February 2017             
John S. White                        Date of Signature

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