Exhibit 10.4
CHANGE IN CONTROL
AND SEVERANCE AGREEMENT
BETWEEN
RUDDICK CORPORATION and FRED A. JACKSON
This Change in Control and Severance Agreement ("Agreement") is
made and entered into as of this 19th day of September, 2007, by
and between Fred A. Jackson, an individual ("Executive"), and
Ruddick Corporation, a North Carolina corporation in Charlotte,
North Carolina ("Company"). As used herein, the term
"Company" shall include the Company and any and all of its
subsidiaries, unless the context otherwise requires, and shall
specifically include any subsidiary that directly employs the
Executive without further action by the subsidiary.
RECITALS
WHEREAS , the Board of Directors of the Company ("Board")
recognizes that, as is the case with many publicly held
corporations, the possibility of a Change in Control (as defined in
Section 2 hereof) exists and that such possibility, and the
resultant uncertainty as to the Executive's responsibilities,
compensation, or continued employment, may result in the departure
or distraction of the Executive which may be detrimental to the
financial performance of the Company; and
WHEREAS, the Board believes it is important to the Company
and the interests of its stockholders, should the Company receive
acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties
of his own employment situation, to perform his regular duties and
to act objectively in connection with any such proposals; and
WHEREAS , the Board further recognizes that it is in the
best interests of the Company and Executive to provide a reasonable
level of financial protection to the Executive in the event of
certain non-change in control severance situations to resolve any
related uncertainty related to such issues and encourage continuity
of management; and
WHEREAS , the Company considers it essential to the best
interests of the Company, its shareholders, and its employees
generally to agree to provide the benefits set forth below; and
WHEREAS , the Company and the Executive desire to enter into
the agreements set forth herein, and the Company and the Executive
hereby agree to the terms set forth below.
NOW, THEREFORE , in consideration of the premises and the
mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1.
Employment . The parties acknowledge
that this Agreement does not alter Executive's status as an "at
will" employee of the Company.
2.
Definitions . For purposes of this Agreement, the
following terms shall have the meanings specified below.
"Cause"
shall mean (a) fraud; (b) embezzlement; (c) conviction or other
final adjudication of guilt of Executive of any felony; (d) a
material breach of, or the willful failure by Executive to perform
and discharge Executive's duties, responsibilities and obligations
under this Agreement; (e) any act of moral turpitude or willful
misconduct by Executive intended to result in personal enrichment
of Executive at the expense of the Company, or any of its
affiliates or which has a material adverse impact on the business
or reputation of the Company or any of its affiliates; (f)
intentional material damage to the property or business of the
Company; or (g) gross negligence. The determination of Cause
under (d), (e), (f) and (g) shall be made by the Board in its
reasonable judgment.
"Change in
Control" shall mean a "change in ownership," a "change in effective
control," or a "change in the ownership of substantial assets" of a
corporation as generally described in Treasury Regulation Section
1.409A-3(i)(5) and as specifically set forth below (which events
are collectively referred to herein as "Change in Control
events"). Notwithstanding any provision herein to the
contrary, to qualify as a Change in Control, the occurrence of the
Change in Control event must be objectively determinable and any
requirement that any person, such as the Compensation Committee of
the Board, certify the occurrence of a Change in Control event must
be strictly ministerial and not involve discretionary
authority. To constitute a Change in Control with respect to
the Executive, the Change in Control event must relate to (i) the
corporation for which the Executive is performing services at the
time of the Change in Control or (ii) the corporation that is a
majority shareholder of a corporation identified in clause (i)
above, or any corporation in a chain of corporations in which each
corporation is a majority shareholder of another corporation in the
chain, ending in a corporation identified in clause (i) above.
(a) A "change in
ownership" of a corporation occurs on the date that any one person
or more than one person acting as a group, acquires ownership of
stock of the corporation that, together with stock held by such
person or group, constitutes more than 50 percent of the total fair
market value or total voting power of the stock of such
corporation. However, if any one person, or more than one
person acting as a group, is considered to own more than 50 percent
of the total fair market value or total voting power of the stock
of a corporation, the acquisition of additional stock by the same
person or persons is not considered to cause a change in ownership
of the corporation (or to cause a change in the effective control
of the corporation (within the meaning of paragraph (b)
below)). For purposes of this paragraph (a), the term
"corporation" refers to Ruddick Corporation.
(b) Notwithstanding that
a corporation has not undergone a change in ownership under
paragraph (a) above, a "change in effective control" of a
corporation occurs on the date of either:
(i) Any one person,
or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of
the corporation possessing 30 percent or more of the total voting
power of the stock of such corporation; or
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(ii) A majority of
members of the corporation's board of directors is replaced during
any 12-month period by directors whose appointment or election is
not endorsed by a majority of the members of the corporation's
board of directors prior to the date of the appointment or
election.
For purposes of this paragraph (b), the term "corporation" refers
to Ruddick Corporation.
(c) A "change in the
ownership of substantial assets" of a corporation occurs on the
date that any one person, or more than one person acting as a
group, acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such person or
persons) assets from the corporation that have a total gross fair
market value equal to or more than 40 percent of the total gross
fair market value of all of the assets of the corporation
immediately prior to such acquisition or acquisitions. For
this purpose, gross fair market value means the value of the assets
of the corporation, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such
assets. For purposes of this paragraph (c), the term
"corporation" refers to Ruddick Corporation.
Notwithstanding anything to the contrary within this definition of
Change in Control, a sale of assets or stock or other change in
ownership of American & Efird, Inc. shall not constitute a
Change in Control for purposes of this Agreement.
"CIC Accrued
Bonus" shall mean the greater of the amounts determined based upon
the bonus schedule in effect pursuant to the Ruddick Corporation
Cash Incentive Plan calculated based upon the annualized NOPAT
return on invested capital of American & Efird, Inc. for the
fiscal period to date as of the most recent fiscal quarter ending
on or before (a) the date of the Executive's termination or (b) the
Change in Control.
"CIC Average
Prior Bonus Payments" shall mean the greater of the average of the
Executive's prior three (3) year's total bonus payments paid with
respect to the three (3) full fiscal years ending (a) on or prior
to the Change in Control or (b) on or prior to the date of the
Executive's termination.
"CIC
Prorated Bonus" shall mean the amount determined based upon the
bonus schedule in effect pursuant to the Ruddick Corporation Cash
Incentive Plan calculated based upon the annualized NOPAT return on
invested capital of American & Efird, Inc. for the fiscal
period to date as of the most recent fiscal quarter ending on or
before the Change in Control.
"Code"
shall mean the Internal Revenue Code of 1986, as amended.
"Disability"
or "Disabled" shall mean that the Executive: (1) is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (2) is, by reason
of any medically determinable physical or mental impairment which
can be expected to result in death or can
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be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of
not less than 3 months under an accident and health or disability
insurance plan covering Company employees.
"Good
Reason" shall mean the termination by Executive of Executive's
employment with the Company and all its affiliates and subsidiaries
that are considered a single employer within the meaning of
Sections 414(b) and 414(c) of the Code within twenty-four (24)
months following a Change in Control which is due to (i) a material
diminution of Executive's responsibilities, or working conditions,
or duties; (ii) a material diminution in the Executive's base
salary or potential incentive compensation; (iii) a material
negative change in the terms or status of this Agreement; or (iv) a
forced relocation of the Executive outside of a thirty (30) mile
radius of the intersection of Trade and Tryon Streets in Charlotte,
North Carolina; provided, however, the Executive shall provide
written notice to the Company of the initial existence of the
condition causing the change in terms or status no more than ninety
(90) days after the change in terms or status occurs and the
Company shall have thirty (30) days to resolve the issue causing
the change in terms or status. If the Company resolves such
issue, then Executive's employment shall not be subject to the Good
Reason provisions of this Agreement as to such issue.
"Severance
Accrued Bonus" shall mean the amount determined based upon the
bonus schedule in effect pursuant to the Ruddick Corporation Cash
Incentive Plan calculated based upon the annualized NOPAT return on
invested capital of American & Efird, Inc. for the fiscal
period to date as of the most recent fiscal quarter ending on or
before the date of the Executive's termination.
"Severance
Average Prior Bonus Payments" shall mean the average of the
Executive's prior three (3) year's total bonus payments paid with
respect to the three (3) full fiscal years ending on or prior to
the date of the Executive's termination.
"Specified
Benefits Period" shall mean:
(a) One and one-half
(1.5) years if Executive's employment is terminated prior to or
more than twenty-four (24) months following a Change in Control;
or
(b) Two and one-half
(2.5) years if Executive's employment is terminated within
twenty-four (24) months following a Change in Control.
3. Term
. The Agreement shall commence on the date hereof and
shall continue in effect until terminated by written agreement
between the Company and the Executive or until the Executive's
employment with the Company has been terminated.
4. Severance
Benefit . (a) In the event Executive's employment is
terminated by the Company prior to a Change in Control or more than
twenty-four (24) months following a Change in Control other than
for Cause, death, or Disability, the Company shall pay to
Executive, in a single lump sum, an amount equal to one and
one-half (1.5) times: (i) the Executive's current base salary; plus
(ii) the greater of the Executive's current year Severance
Accrued Bonus compensation or the Severance Average Prior Bonus
Payments. Subject to Section 20 below, such amount shall
be
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payable immediately upon Executive's termination of
employment and the lapse of any rescission rights of Executive
under the release referred to below.
(b) In the event Executive's employment is terminated by the
Company prior to a Change in Control or more than twenty-four (24)
months following a Change in Control other than for Cause, the
Company shall pay to Executive, in a single lump sum, a partial
year pro-rated bonus under the Ruddick Corporation Cash Incentive
Plan. Such bonus amount shall be determined by multiplying
the Severance Accrued Bonus amount by a fraction, the numerator of
which is the number of full and partial months of Executive's
employment during the Company's fiscal year that includes
Executive's termination and the denominator of which is twelve
(12). Subject to Section 20 below, such amount shall be
payable to Executive in a lump sum immediately upon Executive's
termination of employment and the lapse of any rescission rights of
Executive under the release referred to below.
(c) Notwithstanding the above provisions of this Section 4, the
payment of any amounts under this Section 4 shall be contingent
upon the Executive agreeing to, executing and not rescinding,
