EXHIBIT 10.5
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT (the "Agreement"), dated as
of October 6, 1997, between RICHFOOD HOLDINGS, INC., a Virginia corporation (the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Employee").
WHEREAS, the Company expects that the Employee will make substantial
contributions to the future growth and prospects of the Company's Retail
Division; and
WHEREAS, the Company desires to obtain the services of the Employee;
and
WHEREAS, the Employee desires to be employed by the Company and to
remain in the employ of the Company during the term of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto covenant and agree
as follows:
1. Definitions. When used in this Agreement, the following terms
shall have the meanings specified:
(a) Cause. "Cause", when referring to a termination of
employment, shall mean: (i) conviction by a court of competent jurisdiction for
a felony; (ii) breach of any material obligation to the Company under any
material agreement concerning any term of employment; or (iii) willful or gross
neglect of duties to the Company (other than by reason of illness or temporary
disability short of Disability) or willful or gross misconduct in the
performance of such duties. All determinations as to whether a termination of
employment is for Cause shall be made in good faith by the Board of Directors of
the Company and shall be binding on the parties hereto.
(b) Change in Control. A "Change in Control" of the
Company shall be deemed to have occurred if: (i) any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) becomes the beneficial owner, directly or indirectly, of securities of
the Company representing more than 50% of the aggregate voting power of all
classes of the Company's then-outstanding voting securities; or (ii) the
shareholders of the Company approve (A) a plan of merger, consolidation or share
exchange between the Company and an entity other than a direct or indirect
wholly-owned subsidiary of the Company, or (B) a proposal with respect to the
sale, lease, exchange or other disposal of all, or substantially all, of the
Company's property.
(c) Disability. "Disability" shall mean a condition,
determined on the basis of medical evidence satisfactory to a physician
designated by the Board of Directors of the Company, rendering the Employee, due
to bodily injury or disease or mental illness, unable to perform the duties
pertaining to his employment with the Company on a full-time basis for 180
consecutive days.
2. Term. This Agreement shall continue in full force and effect
for two (2) years following the date first above written (the "Term").
3. Employment by the Company. The Company hereby employees the
Employee to assist in the management of its Retail Division and with
transitional matters related to its planned acquisition of Farm Fresh, Inc.
("Farm Fresh"), it being understood that it is the intention of the parties that
the Employee will be elected President of Farm Fresh upon completion of such
acquisition, with a job description, responsibilities and duties commensurate
with that position. Notwithstanding the foregoing, the parties agree that the
Company may terminate the Employee's employment hereunder at any time
(including, without limitation, upon the Company's failure to complete the
planned acquisition of Farm Fresh), subject to the provisions of Section 5
hereof, it being expressly understood that this Agreement is not intended to
alter the at-will nature of the Company's employment of the Employee. In
consideration of the Company's obligations under this Agreement, the Employee
agrees that (i) he will not voluntarily leave the employ of the Company during
the Term of this Agreement, and (ii) he will devote his full business time and
attention to service to the Company and its subsidiaries commensurate with his
position throughout the Term of this Agreement.
4. Compensation. (a) During the Term of this Agreement and
unless the Employee's employment has been earlier terminated, the Company agrees
to: (i) pay the Employee as compensation for his services an annual base salary
in the amount of Two Hundred Seventy-Five Thousand Dollars ($275,000) per year,
payable in equal periodic installments (less any amounts permitted or required
to be deducted or withheld under applicable law) not less frequently than
monthly; (ii) permit the Employee to participate in the Company's executive
officer annual performance plan, with a participation level of 35% of his base
salary (it being understood that the Employee's award for the first year of his
participation shall be not less than $50,000); (iii) permit the Employee to
participate in such long-term incentive compensation programs as the Company may
make generally available to its executive employees from time to time; (iv)
provide for the benefit of the Employee such vacation, pension and disability
benefits as are, and such coverage under life, accident, medical and dental
plans as is, generally provided from time to time to executive employees of the
Company; and (v) provide the Employee with an automobile consistent with those
provided by the Company to its other executive officers with similar titles and
responsibilities.
(b) As soon as practicable after the date of this
Agreement, the Company shall grant to the Employee, pursuant to the Company's
Omnibus Stock Incentive Plan, 20,000 non-qualified stock options, with
one-fourth of such options to become exercisable on each of the first four
anniversaries of such grant, and with exercise price for such options to equal
the closing price of the Company's Common Stock on the date of this Agreement as
reported on the New York Stock Exchange Composite Tape. Such grant shall be
made pursuant to a form of agreement, and subject to terms and conditions,
currently in effect for such plan and for grants to the Company's executive
officers generally.
5. Termination of Employment; Severance.
(a) By the Company For Cause. The Company may terminate
the Employee's employment under this Agreement at any time for Cause by delivery
of written notice of termination to the Employee (which notice shall specify in
reasonable detail the basis upon which such termination is made). In the event
the Employee's employment is terminated for Cause, all provisions of this
Agreement (other than Sections 6, 7 and 9 through 17 hereof) and the Term shall
be terminated. Upon any such termination, the Employee shall be entitled only
to payment of his earned and unpaid salary to the date of termination, any
earned and unpaid bonus under the Company's executive officer annual performance
plan (or such comparable successor program that may be in effect from time to
time) for the prior year, unreimbursed business and entertainment expenses in
accordance with the Company's policy, and unreimbursed medical, dental and other
employee benefit expenses incurred in accordance with the Company's employee
benefit plans (hereinafter referred to as the "Standard Termination Payments").
(b) Upon Death or Disability. If the Employee dies, all
provisions of this Agreement (other than Sections 6 and 9 through 17 hereof, and
other than rights or benefits arising as a result of such death) and the Term
shall be automatically terminated; provided, however, that the Standard
Termination Payments, together with additional salary payments equal to and in
lieu of the Employee's accrued and unused vacation, shall be paid to the
Employee's surviving spouse or, if none, his estate, and the death benefits
under the Company's employee benefit plans shall be paid in accordance with the
terms of the individual plans. If the Employee becomes Disabled, either the
Company or the Employee may terminate this Agreement and the Term at any time
thereafter. In such event, the Employee shall be entitled to receive his normal
compensation hereunder through the date of such termination, and shall
thereafter be entitled to receive the Standard Termination Payments, together
with additional salary payments equal to and in lieu of the Employee's accrued
and unused vacation and such disability and other employee benefits as may be
provided under the terms of the Company's employee benefit plans.
(c) By the Company Without Cause.
(i) The Company may terminate the Employee's
employment under this Agreement without Cause, and other than by reason of his
death or Disability, by sending written notice of termination to the Employee,
which notice shall specify a date not more than ninety (90) days after the date
of such notice as the effective date of such termination (the "Termination
Date"). From the date of such notice through the Termination Date, the Employee
shall continue to perform the normal duties of his employment hereunder, and
shall be entitled to receive when due all compensation and benefits applicable
to the Employee hereunder. Promptly following the Termination Date, the Company
shall pay the Standard Termination Payments to the Employee. In addition, as a
severance benefit the Company shall continue to pay the Employee his base salary
(as in effect on the Termination Date) from the Termination Date through the
expiration of the Term (which salary shall be paid in a manner consistent with
the Company's payroll practices as in effect on the Termination Date). The
Employee shall have no obligation whatsoever to mitigate any damages, costs or
expenses suffered or incurred by the Company with respect to the severance
obligations set forth in this Section 5(c)(i) and, except as set forth in
subsection (ii) of this Section, no such severance payments received or
receivable by the Employee shall be subject to any reduction, offset, rebate or
repayment as a result of any subsequent employment or other business activity by
the Executive.
(ii) Following any termination of the Employee's
employment pursuant to this Section 5(c), the Company shall also be obligated to
provide continued coverage under the Company's medical, dental and life
insurance benefit plans or arrangements with respect to the Employee from the
Termination Date through the expiration of the Term (or, if the Employee is not
eligible for continuing coverage under the terms of such plans or arrangements,
the Company shall provide substantially similar coverage on an individual basis
for such period). The Company's obligation to provide continued benefits
coverage in accordance with this Section 5(c)(ii) shall be subject to mitigation
to the extent that substantially similar benefits are provided by any successor
employer during such continuation period.
(d) By the Employee. The Employee may terminate his
employment, and any further obligations which Employee may have to perform
services on behalf of the Company hereunder at any time after the date hereof,
by sending written notice of termination to the Company not less than ninety
(90) days prior to the effective date of such termination. During such ninety
(90) day period, the Employee shall continue to perform the normal duties of his
employment hereunder, and shall be entitled to receive when due all compensation
and benefits applicable to the Employee hereunder. Except as provided below, if
the Employee elects to terminate his employment hereunder (other than as a
result of Disability), then the Employee shall be entitled to receive the
Standard Termination Payments, but the Company shall have no further obligation
to make payments or provide benefits to the Employee. Anything in this
Agreement to the contrary notwithstanding, the termination of the Employee's
employment by the Employee within one year after a Change in Control of the
Company shall be deemed to be a termination of the Employee's employment without
Cause by the Company for purposes of this Agreement, and the Employee shall be
entitled to the payments and benefits set forth in Section 5(c) above.
6. Confidentiality. (a) Except as specifically authorized by the
Company in writing, from the date hereof and continuing forever, the Employee
agrees not to (i) disclose any trade secrets or confidential information to any
individual or entity, or otherwise permit any person or entity to obtain or
disclose any trade secrets or confidential information, or (ii) use any trade
secrets or confidential information for the Employee's own financial gain,
whether individually or on behalf of another individual or entity. For purposes
hereof, the phrase "trade secrets and confidential information" means any and
all information relating to any part of the business of the Company or the
business of any affiliate of the Company, provided to the Employee or to which
the Employee has had access, which information is not a matter of public record
or generally known to the public, including, without limitation: (i) financial
information regarding the Company or any affiliate of the Company; (ii)
personnel data, including compensation arrangements, relating to any employee of
the Company or any affiliate of the Company; (iii) internal plans, practices and
procedures of the Company or any affiliate of the Company; (iv) the names,
addresses and requirements of any customers of the Company or any affiliate of
the Company; (v) any other information expressly deemed confidential by the
officers or directors of the Company; and (vi) the terms and conditions of any
supply agreements and other agreements, documents and instruments to which the
Company or any of its affiliates are parties.
(b) All writings, records and other documents and things containing
any trade secrets or confidential information in the Employee's custody or
possession shall be the exclusive property of the Company, shall not be copied
and/or removed from the premises of the Company, except in pursuit of the
business of the Company, and shall be delivered to the Company, without
retaining any copies, upon the termination of the Employee's employment or at
any time as requested by the Company.
7. Non-competition Agreement. In consideration of the Company's
agreement to employ the Employee upon the terms and conditions set forth in this
Agreement and the Company's agreement to pay severance benefits under certain
circumstances pursuant to Section 5(c) hereof, the Employee covenants and agrees
that during the Term hereof the Employee shall not, directly or indirectly: (a)
engage in or accept employment with (as a consultant or otherwise), own a
material interest in, or otherwise give assistance to, whether or not for
compensation, any person, firm or corporation (other than an affiliate of a
purchaser of, or successor to, the business of the Company) engaged in the
ownership or management of a business of the type conducted by the Company or
any of its subsidiaries within the geographical areas in which the Company or
any of its subsidiaries compete on the date of such termination; or (b) solicit
or recruit for employment any employee or independent contractor of the Company
or any of its subsidiaries. In the event of any breach of the provisions of
this Section by the Employee, the restrictions set forth herein shall be
extended by a period equal to the duration of such breach.
8. Reimbursement of Certain Expenses. The Company hereby agrees
promptly to reimburse the Employee for all reasonable legal fees and costs
incurred by him in the defense and settlement of that certain suit styled
[identify Food Lion suit].
9. Remedies. The parties hereto agree that each would suffer
irreparable harm from a breach by the other of any of the covenants or
agreements contained herein. Therefore, in the event of the actual or
threatened breach by either party hereto of any of the provisions of this
Agreement, the other party hereto may, in addition and supplementary to other
rights and remedies existing in favor of such party, apply to any court of law
or equity of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce or prevent any violation of the provisions
hereof.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Company and its affiliates and their successors
and assigns, and shall be binding upon and inure to the benefit of the Employee
and his legal representatives and assigns, provided that in no event shall the
Employee's obligations to perform services for the Company and its affiliates be
delegated or transferred by the Employee. The Company may assign or transfer its
rights hereunder to a successor corporation in the event of a merger,
consolidation or transfer or sale of all or substantially all of the assets of
the Company or of the Company's business (provided, however, that no such
assignment or transfer shall have the effect of relieving the Company of any
liability to the Employee hereunder or under any other agreement or document
contemplated herein), but only if such assignment or transfer does not result in
employment terms, conditions, duties or responsibilities which are or may be
materially different than the terms, conditions, duties or responsibilities of
the Employee hereunder.
11. Modification or Waiver. No amendment, modification, waiver,
termination or cancellation of this Agreement shall be binding or effective for
any purpose unless it is made in a writing signed by the party against whom
enforcement of such amendment, modification, waiver, termination or cancellation
is sought. No course of dealing between or among the parties to this Agreement
shall be deemed to affect or to modify, amend or discharge any provision or term
of this Agreement. No delay on the part of the Company or the Employee in the
exercise of any of their respective rights or remedies shall operate as a waiver
thereof, and no single or partial exercise by the Company or the Employee of any
such right or remedy shall preclude other or further exercises thereof. A
waiver of a right or remedy on any one occasion shall not be construed as a bar
to or waiver of any such right or remedy on any other occasion.
12. Notice. For purposes of this Agreement, notice and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or by overnight courier
service, or when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Company:
Richfood Holdings, Inc.
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President & Chief Executive Officer
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
Hunton & ▇▇▇▇▇▇▇▇
Riverfront Plaza - East Tower
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Employee:
to his address as reflected from time-to-time in the
personnel records of the Company.
Either party hereto may change its address for purposes of this Section by
furnishing written notice to the other party in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
13. Governing Law; Jurisdiction. This Agreement and all rights,
remedies and obligations hereunder, including, but not limited to, matters of
construction, validity and performance shall be governed by the laws of the
Commonwealth of Virginia without regard to its conflict of laws principles or
rules. To the full extent lawful, each of the Company and the Employee hereby
consents irrevocably to personal jurisdiction, service and venue in connection
with any claim or controversy arising out of this Agreement in the courts of the
Commonwealth of Virginia located in Richmond, Virginia, and in the federal
courts in the Eastern District of Virginia.
14. Severability. Whenever possible each provision and term of
this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision or term of this Agreement shall
be held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provisions or term or the remaining provisions or terms of
this Agreement.
15. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same Agreement.
16. Headings. The headings of the Sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
hereof and shall not affect the construction or interpretation of this
Agreement.
17. Entire Agreement. This Agreement (together with all documents
and instruments referred to herein) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed on its behalf, and the Employee has duly executed this Agreement, all
as of the date first above written.
RICHFOOD HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President & Chief Executive
Officer
EMPLOYEE:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
