Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into between Xxxxx
Supermarkets, LLC, an Indiana limited liability company ("Company"), and Xxxxx
X. Xxxxx, a resident of Muncie, Indiana ("Executive"), as of September 15, 2002
(the "Effective Date"). Company and Executive are sometimes referred to herein
individually as a "Party" and collectively as the "Parties".
WHEREAS, Executive was employed by the Company and its affiliate, Xxxxx
Supermarkets, Inc. ("Xxxxx") from 1965 to 2002; and
WHEREAS, Executive resigned as an officer of the Company and Xxxxx and
retired from employment with the Company and Xxxxx on March 30, 2002; and
WHEREAS, Company desired the benefit of Executive's experience in and
knowledge of retail food operations and merchandising and retained his
consulting services after his retirement for a period of one (1) year pursuant
to a certain Consulting Agreement, dated as of March 30, 2002 (the "Contract");
and
WHEREAS, in lieu of his services as a consultant pursuant to the
Contract, the Company desires to terminate the Contract and rehire Executive as
President and Chief Operating Officer of the Company, and Executive is willing
to terminate the Contract and serve the Company in such capacity on the
following terms and conditions,
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound,
the Parties hereby agree as follows:
1. EMPLOYMENT. Company hereby employs Executive and Executive hereby
accepts employment with the Company upon the terms and conditions set forth
herein. The Parties agree that the Contract is terminated as of the Effective
Date.
2. DUTIES AND RESPONSIBILITIES.
2.1 Extent of Service. Executive shall, during the Term
(hereinafter defined), devote his full time, attention, energies and
business efforts to his duties as an executive of the Company as are
necessary to carry out his duties specified in Section 2.2 below.
Executive shall not, during the Term, engage in any other business
activity if such business activity would impair in any material respect
the Executive's ability to carry out his duties hereunder.
2.2 Position and Duties. During the Term, Executive shall serve
the Company as President and Chief Operating Officer and shall perform
the services and functions relating to such office or otherwise
reasonably incident to such office as may be designated from time to
time by the Board of Managers of the Company (the "Board"), the Chairman
of the Board or the President of Xxxxx.
3. SALARY AND OTHER BENEFITS.
3.1 Salary. As compensation for his services as President and
Chief Operating Officer during the Term, Executive shall be paid an
annual salary of not less than Three Hundred Fifteen Thousand and No/100
Dollars ($315,000.00) (the "Base Salary"), payable in accordance with
the then current payroll policies of the Company, but in no event less
frequently than once each fiscal period of the Company. The Base Salary
may be increased by the Board of Managers of the Company (or the
appropriate committee thereof) from time to time and shall be increased
on the date of termination of employment as
provided in Section 3.3 below. The annual salary being paid to Executive
hereunder at any given point of time is hereafter referred to as his
"Base Salary".
3.2 Other Benefits. During the Term, Executive shall be entitled
to receive the following benefits in addition to his Base Salary:
(a) Executive shall be eligible to participate in all group
benefit plans of the Company (including without limitation,
disability, accident, medical, life insurance, optional life
insurance, hospitalization, 401(k) and deferred compensation
plans) generally available to other executives of the Company.
(b) Executive shall be entitled to reimbursement from the
Company for reasonable out-of-pocket expenses incurred by him in
the course of the performance of his duties hereunder.
(c) Executive shall be eligible to receive any discretionary
incentive compensation award.
(d) Executive shall be entitled to such vacation, holidays
and other paid or unpaid leaves of absence in accordance with the
Company's established policy; provided, however, Executive shall
be entitled to not less than four (4) weeks of vacation each year
during the Term.
(e) Executive shall be eligible to participate in the Xxxxx
Supermarkets, Inc. Supplemental Retirement Plan (the "SRP") and,
after termination of his employment pursuant to this Agreement, to
receive Lifetime Medical Benefits in accordance with the
resolutions of the Board of Directors of Xxxxx ("Lifetime Medical
Benefits"), and an amount equal to the sum of (i) the premium cost
paid by Executive for a policy of term life insurance up to an
aggregate amount $600,000 for coverage during the period
commencing on the date of termination of employment pursuant to
this Agreement and ending on February 13, 2004; and (ii) 40% of
the amount by which the income to Executive annually by reason of
the payment set forth in (i) above exceeds the amount of income
imputed to Executive annually for term life insurance provided by
the Company immediately prior to the date of termination of
employment pursuant to this Agreement.
3.3 SRP Benefit Enhancement. Notwithstanding anything to the contrary
contained in this Agreement or the SRP, if Executive's employment is
terminated under any circumstance other than for Cause or a voluntary
resignation without Good Reason pursuant to 6.1(a) or Section 6.1(b)
below, the Executive's Base Salary shall be increased on the date of
termination such that the sum of the benefits which Executive (or
Executive's spouse) will be entitled to receive (i) from the SRP, (ii)
from the Employee's Pension Plan of Xxxxx Supermarkets, Inc. and
subsidiaries ("Pension Plan"), (iii) from the Executive's Primary Social
Security Benefit (as that term is defined in the Pension Plan), and (iv)
from the actuarial equivalent of the benefit payable to the Executive
from the Replacement Plan (as that term is defined in the SRP), such
benefits being determined as of Executive's Normal Retirement Date (as
that term is defined in the Pension Plan), but converted to actuarially
equivalent benefits to Executive and Executive's spouse in the form of a
joint and 100% survivor's annuity commencing the month following
Executive's date of termination, shall equal $150,000 per year.
4. TERM. The initial term of this Agreement shall be for a period
commencing on the Effective Date and ending on March 29, 2003 (the "Initial
Term"). Upon expiration of the Initial Term, the term of this Agreement shall
automatically extend for additional successive periods of twenty eight (28) days
each, unless either Party gives written notice, at least thirty (30) days in
advance of the expiration of the then current Term, of such Party's intent not
to extend the Term. The Initial Term and any successive term are herein referred
to as the "Term").
5. TERMINATION AND RESIGNATION. Company shall have the right to terminate
Executive's employment hereunder at any time and for any reason. Upon any such
termination by the Company, Executive shall be entitled to receive from the
Company payment of the amount determined pursuant to the applicable
subparagraph of Section 6 below. Executive shall have the right to terminate his
employment hereunder at any time by resignation, and he shall thereupon be
entitled to receive from the Company prompt payment of the amount determined
pursuant to the applicable subparagraph of Section 6 below.
6. PAYMENTS UPON TERMINATION AND RESIGNATION.
6.1 Payments Upon Termination for Cause, Death, Disability or
Voluntary Resignation. If during the Term (a) the Company at any time
terminates Executive's employment pursuant to this Agreement for Cause,
(b) Executive voluntarily resigns for any reason other than for Good
Reason, or (c) Executive at any time dies or becomes disabled, then in
each case Executive shall be entitled to receive only his accrued and
unpaid Base Salary and any other accrued and unpaid benefits due
Executive in accordance with Section 3.2 as of the date of termination
plus reimbursement of expenses through the date of termination in
accordance with Section 3.2(b); provided, however, that in the event of a
termination under clause (b) or (c) of this Section 6.1, but not in the
case of a termination for Cause under clause (a) of this Section 6.1, the
date of termination shall be the later of (i) the actual date of
termination or (ii) March 29, 2003.
6.2 Payments Upon Termination Without Cause or Resignation for
Good Reason. If the Company terminates Executive's employment pursuant to
this Agreement without Cause or Executive resigns for Good Reason, then
in each case Executive shall be entitled to receive (a) his accrued and
unpaid Base Salary and any other accrued and unpaid benefits due
Executive in accordance with Section 3.2 as of the date of termination
plus reimbursement of expenses through the date of termination in
accordance with Section 3.2(b), (b) the post termination benefits
pursuant to Section 3.2(e), and (c) the enhanced SRP benefit pursuant to
Section 3.3.
6.3 Definition of "Cause". For purposes of this Agreement,
termination by the Company of Executive's employment for "Cause" shall
mean termination of the Executive's employment by the Board or the
Chairman of the Board (including, only for purposes of subsection (c)
below, acting in good faith, by written notice to Executive specifying
the event(s) relied upon for such termination), due to (a) the commission
of a felony or a crime involving moral turpitude or the commission of any
other act or omission involving dishonesty or fraud with respect to the
Company or any of its affiliates or any of their customers or suppliers,
(b) any breach of the Executive's fiduciary duties to the Company, (c)
repeated failure to perform duties of the office held by Executive as
reasonably directed by the Board or the Chairman of the Board, (d) gross
negligence or willful misconduct with respect to the Company or any of
its affiliates, or (e) any breach of Section 7 of this Agreement.
6.4 Definition of "Good Reason". For purposes of this Agreement,
"Good Reason" shall mean any of the following (without Executive's
express written consent), which is not cured by the Company within thirty
(30) days of receipt of written notice from Executive (such written
notice to be received by the Company within thirty (30) days of the event
giving rise to the notice): (a) a failure of the Company to fulfill its
obligations under this Agreement in any material respect including any
reduction of Base Salary or other compensation or benefits other than
reductions applicable to other senior executives of the Company, or (b) a
material change by the Company in the functions, duties or
responsibilities of Executive's position.
7. RESTRICTIVE COVENANTS.
7.1 Covenants Against Competition. Executive acknowledges that (a)
the business of the Company and its affiliates is the retail sale of
food, general merchandise, prescription drugs, flowers and catering and
food management services in various formats, and that the business of the
Company and its affiliates will change from time to time as the Company
and/or its affiliates expand their scope of services, expand their
products or acquire additional affiliates (all of which are referred to
collectively as the "Company Business"); and (b) Executive's work
relating to Company Business will bring him into close contact with many
confidential matters not readily available to the public.
7.2 Non-Compete. During the term of this Agreement and for a
period of twelve (12) months following the termination of Executive's
employment with the Company, whether Executive's employment terminates
pursuant to the provisions of Section 5 of this Agreement or otherwise
(collectively, the "Restricted Period"), Executive covenants and agrees
that he will not, without the express approval of the Board or the
Chairman of the Board, anywhere within a 10 mile radius of any facility
owned or operated by the Company or any of its affiliates in the states
of Indiana and Ohio, engage in any business directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent,
Executive, trustee, consultant or in any other relationship or capacity,
if such business is competitive with the Company Business; provided,
however, that Executive may own, directly or indirectly, solely as an
investment, securities of any entity if Executive (a) is not a
controlling person with respect to such entity and (b) does not, directly
or indirectly, own one percent (1%) or more of the outstanding shares of
any class of the securities of such entity.
7.3 Trade Secrets; Confidential Information. Executive covenants
and agrees that at all times during and after the Restricted Period, he
shall keep the existence and the terms and conditions of this Agreement
strictly confidential and shall keep secret and not disclose to others or
appropriate to his own use or the use of others any trade secrets, or
secret or confidential information or knowledge pertaining to the Company
Business or the affairs of the Company or its affiliates, including
without limitation trade know-how, trade secrets, consultant contracts,
customer lists, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition
plans, new personnel acquisition plans, technical processes, designs and
design projects, inventions and research projects. Information shall not
be deemed confidential or secret for purposes of this Agreement if it is
generally known in the industry other than as a result of a breach by
Executive.
7.4 Property of the Company or its Affiliates.
(a) Without further consideration, Executive agrees to
assign to the Company or its designee, Executive's entire right,
title and interest in and to all concepts, ideas, inventions,
intellectual or other proprietary rights (collectively the
"Intellectual Property") that (i) relate to any of Executive's
work during the period of Executive's employment with the Company;
(ii) pertain to any present or anticipated business activity of
the Company; or (iii) are aided by the use of time, equipment,
supplies, facilities or information of the Company.
(b) Executive agrees that any Intellectual Property created
by Executive under this Agreement are "works made for hire" within
the meaning of the United States Copyright Act. To the extent that
any Intellectual Property does not qualify as "works made for
hire," this Agreement will constitute an irrevocable assignment by
Executive to the Company of such Intellectual Property. During and
after the term of this Agreement, Executive agrees to assist the
Company, at its expense, in obtaining and enforcing the full
benefits, rights and title in the Intellectual Property and
proprietary rights assigned to the Company in this Section 7.4.
(c) All memoranda, notes, lists, records and other documents
(and all copies thereof) made by Executive or made available to
Executive during his employment is the exclusive property of the
Company and shall be delivered by Executive to the Company
promptly upon the termination of Executive's employment.
7.5 Rights and Remedies Upon Breach. If Executive breaches, or
threatens to commit a breach of, any of the provisions of Sections 7.1
through 7.4 of this Agreement (collectively, the "Restrictive
Covenants"), the Company shall have the following rights and remedies,
each of which shall be independent of the other and severally
enforceable, and all of which shall be in addition to, and not in lieu
of, any other rights and remedies available to the Company: (a) the right
and remedy to have any of the Restrictive Covenants specifically enforced
by any court having jurisdiction, it being hereby acknowledged and agreed
by Executive that any such breach or threatened breach will cause
irreparable
injury to the Company and that money damages will not provide an
adequate remedy to the Company; and (b) the right and remedy to require
Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or
received by Executive as a result of any transactions constituting a
breach of any of the Restrictive Covenants, and Executive shall account
for and pay over such benefits to the Company.
7.6 Severability of Restrictive Covenants. Executive agrees that
the Company may enforce the Restrictive Covenants to the broadest extent
possible. If any provision of this Agreement shall be held or deemed to
be or shall, in fact, be invalid, inoperative or unenforceable as applied
in any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions, because it conflicts with any provisions of any
constitution, statute, rule or public policy, or for any reason, such
circumstances shall not have the effect of rendering the provision in
question invalid, inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions of this
Agreement invalid, inoperative or unenforceable to any extent whatever.
If it is determined that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect,
without regard to the invalid portions. If it is determined that any of
the Restrictive Covenants, or any part thereof, is unenforceable because
of the duration of such provision, the geographical area covered thereby,
or any other determination of unreasonableness of the provision, the
court making such determination shall have the power to reduce the
duration, area or scope of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
8. NOTICE. All notices, requests, demands and other communications given
under or by reason of this Agreement shall be in writing and shall be deemed
given when delivered in person, by facsimile or when mailed, by certified mail
(return receipt requested), postage prepaid, addressed as follows (or to such
other address as a Party may specify by notice pursuant to this provision):
8.1 To the Company:
Xxxxx Supermarkets, LLC
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Corporate Secretary
8.2 To Executive:
Xxxxx X. Xxxxx
000 Xxxxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000-0000
9. GOVERNING LAW; TRADE SECRETS; VENUE; ARBITRATION. The execution,
validity, interpretation and performance of this Agreement shall be governed by
the laws of the State of Indiana. The parties intend the provisions of this
Agreement to supplement, but not displace, their respective rights and
responsibilities under the Indiana Trade Secrets Act, Ind. Code ss. 24-2-3-1 et
seq., as amended. The parties to this Agreement irrevocably consent to the
exclusive jurisdiction and venue of the courts of the State of Indiana, located
in Xxxxxxxx County, and the United States District Court for the Southern
District of Indiana with respect to any and all actions relate this Agreement or
the enforcement of this Agreement and the parties to this Agreement hereby
irrevocably waive any and all objections thereto.
10. ADDITIONAL INSTRUMENTS. The Parties shall execute and deliver any
and all additional instruments and agreements that may be necessary or proper to
carry out the purposes of this Agreement.
11. ENTIRE AGREEMENT AND AMENDMENTS. This Agreement contains the entire
agreement of the Parties relating to the matters contained herein and supersedes
all prior agreements and understandings, oral or
written, between the Parties with respect to the subject matter hereof,
including the Contract, which is hereby terminated as of the Effective Date.
This Agreement may be changed only by an agreement in writing signed by both
Parties.
12. SEVERABILITY. If any provision of the Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by the decision of or decree of a court of last resort,
the Parties shall promptly meet and negotiate substitute provisions for those
rendered or declared illegal or unenforceable to preserve the original intent of
this Agreement to the extent legally possible, but all other provisions of this
Agreement shall remain in full force and effect.
13. ASSIGNMENTS. Company may assign (whether by operation of law or
otherwise) this Agreement only with the written consent of Executive, which
consent shall not be withheld unreasonably, and in the event of an assignment of
this Agreement, all covenants, conditions and provisions hereunder shall inure
to the benefit of and be enforceable against the Company's successors and
assigns. The rights and obligations of Executive under this Agreement are
personal to him, and no such rights, benefits or obligations shall be subject to
voluntary or involuntary alienation, assignment or transfer.
14. EFFECT OF AGREEMENT. Subject to the provisions of Section 13 with
respect to assignments, this Agreement shall be binding upon Executive and his
heirs, executors, administrators, legal representatives and assigns and upon the
Company and its respective successors and assigns.
15 EXECUTION. This Agreement may be executed in multiple counterparts
each of which shall be deemed an original and all of which shall constitute one
and the same instrument.
16. WAIVER OF BREACH. The waiver by either Party of a breach of any
provision of the Agreement by the other Party shall not operate or be construed
as a waiver by such Party of any subsequent or similar breach by such other
Party.
17. JOINT DRAFTING. This Agreement shall be deemed to have been drafted
jointly by the Parties and in the event of any ambiguity in this Agreement, the
same shall not be construed against either party.
IN WITNESS WHEREOF, the Parties have executed this Agreement on and
caused the same to be duly delivered on their behalf as of the day and year
first written above.
XXXXX SUPERMARKETS, LLC
By: /s/ Xxx X. Xxxxx /s/ Xxxxx X. Xxxxx
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Xxx X. Xxxxx, Chairman of the Board XXXXX X. XXXXX
and Chief Executive Officer
Attest: /s/ X. Xxxxxxxx Butt
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X. Xxxxxxxx Butt, Secretary
