TRANSITION AGREEMENT
This agreement is made and executed this 8th day of May, 1997, by and
between UNITED GROCERS, INC., an Oregon corporation, hereinafter referred to as
"UG," and XXXX X. XXXXX, hereinafter referred to as "Xxxxx."
WHEREAS, Xxxxx has occupied the position of Chief Executive Officer of
UG since 1983, and was previously employed by UG in various positions prior
thereto since 1964, and
WHEREAS, UG and Xxxxx previously entered into an Executive Compensation
Agreement - 1991 ("Compensation Agreement"), dated March 7, 1991, and
WHEREAS, Xxxxx and UG are desirous of terminating the aforesaid
Compensation Agreement effective the date hereof, and
WHEREAS, the parties hereto are also desirous of settling any and all
claims either party may have against the other of whatsoever kind, nature or
description, and
WHEREAS, UG is further desirous of retaining the unique experience,
ability and services of Xxxxx as acting Chief Executive Officer for an interim
period until such time as a replacement Chief Executive Officer is retained;
until the Board of Directors determines Xxxxx'x services are no longer required;
or December 1, 1997, whichever first occurs, and
WHEREAS, UG is further desirous of obtaining Xxxxx'x assurances as a
condition to the performance by UG of its obligations hereunder, that during the
term of this agreement and of any renewal thereof, he will not directly or
indirectly render any services of an advisory nature, or otherwise to or become
employed by or participate in, or engage in any business which, directly or
indirectly, is competitive with the wholesale distribution of grocery and
related products which are customarily stocked by retail supermarkets within the
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States of Oregon, Washington and California, without the prior written consent
of UG. Provided, however, that nothing herein contained shall prohibit Xxxxx
from owning stock or other securities of a competitor which are relatively
insubstantial to the total outstanding stock of such competitor and so long as
he, in fact, does not have the power to control, participate in or direct the
management or polices of such competitor, and does not serve as a director or
officer of, or is not otherwise associated with any competitor. It is expressly
acknowledged, however, by and between the parties hereto, that Xxxxx'x
involvement, employment, affiliation or ownership in the retail grocery industry
shall not constitute a violation of this agreement or a prohibited activity.
NOW, THEREFORE, in consideration of the promises of the parties one
unto the other, and the above recitals which by reference are hereby
incorporated herein, it is hereby agreed as follows:
1. Xxxxx will continue to serve as Chief Executive Officer during the
transition until such time as UG retains the services of a new Chief Executive
Officer or until December 1, 1997, whichever first occurs. Following UG's
employment of a new Chief Executive Officer, Xxxxx will thereafter act as and
serve as an employee of UG and be available upon reasonable notice to provide
advice and assistance to the Board of Directors or the replacement Chief
Executive Officer. However, such services shall not exceed five hours per month.
2. Term. The term of this agreement shall commence on March 1, 1997,
and shall continue for a period of seven years from said date.
3. Compensation. As compensation for the services to be rendered by
Xxxxx, UG shall pay Xxxxx base compensation of $275,000 per annum for a period
from March 1, 1997,
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through February 28, 1999. Thereafter, for a period of five years, UG shall pay
Xxxxx base compensation of $137,500 per annum from March 1, 1999, to February
28, 2004. Such compensation shall be paid to Xxxxx with the same frequency as
executives of UG are compensated. In addition thereto, Xxxxx will have the
continuing use of his company car through the expiration of the current lease in
January, 2000. The company shall be responsible for maintenance, repairs,
insurance and other incidental costs attendant thereto.
4. Employee Benefits/Expenses. UG shall reimburse Xxxxx for all
reasonable, customary and necessarily incurred expenses in carrying out his
duties. Xxxxx shall present to UG from time to time an itemized account of such
expenses and in such form as may be required by UG. This reimbursement of
expenses will continue as long as Xxxxx continues to perform the duties of Chief
Executive Officer.
5. Employee Benefits. This agreement is not, however, intended and
shall not be deemed to waive, release and/or modify any rights, benefits and/or
privileges to which Xxxxx and/or his spouse may be entitled to as an employee of
UG under any retirement or pension plan (qualified or non-qualified), including
without limitation the Executive Deferred Compensation Plan, 401(k),
supplemental 401(k) and medical, dental or other plans which are now in effect
or such other medical and dental plans as may subsequently be offered to senior
management of UG. In the event UG is unable to include Xxxxx and his spouse in
the group medical and dental plans, UG agrees to provide medical and dental
insurance providing comparable benefits for Xxxxx and his spouse. UG represents
and warrants that the benefits Xxxxx will receive under the pension plan will be
determined in the same manner and at the same level of benefits as if he retired
at age 62. The 401(k) benefits will, however, be based upon the salary actually
earned each year during the term of this agreement. In
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addition thereto, UG shall continue to pay annually, in addition to the
compensation set forth herein, the sum of $48,387 per year, which sum shall be
used by Xxxxx to satisfy the insurance premium policy with Guardian Life
Insurance Company. The company shall pay to Xxxxx the aforesaid $48,387 sum
prior to the premium due dates at December 1, 2003. The company will, upon
expiration of this agreement, cause the collateral assignment of benefits under
the November 14, 1994 assignment, to be released.
6. Release/Xxxxx. In consideration of the foregoing payments and as a
material inducement to UG to enter into this agreement, Xxxxx does hereby
completely release and forever discharge UG and its officers, directors, agents,
employees, successors, estate, heirs and assigns from any and all claims,
rights, demands, actions, obligations and causes of action in every kind,
nature, character, known or unknown, which Xxxxx may now have or has ever had
against UG arising from or in any way connected with Xxxxx'x prior employment,
termination of employment or lack of employment with UG, including, but not
limited to, all "constructive discharge" and "wrongful discharge" claims, all
claims relating to any contracts of employment, whether express or implied, all
past claims relating to wages, salary, compensation payments, expense
reimbursements, loans, costs, expenses or attorney's fees, any covenant of good
faith in fair dealing, whether express or implied, and any tort of any nature,
any legal restriction on UG's right to terminate employees, or any federal,
state or municipal law, rule, regulation or ordinance, including, without
limitation, the Federal Age Discrimination and Employment Act, as amended, Title
VII of the Civil Rights Act of 1964, as amended, and any other laws or
regulations relating to prior employment, discrimination and expense
reimbursement.
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7. Release/UG. In consideration for entering into this agreement, UG
hereby releases and forever discharges Xxxxx from any and all claims, rights,
demands, actions, obligations and causes of action of any and every kind, nature
and character, known or unknown, which UG may now have, has ever had, or may
have in the future against Xxxxx arising from or in any way connected with
Xxxxx'x prior employment, including, but not limited to, any and all claims
arising out of any tort of any nature, or any federal, state or municipal law,
rule, regulation or ordinance, excepting therefrom only claims arising from
criminal wrongdoings, obligations, preserved or created, by this agreement.
8. Restrictive Covenant. Xxxxx expressly agrees as a condition to the
performance by UG of its obligations hereunder, that during the term of this
agreement and of any renewal thereof, he will not directly or indirectly render
any services of an advisory nature, or otherwise to or become employed by or
participate in, or engage in any business which, directly or indirectly, is
competitive with the wholesale distribution of grocery and related products
which are customarily stocked by retail supermarkets within the States of
Oregon, Washington and California, without the prior written consent of UG.
Provided, however, that nothing herein contained shall prohibit Xxxxx from
owning stock or other securities of a competitor which are relatively
insubstantial to the total outstanding stock of such competitor and so long as
he, in fact, does not have the power to control, participate in or direct the
management or polices of such competitor, and does not serve as a director or
officer of, or is not otherwise associated with any competitor. It is expressly
acknowledged, however, by and between the parties hereto, that Xxxxx'x
involvement, employment, affiliation or ownership in the retail grocery industry
shall not constitute a violation of this agreement or a prohibited activity.
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9. This agreement shall be binding and enforceable by Xxxxx against UG,
its successors and assigns.
10. The parties hereto agree that they respectively will refrain from
making any disparaging statements, releases, comments or publications with
respect to the other party.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
executed the day and year first above written.
UNITED: United Grocers, Inc.
By: /s/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board
XXXXX: /s/ XXXX X. XXXXX
Xxxx X. Xxxxx
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