Contract
Exhibit
10.54
THIS SEVERANCE AGREEMENT
(“Agreement”) is effective as of December 5, 2007, and is made by and
between United Natural Foods, Inc., a Delaware corporation (the "Company"), and
Xxxxxx Xxxxx ("Employee"). For good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, including without
limitation the Employee’s willingness to continue his employment with the
Company and the other obligations of the parties hereunder, the parties hereby
agree as follows:
1. The
following terms shall have the following definitions:
(a) the
term “Act” shall mean the Securities Exchange Act of 1934, as amended to
date.
(b) the
term “Affiliate” shall mean any corporation which is a subsidiary of the Company
within the definition of “subsidiary corporation” under Section 424(f) of the
Internal Revenue Code of 1986, as amended.
(c) the
term "Cause" shall mean (i) conviction of Employee of a felony or crime of moral
turpitude under applicable law, (ii) unauthorized acts intended to result in
Employee's personal enrichment at the material expense of the Company or its
reputation, or (iii) any material violation of Employee's duties or
responsibilities to the Company which constitutes willful misconduct or
dereliction of duty, or breach of Section 6 of this Agreement.
(d) The
term “Change in Control” means the happening of any of the
following:
(i) any
“person”, including a “group” (as such terms are used in Sections 13(d) and
14(d) of the Act, but excluding the Company, any of its Affiliates, or any
employee benefit plan of the Company or any of its Affiliates) is or becomes the
“beneficial owner” (as defined in Rule 13(d)(3) under the Act), directly or
indirectly, of securities of the Company representing the greater of 30% or more
of the combined voting power of the Company’s then outstanding
securities;
(ii) the
stockholders of the Company shall approve a definitive agreement (1) for the
merger or other business combination of the Company with or into another
corporation if (A) a majority of the directors of the surviving corporation were
not directors of the Company immediately prior to the effective date of such
merger or (B) the stockholders of the Company immediately prior to the effective
date of such merger own less than 50% of the combined voting power in the then
outstanding securities in such surviving corporation or (2) for the sale or
other disposition of all or substantially all of the assets of the Company;
or
1
(iii) the
purchase of 30% or more of the Stock pursuant to any tender or exchange offer
made by any “person”, including a “group” (as such terms are used in Sections
13(d) and 14(d) of the Act), other than the Company, any of its Affiliates, or
any employee benefit plan of the Company or any of its Affiliates.
(e) the
term "Disability" shall mean the material inability, in the reasonable opinion
of the Board of Directors, of Employee to render his agreed upon full-time
services to the Company due to physical and/or mental infirmity for a period of
one hundred twenty (120) consecutive days, or an aggregate period of time
exceeding one hundred twenty (120) days in any consecutive twelve (12) month
period.
(f) the
term “Effective Date” means the date on which a Change in Control
occurs. Anything in this Agreement to the contrary notwithstanding,
if a Change in Control occurs and if the Employee’s employment with the Company
is terminated prior to the date on which the Change in Control occurs, and if it is reasonably
demonstrated by the Employee that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change in Control or (ii) otherwise arose in connection with or in anticipation
of a Change in Control, then for all purposes of this Agreement, the “Effective
Date” shall mean the date immediately prior to the date of such termination of
employment.
(g) the
term “Equity Plan” shall mean any option to purchase shares of the
Common Stock $.01 par value per share of the Company
(“Stock”) granted to Employee pursuant to the
Company’s 2002 Stock Incentive Plan, as amended from time to time
(“Options”), any rights the Employee may have under the Company’s Employee Stock
Ownership Plan, as amended from time to time, or any rights the Employee may
have under any other current or future Company plan relating to Options or
restricted stock, such as the 2004 Equity Incentive Plan.
(h) the
term “Good Reason” shall mean, without the Employee’s express written consent,
the occurrence of any one or more of the following: (i) a material diminution in
the Employee’s current duties, responsibilities, or authorities as President of
Millbrook Distribution Services Inc., and failure to rescind such diminution
within thirty (30) days of receipt of notice from the Employee (provided that
this provision shall not be effective if Millbrook Distribution Services Inc. is
absorbed as a separate entity into the Company and operated as a division or
integrated with other operations, as long as Employee has the same level of
duties, responsibilities and authorities with the resultant entity); (ii) any
other action or inaction that constitutes a material breach of the terms of this
Agreement or any applicable employment agreement, which is not rescinded within
thirty (30) days of receipt of notice from Employee; (iii) a relocation more
than fifty (50) miles from Employee’s current office in Leicester,
Massachusetts; or (iv) the resignation or termination of the current Chief
Executive Officer of the Company for any reason (provided that Employee must
resign within thirty (30) days of such termination or resignation for this
subsection (iv) to be effective).
2
2. In the
event (a) the Employee is terminated by the Company for any reason other than
Cause, death or Disability or (b) the Employee resigns for Good Reason, in each
case, prior to the third anniversary hereof, in addition to the payment of any
unpaid base salary and accrued and unpaid vacation as of the date of such
termination or resignation, the Company shall: (i) continue Employee's base
salary and medical benefits in effect as of the date of such termination or
resignation for a period beginning on the date of such termination or
resignation and ending on the third anniversary hereof, subject to applicable
withholding and deductions (provided that the salary and benefits continuation
for a resignation under Section 1(h)(iv) shall be for a period of one
(1) year from such resignation, or such lesser period until the third
anniversary hereof) and (ii) pay Employee a bonus equal to twenty-five percent
(25%) of his base salary in the year of resignation or termination, to be paid
in accordance with the terms of other similar Company bonuses to other
employees. The foregoing notwithstanding, if the Employee is a
“specified employee” of the Company (within the meaning of Section 409A of the
Internal Revenue Code and its regulations and other guidance (“Section 409A”)),
any payment that would otherwise be made pursuant to this Section 2 during the
six-month period beginning on the date of termination of employment that
constitutes “nonqualified deferred compensation” within the meaning of Section
409A shall be accrued and paid on the date that is six months and one day after
the date of Employee’s “separation of service” with the Company (within the
meaning of Section 409A of the Code) or, if earlier, the Employee’s date of
death, and no interest or other adjustments shall be made to reflect the delay
in payment.
3. In the
event of termination for Cause, death or Disability, or resignation for other
than Good Reason, the Company shall be under no obligation other than to provide
payment of any unpaid base salary and accrued and unpaid vacation as of the date
of such termination or resignation; provided, however, that with respect to a
termination for Cause, the Company may withhold any compensation due to Employee
as a partial offset against any damages suffered by the Company as a result of
Employee's actions to the extent permitted by law.
4. In the
event (a) the Employee is terminated by the Company for any reason other than
Cause, death or Disability or (b) the Employee resigns for Good Reason, and such
termination or resignation takes place on or within one (1) year after the
Effective Date of a Change in Control, in addition to the compensation set forth
in Section 2 and subject to any limitations imposed under applicable law: (i)
any and all Options awarded to the Employee not previously exercisable and
vested shall become fully vested and exercisable, (ii) subject to the terms of
the Employee Stock Ownership Plan, Employee shall become fully vested in
Employee’s account under the Employee Stock Ownership Plan and (iii) all
restrictions shall lapse on and Employee shall become fully vested in all rights
to restricted stock granted to Employee under any Equity Plan.
3
5. The
availability, if any, of any other benefits shall be governed by the terms and
conditions of the plans and/or agreements under which such benefits are
granted. The benefits granted under this Agreement are in addition
to, and not in limitation of, any other benefits granted to Employee under any
policy, plan and/or agreement.
6.
Employee covenants with the Company as follows (as used in this Section 6,
"Company" shall include the Company and its subsidiaries and
affiliates):
(a)
Employee shall not knowingly use for Employee’s own benefit or disclose or
reveal to any unauthorized person, any trade secret or other confidential
information relating to the Company, or to any of the businesses operated by it,
including, without limitation, any customer lists, customer needs, price and
performance information, processes, specifications, hardware, software, devices,
supply sources and characteristics, business opportunities, potential business
interests, marketing, promotional pricing and financing techniques, or other
information relating to the business of the Company, and Employee confirms that
such information constitutes the exclusive property of the
Company. Such restrictions shall not apply to information which is
generally (i) available in the industry or (ii) disclosed through no fault of
Employee. Employee agrees that Employee will return to the Company
upon request, but in any event upon termination of employment, any physical
embodiment of any confidential information and/or any summaries containing any
confidential information, in whole in part, in any media.
(b)
During the term of employment, and for a period of one year following (i)
termination of such employment for any reason or (ii) payment of any
compensation by the Company to Employee, including under Section 2 hereof,
whichever occurs later, Employee shall not engage, directly or indirectly (which
includes, without limitation, owning, managing, operating, controlling, being
employed by, giving financial assistance to, participating in or being connected
in any material way with any person or entity), anywhere in the United States in
any activities with the following companies, that include Tree of Life or any of
its subsidiaries, Nature’s Best, C&S Distributors or any other company which
is a direct competitor of the Company with respect to (i) the Company’s
activities on the date hereof and/or (ii) any activities which the Company
becomes involved in during the Employee’s term of employment; provided, however,
that Employee’s ownership as a passive investor of less than three percent (3%)
of the issued and outstanding stock of a publicly held corporation so engaged,
shall not by itself be deemed to constitute such competition. Further, during
such one-year period Employee shall not act to induce any of the Company’s
vendors, customers or employees to take action might be disadvantageous to the
Company or otherwise disturb such party’s relationship with the
Company.
(c)
Employee hereby acknowledges that Employee will treat as for the Company’s sole
benefit, and fully and promptly disclose and assign to the Company without
additional compensation, all ideas, information, discoveries, inventions and
improvements which
4
are based
upon or related to any confidential information protected under Section (a)
herein, and which are made, conceived or reduced to practice by Employee during
Employee’s employment by the Company and within one year following (i)
termination thereof or (ii) payment of any compensation by the company to
Employee, including under Section 2 hereof, whichever occurs
later. The provisions of this subsection (c) shall apply whether such
ideas, discoveries, inventions, improvements or knowledge are conceived, made or
gained by Employee alone or with others, whether during or after usual working
hours, either on or off the job, directly or indirectly related to the Company’s
business interests (including potential business interests), and whether or not
within the realm of Employee’s duties.
(d)
Employee shall, upon request of the Company, but at no expense to Employee, at
any time during or after employment by the Company, sign all instruments and
documents and cooperate in such other acts reasonably required to protect rights
to the ideas, discoveries, inventions, improvements and knowledge referred
to above, including applying for, obtaining and enforcing patents and copyrights
thereon in any and all countries.
(e)
Employee recognizes that the possible restrictions on Employee’s activities
which may occur as a result of Employee’s performance of Employee’s obligations
under this Agreement are required for the reasonable protection of the Company
and its investments, and Employee expressly acknowledges that such restrictions
are fair and reasonable for that purpose. Employee further expressly
acknowledges that damages alone will be an inadequate remedy for any breach or
violation of any of the provisions of this Agreement, and that the Company, in
addition to all other remedies hereunder, shall be entitled, as a matter of
right, to injunctive relief, including specific performance, with respect to any
such breach or violation or threatened breach or violation, in any court of
competent jurisdiction. If any of the provisions of this Agreement
are held to be in any respect an unreasonable restriction upon Employee then
they shall be deemed to extend only over the maximum period of time, geographic
area, and/or range of activities as to which they may be
enforceable. Employee expressly agrees that all payments and benefits
due Employee under this Agreement shall be subject to Employee’s compliance with
the provisions set forth in this Section 6.
(f)
Except with respect to any shorter term as expressly provided herein, this
Section 6 shall survive the expiration or earlier termination of Employee’s
relationship with the Company for a period of ten (10) years.
7. This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto. If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held so invalid, and each such other provision shall to
the full extent consistent with law continue in force and effect. The
Company agrees that in the event of a Change in Control this Agreement shall be
assigned to, accepted and performed in good faith by
5
the
person or persons effecting the Change in Control and any failure to so assign
or accept and perform shall be a breach of this Agreement. This
Agreement has been executed and delivered in the State of Connecticut, and its
validity, interpretation, performance, and enforcement shall be governed by the
laws of said State. This Agreement contains the entire understanding
between the parties hereto and supersedes any and all prior agreements, oral or
written, on the subject matter hereof between the Company and Employee, but it
is not intended to, and does not, limit any prior, present or future obligations
of the Employee with respect to confidentiality, ownership of intellectual
property and/or non-competition which are greater than those set forth herein,
including those set forth in the (i) Merger Agreement dated as of October
5, 2007 among the Company, UNFI Merger Sub, Distribution Holdings, Inc., and
Millbrook Distribution Services Inc. (the “Merger Parties”) and (ii) the
Noncompetition and Nonsolicitation Agreement between the undersigned and certain
of the Merger Parties. For purposes of Section 3 of the
Noncompetition and Nonsolicitation Agreement described above and for no other
purpose, this Agreement shall be deemed to be an employment agreement between
the Employee (referred to in the Noncompetition and Nonsolicitation Agreement as
the “Stockholder”) and the Company.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement, intending the
Agreement to become binding and effective as of the date and year first written
above.
|
United
Natural Foods, Inc.
|
Employee | |||
|
/s/
Xxxxxxx Xxxx
|
/s/
Xxxxxx X. Xxxxx
|
|||
|
Xxxxxxx Xxxx
|
Xxxxxx X. Xxxxx
|
|||
|
|
|
6
