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EMPLOYMENT AGREEMENT
AGREEMENT by and between Ameriserve Food Distribution, Inc., a
Nebraska corporation (the "Company"), and Xxxxxxx X. Xxxx (the "Executive"),
dated as of the 26th day of November, 1997.
WHEREAS, prior to July 11, 1997, the Executive was employed by the PFS
Division of Pepsico, Inc. ("Old PFS"); and
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of
May 23, 1997 between Pepsico, Inc. and Nebco Xxxxx Holding Company ("Nebco"),
and effective as of July 11, 1997 (the "Effective Date"), all of the assets of
Old PFS, were sold to Nebco, and Old PFS, together with a division of the
Company, became AmeriServe/PFS ("AmeriServe/PFS"); and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interest of the Company and its shareholders
to employ the Executive as the Senior Vice President, Operations of
AmeriServe/PFS, and the Executive desires to serve the Company in that capacity;
and
WHEREAS, the Company desires to employ the Executive and the Executive
desires to work for the Company.
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NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive, and the
Executive shall serve the Company, on the terms and conditions set forth in this
Agreement, for the period beginning on the Effective Date and ending on the
third anniversary thereof (the "Employment Period"), provided, however, that
commencing on the date two years after the Effective Date and on each annual
anniversary of such date (each annual anniversary thereof shall hereinafter be
referred to as the "Renewal Date"), unless previously terminated, the
Employment Period shall be automatically extended so as to terminate two years
from the Renewal Date, so that there is always between one and two years
remaining in the Employment Period, unless 90 days prior to the Renewal Date the
Company or the Executive shall terminate this Agreement by giving notice to the
other party that the Employment Period shall not be so extended (a "Notice of
Nonrenewal"). Notwithstanding any such termination, Section 6 of this Agreement
shall remain in full force and effect.
2. Position and Duties. During the Employment Period, the Executive
shall serve as Senior Vice President, Operations of AmeriServe/PFS, reporting to
the President of PFS
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Foodservice Distribution Group, with such duties and responsibilities as are
currently associated with such position. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote full attention and time during normal
business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive under this
Agreement, use the Executive's reasonable best efforts to carry out such
responsibilities faithfully and efficiently. The Executive shall not, during the
term of this Agreement, engage in any other business activities that will
interfere with the Executive's employment pursuant to this Agreement. During the
Employment Period, the Executive's services shall be performed primarily at the
Company's offices in Dallas, Texas.
3. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of
$194,000, payable in accordance with the normal payroll practices for executives
as in effect from time to time. Such Annual Base Salary shall be subject to
review annually in accordance with the review policies and practices for
executives as in effect at the time of any such review.
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(b) Bonus. For the 1997 calendar year, the Executive shall receive a
cash bonus on a basis consistent with the terms of the annual bonus plan
maintained by Old PFS, as in effect immediately prior to the Effective Date,
which shall be payable on March 1, 1998. The Executive shall also be eligible to
receive an additional bonus with respect to the period from the Effective Date
to December 31, 1997, pursuant to the terms of an interim bonus plan to be
established by the Company as soon as reasonably practicable. For each
subsequent calendar year ending during the Employment Period, the Executive
shall be eligible to receive an annual bonus, based upon the terms and
conditions of a new annual bonus program to be established by the Company. For
calendar years after 1997, any such annual bonus program shall provide that the
Executive's target bonus ("Target Annual Bonus") will be 50% of the Annual Base
Salary.
(c) Phantom Equity Plan. The Company expects to adopt, effective on or
about January 1, 1998, an equity incentive plan or program (the "Equity Plan")
for certain of its key executives. The Executive shall be entitled to
participate in the Equity Plan from and after the effective date thereof, in
accordance with the terms and conditions of such plan. Without limiting the
generality of the foregoing, upon the implementation of the Equity Plan, the
Executive shall be entitled to elect, on or before July 1, 1998, either (i) to
receive an award under such Equity Plan or (ii) to receive a cash bonus
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("Alternative Bonus") equal to the Executive's Annual Base Salary. The
Alternative Bonus shall be payable on March 31, 1999, provided, that the
Executive is still employed by the Company as of such payment date and that the
Executive has forfeited or waived all rights to compensation and benefits under
the Equity Plan.
(d) Supplemental Plan. The Company intends to adopt a supplemental
executive retirement or savings plan (the "Supplemental Plan") for certain key
executives, which is expected to be implemented as soon as reasonably
practicable. The Executive shall be entitled to participate in the Supplemental
Plan from and after the effective date thereof, on terms and conditions
substantially similar to peer executives.
(e) Deferred Compensation Program. The Company intends to adopt a
deferred compensation program (the "Deferred Compensation Program") for certain
of its key executives, which is expected to be implemented as soon as reasonably
practicable. The Executive shall be entitled to participate in the Deferred
Compensation Program from and after the effective date thereof, on terms and
conditions substantially similar to those applicable to peer executives.
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(f) Other Benefits. In addition to the foregoing, during the Employment
Period: (i) the Executive shall be entitled to participate in savings,
retirement, and fringe benefit plans, practices, policies and programs of the
Company as in effect from time to time, on the same terms and conditions as
those applicable to peer executives; (ii) the Executive shall be entitled to
four weeks of annual vacation, to be taken in accordance with the vacation
policy as in effect from time to time; (iii) the Executive shall be entitled to
participate in an automobile program on terms and conditions similar to the
automobile program of Old PFS, as in effect immediately prior to the Effective
Date; (iv) the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in, and shall receive all benefits under
medical, dental, disability and other welfare benefit plans, practices, policies
and programs provided by the Company, as in effect from time to time, on the
same terms and conditions as those applicable to peer executives.
(g) For purposes of this Section 3, the Executive's peers shall be
those other executives employed by Ameriserve/PFS at level 17 or such other
peer group as shall be reasonably determined by the Company.
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4. Termination of Employment. (a) Death or Disability. In the event of
the Executive's death during the Employment Period, the Executive's employment
with the Company shall terminate automatically. The Company, in its discretion,
shall have the right to terminate the Executive's employment because of the
Executive's Disability during the Employment Period. "Disability" means that (i)
the Executive has been unable, for a period of 180 consecutive days, or for
periods aggregating 180 business days in any period of twelve months, to perform
the Executive's duties under this Agreement, as a result of physical or mental
illness or injury, and (ii) a physician selected by the Company or its insurers
has determined that the Executive's incapacity is total and permanent. A
termination of the Executive's employment by the Company for Disability shall be
communicated to the Executive by written notice, and shall be effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), unless the Executive returns to full-time performance of the
Executive's duties before the Disability Effective Date.
(b) By the Company. In addition to termination for Disability, the
Company may terminate the Executive's employment during the Employment Period
for Cause or without Cause. "Cause" means:
(i) the continued and willful or deliberate failure of the Executive
substantially to perform the Executive's
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duties under this Agreement (other than as a result of physical or mental
illness or injury), or
(ii) illegal conduct or gross misconduct by the Executive, in either
case that is willful and results in material damage to the business or
reputation of the Company.
Upon the occurrence of events constituting Cause as defined in subsection (i) of
this paragraph (b), the Company shall give the Executive advance notice of any
such termination for Cause and shall provide the Executive with a reasonable
opportunity to cure.
(c) Voluntarily by the Executive. The Executive may terminate his
employment by giving written notice thereof to the Company.
(d) Date of Termination. The "Date of Termination" means the date of
the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause as set forth
in notice from the Company is effective, or the date on which the Executive
gives the Company notice of a termination of employment, as the case may be.
5. Obligations of the Company upon Termination. (a) By the Company
Other Than for Cause, Death or Disability: If, during the Employment Period, the
Company terminates the
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Executive's employment, other than for Cause, death or Disability, but
excluding any termination of employment at the end of the Employment Period
(whether or not as a result of a Notice of Nonrenewal by the Company), the
Company shall, for the remainder of the Employment Period as in effect
immediately before the Date of Termination, continue to pay the Executive the
Annual Base Salary and Annual Bonus(es) through the end of the then-current
Employment Period, as and when such amounts would be paid in accordance with
Sections 3(a) and (b) above; provided, that the amount of each of the Annual
Bonus(es) so paid shall equal the Target Annual Bonus. The Company shall also
continue to provide for the same period welfare benefits to the Executive and/or
the Executive's family, at least as favorable as those that would have been
provided to them under clause (f) (iv) of Section 3 of this Agreement if the
Executive's employment had continued until the end of the Employment Period;
provided, that during any period when the Executive is eligible to receive such
benefits under another employer-provided plan, the benefits provided by the
Company under this Section 5(a) may be made secondary to those provided under
such other plan. Notwithstanding anything contained herein to the contrary, if
during the Noncompetition Period (as defined in Section 6(b) hereof), the
Executive becomes associated with a Competitive Activity (within the meaning of
Section 6(b)
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hereof), the Company's obligation to continue to pay the Executive the Annual
Base Salary and Annual Bonus (es) and to provide welfare benefits (whether
primary or secondary) for the remainder of the then-current Employment Period
shall immediately cease, and, in full satisfaction of the Company's obligations
hereunder, the Company shall pay the Executive a lump-sum amount equal to the
product of (i) 50% and (ii) the sum of the Annual Base Salary and Annual
Bonus(es) otherwise payable to the Executive for the period of time from the
date the Executive first became associated with a Competitive Activity until the
end of the then-current Employment Period. For purposes hereof, the Executive
shall have an affirmative obligation to inform the Company immediately of his
anticipated or actual association with a Competitive Activity, and any failure
to do so will constitute a breach of this Agreement, thereby discharging the
Company from any further obligations to the Executive under this Agreement. The
payments provided pursuant to this Section 5(a) are intended as liquidated
damages for a termination of the Executive's employment by the Company other
than for Cause or Disability and shall be the sole and exclusive remedy
therefor.
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, the Company shall make, within
30 days after the Date of Termination, a lump-sum cash payment to the
Executive's
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estate equal to the sum of (i) the Executive's Annual Base Salary through the
end of the calendar month in which death occurs, (ii) any earned and unpaid
annual bonus amounts for any calendar year ended prior to the Date of
Termination, (iii) any accrued but unpaid vacation pay and (iv) any other vested
benefits to which the Executive is entitled, in each case to the extent not yet
paid.
(c) Disability. In the event the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period in
accordance with Section 4(a) hereof, the Company shall pay to the Executive or
the Executive's legal representative, as applicable, (i) the Executive's Annual
Base Salary for the duration of the Employment Period in effect on the Date of
Termination, provided that any such payments made to the Executive shall be
reduced by the sum of the amounts, if any, payable to the Executive under any
disability benefit plans of the Company or under the Social Security disability
insurance program, (ii) any earned and unpaid bonus amounts for any calendar
year ended prior to the Date of Termination and (iii) any other vested benefits
to which the Executive is entitled, in each case to the extent not yet paid.
(d) Cause; Voluntary Termination. If the Executive's employment is
terminated by the Company for Cause or the
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Executive voluntarily terminates his employment during the Employment Period,
the Company shall pay the Executive (i) the Annual Base Salary through the Date
of Termination and (ii) any other vested benefits to which the Executive is
entitled, in each case to the extent not yet paid, and the Company shall have no
further obligations under this Agreement.
6. Confidential Information; Noncompetition. (a) The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies and their respective businesses that the Executive
obtains or obtained during the Executive's employment by the Company or any of
its affiliated companies and their respective businesses (including, but not
limited to, Old PFS) and that is not public knowledge (other than as a result of
the Executive's violation of this paragraph (a) of Section 6) ("Confidential
Information"). The Executive shall not communicate, divulge or disseminate
Confidential Information at any time during or after the Executive's employment
with the Company, except with the prior written consent of the Company or as
otherwise required by law or legal process.
(b) During the Noncompetition Period (as defined below), the Executive
shall not, without the prior written consent of the Chief Executive Officer of
the Company, engage in
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or become associated with a Competitive Activity. For purposes of this paragraph
(b) of Section 6: (i) the "Noncompetition Period" means the period during which
the Executive is employed by the Company and the one-year period following the
termination of the Executive's employment by the Company for Cause or
voluntarily by the Executive; (ii) a "Competitive Activity" means any business
or other endeavor that engages in limited menu or casual dining distribution
services, which is a direct competitor of the Company or any of its affiliated
companies and their respective businesses; and (iii) the Executive shall be
considered to have become "associated with a Competitive Activity" if he becomes
directly or indirectly involved as an owner, employee, officer, director,
independent contractor, agent, partner, advisor, or in any other capacity
calling for the rendition of the Executive's personal services, with any
individual, partnership, corporation or other organization that is engaged in a
Competitive Activity. Notwithstanding the foregoing, the Executive may make and
retain investments during the Noncompetition Period in not more than five
percent of the equity of any entity engaged in a Competitive Activity, if such
equity is listed on a national securities exchange or regularly traded in an
over-the-counter market.
7. Successors. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise
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than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
8. Miscellaneous. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Nebraska without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
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(b) All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxxxx X. Xxxx
0000 Xxxxx Xxxxx
Xxxxx, Xxxxx 00000
If to the Company:
Ameriserve Food Distribution, Inc.
00000 Xxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000-0000
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 8. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
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(d) Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
supersedes any other agreement, whether written or oral, between them concerning
the subject matter hereof, including, but not limited to, the Summary of Terms
of Employment Agreement.
(g) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx
AMERISERVE FOOD DISTRIBUTION, INC.
/s/ XXXXXX XXXXXXXXX
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By: Xxxxxx Xxxxxxxxx
Title: Vice President
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