EMPLOYMENT CONTRACT
DATED: October 1, 1998
BETWEEN: UNITED GROCERS, INC.,
an Oregon corporation, hereinafter referred to as "Company"
AND: XXXXX XXXXX,
hereinafter referred to as "Employee"
RECITALS:
A. The parties desire to provide for employment of Employee by Company,
which for purposes of this Agreement, includes any subsidiary or affiliated
corporation or entity that is at least fifty-one percent (51%) owned directly or
indirectly by Company.
B. Employee desires to be assured of a minimum compensation from Company
for Employee's services over a defined term (unless terminated for cause).
C. Company desires to employ Employee in order to assure continuing
management expertise for Company and to provide reasonable protection of
Company's confidential business information which has and will be developed by
Company.
1. EMPLOYMENT.
1.1 Employment. Company hereby employs Employee as Executive Vice
President and Chief Operating Officer upon the terms and conditions set forth in
this Agreement. Employee accepts such employment upon the terms and conditions
set forth in this Agreement.
1.2 Term. The term of this Agreement shall commence upon October 1, 1998,
and shall continue for a period of three (3) years from said date, subject to
the termination provisions of paragraph 3.
1.3 Extension. This Agreement shall be automatically extended for an
additional year on each successive October 1, commencing with October 1, 2001,
unless terminated by written notice by either party. The notice of termination
shall be given no sooner than 240 days prior to the expiration of the original
term or any subsequent extension and not less than 180 days prior to the
expiration of the original term or any subsequent extension.
1.4 Duties. Employee accepts employment with the Company on the terms and
conditions set forth in this Agreement, and agrees to devote his full time and
attention to the performance of his duties under this Agreement. Employee shall
be the Executive Vice President and Chief Operating Officer of the Company and
agrees to act in such capacity and perform services normally associated with
such positions. Employee shall perform such specific duties and shall exercise
such specific authority as may be assigned to Employee from time to time by the
President and Chief Executive Officer. In performing such duties, Employee shall
be subject to the direction and control of the President and Chief Executive
Officer. Employee further agrees that in all aspects of such employment,
Employee shall comply with the policies, standards and regulations of the
Company from time to time established, and shall perform his duties faithfully,
intelligently, to the best of his ability, and in the best interest of the
Company. The Employee may serve as a member of the boards of directors for
businesses or associations other than United Grocers, Inc. or any of its
subsidiaries, provided such activity does not materially interfere with the
services required to be rendered to or on behalf of the Company.
-1-
2. COMPENSATION.
2.1 Base Compensation. In consideration of all services to be rendered by
Employee to the Company, the Company shall pay to Employee base compensation of
Two Hundred Thousand Dollars ($200,000) per year, payable at the same frequency
as all employees are compensated (the "Base Compensation"). Adjustments may be
mutually agreed upon from time to time, and such adjustments will be in writing
and signed by both parties hereto and added as an amendment to this Agreement.
If Employee's Base compensation is increased during the term of this Agreement,
the increased amount shall be the Base Compensation for the remainder of the
term and any extension. Base compensation shall not include any bonuses or
incentive compensation payments, if any, which Company, in its sole discretion,
may elect to pay to Employee at some future date.
2.2 Withholding; Other Base Benefits. The Base Compensation and any other
payment or benefit shall be subject to the customary withholding of income taxes
and shall be subject to other employment taxes required with respect to
compensation paid by a corporation to an employee. Base Compensation paid to
Employee shall be in addition to any other contribution made by the Company for
the benefit of Employee to any qualified or non-qualified pension or profit
sharing plan, including, but not limited to, the Pension Plan of United Grocers,
Inc., any supplemental pension or bonus plan for key employees, and the
Company's portion, if any, of the 401(k) plan maintained by the Company for the
benefit of its employees. Employee shall be entitled to participate in Company's
medical and dental insurance plans and any other fringe benefits that are
provided to Company's key employees on a regular basis.
2.3 Expenses. Company shall pay or reimburse all of the reasonable and
necessary expenses incurred by Employee in carrying out his duties under this
Agreement, provided that Employee accounts promptly for such expenses to Company
in the manner prescribed from time to time by Company.
2.4 Disability. If Employee shall become unable to perform his duties
under this Agreement because of accident, injury or illness, he shall be
considered permanently disabled, but his salary, less any disability benefits
Employee should receive from an insurer, shall continue for the duration of such
disability for the remaining term of this Agreement, or at the minimum of at
least one full year of salary. Such disability period shall commence with the
month following the month in which the disability occurs. For purposes of this
Agreement, "permanently disabled" shall be defined as Employee's inability due
to physical or mental illness, or other cause, to perform the majority of
Employee's usual duties for a period of one (1) month. For purposes of the
various employee plans referred to in subparagraph 2.2 above, all payments made
to Employee by an insurer or company pursuant to this subparagraph 2.4, shall be
deemed to be compensation paid by Company for actual services rendered to the
Company. The parties acknowledge that the company's disability program for its
key executives is currently being reviewed and agree that once such a plan is
established the benefits provided under this paragraph will be modified to
conform with such plan.
-2-
2.5 Benefit Inclusions.
2.5.1 Auto or auto allowance.
2.5.2 Annual medical physical.
2.5.3 Country club privileges (initiation fee).
2.6 Vacation. Employee shall be entitled to five weeks of paid vacation
per year plus those holidays which are normally recognized by Company during the
year.
2.7 Life Insurance. During the term hereof, Company shall acquire a
$200,000 life insurance policy on the life of Employee which insurance shall be
payable to whatever beneficiaries Employee designates or in the absence of such
a designation to Employee's estate.
3. TERMINATION.
3.1 Termination by Company (Without Cause). Employee's employment under
this Agreement may be terminated without cause by the President and Chief
Executive Officer by giving one hundred eighty (180) days' written notice to
Employee. Upon the giving of such notice or at any time thereafter, the Company
may elect to (i) continue to employ Employee for the balance of said 180-day
notice period subject to the provisions of this Agreement or (ii) immediately
terminate Employee provided that the Company pay to the Employee for the balance
of said 180-day period his Base Compensation that he normally would have
received for such 180-day period, as if Employee had remained as an employee of
the Company. For purposes of this Agreement, the expiration of the term of this
Agreement or any extension of such term, without renewal, shall be treated as a
termination without cause and the foregoing 180-day period shall commence upon
written notice of termination under Subparagraph 1.3. If the Employee should be
terminated without cause ("cause" hereafter defined), the Company shall pay or
provide to the Employee after such termination, the following:
3.1.1 The Employee's Base Compensation, as described in subparagraph
2.1 above, which compensation shall be payable at the same frequency as all
other employees are compensated over the longer of (i) the remaining term of
this Agreement, (ii) the remaining term of any extension of this Agreement if
this Agreement has been extended as provided in subparagraph 1.3, or (iii) the
foregoing 180-day period after notice of termination.
3.1.2 For the period specified in Subparagraph 3.1.1, full employee
benefits as more particularly described in subparagraphs 2.2, 2.3, 2.4 and 2.7
to the extent such benefits are not discretionary on the part of Company. The
coverages provided in subparagraphs 2.2, 2.3, 2.4 and 2.7 may be procured
directly by the Company apart from and outside of the terms of the plans
themselves, provided that the Employee and the Employee's dependents comply with
all of the conditions of the various plans.
3.2 Termination by Company (For Cause). Employee's employment under this
Agreement may be immediately terminated by the President and Chief Executive
Officer for cause. Termination "for cause" means that Employee shall be guilty
of fraud, dishonesty, conduct involving moral turpitude connected with the
employment of Employee, or a breach of the provisions of this Agreement,
including specifically a failure to perform the duties described in subparagraph
1.4. If Employee is terminated for cause, Employee shall be entitled to those
vested retirement benefits as of the date of termination that he qualified for
under the terms of the Company's various retirement plans, both qualified and
non-qualified; however, Employee shall only be entitled to Base Compensation or
any other benefits described in this Agreement up to the date of termination.
-3-
3.3 Termination by Employee. The Employee may terminate his employment for
any reason and without cause by giving 60 days prior written notice to the
Company. Upon receipt of such notice, the Company may elect to (i) continue to
employ Employee for all or a portion of said 60-day period, subject to the
provisions of this Agreement or (ii) immediately terminate Employee, provided
that the Company pay to the Employee for said 60-day period his Base
Compensation that he normally would have received for such 60-day period as if
Employee had remained as an employee of the Company. If Employee terminates his
employment, he shall be entitled to those vested retirement benefits as of the
date of termination that he qualified for under the terms of the Company's
various retirement plans, both qualified and non-qualified, and Employee shall
be entitled to the full benefits provided in subparagraphs 2.2, 2.3 and 2.4
through the date of termination to the extent such benefits are not
discretionary on the part of Company.
3.4 Termination Due to Death or Disability. In the event of termination of
employment due to death or disability of Employee, Base Compensation shall be
prorated and paid through the date of such death or disability. Employee or
Employee's beneficiaries shall be entitled to those vested retirement benefits
as of the date of such termination that employee qualified for under the
Company's various retirement plans, both qualified and non-qualified. All other
benefits provided under this Agreement shall terminate as of the date of such
death or disability except as may be specifically provided otherwise in this
Agreement or the agreements relating to such benefit plans.
4. CONFIDENTIAL INFORMATION.
4.1 Definition. For purposes of this paragraph 4, the term "Confidential
Information: means information, including but limited to financial, operational,
customer, pricing, and marketing information, which is not generally known and
which is proprietary to Company, including but not limited to (i) financial and
trade secret information about Company or its subsidiaries or affiliates, and
(ii) information relating to the business of Company, its subsidiaries or
affiliates including, without limitation, information about Company's and its
subsidiaries' or affiliates' customers, trading skills, contacts and know-how
and information about the trading, manufacturing and marketing activities of
Company, its subsidiaries, or affiliates. All information which Employee has a
reasonable basis to consider Confidential Information or which is treated by
Company, its subsidiaries or affiliates as being Confidential Information shall
be presumed to be Confidential Information, whether originated by Employee or by
others, and without regard to the manner in which Employee obtains access to
such information, except that it shall not include:
4.1.1 information in the public domain;
4.1.2 information that becomes part of the public domain through no
fault of Employee;
-4-
4.1.3 information in Employee's possession prior to his employment by
Company; and
4.1.4 information otherwise acquired lawfully from parties other than
Company.
4.2 Nondisclosure. Employee will not, either during the term of this
Agreement including any extensions or for a period of two (2) years following
expiration or termination of this Agreement, use or disclose any Confidential
Information to any person not then employed by Company without the prior written
authorization of Company's Board of Directors and will use reasonably prudent
care to safeguard and protect and to prevent the unauthorized disclosure of all
such Confidential Information.
5. NON-COMPETITION. If Employee's employment is terminated pursuant to
subparagraphs 3.2 or 3.3, then Employee agrees that for a period of two (2)
years following termination of this Agreement, he will not directly or
indirectly, alone or as a partner, officer, director or employee, perform
services for any firm or organization engaged in activities in competition with
or similar to those activities which have been or are being conducted by
Company, its subsidiaries, or affiliates in the states of Washington, Oregon,
Idaho or California or in such other geographic areas in which Company is
conducting its business as of the date of termination. If Employee's employment
is terminated pursuant to subparagraphs 3.1 or 3.4, then this non-competition
provision shall not apply to Employee after termination. In all events, the
provisions of subparagraph 4.2 shall apply to Employee after his termination. 6.
CORPORATE RESTRUCTURING. If Company is acquired by another company, sells
substantially all of its assets, mergers, or consolidates with another company
or operates its business through a joint venture or partnership with another
company and if Employee's employment under this Agreement or a similar agreement
is not continued by Company, the acquiring company, the successor company or the
joint venture or partnership as the case may be, then Company agrees that
Employee shall be entitled to receive the benefits under subparagraph 3.1 as if
Employee's employment had been terminated without cause. Employee acknowledges
that in such a sale or acquisition, Employee's title may be changed and such a
change in title will not be viewed as a termination of Employee's employment so
long as his duties and responsibilities are commensurate with his current duties
and responsibilities.
7. APPLICABLE LAW. This Agreement is entered into, under, and shall be
governed for all purposes by the laws of the state of Oregon.
8. SUCCESSORS. This Agreement shall be binding upon and inure to the benefit
of the Company, its successors and assigns (including, without limitation, any
company into or with which the Company may merge, form a joint venture or
consolidate).
9. AMENDMENTS. No amendment or variation of the terms and conditions of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the parties hereto.
-5-
10. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. Employee represents and
warrants to the Company that there is no employment contract or any other
contractual obligation to which Employee is subject which prevents Employee from
entering into this Agreement or from performing fully Employee's duties under
this Agreement.
11. NO ASSIGNMENT. The Employee's right to receive payments or benefits under
this Agreement shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by Will or
by the laws of descent or distribution. In the event of any attempted assignment
or transfer contrary to this paragraph, the Company shall have no liability to
pay any amount so attempted to be assigned or transferred. This Agreement shall
inure to the benefit of and be enforceable by the Employee's personal or legal
representatives, heirs, distributees, devisees, and legatees.
12. NO ADEQUATE REMEDY. The parties declare that it is impossible to measure
in money the damages which will accrue to either party by reason of a failure to
perform any of the obligations under this Agreement. Therefore, if either party
shall institute any action or proceeding to enforce the provisions hereof, such
person against who such action or proceeding is brought hereby waives the claim
or defense that such party has an adequate remedy at law, and such person shall
not urge in any such action or proceeding the claim or defense that such party
has an adequate remedy at law.
13. NOTICES. All notices, requests and demands given to or made pursuant
hereto shall, except as otherwise specified herein, be in writing and be
delivered or mailed to any such party at an address to be designated by each of
such parties. Any notice, if mailed properly addressed, postage prepaid,
registered or certified mail, shall be deemed dispatched on the registered date
or that stamped on the certified mail receipt, and shall be deemed received
within the second business day thereafter or when it is actually received,
whichever is sooner.
14. CONSTRUCTION. Where possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
15. WAIVERS. No failure on the part of either party to exercise, and no delay
in exercising, any right or remedy hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right or remedy granted hereby or by any related document or by law.
-6-
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding between the parties herein in reference to all matters herein
agreed upon and supersedes any and all prior agreements.
EMPLOYEE: COMPANY:
UNITED GROCERS, INC.
/s/ Xxxxx Xxxxx By /s/ Xxxxxxx X. Xxxxxxx
Xxxxx Xxxxx Its President and CEO
-7-
