SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into as of the
25th day of July, 1998, by and between Xxxxx'x General Stores, Inc., an Iowa
corporation (the "Company"), and Xxxxxxx X. Xxxxx, an individual residing in
Indianola, Iowa ("Xxxxx").
WHEREAS, the Company has been offered and has determined to accept Xxxxx'x
resignations from participation in the active management of the Company as a
member of the Board of Directors and as Treasurer and the parties wish to
provide for an orderly transition of Xxxxx'x duties to others.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the parties hereto agree as follows:
1. RESIGNATION AS TREASURER. Xxxxx acknowledges that his execution of this
Agreement constitutes his formal written resignation from his current position
as Treasurer of the Company effective as of the date hereof (the "Effective
Date"), and that the Company's execution of this Agreement constitutes its
acceptance of his resignation. As of the Effective Date, Xxxxx shall be
immediately and completely relieved of any and all duties and responsibilities
formerly assigned to him in his capacity as Treasurer of the Company. Except as
provided herein, all privileges of Xxxxx'x current position as Treasurer of the
Company shall cease as of the Effective Date. Xxxxx and the Company further
agree that the Amended and Restated Employment Agreement dated October 24, 1997
between Xxxxx and the Company (the "Employment Agreement") shall be of no
further force or effect from and after the Effective Date, and that the rights,
responsibilities, duties and obligations of the Company and Xxxxx set forth
therein shall be terminated contemporaneously herewith.
2. RESIGNATION AS DIRECTOR AND WITHDRAWAL OF NOMINATION. Xxxxx acknowledges
that his execution of this Agreement constitutes his formal written resignation
from his current positions as a member of the Board of Directors of (i) the
Company and (ii) Xxxxx'x Marketing Company, each as of the Effective Date, and
that the Company's execution of this Agreement constitutes its acceptance of his
resignation. As of the Effective Date, Xxxxx shall be immediately and completely
relieved of any and all duties and responsibilities in his capacity as a member
of the Board of Directors of the Company and Casey's Marketing Company. The
Company shall promptly withdraw its nomination of Xxxxx as a director of the
Company for the coming year, and Xxxxx agrees not to stand for election or
permit himself to be
nominated as a director of the Company at the Annual Meeting of shareholders on
September 18, 1998.
3. PAYMENTS TO XXXXX.
(a) In consideration of the terms hereof, the Company agrees to pay Xxxxx,
and Xxxxx agrees to accept, the following payments:
(i) Commencing on September 1, 1998, and extending until Xxxxx'x death and,
following his death, to his surviving spouse, if any, until the earlier of (i)
the expiration of the period ending on September 1, 2018, or (ii) the death of
his spouse, an annual payment of Seventy Five Thousand Dollars ($75,000) in
equal monthly installments payable on the first day of each month.
(ii) Xxxxx'x present salary through August 31, 1998.
(iii) On August 31, 1998, Thirty Thousand Dollars ($30,000), an amount
equal to one-third (1/3) of the highest annual bonus distributed to Xxxxx during
the three preceding fiscal years.
(iv) On August 31, 1998, an amount equal to the current value to Xxxxx of
thirty (30) days of unused vacation.
(b) In the event of a Change of Control (as defined in the Employment
Agreement) of the Company, Xxxxx shall have the right at any time
thereafter to demand that the present value of the remaining annual
payments described in Section 3(a)(i) be calculated and paid to him, with
such payment to be made by the Company within thirty (30) days of the date
of his written demand for the same. For this purpose, the present value of
the remaining payments shall be calculated using a discount rate equal to
the sum of (i) the yield of a U.S. Treasury security having a maturity
comparable to the remaining number of years that such payments are to be
made to Xxxxx, plus (ii) three hundred basis points. Following any Change
of Control, the Company agrees to pay, to the full extent permitted by law,
all legal fees and expenses which Xxxxx may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company or others
(including Xxxxx) of the validity or enforceability of, or liability under,
any provision of this Agreement, plus interest
at the applicable federal rate provided for in Section 7872(f)(2) of the
Internal Revenue Code of 1986.
(c) Xxxxx acknowledges that the payments set forth above shall fully compensate
him for any and all sums owed to him by the Company in respect of the
Employment Agreement, the Company's Non- Qualified Supplemental Executive
Retirement Plan (the "SERP") and for the releases and obligations contained
herein.
4. OTHER BENEFITS; HEALTH INSURANCE; AND AUTOMOBILE. The Company
further agrees with Xxxxx as follows:
(a) During the two-year period following the Effective Date, the Company shall
continue benefits to Xxxxx and his spouse at least equal to those then
provided by the Company to Xxxxx and other key employees of the Company and
their spouses, including but not limited to health and life insurance
coverages.
(b) Notwithstanding Section 4(a) hereof, but subject to any limitations,
restrictions, or conditions that shall from time to time be necessary to
satisfy the requirements of applicable federal or state laws and
regulations, or which may be imposed by virtue of any health insurance
plans or coverages provided by the Company with respect to its employees
generally, the Company shall use its best efforts to include Xxxxx and his
spouse in the group for which the Company seeks health insurance coverages
for its employees and to continue at all times to include Xxxxx and his
spouse in the Company's group health insurance coverages and provide the
same to Xxxxx and his spouse at the current level of employee
participation, except to the extent and only until such coverage is or
otherwise becomes available to Xxxxx and his spouse under the Medicare
program of benefits. In the event Xxxxx or his spouse shall become
ineligible for such coverages under the Company's then-current health
insurance plans or programs during the term hereof, the Company shall so
inform Xxxxx and shall commence the monthly payment to Xxxxx of One
Thousand Two Hundred Dollars ($1,200), with such payments continuing until
such coverage is or otherwise becomes available to Xxxxx and his spouse
under the Medicare program of benefits or under a subsequent Company plan
of insurance. The Company agrees that it shall not dispute any such
ineligibility is a "qualifying event" under COBRA. Upon request of Xxxxx
from time to time, the
Company will inform Xxxxx in writing of its understanding of the eligibility
status of Xxxxx and Xxxxx'x spouse under the Company's group health
insurance coverages, and shall provide Xxxxx with such other information as
he may reasonably request with respect to the insurance coverage, including
the name of the relevant company and agent or broker involved.
(c) To the extent permitted by applicable law and the administrator of the
Company's existing 401(k) plan, Xxxxx may cause any eligible portion of the
payments described in Section 3 hereof to be deposited and maintained in
his account with said plan.
(d) Nothing herein shall affect any rights Xxxxx may have under any stock
option agreements with the Company.
(e) Xxxxx shall have the opportunity until August 31, 1998 to purchase the
automobile he is presently using at the wholesale price thereof, as
reasonably determined by the Company. Xxxxx acknowledges his personal and
detailed knowledge of said automobile and its present condition, and agrees
that any purchase of the same by him shall be on an "as is" basis and with
all faults. In the event Xxxxx determines to purchase said automobile,
Xxxxx agrees to execute a xxxx of sale and any other documents necessary to
accomplish the transfer of ownership of said automobile, all in the manner
and form reasonably requested by the Company. If Xxxxx does not determine
to purchase said automobile, Xxxxx shall return the same to the Company on
August 31, 1998 in its present condition, ordinary wear and tear excepted.
5. CONSULTING SERVICES. During the period between the Effective Date and
Xxxxxx 00, 0000, Xxxxx agrees to hold himself available at the reasonable
request of the Company to consult with the officers, directors and other
representatives of the Company with respect to the preparation of the Company's
financial statements and Form 10-Q for the fiscal quarter ending July 31, 1998
and the transition of his successor as Treasurer.
6. CONFIDENTIALITY. During the two-year period following the Effective Date
hereof, Xxxxx shall not directly or indirectly reveal to sources or
organizations outside the Company, without the prior written consent of the
Company, any matters, details, information, knowledge, or data concerning the
business, operation or management of Company which shall have been obtained by
Xxxxx during his
employment by the Company and which shall not have been or be publicly
disclosed in writing by the Company or which is not otherwise publicly
available. Nothing herein, however, shall prevent Xxxxx from responding to the
requirements of legal process. In the event of any breach by Xxxxx of the
covenant set forth in this Section, Xxxxx shall repay upon demand by the Company
any and all sums he has received pursuant to Section 3 hereof and the Company's
obligation to make any further payments to Xxxxx shall thereupon be discharged
and terminated in full and be of no further force or effect.
7. RESTRICTIVE COVENANT. During the two-year period following the Effective
Date hereof, Xxxxx shall not directly or indirectly associate with, participate
in or render service to, whether as an employee, officer, director, consultant,
independent contractor or otherwise, any organization that is engaged in the
business of the sale of gasoline and groceries in competition with the Company,
and he shall not himself engage in any such business on his own account. In the
event of any breach by Xxxxx of the covenant set forth in this Section, Xxxxx
shall repay upon demand by the Company any and all sums he has received pursuant
to Section 3 hereof and the Company's obligation to make any further payments to
Xxxxx shall thereupon be discharged and terminated in full and be of no further
force or effect.
8. RELEASES.
(a) Other than claims based upon a breach of this Agreement or affirmative
defenses or counterclaims that Xxxxx may have in connection with claims
brought by the Company pursuant to Section 8 (c), Xxxxx acknowledges and
agrees that the execution of this Agreement shall constitute a full,
complete and final release and discharge by Xxxxx of any and all claims
against the Company and its directors, officers, attorneys, insurers,
employees and their heirs, executors, administrators, successors and
assigns, from any and all claims or demands, whether known or unknown, that
Xxxxx may have based on his employment with the Company, the Employment
Agreement, the SERP or the severance of his employment as Treasurer. This
includes, but is not limited to, a full release of any rights or claims
Xxxxx may have under the Federal Age Discrimination in Employment Act, the
Federal Civil Rights Act, the Iowa Civil Rights Act, or any other federal,
state or local laws, ordinances, regulations or Executive Orders
prohibiting employment discrimination. This also includes a release by
Xxxxx of any claims for attorneys' fees, wrongful discharge, or claims
based upon tort or contract, statute or common law. This release covers
both claims that Xxxxx knows about and those that he may not know about,
and is
binding upon him and his dependents, representatives, successors,
heirs and assigns.
(b) If Xxxxx breaches the covenant set forth in Section 8(a) of this Agreement
and files a claim, charge, complaint or lawsuit based on any of the legal
claims that he has released herein, Xxxxx shall repay upon demand by the
Company, any and all sums he has received pursuant to Section 3 hereof and
the Company's obligation to make any further payments to Xxxxx shall
thereupon be discharged and terminated in full and be of no further force
or effect. Xxxxx shall also pay for all reasonable costs incurred by the
Company or any released party or entity, including reasonable attorneys'
fees, in defending against any such claim.
(c) The Company hereby releases Xxxxx, his successors, heirs and assigns, and
agrees to hold him harmless from any and all claims that the Company may
have under the Employment Agreement or otherwise arising from Xxxxx'x
employment by the Company or his service on the Board of Directors;
provided, however, that nothing herein is intended or shall be construed to
release Xxxxx or hold him harmless from any claims arising from or
attributable to (i) any willful and knowing breach or violation by Xxxxx of
any Company policy, regulation or written directive, (ii) any violation by
Xxxxx of any federal, state or local law (including but not limited to any
violation of the federal or state securities laws), or (iii) any
intentional material misstatement, omission or misrepresentation made by
Xxxxx in connection with his duties as Treasurer of the Company, including
but not limited to his participation, approval, preparation or
dissemination of any tax return, financial statement, application, license
or other permit of or on behalf of the Company or its subsidiaries.
(d) Nothing herein shall affect any rights Xxxxx may have under the Company's
articles of incorporation or bylaws, insurance or under applicable law, in
each case relating to Xxxxx'x service as a director or officer of the
Company or its subsidiaries.
9. RELIANCE ON OWN COUNSEL AND ACCOUNTANT.
(a) By his execution hereof, Xxxxx acknowledges that he is not relying upon any
statement, representation, opinion or advice of the
Company or of its officers, agents, employees, attorneys, or anyone else acting
on its behalf, concerning the consequences to Xxxxx of the release set forth in
Section 8 hereof or his receipt of the payments described herein. Xxxxx
acknowledges that he has obtained counsel and accountants of his own choosing,
with whom he has conferred, and upon whom he is relying exclusively, in
evaluating this Agreement and the legal and tax consequences that may result
therefrom.
(b) Xxxxx further acknowledges that he and his counsel and accountants have had
sufficient time to consider the provisions of this Agreement and have
participated in the negotiation of the terms hereof. Xxxxx acknowledges
that he has read this Agreement in its entirety, understands it and is
voluntarily entering into it.
10. PRESS RELEASE. The Company and Xxxxx agree to meet and confer regarding
the contents of a press release to be disseminated by the Company concerning
Xxxxx'x resignation prior to such dissemination. Until the Company has publicly
released information relating to this Agreement, the Company and Xxxxx agree
that each shall not disseminate or communicate in any form, written or oral, to
any person, the substance of this Agreement or the terms and conditions hereof.
It is recognized that the terms of this confidentiality provision shall not
include any discussion Xxxxx may have with his spouse or daughter, or that
either Xxxxx or the Company have with their legal representatives or certified
public accountants concerning the provisions of this Agreement, provided that
they are informed of and bound by this confidentiality agreement. Xxxxx
acknowledges and agrees that (i) such information may be considered "material"
under the federal securities laws and that any selective dissemination or
communication thereof may be prohibited by law and subject him to both civil and
criminal penalties and (ii) he will indemnify and hold the Company harmless from
any breach by him of the foregoing confidentiality provision.
11. REFERENCES. The parties agree that all requests for references that are
received by employees of the Company (excluding its outside directors) with
respect to Xxxxx'x employment shall be directed to Xxxxxx X. Xxxxxxxx for
response. In the event Xx. Xxxxxxxx shall be unavailable at the time, the
Company shall so advise Xxxxx and seek his further direction.
12. LEGAL FEES. The Company agrees to pay Xxxxx, on August 31, 1998, an
amount equal to the legal fees incurred by Xxxxx in connection with this
Agreement, upon submission to the Company of appropriate invoices with respect
thereto, but in no event in excess of Five Thousand Dollars ($5,000.00).
13. WITHHOLDING. The Company may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
14. NO ASSIGNMENT. Neither party may assign or otherwise transfer its
interest in or obligations under this Agreement or any of the payments described
herein, except as contemplated by this Agreement, without the prior written
consent of the other party.
15. WAIVER. The failure of either Xxxxx or the Company to insist, in any
one or more instances, upon the performance of any of the terms, covenants or
conditions of this Agreement, shall not be viewed as a waiver or relinquishment
of any right granted hereunder or of the future performance of any such term,
covenant or condition, but rather the obligations of both parties with respect
to this Agreement shall continue in full force and effect.
16. NOTICES. Any and all notices provided for in this Agreement shall be
deemed given or delivered on the date of receipt thereof by the party receiving
such notice. Any and all such notices shall be directed as follows: If the
Company, Xxxxx'x General Stores, Inc., Xxx Xxxxxxxxxxx Xxxx., Xxxxxx, Xxxx
00000, Attention: President; and if to Xxxxx, to his residence in Indianola,
Iowa or to such other address as may be designated by him.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon any
successor or successors of the Company and further shall be binding upon and
inure to the benefit of Xxxxx and his spouse.
18. AMENDMENTS. No change, amendment or modification of this Agreement
shall be valid unless the same be in writing and signed by the Company and
Xxxxx.
19. CONSTRUCTION. This Agreement shall be deemed to be made in the State of
Iowa and shall be governed by the laws of the State of Iowa.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument with the same force
and effect as if both parties had executed the same document.
IN WITNESS WHEREOF, the respective parties have caused this Agreement to be
executed on the day and year first above written.
XXXXX'X GENERAL STORES, INC.
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, President And Chief
Executive Officer
ATTEST:
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx, Corporate Secretary
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
