Exhibit 10.4
SEVERANCE AND NON-COMPETITION AGREEMENT
AGREEMENT, entered into this 1st day of June, 1995
("Effective Date"), between XXXXXX'X, INC., a Wisconsin
corporation (the "Company"), and XXXXXX X. XXXXXXX ("Xx.
Xxxxxxx").
RECITALS:
1. Xx. Xxxxxxx is employed by the Company as its President
and Chief Executive Officer, and is also a member of
its Board of Directors. In the course of such
employment, Xx. Xxxxxxx has acquired and will continue
to acquire a great deal of valuable, proprietary and
confidential knowledge and information regarding the
Company's business, its products and services, and its
marketing and business development strategies, and
other proprietary information of potential value to the
Company's competitors.
2. As an incentive for Xx. Xxxxxxx to continue in the
Company's employ, and in consideration for his
agreement not to compete with the Company following the
termination of his employment under certain conditions,
the Company wishes to undertake to make certain
payments and provide certain benefits to Xx. Xxxxxxx
upon the termination of his employment under the
circumstances set out herein.
AGREEMENT:
In consideration of the premises, and the mutual
covenants and agreements contained herein, the Company and
Xx. Xxxxxxx agree as follows:
1. Termination of Xx. Xxxxxxx'x Employment by the Company
without Good Cause or by Xx. Xxxxxxx for Good Reason.
Upon the Company's termination of Xx. Xxxxxxx'x
employment (unless such employment is terminated for
"Good Cause" (as that term is defined below)), or Xx.
Xxxxxxx'x termination of his employment for "Good
Reason" (as that term is defined below), the Company
will pay to Xx. Xxxxxxx, pro rata over the non-compete
period, the Applicable Benefit (as that term is defined
below) without interest. The date upon which Xx.
Xxxxxxx'x employment with the Company ceases is
referred to herein as the "Termination Date."
2. Post-Retirement Insurance Benefits. If Xx. Xxxxxxx
ceases to be employed with the Company (including by
reason of his death) at any time after his attaining
age 55 and while he is then an officer and a director
of the Company (unless his employment is terminated by
the Company for Good Cause), the Company will continue
to provide, during the Post Retirement Period (as
defined below), at no cost to Xx. Xxxxxxx, coverage for
Xx. Xxxxxxx and his spouse under the employee health,
medical and life insurance plans maintained by the
Company for its most senior executive personnel, in
accordance with the terms of such plans as the same may
exist and be in effect from time to time during the
Post Retirement Period. The "Post Retirement Period"
means the period from the date of the termination of
Xx. Xxxxxxx'x employment until the earliest of (i) date
on which he attains (or would have attained) age 65,
(ii) the date on which he accepts other employment the
terms of which include a health or medical insurance
benefit reasonably comparable to that to be provided
under this Section 2, or (iii) the date on which he
accepts other employment in violation of, or otherwise
breaches or violates the provisions of, Section 4
hereof. In the event of Xx. Xxxxxxx'x death prior to
the end of the Post Retirement Period, the benefits to
be provided under this Section 2 will be provided to
his spouse until the date on which Xx. Xxxxxxx would
have attained age 65, or, if earlier, the date of his
spouse's remarriage.
3. Definitions.
(a) For purposes of this Agreement, the term "Good Cause" means
only (i) the wilful commission by Xx. Xxxxxxx of a material
act of dishonesty or moral turpitude involving the
Company; (ii) Xx. Xxxxxxx'x conviction of a felony, or his
pleading guilty or nolo contendere to the same; (iii) Xx.
Xxxxxxx'x xxxxx negligence in the performance of his duties
and responsibilities as an officer of the Company; (iv) the
wilful failure of Xx. Xxxxxxx to carry out the duties and
responsibilities of his office, or to follow a specific and
lawful directive of the Board of Directors of the Company
(provided such directive is consistent with his position as
the President and Chief Executive Officer of the Company),
but only if such failure continues for ten days after Xx.
Xxxxxxx has been provided with written notice of such
failure (which notice includes a description of the nature
of the failure and specifies the actions to be taken by Xx.
Xxxxxxx to rectify it); (v) Xx. Xxxxxxx'x wilful disclosure
of material proprietary confidential information of the
Company to or for the benefit of a competitor of the
Company, to the extent such information was not available
publicly; or (vi) any intentional misrepresentation by Xx.
Xxxxxxx to the shareholders or directors of the Company.
For purposes of the preceding definition, no act, failure
to act, or omission on the part of Xx. Xxxxxxx will be
deemed to have been "wilful" or "intentional" if done or
omitted to be done in good faith and in the reasonable
belief that it was in or not opposed to the best interests
of the Company. Any such act or omission or failure to act
based upon the advice of counsel for the Company will be
conclusively deemed to have been done or omitted to be done
in good faith and in the best interests of the Company.
(b) For purposes of this Agreement, the term "Good Reason" means
any material diminution or adverse change (effected by the
Company, without Xx. Xxxxxxx'x voluntary concurrence) in the
nature or scope of Xx. Xxxxxxx'x authority, powers,
functions, duties or responsibilities or any other material
aspect of his employment, including, without limitation, Xx.
Xxxxxxx'x ceasing to hold the positions of President and
Chief Executive Officer of the Company, and including his
ceasing to be a member of the Board of Directors of the
Company (other than by reason of his voluntary resignation
from such offices or from the Board of Directors).
(c) For purposes of this Agreement, the term "Monthly Benefit
Amount" means the sum of the following: (i) an amount equal
to one-twelfth of Xx. Xxxxxxx'x annual base salary as
established and in effect as of the Termination Date; (ii)
one-twelfth of the amount of any bonus and/or incentive
compensation paid or payable to Xx. Xxxxxxx for the fiscal
year preceding the fiscal year of the Company in which the
Termination Date occurs (the "Prior Year Bonus"), or, if
greater, the amount of such bonus and/or incentive
compensation for the fiscal year of the Company in which the
Termination Date occurs (the "Current Year Bonus"); and
(iii) subject to the final sentence of Section 3(d), the
fair value of any health and/or life insurance benefits, on
a monthly basis, to which Xx. Xxxxxxx is entitled or which
are provided or made available by the Company to him as of
the Termination Date. If the amount of the bonus or
incentive compensation described in the preceding clause
(ii) cannot be determined as of the date when the benefits
to be paid hereunder are to be paid, then the amount to be
paid at such time shall be determined on the basis of the
Prior Year Bonus, and such amount shall be adjusted, if
necessary, to reflect the Current Year Bonus, as soon as
practical after the amount of the Current Year Bonus can be
determined.
(d) For purposes of this Agreement, and subject to the last
sentence of this Section 3(d), the term "Applicable Benefit"
shall mean (i) if the Termination Date occurs prior to June
1, 1996, 24 times the Monthly Benefit Amount, and (ii) if
the Termination Date occurs on or after June 1, 1996, the
Monthly Benefit Amount times the greater of (A) the number
of months remaining between the Termination Date and June 1,
1998, and (B) twelve (12). For purposes of the preceding
clause (ii)(A), in determining the number of months between
the Termination Date and June 1, 1998 the month in which the
Termination Date falls will be included and the month of
June 1998 will not be included. If the benefit described in
Section 1 hereof becomes payable under circumstances under
which the benefits described in Section 2 hereof are also
payable, the Applicable Benefit shall be determined by
excluding from the Monthly Benefit Amount the amount
described in clause (iii) of Section 3(c) for any month
during which the benefit described in Section 2 is also
payable.
4. Noncompetition.
(a) For a period of (1) year following the Termination Date (but
only if such termination occurs under circumstances giving
rise to the Company's obligation to pay the severance
benefit provided in Section 1 hereof), Xx. Xxxxxxx will not,
directly or indirectly, as a principal, agent, owner,
employee, trustee, beneficiary, partner, co-venturer,
officer, director, stockholder (other than as a stockholder
of less than 5% of the stock of a publicly traded
corporation) or in any other capacity, engage in, have an
interest in or become associated with any entity, firm,
business, activity or enterprise which is engaged in the
wholesale distribution of groceries and which (either
directly or through a subsidiary or affiliate) has a
warehouse or distribution facility in the "Proscribed
Territory," as that term is defined below. The "Proscribed
Territory" means (i) the area consisting of the States of
Wisconsin, Michigan, Illinois, Indiana and Ohio, plus (ii)
to the extent not included within (i), the area encompassed
within a radius of four hundred (400) miles of any warehouse
or distribution facility operated by the Company or any
affiliate of the Company as of the Termination Date.
(b) Xx. Xxxxxxx acknowledges and agrees that the restrictions
set forth in this Section 3 are founded on valuable
consideration and are reasonable in duration and geographic
area in view of the circumstances under which this Agreement
is entered into, and that such restrictions are necessary to
protect the legitimate interests of the Company. In the
event that any provision of this Section 3 is determined to
be invalid by any court of competent jurisdiction, the
provisions of this Section 3 shall be deemed to have been
amended and the parties will execute any documents and take
whatever action is necessary to evidence such amendment, so
as to eliminate or modify any such invalid provision and to
carry out the intent of this Section 3 so to render the
terms of this Section 3 enforceable in all respects as so
modified.
(c) Xx. Xxxxxxx acknowledges and agrees that irreparable injury
will result to the Company in the event Xx. Xxxxxxx breaches
any covenant contained in this Section 3, and that the
remedy at law for such breach will be inadequate.
Therefore, if Xx. Xxxxxxx engages in any act in violation of
the provisions of this Section 3, the Company shall be
entitled, in addition to such other remedies and damages as
may be available to it by law or under this Agreement, to
injunctive or other equitable relief to enforce the
provisions of this Section 3.
5. Term and Termination. This Agreement will become effective as of
the Effective Date and continue in effect thereafter until October
10, 2007, unless sooner terminated by the mutual agreement of the
Company and Xx. Xxxxxxx.
6. Severability. The provisions of this Agreement are severable. If
any part of this Agreement is held to be void or unenforceable or
contrary to law, the Company shall have the option to either
terminate this Agreement in its entirety, in which case it shall
be entitled to the return of (or be relieved of the obligation to
pay) any amounts paid (or which would otherwise be payable) to Xx.
Xxxxxxx hereunder, or it may require that the balance of the
Agreement nonetheless shall remain in full force and effect.
Notwithstanding the preceding sentence, if any court of competent
jurisdiction shall determine that any geographic or time restraint
provided in this Agreement is too broad as to the area or time
covered, such restraint may be reduced to whatever extent the
court deems reasonable and such restraint may be enforced as
reduced.
7. Effect on Retiree Health Benefits Policy. Xx. Xxxxxxx
acknowledges that the benefits provided hereunder (in particular
the benefits described in Section 2 hereof) are intended to be in
lieu of any benefits to which he may now be or hereafter become
entitled under the Company's existing policy relating to the
provision of health insurance benefits to its retired officer/
directors, as embodied in certain resolutions adopted by the
Company's directors on December 10, 1980 (the "1980 Retiree
Medical Benefits Policy"). The Company has not and does not
hereby acknowledge any obligation to Xx. Xxxxxxx or any of its
other employees, officers or directors by reason of the existence
of the 1980 Retiree Medical Benefit Policy, and reserves the right
to modify, limit, cancel or terminate that Policy at any time.
8. Notices. All notices under this Agreement shall be in writing and
any notice shall be considered to be given and received in all
respects on the day it is personally delivered or deposited in the
United States mail, first class, postage prepaid, addressed as
follows or to such other address as may be designated by one party
to the other by notice duly given (provided, that written notice
given in any other manner shall nonetheless be effective when
actually received by the party entitled to receive it):
If to the Company: Xxxxxx'x, Inc.
00000 Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attn: Secretary
If to Xx. Xxxxxxx: Xxxxxx X. Xxxxxxx
c/x Xxxxxx'x, Inc.
00000 Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
9. No Contract of Employment. Nothing contained herein is intended
to create or constitute a contract of employment between the
Company and Xx. Xxxxxxx, or to impose on the Company any
obligation to continue the employment of Xx. Xxxxxxx or to xxxxxx
on Xx. Xxxxxxx any rights to such continued employment.
10. Assignment. This Agreement may not be assigned by the Company
without the written consent of Xx. Xxxxxxx, except that if the
Company shall transfer substantially all of its business or assets
to another corporation or other form of business or other entity,
this Agreement may be assigned to such a successor and it shall be
binding upon and inure to its benefit. Xx. Xxxxxxx may not
assign, pledge or encumber this Agreement or any interest herein.
11. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, the Company's successors and
assigns and Xx. Xxxxxxx'x heirs and legal representatives. If the
Company merges or consolidates with or into any other corporation
or entity (whether or not the Company is the surviving entity in
such transaction), or transfers all or substantially all of its
business or assets to another corporation or other form of
business or other entity, all references herein to the Company
shall be deemed references to the corporation or other entity
surviving such merger or consolidation or to which such assets or
business are transferred.
12. Costs of Enforcement. If any action or proceeding is brought by
either party to enforce any provision of this Agreement, or to
recover damages for the breach hereof, the prevailing party shall
be entitled to recover from the other party its reasonable costs
and expenses (including reasonable attorneys' fees) incurred in
such action or proceeding.
13. Amendment. This Agreement may be amended only by a written
instrument executed by the parties hereto or their respective
successors, assigns, heirs or legal representatives, as
applicable.
14. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
XXXXXX'X, INC.
By:_________________________________
Its:__________________________
____________________________________
Xxxxxx X. Xxxxxxx
