EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the
____ day of _________, 1996, by and between Certified Grocers of California,
Ltd., a California corporation (the "Company"), and Xxxxxx X. Xxxxxxx (the
"Executive").
WHEREAS, the Executive has been serving as the President and Chief
Executive Officer of the Company since January 1994; and
WHEREAS, the Company desires to continue to employ the Executive upon
the terms and conditions specified in this Agreement and the Executive desires
to remain in the employ of the Company upon such terms and conditions; and
WHEREAS, the Company and the Executive desire to set forth in a
written agreement the terms and conditions of Executive's employment with the
Company.
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
1. EMPLOYMENT. The Company hereby agrees to continue to employ the
Executive and the Executive hereby agrees to remain in the employ of the Company
upon the terms and conditions herein set forth.
2. TERM. Employment shall be for a term commencing on the date
hereof and, subject to termination under Section 8, expiring three (3) years
from the date hereof. Notwithstanding the previous sentence, this Agreement and
the employment of the Executive shall be automatically extended (subject to
Section 8) for successive one-year periods upon the terms and conditions set
forth herein, commencing on the first anniversary of the date of this Agreement,
and on each anniversary date thereafter, unless either party to this Agreement
gives the other party written notice (in accordance with Section 16) of such
party's intention to terminate this Agreement and the employment of the
Executive within the 60 day period prior to the first anniversary and prior to
each succeeding anniversary date thereafter, as applicable. Notwithstanding the
foregoing, after the fifth anniversary, the notice shall be given within 60 days
of the end of the second year of the extended term instead of within 60 days of
the end of the first year of the extended term. For purposes of this
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Agreement, any reference to the "term" of this Agreement shall include the
original term and any extension thereof.
3. DUTIES OF THE EXECUTIVE. The Executive shall serve as the
President and Chief Executive Officer of the Company, serving at the pleasure of
the Company's Board of Directors (the "Board"). The Executive shall devote
substantially all of his normal working time and his best efforts, full
attention and energies to the business of the Company, the responsibilities
provided for the President and Chief Executive Officer in the Company's Bylaws,
and such other related duties and responsibilities as may from time to time be
reasonably prescribed by the Board. Notwithstanding the foregoing and with the
advance approval of the Board, which approval may be withheld for any reason,
the Executive may serve on the boards of directors of unrelated companies and
may devote reasonable time to fulfilling his responsibilities as a member of
such boards.
4. COMPENSATION.
(a) During the term of this Agreement, the Company shall pay to
the Executive a base salary of not less than $365,000 per annum, which base
salary shall be reviewed annually by the Board and may be increased (but not
decreased) from time to time by the Board in its sole discretion, payable at the
times and in the manner consistent with the Company's general policies regarding
compensation of executive employees. The Board may from time to time authorize
such additional compensation to the Executive, in cash or in property, as the
Board may determine in its sole discretion to be appropriate.
(b) The Executive shall be eligible to participate in a CEO
Incentive Bonus Plan, administered by the Company's Personnel and Executive
Compensation Committee ("Compensation Committee"). Annually, at or near the
inception of each fiscal year (and at the inception of this contract), the
Compensation Committee shall establish an incentive bonus formula for the
Executive based on reasonably assigned short-term and long-term goals and
objectives. Within three (3) months of the end of each fiscal year, the
Compensation Committee shall determine the Executive's bonus based on
Executive's performance measured by the Board against the established goals.
5. EXECUTIVE BENEFITS.
(a) In addition to the compensation described in Section 4, the
Company shall make available to the Executive, subject to the terms and
conditions of the applicable plans, including without limitation the eligibility
rules thereof,
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participation for the Executive and his eligible dependents in all
Company-sponsored employee welfare benefit plans and all plans intended to
benefit executives which are adopted or maintained by the Company, including
the Company's Employees' Sheltered Savings Plan and Employees' Excess Benefit
and Supplemental Deferred Compensation Plan.
(b) The Executive shall be provided with supplemental retirement
benefits under that certain Executive Salary Protection Plan effective January
4, 1995 ("ESPP II"), subject to all of the terms and conditions thereof.
6. EXPENSES. The Company shall pay or reimburse the Executive for
reasonable and necessary expenses incurred by the Executive in connection with
his duties on behalf of the Company in accordance with the general policies of
the Company.
7. PLACE OF PERFORMANCE. In connection with his employment by the
Company, the Executive shall be based at the principal executive office of the
Company in Southern California, except for travel reasonably required for
Company business.
8. TERMINATION.
(a) INVOLUNTARY TERMINATION. The Executive's employment
hereunder may be terminated by the Company for any reason by written notice as
provided in Section 16. The Executive will be treated for purposes of this
Agreement as having been involuntarily terminated by the Company if the
Executive terminates his employment with the Company under the following
circumstances: (i) the Company has breached any material provision of this
Agreement and within 30 days after notice thereof from the Executive, the
Company fails to cure such breach; (ii) at any time after the Company has
notified the Executive pursuant to Section 2 hereof that the Company intends to
terminate this Agreement and the Executive's employment (rather than allow the
Agreement to automatically renew); (iii) a successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company fails to assume
liability under this Agreement or enter into a substitute agreement satisfactory
to Executive; (iv) the Board fails to appoint the Executive as President and
Chief Executive Officer; or (v) the Board elects to give notice of termination
pursuant to this Section 8(a) other than for Cause (as hereinafter defined) or
Disability (as defined herein).
(b) VOLUNTARY TERMINATION. Upon sixty (60) days' prior notice
to the Company as provided in Section 16, the Executive may voluntarily
terminate
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this Agreement. The Executive's death or termination by reason of Disability
during the term of the Agreement shall constitute a voluntary termination of
employment for purposes of liability for Termination Payments and Benefits as
provided in Section 9.
(c) Subject to Section 9 and any benefit continuation
requirements of applicable laws, in the event the Executives's employment
hereunder is voluntarily or involuntarily terminated for any reason whatsoever,
the compensation and benefits obligations of the Company under Sections 4 and 5
shall cease as of the effective date of such termination, except for any
compensation and benefits earned or accrued but unpaid through such date.
9. TERMINATION PAYMENTS AND BENEFITS. If the Executive's employment
hereunder is involuntarily terminated by the Company other than for Cause (as
defined herein) or Disability (as defined herein) prior to the end of the term
of this Agreement, then the Company shall be obligated to pay to the Executive
certain termination payments and make available certain benefits during the
termination payment period, as follows:
(a) TERMINATION PAYMENT PERIOD. Termination payments shall
be made for the balance of the term of this Agreement as defined in
Section 2.
(b) CALCULATION OF TERMINATION PAYMENTS. Subject to
subsection (g) below, termination payments calculated on an annual basis
shall equal the sum of (i) the Executive's highest annual base salary
during the three-year period prior to the Executive's termination PLUS
(ii) the Executive's average annual incentive bonus during the three-year
period prior to the Executive's termination (or such shorter period that
an incentive bonus plan has been in effect).
(c) METHOD OF PAYMENT. Termination payments shall be paid to
the Executive in accordance with the Company's regular payroll schedule.
If the Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be
paid to the Executive's surviving spouse, or, if she is not then living,
to the Executive's estate.
(d) BENEFITS. During the termination payment period as set
forth above in subsection (a), the Company shall use its best efforts to
maintain in full force and effect for the continued benefit of the
Executive all employee welfare benefit plans and perquisite programs in
which the Executive was entitled to participate immediately prior to the
Executive's termination or shall
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arrange to make available to the Executive benefits substantially
similar to those which the Executive would otherwise have been entitled
to receive if his employment had not been terminated. Such welfare
benefits shall be provided to the Executive on the same terms and
conditions (including employee contributions toward the premium
payments) under which the Executive was entitled to participate
immediately prior to his termination.
Notwithstanding the foregoing, with respect to the Executive's
continued coverage under the Company's medical and dental plan, or a successor
plan, pursuant to this provision, the Executive's "qualifying event" for
purposes of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
shall be his date of termination from the Company.
Any termination payments hereunder shall not be taken into account for
purposes of any retirement plan or other benefit plan sponsored by the Company,
except as otherwise expressly required by such plans or applicable law.
(e) TERMINATION FOR CAUSE. For purposes of this Agreement,
"Cause" shall mean
(i) the willful and continued failure by the
Executive to substantially perform his duties hereunder (other
than any such failure resulting from the Executive's
incapacity due to physical or mental illness), after demand
for substantial performance is delivered by the Company to the
Executive that specifically identifies the manner in which the
Company believes the Executive has not substantially performed
his duties,
(ii) the willful engaging by the Executive in
misconduct which is materially injurious to the Company,
monetarily or otherwise, or
(iii) the material breach of the Confidentiality and
Nonsolicitation Agreement set forth in Section 10.
No act, or failure to act, on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company.
(f) DISABILITY DEFINED. "Disability" shall mean the
Executive's incapacity due to physical or mental illness to
substantially perform his duties on a
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full-time basis for six (6) consecutive months and, within thirty (30)
days after a notice of termination is thereafter given by the Company,
the Executive shall not have returned to the full-time performance of
the Executive's duties; provided, however, if the Executive shall not
agree with a determination to terminate him because of Disability, the
question of the Executive's disability shall be subject to the
certification of a qualified medical doctor agreed to by the Company
and the Executive or, in the event of the Executive's incapacity to
designate a doctor, the Executive's legal representative. In the
absence of agreement between the Company and the Executive, each party
shall nominate a qualified medical doctor and the two doctors shall
select a third doctor, who shall make the determination as to
Disability.
(g) NO OBLIGATION TO MITIGATE. The Executive is under no
obligation to mitigate damages or the amount of any payment provided
for hereunder by seeking other employment or otherwise; provided,
however, that the Executive's coverage under the Company's welfare
benefit plans will terminate when the Executive becomes covered under
any employee benefit plan made available by another employer and
covering the same type of benefits. The Executive shall notify the
Company within thirty (30) days after the commencement of any such
benefits.
(h) FORFEITURE. Notwithstanding the foregoing, any right of
the Executive to receive termination payments and benefits hereunder
shall be forfeited to the extent of any amounts payable after any
breach of Section 10 by the Executive.
10. CONFIDENTIALITY AND NONSOLICITATION AGREEMENT.
(a) The Executive acknowledges that in the course of his
employment by the Company, he will or may have access to and become informed of
confidential and secret information which is a competitive asset of the Company
("Confidential Information"), including, without limitation, (i) the terms of
any agreement between the Company and any employee, customer or supplier,
(ii) pricing strategy, (iii) merchandising and marketing methods, (iv) product
development ideas and strategies, (v) personnel training and development
programs, (vi) financial results, (vii) strategic plans and demographic
analyses, (viii) proprietary computer and systems software, and (ix) any
non-public information concerning the Company, its employees, suppliers or
customers. The Executive agrees that he will keep all Confidential Information
in strict confidence during the term of his employment by the Company and
thereafter and will never directly or indirectly make known, divulge, reveal,
furnish, make available, or use any Confidential Information (except in the
course of his regular authorized duties on behalf of the Company). The
Executive agrees that the obligations of confidentiality hereunder shall survive
termination of his employment at the Company regardless of any actual or alleged
breach by the Company of this
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Agreement and shall continue for two years following such termination
provided that such obligation shall terminate earlier (i) as to specific
information that shall have become, through no fault of the Executive,
generally known to the public or (ii) as to Confidential Information which
the Executive is required by law to disclose (after giving the Company notice
and an opportunity to contest such requirement). The Executive's obligations
under this Section 10 are in addition to, and not in limitation or preemption
of, all other obligations of confidentiality which the Executive may have to
the Company under general legal or equitable principles.
(b) Except in the ordinary course of the Company's business, the
Executive has not made, nor shall at any time following the date of this
Agreement, make or cause to be made, any copies, pictures, duplicates,
facsimiles or other reproductions or recordings or any abstracts or summaries
including or reflecting Confidential Information. All such documents and other
property furnished to the Executive by the Company or otherwise acquired or
developed by the Company shall at all times be the property of the Company.
Upon termination of the Executive's employment by the Company, the Executive
will return to the Company any such documents or other property of the Company
which are in the possession, custody or control of the Executive.
(c) In the event of the Executive's voluntary or involuntary
termination of employment at the Company, the Executive agrees that he will not
in any capacity, on his own behalf or on behalf of any other firm, person or
entity, for a period of two years, solicit, or assist in the solicitation of,
any employee of the Company to terminate his or her employment with the Company.
(d) The Executive acknowledges and agrees that a violation of
the foregoing provisions of this Section 10 (referred to collectively as the
Confidentiality and Nonsolicitation Agreement) that results in material
detriment to the Company would cause irreparable harm to the Company, and that
the Company's remedy at law for any such violation would be inadequate. In
recognition of the foregoing, the Executive agrees that, in addition to any
other relief afforded by law or this Agreement, including damages sustained by a
breach of this Agreement and any forfeitures under Section 9, and without any
necessity or proof of actual damages, the Company shall have the right to
enforce this Agreement by specific remedies, which shall include, among other
things, temporary and permanent injunctions, it being the understanding of the
undersigned parties hereto that damages, the forfeitures described above and
injunctions shall all be proper modes of relief and are not to be considered as
alternative remedies.
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11. POST-TERMINATION ASSISTANCE. The Executive agrees that after his
employment with the Company has terminated he will provide, upon reasonable
notice from the Company, such information and assistance to the Company as may
reasonably be requested by the Company in connection with any litigation in
which it or any of its affiliates is or may become a party; provided, however,
that the Company agrees to reimburse the Executive for any related expenses,
including travel expenses.
12. ARBITRATION. Any dispute between the Executive and the Company
under this Agreement shall be resolved (except as provided below) through
arbitration by an arbitrator selected under the rules of the American
Arbitration Association (located in Los Angeles, California) and the arbitration
shall be conducted in that location under the rules of said Association. Each
party shall each be entitled to present evidence and argument to the arbitrator.
The arbitrator shall have the right only to interpret and apply the provisions
of this Agreement and may not change any of its provisions. The arbitrator
shall permit reasonable pre-hearing discovery of facts, to the extent necessary
to establish a claim or a defense to a claim, subject to supervision by the
arbitrator. The determination of the arbitrator shall be conclusive and binding
upon the parties and judgment upon the same may be entered in any court having
jurisdiction thereof. The arbitrator shall give written notice to the parties
stating his or their determination, and shall furnish to each party a signed
copy of such determination. The expenses of arbitration shall be borne equally
by the Executive and the Company or as the arbitrator shall otherwise equitably
determine.
Notwithstanding the foregoing, the Company shall not be required to
seek or participate in arbitration regarding any breach of the Executive's
Confidentiality and Nonsolicitation Agreement contained in Section 10, but may
pursue its remedies for such breach in a court of competent jurisdiction in
Los Angeles, California.
13. AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the subject matter hereof and contains all of the covenants and agreements
between the parties with respect to such subject matter. Each party to this
Agreement acknowledges that no representations, inducements, promises, or other
agreements, orally or otherwise, have been made by any party, or anyone acting
on behalf of any party, pertaining to the subject matter hereof, which are not
embodied herein, and that no other agreement, statement, or promise pertaining
to the subject matter hereof that is not contained in this Agreement shall be
valid or binding on either party.
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14. WITHHOLDING OF TAXES. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any law or government regulation or
ruling.
15. SUCCESSORS AND BINDING AGREEMENT.
(a) This Agreement will be binding upon and inure to the benefit
of the Company and any successor to the Company by merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 15(a) and 15(b). Without limiting the generality
or effect of the foregoing, the Executive's right to receive payments hereunder
will not be assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a transfer by the
Executive's will or by the laws of descent and distribution and, in the event of
any attempted assignment or transfer contrary to this Section 15, the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
16. NOTICES. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service, addressed to the Company (to
the attention of the Secretary of the Company) at its principal executive office
and to the Executive at his principal residence, or to such other address as any
party may have furnished to the other in writing and in accordance herewith,
except that notices of changes of address shall be effective only upon receipt.
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17. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of California, without giving effect to
the principles of conflict of laws of such State.
18. VALIDITY. If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
19. SURVIVAL OF PROVISIONS. Notwithstanding any other provision of
this Agreement, the parties' respective rights and obligations under Sections 9,
10, 11 and 12 will survive any termination or expiration of this Agreement or
the termination of the Executive's employment for any reason whatsoever.
20. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. Unless otherwise noted, references to
"Sections" are to sections of this Agreement. The captions used in this
Agreement are designed for convenient reference only and are not to be used for
the purpose of interpreting any provision of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Company:
CERTIFIED GROCERS OF
CALIFORNIA, LTD.
By:__________________________
Its:_________________________
Executive:
_____________________________
Xxxxxx X. Xxxxxxx
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