Exhibit 10.42
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EMPLOYMENT AND NON-COMPETITION AGREEMENT
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THIS AGREEMENT is entered into as of the 23rd day of February, 1999 by and
among Xxxx X. Xxxxxxxx, an individual resident of 0000 Xxxxxx Xxxxx Xxxx,
Xxxxxxxxx, XX 00000 (the "Executive"), Big V Holding Corp., a Delaware
corporation ("Holding"), and Big V Supermarkets, Inc., a New York corporation
(the "Company").
RECITALS
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WHEREAS, the Company and Holding are parties to a Management Agreement
under which Holding provides the services of senior management to the Company
(the "Management Agreement");
WHEREAS, the Executive has indicated his willingness to enter into this
Agreement and to perform management services for the Company under the
Management Agreement as are set forth herein; and
WHEREAS, the Company and the Executive desire to set forth the terms and
conditions under which the Executive shall be employed by Holding and upon which
Holding shall compensate the Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements hereinafter set forth, Holding, the Company and the Executive
agree as follows:
SECTION ONE
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EMPLOYMENT
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1.01 Office. Holding hereby employs, engages and hires the Executive, and
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the Executive agrees to serve Holding, as an executive-level employee of Holding
for the term of employment specified in section 1.04 herein.
1.02 Responsibilities. The Executive shall serve as President and Chief
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Executive Officer and Director of Holding and the Company, performing such
duties as
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shall reasonably be required of a President and Chief Executive Officer are
reasonably consistent with the job description attached hereto as Exhibit A
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reporting only to the Board of Directors of Holding (the "Board"). The Executive
shall have such other powers and perform such other reasonable additional
executive duties as may from time to time be assigned to him by the Board.
1.03 Full-Time Commitment. The Executive will serve Holding faithfully
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AND to the best of his ability and will devote substantially all of his time,
energy, experience, and talents during regular business hours and as otherwise
reasonably necessary to such employment, to the exclusion of all other business
activities.
1.04 Term. The term of this Agreement (the "Term") shall be from the date
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hereof until the earlier of (a) the termination of the Executive's employment
hereunder pursuant toSections 3.01 or 3.04 hereof or (b) December 31, 2003,
provided, however, that the Term shall be automatically renewed for an
additional one-year period following December 31, 2003 and for additional one-
year periods thereafter unless (i) either Holding or the Executive notifies the
other of its or his desire not to renew the Term no later than December 31, 2002
or, with respect to a year in which the Term has been renewed, one year prior to
the last day of such renewal year, (ii) the Executive's employment is terminated
pursuant to Sections 3.01 or 3.04, in which case the Term shall end as of the
date of such termination or (iii) the Executive's employment is terminated
pursuant to Sections 3.02, 3.03 or 3.05, in which case the Term shall end on
December 31, 2003 or, with respect to any renewal years December 31 of the year
in which such termination occurred.
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SECTION TWO
COMPENSATION OF EXECUTIVE
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2.01 Base Salary. During the Term the Executive shall receive as a base
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salary $500,000 per annum (the "Base Salary"). The Base salary shall be paid in
weekly installments in arrears and subject to withholding and other applicable
taxes. The Base Salary shall be reviewed annually at the end of each calendar
year beginning with calendar year 2000 by the Board and may be increased at that
time if the Board determines, in its sole discretion, that the Base Salary
warrants any increase.
2.02 Bonuses. The Executive shall be entitled to receive accrued annual
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bonuses at the end of each calendar year in accordance with the Annual Incentive
Bonus Plan attached hereto as Schedule I (the "Plan"). The Annual Incentive
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Bonus Plan initially provides for a $250,000 annual base bonus depending on the
Company's meeting certain performance criteria set forth in the Plan, and
subject to adjustment downward or upward for performance below or in excess of
the criteria set forth in the Plan; provided, however, notwithstanding the
foregoing, the Executive shall be entitled to a minimum bonus pursuant to the
foregoing of $200,000 for 1999, to be paid in accordance with Schedule I
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("Initial Bonus"). If, however, the Executive's employment is terminated
pursuant to either Sections 3.01 or 3.04 hereunder within two years from the
date hereof, the Company may, at its sole discretion, demand that Executive
repay a portion of the Initial Bonus not earned pursuant to the Section III of
the Annual Percentage Bonus Plan attached hereto as Schedule I. The Executive
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shall repay such Initial Bonus using a certified or official bank check payable
to the Company, within ten (10) days of such demand. The payment of the
Executive's bonus shall be subject to withholding and other applicable taxes.
2.03 Options. As soon as practicable after commencement of the Term, the
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Executive shall be granted an option, pursuant to Holding's 1990 Time
Accelerated Restricted Stock Option Plan (the "Option Plan"), to purchase
[19,000] shares of the
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common stock, $.01 par value per share, of Holding ("Option Stock") for $35 per
share. Such option shall be evidenced by an option agreement in substantially
the form attached hereto as Exhibit B (the "Stock Option Agreement"). The Option
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Stock shall vest and become exercisable based upon the performance schedule set
forth in the Stock Option Agreement.
2.04 Vacation. The Executive shall be entitled to take four weeks of paid
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vacation annually during the Term, to be taken at such time or times as shall be
mutually convenient and consistent with his duties and obligations to Holding
and the requirements of the Company.
2.05 Expenses. Holding shall promptly pay or reimburse the Executive for
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all reasonable expenses incurred by him in connection with the performance of
his duties and responsibilities hereunder, including, but not limited to,
expenses paid or incurred for travel relating to the business of Holding or the
Company. All requests for reimbursement of expenses referred to in this
paragraph shall be accompanied by such underlying documents or other evidence as
are reasonably required to support the deduction of such expenses in accordance
with the rules established by Holding, which shall be consistent with the rules
in effect at the Company for the Company's executive officers.
2.06 Life Insurance. Subject to the Executive's reasonable insurability,
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Holding shall obtain and keep in full force and effect during the Term, at its
own cost and expense, insurance covering the Executive's life in an amount equal
to 200% of his Base Salary as of January 1st of each year during the Term, or
such higher percentage as the Company may maintain from time to time with
respect to its senior executives, payable to his estate or such other person or
persons as he may from time to time direct. In addition to such insurance,
Holding or the Company, in its discretion, and at its own cost and expense, may
also obtain insurance for its own benefit covering the
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Executive's life in such amount as it considers advisable, and the Executive
agrees to cooperate fully to enable Holding or the Company to obtain such
insurance.
2.07 Automobile. During the Term, Holding shall make available to the
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Executive a luxury class automobile in accordance with the Company's car policy
for senior officers, together with all normal maintenance of such automobile
including insurance, garage, repairs, etc. If Holding makes available to the
Executive a leased automobile, the Executive shall have the right to purchase
the same with his own funds at the end of the lease term at the purchase option
exercise price.
2.08 Relocation Expenses. (a) The Company shall reimburse the Executive
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for certain specified reasonable expenses actually incurred by the Executive and
his immediate family in relocating to the Florida, New York area in accordance
with the Company's established relocation policy guidelines. Upon the purchase
or renting of a residence, the Executive will be reimbursed for specific closing
costs or allowances in accordance with the Company's established relocation
policy guidelines relating to "buy-side" transactions. The Company will also
provide the Executive with the assistance of a national relocation company to
market the Executive's home in Maryland.
(b) The Company will provide the Executive with temporary living
arrangements in an apartment rented by the Company for a period of six months
from first day of employment, which period may be extended for up to three
additional months if necessary and approved by the Chairman.
(c) The Company will reimburse the Executive and his immediate family
for a reasonable number of return trips to Maryland and house search trips to
New York.
(d) In the event that the reimbursement of the Executive for foregoing
expenses results in taxable income to the Executive, the Executive will be
grossed-up to the extent of 33% of the incremental taxable income through a
bonus.
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2.09 Other Benefits. The Executive shall be entitled to participate in
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ALL employment benefit plans now existing or hereafter established by Holding,
which shall be consistent with such benefit plans or arrangements generally made
available to senior executive officers of the Company.
SECTION THREE
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TERMINATION
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3.01 Cause. The Executive may be terminated from his employment by
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Holding at any time for Cause without prior notice, and Holding shall, upon such
termination, have no obligation to pay the compensation specified in section 2
herein except that Holding shall be obligated to pay the Base Salary specified
in Section 2.01 herein through the date of such termination. For purposes of
this Agreement, "Cause" shall mean a termination of employment of the Executive
by Holding or any of its subsidiaries due to (a) the commission by the Executive
of an act of fraud or embezzlement (including the unauthorized disclosure of
confidential or proprietary information of Holding or the Company which results
in, or which could be reasonably expected to result in, a material injury to
Holding or the Company), (b) a felony conviction or guilty plea of the
Executive, (c) willful misconduct as an employee of Holding or the Company which
results in material injury to Holding or the Company or (d) the willful failure
of the Executive to render services to Holding or the Company in accordance with
his employment which failure amounts to a material neglect of his duties to
Holding or the Company; as determined in each case in good faith by the Board.
In the event of a termination for Cause pursuant to this Section 3.01, the
Executive's right to receive compensation and other benefits I except for
payments for services previously rendered, shall cease immediately upon such
termination.
3.02 Disability; Death. If the Executive shall fail to or be unable to
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perform the duties required hereunder because of any serious physical or other
incapacity as
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determined by an independent medical doctor selected by the Board, and such
failure or inability shall continue for a period of 180 consecutive days or
longer during the Term, Holding shall have the right to terminate this
Agreement. This Agreement shall terminate automatically upon the death of the
Executive. In the event of termination due to death or disability pursuant to
this Section 3.02, the Executive's right to receive compensation hereunder shall
cease, except that (a) the Executive shall receive any life or disability
insurance benefits (as applicable) and Holding shall pay to the Executive all
bonus compensation earned or awarded hereunder to the date of termination, (b)
in the event of termination due to disability and subject to the Executive's
reasonable insurability, during the Term the Executive shall continue to receive
medical and health insurance benefits otherwise made available to other senior
executives, except to the extent such coverage is available to the Executive
from sources other than Holding or the Company, (c) in the event of termination
due to disability, Holding shall continue to treat the Executive as an employee
for federal tax purposes but only if and to the extent Holding is permitted to
do so under applicable statutes, regulations and rulings and only for so long as
Holding is required to pay the Executive Base Salary pursuant to the terms
hereof and the Executive is not employed by any other person or entity and (d)
in the event of termination due to disability, Holding shall continue to pay the
Executive his Base Salary in accordance with Section 2.01 hereof until the end
of the Term, provided that any Base Salary payable pursuant to this Section 3.02
shall be reduced by any compensation received by the Executive during such
period from any entity or person (it being understood that the Executive shall
not be obligated to seek other employment) and by any disability insurance
benefits received by the Executive. Except as specifically provided in the
preceding sentence, the Base Salary shall not be subject to any increases
whatsoever.
3.03 Termination Without Cause. Holding shall have the right to terminate
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the employment of the Executive at any time without Cause ("Cause" shall be
determined
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according to Section 3.01 herein). In such case, the Executive's right to
receive compensation and other benefits hereunder, other than bonus compensation
earned or awarded to the date of such termination, shall cease. Notwithstanding
the foregoing, Holding shall continue to pay the Executive his Base Salary in
accordance with Section 2.01 hereof until the earlier of two (2) years from the
date of such termination or the end of the Term (the "Severance Term"); provided
that any Base Salary payable pursuant to this Section 3.03 shall be reduced by
any compensation received by the Executive during such period from any entity or
person (it being understood that the Executive shall not be obligated to seek
other employment). Except as specifically provided in the preceding sentence,
the Base Salary shall not be subject to any increases whatsoever.
3.04 Voluntary Termination. The Executive may voluntarily terminate
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his employment hereunder at any time, for any reason or for no reason. In such
case, the Executive's right to receive compensation and other benefits
hereunder, other than Base Salary and bonus compensation earned or awarded, in
each case to the date of such termination, shall cease.
3.05 Termination for Good Reason. The Executive shall have the right
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to terminate his employment with Holding for "Good Reason" upon written notice
to Holding, delivered to Holding promptly after the event or cause constituting
"Good Reason." For purposes of this Agreement, "Good Reason" shall mean (a) the
failure to elect or appoint the Executive as President and Chief Executive
Officer and to the Board of Directors of Holding or the Company or (b) the
failure by Holding or the Company to pay any compensation or other amount due
the Executive under this Agreement, which failure is not remedied within ten
(10) business days after written notice thereof is delivered to Holding by the
Executive. The Executive's termination for Good Reason hereunder shall be
treated for purposes of this Agreement, and for purposes of the Shareholders'
Agreement by and among Holding and the shareholders of Holding named therein,
dated as of December 28, 1990 (the "Shareholders'
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Agreement"), and the Non-Qualified Time Accelerated Restricted Stock Option
Agreement to be entered into pursuant to Section 2.03 hereof, as if the
Executive were terminated without Cause by Holding pursuant to Section 3.03
hereof.
SECTION FOUR
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SALE OF COMMON STOCK TO EXECUTIVE; PUT OPTION
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4.01 The Executive hereby agrees to purchase from Holding, and Holding
hereby agrees to sell, assign and convey to the Executive, 20,000 shares (the
"Purchase Shares") of Common Stock for the aggregate purchase price of $700,000
at a closing to occur within 90 days hereof (the "Closing"). At the Closing:
(a) the Executive shall pay such purchase price by delivering to Holding a
promissory note made in the principal amount of $700,000 payable to the order of
Holding in the form of Exhibit C hereto (the "Promissory Note") and a pledge
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agreement in the form of Exhibit D hereto (the "Pledge Agreement"), and (b) the
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Company shall deliver to the Executive certificates representing the Purchase
Shares, duly registered in the name of the Executive. The sale will be governed
by the Management Stock Subscription Agreement in the form of Exhibit E hereto.
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4.02 The Executive agrees to execute and deliver to Holding at the Closing
the Shareholders' Agreement, and a certificate acknowledging, in connection with
the purchase of the Purchase Shares, that he is making and shall be bound by,
the representations, warranties, agreements, acknowledgments and covenants set
forth on Exhibits hereto.
4.03 Pursuant to the conditions set forth in this Section 4, the Company
grants the Executive an option to require the Company to purchase certain shares
held by the Executive (the "Put Option") so long as the Executive is still
employed by the Company pursuant to this contract as of December 31, 2003 and
December 31, 2005 (each year shall be referred to as a "Put Year"). To be
eligible for the Put Option for a particular Put Year, the following thresholds
must be met:
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(i) the actual Cash Flow (as defined in the Plan) for the Put Year
must exceed the actual Cash Flow of the prior year by 2.5%; and
(ii) the Company must have a cumulative actual Cash Flow that exceeds
the cumulative Plan Cash Flow (as defined in the Plan) for all
target periods up through and including the Put Year.
If the Company meets the above thresholds during a Put Year, the Executive
may, upon written notice to the Company (the "Put Notice"), require the Company
to repurchase free and clear of any liens, claims or encumbrances, up to 25% of
the Purchase Stock and Option Stock in each Put Year, up to an aggregate of 50%
of such stock for both Bonus Years (the "Put Shares"). The purchase price for
the Put Shares shall be calculated as follows (the "Put Share Price" formula):
Put Share Price = (Bonus Year Cash Flow x 5.5) - Funded Indebtedness
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Outstanding Capital Stock
"Bonus Year Cash Flow" shall equal the actual Cash Flow for the particular
Bonus Year.
"Funded Indebtedness" shall mean all of the Company's funded indebtedness
as of the end of the Put Year, including capital leases, as reported in the
Company's audited financial statements.
"Outstanding Capital Stock" shall mean all of the Company's outstanding
capital stock on a fully diluted basis as of the end of a Put Year.
In order to exercise the Put Option, the Executive must deliver the Put
Notice to the Company within thirty (30) days of receipt by the Company of
audited financial statements for such Put Year. The closing of the purchase of
the Put Shares shall occur at 10:00 a.m. at the Company on the thirtieth day
after receipt by the Company of the Put Notice (or at such date, time and place
as the parties may otherwise agree). At the Closing, the Executive shall
deliver to the Company certificates representing the shares to be purchased,
together with stock powers endorsed in blank free and clear of
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all liens and encumbrances. The Company shall deliver the Put Share Price using
a certified or official bank check payable to the Executive.
4.04 Notwithstanding the provisions of this Section 4, the issuing of such
Purchase Shares and the consummation of the Put Option are subject to the
receipt by Holding of the consents required by certain lending institutions to
such transactions. The Company agrees to seek for such consents whenever such
consents are required.
SECTION FIVE
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COVENANT NOT TO COMPETE
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5.01 Non-Competition. So long as the Executive is employed by Holding and
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for a period of one (1) year from the date of the Executive's termination of
employment hereunder or, if terminated pursuant to Sections 3.02, 3.03 and 3.05,
until the earlier of the expiration of the Term, notwithstanding such
termination, or the Severance Term, the Executive shall not, directly or
indirectly, by or for himself or as the agent of another or through another as
his agent (a) own any interest in (other than up to five percent of any publicly
traded security), provide consulting or other services to or serve as an officer
or director or engage in the management or operation of any entity that,
directly or indirectly, owns, manages or operates, or participates in the
operation of, any supermarket or other retail grocery store located within 20
miles of any supermarket owned or operated by the Company or any subsidiary of
the Company, or (b) solicit for employment, employ or induce or advise any
employee to leave the employ of Holding, the Company or any of its subsidiaries.
Notwithstanding the foregoing, if the Executive is terminated pursuant to
Sections 3.02, 3.03 or 3.05 hereof, after one year from the date of such
termination the Executive may elect by written instrument in form and substance
reasonably acceptable to Holding, to waive any and all rights to, and release
Holding and the Company from any and all obligations to pay or provide, any Base
Salary or benefits to which the Executive would otherwise be entitled pursuant
to such Sections 3.02, 3.03 or 3.05. In such event, notwithstanding anything
herein to the
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contrary, from and after ten (10) business days following the date on which an
originally executed copy of such instrument is delivered to Holding, the
Executive shall no longer be subject to the restrictions set forth in this
Section 5.01 and neither Holding nor the Company shall be obligated to make any
payments or provide any benefits or other compensation to the Executive.
5.02 Restitution. In addition to all other remedies provided for
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hereunder, the Executive agrees that if he shall violate any of the provisions
of this Section 5, Holding shall be entitled to an accounting and repayment of
all profits, compensation, remuneration or other benefits that the Executive may
realize arising from or related to any such violation.
5.03 Modification. The parties agree and acknowledge that the duration,
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scope and geographic area of the covenant not to compete described in this
Section 5 are fair, reasonable and necessary in order to protect the good will
and other legitimate interests of Holding, that adequate compensation has been
received by the Executive for such obligations, and that these obligations do
not prevent the Executive from earning a livelihood. If, however, for any reason
any court determines under applicable law that the provisions in this Section 5
pertaining to duration, scope and geographic area in relation to non-competition
are too broad or otherwise unreasonable, that the consideration provided for
hereunder is inadequate or that the Executive has been prevented unlawfully from
earning a livelihood (together, such provisions being hereinafter referred to as
"Restrictions"), such Restrictions shall be interpreted, modified or rewritten,
and such court is hereby requested and authorized by the parties hereto to
revise the Restrictions, to include the maximum Restrictions as are valid and
enforceable under applicable law.
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SECTION SIX
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CONFIDENTIAL INFORMATION
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6.01 Proprietary Information. In the course of his service to Holding and
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the Company, the Executive shall have access to confidential and proprietary
information, including, but not limited to strategic plans or data, financial
statements, information concerning marketing data, customer research and data,
information concerning sources of supply, pricing information and data, trade
secrets or the business, operations or financial condition of Holding, the
Company and its subsidiaries and affiliates and Wakefern Food Corporation. Such
information shall be referred to hereinafter as "Proprietary Information" and
shall include any and all items enumerated in the preceding sentence whether
previously existing, now existing or arising hereafter, whether conceived or
developed by others or by the Executive alone or with others, and whether or not
conceived or developed during regular working hours. Proprietary Information
which is in the public domain during the period of service by the Executive,
provided the same is not in the public domain as a consequence of disclosure
directly or indirectly by the Executive in violation of this Agreement, shall
not be subject to the restrictions of Sections 6.01 through 6.03 herein.
6.02 Fiduciary Obligations. The Executive acknowledges that Holding and
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the Company have expended, and will continue to expend, significant amounts of
time, effort and money in the procurement of their Proprietary Information, that
Holding and the Company have taken all reasonable steps in protecting the
secrecy of the Proprietary Information, that said Proprietary Information is of
critical importance to Holding and the Company and that a violation of this
Section 6 would seriously and irreparably impair and damage the business of both
Holding and the Company, and the Executive agrees to keep all Proprietary
Information in a fiduciary capacity for the sole benefit of Holding and the
Company.
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6.03 Non-Disclosure. The Executive shall not disclose. directly or
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indirectly (except as the Executive's duties in the regular and proper course of
business of Holding or the Company may require and except as required by law),
any Proprietary Information to any person other than Holding, the Company or
authorized employees thereof at the time of such disclosure, or to such other
persons to whom the Executive has been specifically instructed to make
disclosure by the Board of Directors of Holding or the Company and in all such
cases only to the extent required in the regular and proper course of business
of Holding and the Company. At the termination of his employment, the Executive
shall deliver to Holding all notes, letters, documents and records which may
contain Proprietary Information which are then in his possession or control and
shall not retain or use any copies or summaries thereof.
SECTION SEVEN
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REMEDIES
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7.01 Remedies. The Executive acknowledges that he has carefully read and
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considered the terms of this Agreement and knows them to be essential to induce
Holding and the Company to enter into this Agreement and that any breach of the
provisions contained herein will result in serious and irreparable injury to
Holding and the Company. Therefore, in the event of a breach of this Agreement,
Holding and the Company shall be entitled to equitable relief against the
Executive, including, without limitation, an injunction to restrain the
Executive from such breach and to compel compliance with this Agreement in
protecting or enforcing its rights and remedies.
SECTION EIGHT
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MISCELLANEOUS
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8.01 Notice of Sale. If, during the term of Executive's employment
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hereunder, Holding, the Company or an Affiliate (as defined in the Shareholders'
Agreement) of the Company to which this Agreement is assigned is sold to a third
party (whether directly or indirectly, by sale of stock or assets, merger or
otherwise), Holding shall endeavor to
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give Executive such advance notice therefor as is practicable in the
circumstances, taking into account the need of the parties to the transaction to
maintain confidentiality of their negotiations until public announcement
thereof. In such event, Executive shall not disclose to any other person the
pendency of such transaction until such public announcement is made.
8.02 Indemnification. Holding and the Company shall indemnify Executive
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in the event that he is a party or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director or officer of Holding or the Company, its subsidiaries or
Affiliates, in which capacity he is or was serving at the request of Holding or
the Company, against expenses (including attorneys' fees which shall be advanced
as incurred) judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding to
the fullest extent and in the manner set forth and permitted by the General
Corporation Law of the State of Delaware, and any other applicable law, as from
time to time in effect.
8.03 Notices. All notices hereunder, to be effective, shall be in writing
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and shall be deemed delivered when delivered by hand or five days after being
sent by first-class-certified mail, postage and fees prepaid, as follows (unless
and until notice of another or different address shall be given):
(i) If to Holding: Big V Holding Corp.
c/o Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chairman
Copy to: Xxxxxxx X. Xxxxxx, Esquire
Xxxxxxxx, Xxxxxxx & Xxxxxxx
A Professional Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
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(ii) If to the Executive: To the address set forth below.
8.04 Modification. This Agreement, together with the Stock Option
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Agreement, Promissory Note, Pledge Agreement and Shareholders' Agreement,
constitute the entire agreement between the parties hereto with regard to the
subject matter hereof, terminating and superseding all prior understandings and
agreements, whether written or oral. This Agreement may not be amended or
revised except by a writing signed by the parties.
8.05 Assignment. This Agreement and all rights hereunder are personal to
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the Executive and may not be assigned by him. Notwithstanding anything else in
this Agreement to the contrary, Holding and the Company may assign this
Agreement to and all rights hereunder shall inure to the benefit of any person,
firm or corporation succeeding to all or substantially all of the business or
assets of the Company whether by purchase, merger or consolidation.
8.06 Captions. Captions herein have been inserted solely for convenience
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of reference and in no way define, limit or describe the scope or substance of
any provision of this Agreement.
8.07 Severability. The provisions of this Agreement are severable, and
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the invalidity of any provision shall not affect the validity of any other
provision. In the event that any arbitrator or court of competent jurisdiction
shall determine that any provision of this Agreement or the application thereof
is unenforceable because of the duration or scope thereof, the parties hereto
agree that said arbitrator or court in making such determination shall have the
power to reduce the duration and scope of such provision to the extent necessary
to make it enforceable, and that the Agreement in its reduced form shall be
valid and enforceable to the full extent permitted by law.
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8.08 Taking Effect. The terms and conditions set forth in this Agreement
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shall take effect and be binding upon the parties as of the date first above
written.
8.09 Governing Law. This Agreement shall be construed under and governed
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by the laws of the State of New York.
****
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
a binding contract as of the day and year first above written.
BIG V HOLDING CORP.
By /s/Xxxxx Xxxxxxxxx
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(signature)
Xxxxx Xxxxxxxxx
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(print name)
Chairman & CEO
----------------------
(print title)
EXECUTIVE: BIG V SUPERMARKETS, INC.
/s/Xxxx X. Xxxxxxxx By /s/Xxxxx Xxxxxxxxx
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Xxxx X. Xxxxxxxx (signature)
Xxxxx Xxxxxxxxx
----------------------
(print name)
Chairman & CEO
----------------------
(print title)
Executive's Home Address:
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
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SCHEDULE I
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TO
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EMPLOYMENT AGREEMENT WITH XXXX X. XXXXXXXX
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ANNUAL INCENTIVE BONUS PLAN
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I. ANNUAL INCENTIVE BONUS BASE AMOUNT AND SCALE
The Annual Incentive Bonus base amount (the "Base Amount") for the
Executive for each year shall equal 50% of his Base Salary for such year.
For each year shown below, the Executive will earn all of the Base Amount
upon the achievement by the Company of the "Plan Cash Flow" shown below for
such year:
YEAR PLAN CASH FLOW ($000)/1/
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---------------------------------
/1/ For the years ending 2000 through 2003 and including any extensions of this
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Agreement, the Plan Cash Flow targets shall be determined by the Executive
Committee of Holding and approved by the Compensation Committee of the Board
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1999 46,300
2000 *
2001 *
2002 *
2003 *
Cumulative Plan Cash *
Flow for all Target
Periods
The achievement of the Plan Cash Flow target will result in the payment of
an Annual Incentive Bonus equal to the Base Amount. The Bonus will be
reduced by one eleventh (1/11) of the Base Amount for each one percent by
which the Plan Cash Flow target exceeds the Company's actual Cash Flow for
the applicable year; provided, however, that if less than 90% of the Plan
Cash Flow target is achieved, no Bonus will be paid.
In the event the Company's actual Cash Flow exceeds the Plan Cash Flow
target for the applicable year, the Annual Incentive Bonus will be
increased as follows: (i) by 0.2% of the Executive's Base Salary (as of the
last day of the year) for each 0.1% by which the Company's actual Cash Flow
exceeds the applicable Plan Cash Flow target but is less than 110% of the
Plan Cash Flow target, (ii) by 0.3% of the Base Salary for each 0.1% by
which the Company's actual Cash Flow exceeds 110% of the applicable Plan
Cash Flow target but is less than 120% of the Plan Cash Flow target, and
(iii) by 0.4% of the Base Salary for each 0.1% by which the Company's
actual Cash Flow exceeds 120% of the applicable Plan Cash Flow target.
II. "CASH FLOW" DEFINED
-------------------
For the purpose of this Agreement, "Cash Flow" shall mean the Company's
consolidated income without reduction for non-cash compensation expense or
deferred compensation expense, interest (except as indicated below), income
taxes, depreciation or amortization but after deduction of: (i) all
operating expenses (including up to $250,000 in management fees payable to
Xxxxxx X. Xxx Company and X.X. Xxxxxxxxxxxxx & Co. pursuant to their
respective Management Agreements with the Company) and (iii) other reserves
required in connection with the operation of the Company's business in the
ordinary course. The determination of Cash Flow shall not take into
account any income or expense attributable to LIFO reserves, or gains or
losses on sales of assets or other extraordinary gains or losses. Except
as otherwise provided herein, Cash Flow shall be determined in accordance
with generally accepted accounting
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principles consistently applied, all as reflected in the Company's most
recently available consolidated audited financial statements for the
immediately preceding fiscal year and as certified by the Chief Financial
Officer of the Company. The Plan Cash Flow targets set forth above shall be
adjusted in the manner and to the extent reasonably determined by the
Company's Board of Directors in order to take into account (i) material
changes in the Company's methods of accounting, (ii) the sale of
substantial assets by the Company or (iii) the acquisition of ongoing
business, whether by merger, consolidation or otherwise. Any such
adjustment shall be made in good faith with the intent that, after taking
into account the nature of the cause of the adjustment, the measure of the
Company's performance established by the Plan Cash Flow targets before and
after the adjustment will be as nearly equivalent as is reasonably
possible.
III. ANNUAL BONUS PAYMENT, EARLY TERMINATION PAYMENT
-----------------------------------------------
The Annual Incentive Bonus shall be paid by Holding on April 30 of the year
immediately following the year in which it was earned or within thirty (30)
days of the date on which the Company receives its audited financial
statements for such year, whichever occurs first. Such Bonus is not
payable prior to such date unless the Company is sold or the Executive is
terminated pursuant to Sections 3.02, 3.03 or 3.05 hereof. If any of the
events occur, the Bonus will vest to the extent that the Bonus would
otherwise be payable by measuring the Company's Cash Flow as of the date
the material terms of such sale were established (the "Sale Date") against
the Plan Cash Flow target pro rated to the Sale Date, taking into account
seasonal factors as determined in good faith by the Company's Board of
Directors; provided, however, that the amount of any resulting Bonus will
also be pro rated to the Sale Date based on the number of days elapsed (up
to and including the Sale Date). If the Executive's employment terminates
for any other reason, no portion of his Annual Incentive Bonus will be paid
without authorization and approval of the Board of Directors of Holding.
Annual Incentive Bonus Payments are not assignable or transferable except
by beneficiary designations to take effect at death.
For the purpose of this Plan, a sale of the Company shall mean a sale of
all or substantially all of the assets of the Company or the sale or other
transfer of 50% or more of the common stock of the Company held by the
Institutional Investors (as defined in the Shareholders' Agreement among
Big V Holding Corp. and its shareholders dated as of December 28, 1990) to
an unaffiliated third party or parties.
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