May 22, 1996
Personal and Confidential
Mr. Ronald Johnson
17802 Osprey Pointe Place
Tampa, Florida 33647
Re: Employment Agreement Modification
Dear Ron:
I am pleased to advise you that the Compensation Committee
of Kash N' Karry Food Stores, Inc., (the "Company") has
determined to modify your employment agreement, dated as of
January 24, 1995, with the Company (the "Employment Agreement")
to (i) provide enhanced base salary continuation protection in
the event your employment with the Company is terminated Without
Cause (as defined in Section 7.2 of the Employment Agreement)
within a specified period after the occurrence of a change in
ownership of the Company, and (ii) clarify the application of
Section 7.4(f) to the stock option granted to you on May 1, 1996.
Accordingly, the Employment Agreement, in accordance with
Section 10.5 of the Employment Agreement, is hereby modified,
effective as of May 1, 1996, as follows:
1. Section 2.1 of the Employment Agreement is hereby
amended by adding thereto a new last sentence to read as follows:
"Notwithstanding the above, if, prior to the
Scheduled Termination Date, a Change in Control
(as defined in Section 7.4 below); occurs the Term
shall expire upon the later to occur of (i) the
Scheduled Termination Date, and (ii) the second
anniversary of the date on which any such Change
of Control occurred (the "CIC Anniversary Date")."
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2. Section 7.4(c) of the Employment Agreement is hereby
deleted in its entirety and replaced with a new Section 7.4(c) to
read as follows:
"(c) Subject to Section 7.5 and except in
the case of a termination Without Cause under
Section 7.2(d), the Employee shall be entitled to
receive all amounts of salary as would have been
payable under Section 3.1 hereof through the
Scheduled Termination Date (the "Salary
Continuation Period"), which amounts shall be paid
as and when the same would have been payable under
the Agreement had it not been terminated;
provided, however, in the case of a termination
Without Cause pursuant to Section 7.2(c), the
Employee is entitled to elect to receive all
salary due under this Section 7.4(c) in a lump
sum, discounted to reflect the present value of
that salary over the Salary Continuation Period
(as defined in Section 7.5); provided, further,
however, that if (x) there occurs within one year
after the occurrence of a Change in Control (as
defined below) a termination Without Cause (other
than one under Section 7.2(d), the Salary
Continuation Period shall not be less than two
years from the date of termination;, or (y) there
occurs within the one year period commencing
immediately upon the termination of the one year
period described in (x) above (the "Second One
Year Period") a termination Without Cause (other
than one under Section 7.2(d)), the Salary
Continuation period, after the date of
termination, shall not be less than twenty-four
months less the number of whole or partial months
transpired in the Second One Year Period as of the
date of the Employee's termination of employment;"
3. Section 7.4 of the Employment Agreement is hereby
amended by adding a new paragraph at the end thereof to read as
follows:
"For purposes of Section 7.4(c) above, (i)"Change
in Control" shall mean and be deemed to have
occurred if, after May 1, 1996, any Person (as
defined below) becomes the beneficial owner (as
defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of (a) securities of the Company
(not including in the securities beneficially
owned by such Person any securities acquired
directly from the Company in any transaction,
including without limitation, any
recapitalization, reorganization or bankruptcy
proceeding) representing more than fifty percent
(50%) of the combined voting power of the
Company's then outstanding securities, or (b) all
or substantially all of the assets of the Company,
and (ii) "Person" shall have the meaning ascribed
thereto in Section 3(a)(9) of the Exchange Act, as
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modified, applied and used in Sections 13(d) and
14(d) thereof; provided, however, that a Person
shall not include (A) the Company or any of its
subsidiaries or any of the Original Stockholders
(as defined in the Company's 1995 Key Employee
Stock Option Plan), (B) a trustee or other
fiduciary holding securities under an employee
benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (C) an
underwriter temporarily holding securities
pursuant to an offering of such securities, (D) a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the
same character and proportions as their ownership
of stock of the Company, or (E) any entity or
individual acquiring securities or assets of the
Company in connection with any bankruptcy
proceeding. In addition, the Employee's
employment (if in fact terminated) shall be deemed
to have been terminated following a Change of
Control by the Company Without Cause if the
Employee's employment was terminated Without Cause
within six months demonstrates that such
termination, or the circumstance(s)or event(s)
constituting such a termination, occurred (1) at
the request of a Person who has entered into an
agreement with the Company the consummation of
which will constitute a Change in Control (or who
has taken other steps reasonably calculated to
effect a Change in Control) or (2) otherwise in
connection with, as a direct result of or in
anticipation of a Change in Control."
4. Prior to the occurrence of a "Change of Control" (as
defined in Section 3 of this Agreement), Section 7.4(f) shall not
apply to the stock option granted to you on May 1, 1996 to
acquire (when vested and exercised) 25,378 shares of the
Company's common stock at an exercise price equal to $22.00 per
share.
5. Section 7.5 of the Employment Agreement shall be amended
by deleting the first sentence thereof and replacing it with a
new first sentence to read as follows:
"In the event of termination of employment
hereunder, the Employee shall be under no
obligation to seek alternative employment or other
gainful occupation during the period from the
termination of this Agreement through the later to
occur of (a) the CIC Anniversary Date, and (b) the
Scheduled Termination Date (the "Unexpired Term")
by way of mitigation of amounts payable to the
Employee under this Article 7; provided however,
that, except in the case of Employee's Termination
Without Cause under Section 7.2(c), if the
Employee provides, directly or indirectly
(including through any personal service entity),
any services (whether as employee, consultant,
independent contractor or otherwise) to any person
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engaged in a business similar to the business of
the company as then conducted (a "Third Party")
during the Unexpired Term, all amounts paid or
payable to the Employee by or on behalf of such
Third Party in respect thereof (exclusive of any
fringe benefits, profit sharing and deferred
compensation arrangement customarily offered to
senior management of the Third Party) ("Offset
Amounts") shall reduce any amounts payable
thereafter by the Company to the Employee under
Sections 7.4(c), (d) and (e) hereof on a dollar-
for-dollar basis."
6. Except as expressly modified herein, the Employment
Agreement shall remain in full force and effect in accordance
with its terms and provisions as the same are set forth on the
date hereof.
Please indicate your acceptance of and agreement to the
above modifications by dating and signing this modification
agreement in the space provided below.
KASH N' KARRY FOOD STORES, INC.
By: /s/ Peter Zurkow
____________________________
Name: Peter Zurkow
Title: Member, Compensation Committee
AGREED TO AND ACCEPTED:
/s/ Ronald E. Johnson
________________________
Ronald Johnson
Date: May 30, 1996
_________________