May 23, 1996
Personal and Confidential
Mr. Cliff Smith
Senior Vice President-Perishables
8029 Long Nook Lane
Charlotte, NC 28277
Re: Employment Agreement Modification
Dear Mr. Smith:
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 March
16, 1995, with the Company (the "Employment Agreement") to
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 one
year after the occurrence of a change in ownership of the
Company.
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 first
anniversary of the date on which any such Change of Control
occurred (the "CIC Anniversary Date")."
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, that if 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 one year
from the date of termination;"
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 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. 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
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."
5. 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/ Ronald Johnson
______________________________
Name: Ronald Johnson
Title: Chief Executive Officer
AGREED TO AND ACCEPTED:
/s/ Cliff Smith
_______________________
Mr. Cliff Smith
Senior Vice President-Perishables
Date: May 23, 1996