EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 1, 1993 (the
"Effective Date"), between Supermarkets General Corporation, a
Delaware corporation (the "Company"), and Jules Borshadel
("Executive").
W I T N E S S E T H
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WHEREAS, the Company and Executive are paries to an
Employment Agreement, dated as of July 16, 1990 (the "Prior
Agreement"); and
WHEREAS, subsequent to the execution of the Prior
Agreement, Executive has assumed the positions of President
and Chief Executive Officer of the Rickel Home Center division
of the Company ("Rickel"); and
WHEREAS, the parties now desire to enter into a new
employment agreement reflecting the terms and conditions of
Executive's current positions with the Company and certain
other agreements and understandings between the parties, and
the parties further intend that such new agreement shall
supersede the Prior Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as
follows:
1. Employment and Duties.
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(a) General. The Company hereby employs Executive
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and Executive agrees upon the terms and conditions herein set
forth to serve as President and Chief Executive Officer of
Rickel and, in by-laws of the Company, and such other duties,
commensurate with Executive's title and position of President
and Chief Executive Officer of Rickel, as may be assigned to
Executive from time to time by the Chairman and Chief
Executive Officer of the Company, or by the Board of Directors
of the Company or Supermarkets General Holdings Corporation
("Holdings"), parent corporation of the Company, or such other
officer of the Company or Holdings as may be designated by the
Board of Directors of the Company or the Board of Directors of
Holdings. If elected or appointed, Executive shall also serve
as a director or officer of any of the Company's subsidiaries
or affiliated companies and, if elected, will serve as a
member of the Board of Directors or committees of the Board of
Directors of the Company and/or Holdings, without further
compensation.
(b) Full-Time Service. Throughout the Period (as
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defined in paragraph 2 below), Executive shall, except as may
from time to time be otherwise agreed to in writing by the
Company and unless prevented by ill health, devote his full-
time working hours to his duties hereunder, in all respects
conform to and comply with the lawful and reasonable
directions and instructions given to him by the Chairman and
CEO of the Company, or the Boards of Directors of the Company
and Holdings, and shall use his best efforts to promote and
serve the interests of the Company.
(c) No Other Employment. Through the Period,
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Executive shall not, directly or indirectly, render services
to any other person or organization for which he receives
compensation without the consent of the Board of Directors of
Holdings or the Company, or otherwise engage in activities
which would interfere significantly with his faithful
performance of his duties hereunder. Executive may perform
inconsequential services without specific compensation
therefor in connection with the management of personal
investments, provided that such activity does not contravene
the provisions of subparagraph 1(b) hereof or paragraph 5
hereof.
2. Term of Employment. The Company shall retain
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Executive and Executive shall serve in the employ of the
Company for an initial period of three years commencing on the
Effective Date and extending through and including July 31,
1996 (the "Initial Period"); provided, however, that
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commencing on the second anniversary of the Effective Date and
each successive anniversary thereafter the term of employment
hereunder shall be automatically extended for one additional
year, unless at least 30 days prior to such anniversary the
Company has delivered to Executive, or Executive has delivered
to the Company, written notice of its or his desire, as the
case may be, not to extend the term of employment (the Initial
Period, including the extensions thereof, if any, is herein
referred to as the "Period"; provided, further, that the
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period shall terminate when Executive's employment hereunder
terminates).
3. Compensation and other Benefits. Subject to the
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provisions of this Agreement, the Company shall pay and
provide the following compensation and other benefits to
Executive during the Period as compensation for services
rendered hereunder:
(a) Base Salary. The Company shall pay to
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Executive an annual base salary (the "Base Salary) at the rate
of $300,000 per annum, payable in accordance with the
Company's then current payroll practice. The Base Salary
shall be reviewed annually and may be increased in the
discretion of the Board of Directors of Holdings or the
Company. The Company shall be entitled to deduct or withhold
all taxes and charges which the Company may be required to
deduct or withhold therefrom.
(b) Bonus. Commencing on the Effective Date, for
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each fiscal year in the period (or fraction thereof),
Executive shall be eligible to receive a bonus, ranging in
each year from 0 to a maximum rate of 75% of annual Base
Salary, in accordance with the terms of the Executive
Incentive ("EIP") of the Company as in effect for Rickel.
(c) Employee Benefit Plans. At all times during
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the Period, Executive shall be provided the opportunity to
participate in pension and welfare plans, programs and
arrangement (the "Plans") that are generally made available to
executives of Rickel, or as may be deemed appropriate by the
Compensation Committee of the Board of Directors of the
Company (the "Compensation Committee"), or if there shall be
no Compensation Committee, then the Compensation Committee of
the Board of Directors of Holdings.
(d) Support Service. At all times during the
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Period, the Company shall provide Executive with office space
and support services, including secretarial services,
equivalent to those afforded to Executive immediately prior to
the Executive Date.
(e) Relocation. The Company shall not, without
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Executive's consent, relocate Executive's principal place of
business to a location beyond 20 miles from the location of
Executive's principal place of business as of the Effective
Date.
(f) Travel. The Company shall not, without
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Executive's consent, require Executive to travel on the
Company's business to an extent materially inconsistent with
the Company's business travel requirements as applied to
Executive immediately prior to the Effective Date.
(g) Special Sale Bonus. In the event the Company
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decides to sell Rickel, Executive shall, in such manner as the
Company may reasonably request, use his best efforts to assist
the Company in effecting a sale and in obtaining the highest
practicable sale price for Rickel. In consideration of the
agreements of Executive contained in this Agreement and his
continued employment hereunder, in the event that a sale of
Rickel to a Third Party (as hereinafter defined) is
consummated during the Period, the Company shall pay to
Executive a bonus of $300,000, payable on the closing of said
sale. For purposes of this paragraph 3(g), "Third Party"
shall mean any person other than the Company, Plainbridge,
Inc., PTK Holdings, Inc., Holdings, SMG-II Holdings
Corporation ("SMG-II"), or any of their respective
subsidiaries, any stockholder of SMG-II on the date hereof who
is an affiliate as of the date hereof of Merrill Lynch & Co.,
Inc. or with The Equitable Life Assurance Society of the
United States or any of their respective affiliates. For
purposes of this paragraph 3(g), "person" shall have the
meaning assigned to such term under Section 13(d) of the
Securities Exchange Act of 1934, as amended, and "affiliate"
of any first person shall mean a second person that directly,
or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such first
person.
4. Termination of Employment.
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(a) Termination for Cause (i) If, prior to the
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expiration of the Period, Executive's employment is terminated
by the Company for Cause, as defined in subparagraph 4(a)(ii),
or if Executive resigns from his employment without Good
Reason, as defined in subparagraph 4(b)(iv), Executive shall
not be eligible to receive Base Salary under subparagraph 3(a)
or to participate in any Plans under subparagraph 3(c) with
respect to future periods after the date of such termination
or resignation except for the right to receive benefits which
have become vested under any Plan in accordance with the term
of such Plan. In addition, Executive shall not be eligible to
receive any bonus described in subparagraph 3(b) for the
Company's fiscal year during which the date of termination or
resignation occurs and any later years.
(ii) Termination for "Cause" shall mean
termination of Executive's employment with the Company by the
Board of Directors of the Company because of (A) the
commission by Executive of an act of fraud or embezzlement
against the Company or any of its subsidiaries; or (B) a
conviction of such Executive of a crime.
(iii) The date of termination of employment
by the Company under this paragraph 4(a) shall be the date
specified in a written notice of termination (which date shall
be no earlier than the date of furnishing such notice), or if
no such date is specified therein, the date of receipt by
Executive of such written notice of termination. The date of
resignation under this written notice of resignation, or if no
such notice is provided, the date the Executive ceases to
perform his duties hereunder.
(b) Termination Without Cause; Resignation for Good
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Reason (i) Subject to the provisions of subparagraph
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4(b)(ii) and subparagraph 4(b)(vi), if, prior to expiration of
the Period, Executive's employment is terminated by the
Company without Cause or if Executive resigns from his
employment with the Company for Good Reason, Executive shall
be entitled to receive, as "Severance Benefits" the following:
(A) his Base Salary at the annual rate then in effect
immediately prior to such termination or resignation for the
two year period commencing on the day following the date of
such termination or resignation (the "Severance Period"); (B)
the portion of the bonus or bonuses attributable to the
financial targets set for Rickel under the EIP which Executive
would have earned had his employment with the Company
continued for the Severance Period, determined in accordance
with the EIP and based on the same percentage of base
compensation used to calculate bonuses for Executive at the
time of such termination or resignation and subject to Rickel
reaching such applicable financial targets set under the EIP
or any other bonus plans in the applicable fiscal year,
provided, however, that if any bonus period commences during
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the Severance Period and concludes after the expiration
thereof, the amount of the bonus, if any, for such bonus
period shall be prorated to take into account the portion of
such bonus period coinciding with he Severance Period; and (C)
continued coverage for the Severance Period under Rickel
health and insurance plans applicable to Executive immediately
prior to such termination or resignation, or, if any such plan
does not permit continued coverage of Executive, the Company
shall arrange to provide a benefit substantially similar to
and no less favorable than the benefits he was entitles to
under the plan. Severance Benefits shall be reduced by an
compensation or benefits which Executive receive o is entitled
to receive in connection with any employment of the Executive
are payable to Executive pursuant to this paragraph 4(b).
Executive shall provide the Company with any evidence of
amounts received in connection with other employment which the
Company shall reasonably request.
(ii) If, following a termination of employment,
Executive breaches the provisions of paragraph 5 hereof,
Executive shall not be eligible, as of the date of such
breach, for the payment Severance Benefits and all obligations
and agreements of the Company to pay Severance Benefits shall
thereupon cease.
(iii) The date of termination of employment
by the Company under this paragraph 4(b) shall be the date
specified in a written notice of termination to Executive
(which date shall be no earlier than the date of furnishing
such notice) or, if no such date is specified therein, the
date on which such notice is given to Executive. The date of
resignation under this paragraph 4(b) shall be two weeks after
receipt by the Company of the written notice of resignation.
(iv) Resignation for "Good Reason" shall mean
the Executive's voluntary termination of employment with the
Company because of (A) a reduction, without Executive's
written consent, in Executive's then current base or aggregate
compensation, unless such reduction is generally applicable to
all executives of the Company, (B) a reduction, without the
Executive's consent, in Executive's then current
responsibilities, (C) receipt of notice by Executive pursuant
to paragraph (2) hereof of the Company's desire of hardship as
the Boards of Directors of Holdings and the Company may
determine on a case-ny-case basis.
(v) Severance Benefits representing Base
Salary continuation shall be paid in connection with the
Company's then current payroll practice commencing on the next
payroll date following the date of the termination of
Executive's employment under subparagraph 4(b), in a gross
amount equal to the amount paid to Executive by the Company
for the payroll period immediately prior to such termination
or resignation. Severance Benefits representing bonus
payments shall be paid annually in accordance with the
Company's then current practice for paying bonuses commencing
within three months after the Company's fiscal year end.
(vi) In the event that the Severance Benefits
would not be deductible in whole or in part in the calculation
of Federal income tax owed by The Company or any of its
affiliates or any other person or entity making such payment
or providing such benefit by reason of Section 280G of the
Internal Revenue Code of 1986 (the "Code"), the Severance
Benefits shall be reduced until no portion of the Severance
Benefits is not deductible by reason of Section 280G of the
Code.
(c) Death. If Executive dies prior to the
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expiration of the Period, his Base Salary and bonus
(determined as the bonus he would have earned had his
employment continued until the end of the applicable bonus
period during which his death occurred) will be prorated
through his day of death and paid to his beneficiary or
estate.
(d) Disability. If Executive becomes Permanently
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Disabled, as defined below in this subparagraph, prior to the
expiration of the Period, the Company shall be entitled to
terminate his employment and Executive shall be entitled to
receive disability benefits in accordance with the disability
policy maintained by the Company as of the date of such
disability. For the purposes of this subparagraph, Executive
shall be deemed "Permanently Disabled" when, and only when, he
suffers a physical or mental disability or infirmity that
prevents the normal performance of duties lasting for a
continuous period of six months or more.
5. Secrecy and Noncompetition.
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(a) No Competing Employment. For so long as
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Executive is receiving, or is entitled to receive, any
payments under or pursuant to this Agreement or the Phantom
Plan (such period being referred to hereinafter as the
"Restricted Period"), Executive shall not, unless he receives
the prior written consent of the Company, directly or
indirectly, whether as owner, consultant, employee, partner,
venturer, agent, through stock ownership, investment of
capital, lending of money or property, rendering of services,
or otherwise (except ownership of any securities which are
publicly traded), compete with the retail supermarket business
of the Company or any other business contributing at least 15%
of the consolidated revenues of the Company at the time of
termination of Executive's employment hereunder (such business
are hereinafter referred to as the "Business"), or assist,
become interested in or be connected with any corporation,
firm, partnership, joint venture, sole partnership or other
entity which so competes with the Business, except for the
aforementioned 5% ownership of publicly trade securities. The
restrictions imposed by this subparagraph shall not apply to
any geographic area in which the Company is not engaged in the
business at the time of termination.
(b) No Interference. During the Restricted
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Period, Executive shall not, whether for his own account or
for the account of any other individual, partnership, firm,
corporation or other business organization or entity (other
than the Company), intentionally solicit, endeavor to entice
away from the Company or any Affiliate or otherwise interfere
with the relationship of the Company or any Affiliate with,
any person who is employed by or associated with the Company
or any affiliate (including, but not limited to, any
independent sales representatives or organizations) or any
person or entity who is, or was within the then most recent 12
month period, a customer or client of the Company or any
Affiliate.
(c) Secrecy. Executive recognizes that the
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services to be performed by him hereunder are special, unique
and extraordinary in that, by reason of his employment
hereunder and his past employment with the Company, he may
acquire or has acquired confidential information and trade
secrets concerning the operations of the Company or its
Affiliates, the use or disclosure of which could cause the
Company substantial loss and damages which could not be
readily calculated and for which no remedy at law would be
adequate. Accordingly, Executive covenants and agrees with
the Company that he will not at any time, except in
performance of Executive's obligations to the Company
hereunder or with the prior written consent of the Board of
Directors of Holdings, directly or indirectly, disclose any
secret or confidential information that he may learn by reason
of his association with the company or any predecessors to its
business, or use any such information to the detriment of the
Company, Holdings or any of their affiliates. The term
"confidential information" includes, without limitation,
information not previously disclosed to the public or to the
trade by the Company's management with respect to the
Company's, Holdings' or any of their respective subsidiaries'
or affiliates' business plans, prospects and opportunities,
the identity of clients, suppliers or customers, information
regarding operational strengths and weaknesses, trade secrets,
know-how and other intellectual property, systems, procedures,
manuals, confidential reports, product price lists, marketing
plans or strategies, and financial information. Executive
understands and agrees that the perpetual and, in any case,
shall extend beyond the Restricted Period and Executive's
employment hereunder.
(d) Exclusive Property. Executive confirms that all
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confidential information is and shall remain the exclusive
property of the Company. All business records, papers and
documents kept or made by Executive relating to the business
of the Company shall be and remain the property of the
Company. Upon the termination of his employment with the
Company or upon the request of the Company at any time,
Executive shall promptly deliver to the Company, and shall
not, without the consent of the Company (which consent shall
not be unreasonably withheld), retain copies of any written
materials not previously made available to the public, records
and documents made by Executive or coming into his possession
concerning the business or affairs of the Company. Executive
understands and agrees that the rights and obligations set
forth in this subparagraph 5(d) are perpetual and, in any
case, shall extend beyond the Restricted Period and
Executive's employment hereunder.
(e) Stock Ownership. Other than as provided in
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subparagraph 1(c) or 5(a) hereof, nothing in this Agreement
shall prohibit Executive from acquiring or holding any issue
of stock or securities of any company or other business
entity, provided that Executive does not participate in the
operations of any such company and provided further that, with
respect to any class of voting securities listed on a national
securities exchange or quoted on the automated quotations
system of the National Association of Securities Dealers,
Inc., Executive and members of his immediate family do not own
at any time during the Restricted Period more than 5% of the
issued and outstanding shares of such class of securities.
(f) Injunctive Relief. Without intending to
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limited the remedies available to the Company, Executive
acknowledges that a breach of any of the covenants contained
in this paragraph result in material irreparable injury to the
Company for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat
thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited
by this paragraph 5 or such other relief as may be required to
specifically enforce any of the covenants in this paragraph 5.
6. Nonassignability, Binding Agreement. Neither this
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Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by Executive
without the Company's prior written consent provided, however,
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that nothing in this paragraph shall preclude Executive from
designating any of his beneficiaries to receive any benefits
payable hereunder upon his death, or the executors,
administrators, or other legal representatives from assigning
any rights hereunder to the person or persons entitled
thereto.
This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, any successors to or assignees
of the Company and Executive's heirs and the personal
representatives of Executive's estate.
7. Severability. If the final determination of a court
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of competent jurisdiction declares, after the expiration of
the time within which judicial review (if permitted) of such
determination may be perfected, that any term or provision
hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired, and (b) the invalid
or unenforceable term or provision shall be deemed replaced by
a term or provision that is valid and enforceable and that
becomes closest to expressing the intention of the invalid or
unenforceable term or provision.
8. Amendment; Waiver. This Agreement may not be
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modified, amended or waived in any manner except by an
instrument in writing signed by both parties hereto. The
waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this
Agreement, or of any subsequent breach by such party of a
provision of this Agreement.
9. Governing Law. All matters affecting this Agreement,
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including the validity thereof, are to be governed by,
interpreted and construed in accordance with the laws of the
State of New Jersey.
10. Notices. Any notice hereunder by either party to
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the other shall be given in writing by personal delivery or
certified mail, return receipt requested. If addressed to
Executive, the notice shall be delivered or mailed to
Executive at the address last know to the Company, of if
addressed to the Company, the notice shall be delivered or
mailed to the Company at its executive offices, to the
attention of the Chairman of the Board, with a copy to the
Secretary of the Company, at 301 Blair Road, Woodbridge, NJ
07095. A notice shall be deemed given, if by personal
delivery, on the date of such delivery or, if by certified
mail, on the date shown on the applicable return receipt.
11. Supersedes Previous Agreements. This Agreement
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supersedes all prior or contemporaneous negotiations,
commitments, agreements and writings with respect to the
subject matter hereof, all such other negotiations,
commitments, agreements and writings will have no further
force or effect, and the parties to any such other
negotiation, commitment or writing will have no further rights
or obligations thereunder.
12. Counterparts. This Agreement may be executed by
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either of the parties hereto in counterpart, each of which
shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
13. Headings. The headings of paragraphs herein are
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included solely for convenience of reference and shall not
control the meaning or interpretation of any of such
provisions of this Agreement.
14. Tax Withholding. The Company shall be entitled to
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deduct or withhold from any payment made hereunder all
Federal, state and local taxes which the Company is requires
by law to deduct ow withhold therefrom.
15. Definition of Affiliate. As used in this Agreement,
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the term "Affiliate" shall mean a person, corporation or other
entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, the Company or Holdings.
IN WITNESS WHEREOF, the Company has caused this Agreement
to be signed pursuant to the authority of its Board of
Directors, and Executive has executed this Agreement as of the
day and year first written above.
SUPERMARKETS GENERAL CORPORATION
By Jack Futterman
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Jack Futterman
Chairman and
Chief Executive Officer
Jules Borshadel
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Consented to:
SUPERMARKETS GENERAL HOLDINGS CORPORATION
By Jack Futterman
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Jack Futterman
Chairman and Chief Executive Officer
SMG-II HOLDINGS CORPORATION
By Jack Futterman
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Jack Futterman
Chairman and Chief Executive Officer