Exhibit 10.19
EXECUTION COPY
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (this "Agreement") is made as of June 6,
2002, by and among Roundy's Acquisition Corp., a Delaware corporation (the
"Company"), Roundy's, Inc., a Wisconsin corporation and a wholly owned
subsidiary of the Company ("Roundy's"), and Robert A. Mariano ("Executive").
Certain definitions are set forth in Section 18 of this Agreement.
Executive desires to be employed by Roundy's, and Roundy's desires to
employ Executive and to be assured of its right to have the benefit of
Executive's services on the terms and conditions hereinafter set forth.
Executive desires to purchase shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), and Preferred Stock, par value $.01 per
share (the "Preferred Stock," and collectively with the Common Stock, the
"Stock"), of the Company, and the Company desires to issue such Common Stock and
Preferred Stock to Executive on the terms and conditions set forth herein. The
Company, Roundy's and Executive desire to enter into this Agreement to, among
other things, (i) set forth the terms of Executive's purchase of the Executive
Stock (as defined below); (ii) set forth the terms and conditions of Executive's
employment with Roundy's; (iii) provide the Company with certain rights in
respect of the Executive Stock; and (iv) set forth the obligation of Executive
to refrain from competing with the Company and its Subsidiaries (as defined
below) under certain circumstances as provided herein.
On the Effective Date, Executive shall become a party to the Investor
Rights Agreement, dated as of June 6, 2002 by and among the Company, Executive,
the Investors (as defined below) and certain other parties (as in effect today
and as amended from time to time hereafter in accordance with its terms, the
"Investor Rights Agreement").
Certain provisions of this Agreement are intended for the benefit of,
and shall be enforceable by, Willis Stein & Partners III, L.P., Willis Stein &
Partners Dutch III-A, L.P., Willis Stein & Partners Dutch III-B, L.P., and
Willis Stein & Partners III-C, L.P. (the foregoing, collectively, the
"Investors").
NOW, THEREFORE, the parties hereto agree as follows:
A. PURCHASE AND SALE OF EXECUTIVE STOCK
1. On the Effective Date, Executive shall purchase from the Company, and
the Company shall sell to Executive 4,193.33 shares of Common Stock at a price
of $100 per share, which shares shall be subject to vesting as provided herein
(the "Vesting Shares"), for an aggregate purchase price of $419,333. On the
Effective Date, the Company shall deliver to Executive stock certificates
representing the Vesting Shares, and Executive shall deliver to the Company the
aggregate purchase price for the Vesting Shares in the manner provided in
Section 2.
2. On the Effective Date, Executive shall deliver to the Company (i) a
duly executed promissory note in the form of Annex A attached hereto in the
initial principal amount of $419,333 (the "Executive Note"), and (ii) a
counterpart signature page to the Investor Rights
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Agreement. Executive's obligations under the Executive Note shall be secured by
a pledge to the Company of all of the Vesting Shares, and in connection
therewith, Executive shall execute and deliver to the Company a pledge agreement
in the form of Annex B attached hereto.
3. The Company shall hold each stock certificate representing the Vesting
Shares, if any, until such time as the Vesting Shares represented by such
certificate is released from the pledge to the Company.
4. Within thirty (30) days after Executive purchases the Vesting Shares
from the Company hereunder, Executive shall make an effective election with the
Internal Revenue Service under Section 83(b) of the Internal Revenue Code and
the regulations promulgated thereunder in the form of Annex C attached hereto.
5. In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(a) The Executive Stock to be acquired by Executive pursuant to this
Agreement shall be acquired for Executive's own account and not with a view to,
or intention of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Stock shall not be disposed
of in contravention of the Securities Act or any applicable state securities
laws.
(b) Executive is an executive officer of Roundy's, is sophisticated
in financial matters and is able to evaluate the risks and benefits of the
investment in the Executive Stock. Executive is an "accredited investor," as
defined in Regulation D promulgated under the Securities Act.
(c) Executive is able to bear the economic risk of Executive's
investment in the Executive Stock for an indefinite period of time because the
Executive Stock have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the Securities
Act or an exemption from such registration is available.
(d) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Executive Stock
and has had full access to such other information concerning the Company as
Executive has requested. Executive has reviewed, or has had an opportunity to
review, a copy of the Investor Rights Agreement.
(e) This Agreement and each of the other agreements contemplated
hereby constitutes the legal, valid and binding obligation of Executive,
enforceable in accordance with its terms, and the execution, delivery and
performance of this Agreement and such other agreements by Executive does not
and shall not conflict with, violate or cause a breach of any agreement,
contract or instrument to which Executive is a party or any judgment, order or
decree to which Executive is subject.
(f) Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any person or entity
other than the
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Company or Roundy's except as set forth on Schedule 5(f). No waivers or
amendments of the agreements set forth on Schedule 5(f) have been made.
Executive's prior employment with Dominick's Supermarket's, Inc. and Dominick's
Finer Foods, Inc. (collectively, "Dominick's") was terminated by voluntary
resignation by him on November 17, 1998 pursuant to the terms of the Consulting
Services Agreement and Release of Claims dated as of November 9, 1998 by and
among Executive, Dominick's and Safeway Inc. (the "Consulting Agreement").
(g) Since November 17, 1998, Executive has not received any
confidential information or trade secrets of Dominick's other than pursuant to
the terms of the Consulting Agreement. Executive shall be prohibited from using
or disclosing any confidential information or trade secrets belonging to
Dominick's that Executive may have learned through his prior employment with
Dominick's or through his consulting arrangement pursuant to the Consulting
Agreement in the performance of Executive's services hereunder.
(h) Executive has consulted with independent legal counsel regarding
his rights and obligations under this Agreement and fully understands the terms
and conditions contained herein. Executive has obtained advice from persons
other than the Company and its counsel regarding the tax effects of the
transaction contemplated hereby.
6. In connection with the purchase and sale of the Executive Stock
hereunder, the Company represents and warrants to Executive that:
(a) This Agreement and each of the other agreements contemplated
hereby constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, and the execution, delivery and
performance of this Agreement and such other agreements by the Company does not
and shall not conflict with, violate or cause a breach of any agreement,
contract or instrument to which the Company is a party or any judgment, order or
decree to which the Company is subject.
(b) As of the Effective Date, the authorized capital stock of the
Company will consist of 94,350 shares of Common Stock, of which 90,156.67 shares
will be issued and outstanding and 10,483.33 shares of Preferred Stock of which
10,483.33 shares will be issued and outstanding. As of the Effective Date and
immediately thereafter, all of the shares of Executive Stock shall be (so long
as the Executive shall have paid the purchase price in respect of the Executive
Stock) validly issued, fully paid and nonassessable. As of the Effective Date,
except as set forth in the Certificate of Incorporation, neither the Company nor
any of its Subsidiaries shall have any outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock or containing
any profit participation features, nor shall it have outstanding any rights or
options to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital stock or any stock
appreciation rights or phantom stock plans.
7. As an inducement to the Company to issue the Executive Stock to
Executive, and as a condition thereto, Executive acknowledges and agrees that
neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to
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remain in the employment of Roundy's or any of its Subsidiaries or affect the
right of Roundy's to terminate Executive's employment at any time for any
reason.
B. VESTING AND REPURCHASE PROVISIONS
REGARDING CERTAIN EXECUTIVE STOCK
8. Vesting of Common Stock; Vested Shares. The Company and Executive
acknowledge and agree that the Vesting Shares purchased by Executive hereunder
shall be subject to vesting as hereinafter provided. "Vested Shares" means all
Vesting Shares which have become vested pursuant to the terms of this Agreement.
All Vesting Shares which have not become vested are referred to herein as
"Unvested Shares."
The Vesting Shares shall vest in accordance with the following
schedule, if as of each such date Executive is, and has been continuously,
employed by the Company or any of its Subsidiaries:
- --------------------------------------------------------------------------------------------------
Cumulative Percentage of
Date Vesting Shares Vested
- --------------------------------------------------------------------------------------------------
February 2, 2002 (the "Commencement Date") 0%
- --------------------------------------------------------------------------------------------------
End of the First Quarter Following the Commencement Date 5%
- --------------------------------------------------------------------------------------------------
End of the Second Quarter Following the Commencement Date 10%
- --------------------------------------------------------------------------------------------------
End of the Third Quarter Following the Commencement Date 15%
- --------------------------------------------------------------------------------------------------
First Anniversary of the Commencement Date 20%
- --------------------------------------------------------------------------------------------------
End of the Fifth Quarter Following the Commencement Date 25%
- --------------------------------------------------------------------------------------------------
End of the Sixth Quarter Following the Commencement Date 30%
- --------------------------------------------------------------------------------------------------
End of the Seventh Quarter Following the Commencement Date 35%
- --------------------------------------------------------------------------------------------------
Second Anniversary of the Commencement Date 40%
- --------------------------------------------------------------------------------------------------
End of the Ninth Quarter Following the Commencement Date 45%
- --------------------------------------------------------------------------------------------------
End of Tenth Quarter Following the Commencement Date 50%
- --------------------------------------------------------------------------------------------------
End of the Eleventh Quarter Following the Commencement Date 55%
- --------------------------------------------------------------------------------------------------
Third Anniversary of the Commencement Date 60%
- --------------------------------------------------------------------------------------------------
End of the Thirteenth Quarter Following the Commencement Date 65%
- --------------------------------------------------------------------------------------------------
End of the Fourteenth Quarter Following the Commencement Date 70%
- --------------------------------------------------------------------------------------------------
End of the Fifteenth Quarter Following the Commencement Date 75%
- --------------------------------------------------------------------------------------------------
Fourth Anniversary of the Commencement Date 80%
- --------------------------------------------------------------------------------------------------
End of the Seventeenth Quarter Following the Commencement Date 85%
- --------------------------------------------------------------------------------------------------
End of the Eighteenth Quarter Following the Commencement Date 90%
- --------------------------------------------------------------------------------------------------
End of the Nineteenth Quarter Following the Commencement Date 95%
- --------------------------------------------------------------------------------------------------
Fifth Anniversary of the Commencement Date 100%
- --------------------------------------------------------------------------------------------------
Notwithstanding the foregoing, all unvested Vesting Shares shall vest upon the
consummation of a Change of Control (assuming Executive is then, and has been
continuously, employed by the Company or any of its Subsidiaries).
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9. Repurchase Option.
(a) Repurchase Option. In the event that Executive, for any reason,
ceases to be employed by Roundy's, the Repurchase Shares, whether held by
Executive or one or more Permitted Transferees, shall be subject to repurchase
by the Company and the Investors, if the Company or the Investors so elect at
their sole discretion, in accordance with the terms and conditions set forth in
this Section 9 (the "Repurchase Option").
(i) Termination Without Cause, Termination with Good Reason or
Nonrenewal; Death or Incapacity. If Executive is no longer employed by Roundy's
as a result of (A) a termination by Roundy's without Cause, (B) a termination by
Executive with Good Reason, (C) a failure on the part of Roundy's to extend
Executive's Employment Period under this Agreement beyond the then applicable
Employment Period, or (D) as a result of death or Incapacity, then (x) with the
prior written consent of Executive or Executive's estate, as the case may be,
the Company and the Investors shall have the right to purchase all (but not less
than all) of the Vested Repurchase Shares, at a purchase price per share equal
to the Fair Market Value thereof as of the Termination Date, and (y) the Company
and the Investors shall have the right to purchase all or any portion of the
Unvested Repurchase Shares, at a purchase price per share equal to the lesser of
the Original Cost thereof and the Fair Market Value thereof.
(ii) Voluntary Termination. If Executive is no longer employed
by Roundy's as a result of a Voluntary Termination, then (A) the Company and the
Investors shall have the right to purchase all or any portion of the Vested
Repurchase Shares, at a purchase price per share equal to the Fair Market Value
thereof, and (B) the Company and the Investors shall have the right to purchase
all or any portion of the Unvested Repurchase Shares, at a purchase price per
share equal to the lesser of the Original Cost thereof and the Fair Market Value
thereof as of the Termination Date.
(iii) Termination with Cause. If Executive is no longer employed
by Roundy's as a result of a termination by Roundy's with Cause, then the
Company and the Investors shall have the right to purchase all or any portion of
the Repurchase Shares (including Vested Repurchase Shares and Unvested
Repurchase Shares), at a purchase price per share equal to the lesser of the
Original Cost thereof and the Fair Market Value thereof as of the Termination
Date.
(b) Repurchase Procedures. After the termination of Executive's
employment with Roundy's for any reason, subject to the required consent by
Executive under Section 9(a)(i)(x) of this Agreement, the Company may elect to
exercise the right to purchase Repurchase Shares (in the amounts and for the
prices set forth in Sections 9(a)(i), 9(a)(ii) and 9(a)(iii)) pursuant to the
Repurchase Option by delivering a written notice (the "Repurchase Notice") to
Executive and/or any other holder or holders of Repurchase Shares and the
Investors at any time prior to the end of the four-month period commencing on
the date of such termination of employment. The Repurchase Notice shall set
forth the number of shares of each class and type of such stock to be acquired
from such holder(s), the aggregate consideration to be paid for such shares of
such stock and the time and place for the closing of the transaction. The
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number of shares to be repurchased by the Company shall first be satisfied to
the extent possible from the Repurchase Shares held by Executive at the time of
delivery of the Repurchase Notice. If the number of Repurchase Shares then held
by Executive is less than the total number of Repurchase Shares the Company has
elected to purchase, the Company shall purchase the remaining shares elected to
be purchased from the other holder(s) of Repurchase Shares, pro rata according
to the number of Repurchase Shares held by such other holder(s) at the time of
delivery of such Repurchase Notice (determined as close as practicable to the
nearest whole shares). The Company shall have the right to purchase all or any
portion of the Unvested Repurchase Shares without or before purchasing any
Vested Repurchase Shares. Any Unvested Repurchase Shares not repurchased
pursuant to this Section 9 shall automatically vest upon the expiration of the
time periods permitted for the repurchase of such shares under this Section 9.
(c) Rights of the Investors.
(i) If for any reason, subject to the required consent by Executive
under Section 9(a)(i)(x) of this Agreement, the Company does not elect to
purchase all of the Repurchase Shares available for purchase pursuant to the
Repurchase Option, the Investors shall be entitled to exercise the Repurchase
Option, in the manner set forth in this Section 9, for all or any portion of the
Repurchase Shares which the Company has not elected to purchase (the "Available
Shares"). As soon as practicable after the Company determines that there will be
Available Shares, but in any event upon the earlier to occur of (A) the delivery
of the Repurchase Notice, and (B) four (4) months after the termination of
Executive's employment with the Company, the Company shall deliver a written
notice (the "Availability Notice") to the Investors, setting forth the number of
each class and type of Available Shares and the purchase price for each
Available Share.
(ii) The Investors may elect to purchase all or any portion of the
Available Shares by delivering a written notice (an "Election Notice") to the
Company within thirty (30) days after receipt of the Availability Notice from
the Company (such 30-day period being referred to herein as the "Investor
Election Period"); provided that if more than one Investor elects to purchase
any or all Available Shares of any type or class and the number of Available
Shares of such type or class is less than the aggregate number of Available
Shares of such type or class elected to be purchased by such electing Investors,
each Investor shall be entitled to purchase the lesser of (A) the number of
shares of such type or class such Investor has elected to purchase as indicated
in the Election Notice and (B) the number of shares of such type or class
obtained by multiplying the number of shares specified in the Availability
Notice by a fraction, the numerator of which is the number of shares of Common
Stock (on a fully-diluted basis) held by such Investor and the denominator of
which is the aggregate number of shares of Common Stock (on a fully-diluted
basis) held by all electing Investors. If any Available Shares of such type or
class remain after giving effect to such allocation, such allocation shall be
repeated until either all of the Available Shares of such type or class
requested to be purchased by the electing Investors have been so allocated or no
Available Shares of such type or class are available for purchase.
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(d) Supplemental Repurchase Notice. As soon as practicable, and in
any event within ten (10) days after the expiration of the Investor Election
Period, the Company shall, if necessary, notify Executive or each holder of
Repurchase Shares as to the number of shares being purchased from such holder by
the Investors (the "Supplemental Repurchase Notice"). At the time the Company
delivers the Supplemental Repurchase Notice to Executive or the holder(s) of
Repurchase Shares, the Company shall also deliver to the Investors written
notice setting forth the number of Repurchase Shares the Company and the
Investors shall acquire, the aggregate purchase price to be paid and the time
and place of the closing of the transaction.
(e) Closing. The closing of the purchase of the Repurchase Shares
pursuant to this Section 9 shall take place on the date designated by the
Company in the Repurchase Notice or the Supplemental Repurchase Notice, as the
case may be, which date shall not be more than thirty (30) days after the
delivery of the later of such notices, as the case may be. The Company and/or
the Investors, as the case may be, may pay the purchase price for the Repurchase
Shares to be purchased pursuant to the Repurchase Option by delivery of (i) in
the case of the Company, (A) a cashier's or certified check payable to the
holder(s) of such shares or wire transfer of immediately available funds, (B) by
offsetting any amounts owed by Executive to the Company under the Executive Note
or any other indebtedness of Executive to the Company or its Affiliates
evidenced by a note or notes against the purchase price for such shares or (C)
any combination of (A) and (B) in the aggregate amount of the purchase price for
Repurchase Shares, (ii) in the case of the Investors, a cashier's or certified
check payable to the holder(s) of such shares or wire transfer of immediately
available funds, or (iii) in any such case, as the holder(s) of such shares and
the purchaser(s) thereof may otherwise agree. The Company and the Investors, as
the case may be, shall receive customary representations and warranties from
each seller of Repurchase Shares regarding the sale of the Repurchase Shares
(including representations and warranties that such sellers have authorized,
executed and delivered the applicable agreements, that such agreements are valid
and enforceable and that the purchaser shall obtain good title to such shares,
free and clear of all liens and encumbrances).
(f) Termination of Repurchase Right. The right of the Company and the
Investors to repurchase shares of Repurchase Shares pursuant to this Section 9
shall terminate upon the consummation of a Change of Control.
(g) Additional Restrictions on Transfer.
(i) All shares of Executive Stock are subject to the
restrictions on Transfer set forth in the Investor Rights Agreement.
(ii) In addition to any other legend required pursuant to the
Investor Rights Agreement or otherwise, any certificate representing the
Executive Stock shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON JUNE 6, 2002, HAVE NOT BEEN REGISTERED
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UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS AND JUNE NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE
OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN EXECUTIVE
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER HEREOF DATED AS
OF JUNE 6, 2002, AS AMENDED AND MODIFIED FROM TIME TO TIME AND THE
INVESTOR RIGHTS AGREEMENT BETWEEN THE COMPANY AND CERTAIN HOLDERS OF
COMPANY STOCK DATED AS OF JUNE 6, 2002, AS AMENDED AND MODIFIED FROM
TIME TO TIME. A COPY OF EITHER SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(iii) Except for transfers to Permitted Transferees, no holder
of Executive Stock may sell, transfer or dispose of any Executive Stock (except
pursuant to an effective registration statement under the Securities Act)
without first delivering to the Company an opinion (reasonably acceptable in
form and substance to the Company) of counsel experienced in federal securities
laws matters that registration is not required under the Securities Act or any
applicable state securities laws in connection with such transfer.
C. EMPLOYMENT PROVISIONS
10. Employment. Roundy's shall employ Executive, and Executive hereby
accepts employment with Roundy's, upon the terms and conditions set forth in
this Agreement for the period beginning on the Effective Date and ending as
provided in Section 13 hereof (the "Employment Period"). Executive's employment
shall be "at-will" and may be terminated by either party at any time subject to
the provisions contained herein.
11. Position and Duties.
(a) During the Employment Period, Executive shall serve as the
Chief Executive Officer of Roundy's and shall have the normal duties,
responsibilities and authority associated with such position subject to the
power of the board of directors of Roundy's (the "Board") to expand or limit
such duties, responsibilities and authority and to override actions of officers.
(b) During the Employment Period, Executive (i) shall report to
the Board, (ii) shall devote substantially all of Executive's business time and
attention (except for permitted vacation periods, periods of illness or other
incapacity and for service on the Board of Directors (or similar governing body)
of St. Ignatius College Preparatory, Florsheim, Junior Achievement
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of Chicago and Big Shoulders (provided that none of such activities shall
materially interfere with Executive's duties to Roundy's), and other permitted
absences for which senior executive employees of Roundy's are generally eligible
from time to time under Roundy's policies) to the business and affairs of
Roundy's and its Subsidiaries, (iii) shall not engage in any other business
activity without the prior written approval of the Board, and (iv) shall perform
Executive's duties and responsibilities hereunder to the best of Executive's
abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) With respect to all regular elections of directors during the
Employment Period, Roundy's shall nominate, and the Company shall cause the
election of, Executive to serve as a member and Chairman of the Board. Upon the
termination or expiration of the Employment Period, Executive shall resign as a
director of Roundy's and its Subsidiaries, as the case may be.
12. Compensation and Benefits.
(a) Base Salary. During the Employment Period, Executive's base
salary shall be $600,000 per annum or such other increased rate as the Board may
determine from time to time (as adjusted from time to time, the "Base Salary"),
which salary shall be payable by Roundy's in regular installments in accordance
with Roundy's general payroll practices (but in any event no less often than
payable in monthly installments).
(b) Benefits. During the Employment Period, Executive shall be
entitled to five (5) weeks of paid vacation per annum and to participate in all
of Roundy's employee benefit programs for which senior executive employees of
Roundy's and its Subsidiaries are generally eligible.
(c) Bonus. Executive shall be eligible to receive an annual bonus
following the end of each year during the Employment Period (the "Salary Bonus")
in accordance with the Salary Bonus Schedule attached hereto.
(d) Business Expenses. During the Employment Period, Roundy's
shall reimburse Executive for all reasonable expenses incurred by him in the
course of performing his duties and responsibilities under this Agreement to the
extent consistent with Roundy's policies in effect from time to time with
respect to travel, entertainment and other business expenses for Roundy's senior
executives, subject to Roundy's reasonable requirements with respect to
reporting and documentation of such expenses.
(e) Payroll Withholding. All amounts payable to Executive as
compensation hereunder shall be subject to all required withholding by Roundy's.
13. Term; Termination; Severance.
(a) The Employment Period shall commence on the date hereof and
shall continue until the first to occur of (i) Executive's death or Incapacity;
(ii) a termination by Roundy's at any time with or without Cause; and (iii) a
termination by Executive at any time for any reason other than a termination for
Good Reason (a "Voluntary Termination"); provided, that
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the Employment Period shall automatically terminate without action by either
Roundy's or Executive on the fifth anniversary of the Effective Date unless
otherwise extended by mutual agreement of Executive and Roundy's. Any
termination of the Executive's employment with Roundy's shall be a
"Termination." The date of any termination of Executive's employment with
Roundy's shall be the "Termination Date."
(b) Upon any Termination, Executive shall be entitled to receive
Executive's Base Salary earned through Executive's Termination Date, prorated on
a daily basis together with all accrued but unpaid vacation time earned by
Executive during the fiscal year in which such Termination occurs. Except as set
forth in Section 13(d), Executive shall not be entitled to receive Executive's
Base Salary or any bonuses or other benefits from Roundy's for any period after
the Termination Date.
(c) In the event Executive's employment is terminated by Roundy's
with Cause, upon a Voluntary Termination without Good Reason or upon Executive's
death or Incapacity, Roundy's shall have no obligation to make any severance or
other similar payment to or on behalf of Executive.
(d) In the event that Executive's employment is terminated by
Roundy's without Cause, by Executive with Good Reason or because of Roundy's
failure to extend Executive's Employment Period hereunder beyond the then
applicable Employment Period, following such Termination and so long as
Executive executes and delivers to the Company within twenty-one (21) days
following the Termination Date the General Release in the form, subject to any
changes that may be reasonably required to effectuate a valid release/ waiver
under the Age Discrimination in Employment Act of 1967, of Annex D attached
hereto, Roundy's shall (i) pay Executive one year of his annual Base Salary (as
in effect on the Termination Date) and a prorated portion of any Salary Bonus,
and (ii) continue to provide Executive his existing health and welfare benefits
until the first anniversary of the Termination Date; provided, however, in the
event that Executive's employment is terminated within six (6) months following
the consummation of a Change of Control or Executive resigns within six (6)
months following the consummation of a Change of Control, Roundy's shall provide
health coverage to Executive (and Executive shall bear no more than 50% of the
cost of such health coverage for Executive and his eligible dependents) until
the earlier to occur of (x) Executive's attaining the age of 65, and (y)
Executive's employment with another company offering substantially similar
health benefits to Executive, provided that in the event Executive dies prior to
attaining the age of 65, Roundy's shall provide health coverage to Executive's
spouse and his eligible dependents until Executive's spouse attains the age of
65. For purposes of the preceding sentence, the health coverage shall be
substantially similar to the health coverage provided by Roundy's to a
similarly-situated executive employee who has not incurred a termination of
employment, and the cost of such health coverage shall not exceed the amount
determined under Section 604 of the Employee Retirement Income Act of 1974, as
amended (or any successor provision thereto). Each severance payment hereunder
shall be payable in accordance with Roundy's normal payroll procedures and
cycles and shall be subject to withholding of applicable taxes and governmental
charges in accordance with federal and state law. After payment of the severance
amounts described in this Section 13(d), Roundy's shall have no obligation to
make
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any further severance or other payment to or on behalf of Executive except as
otherwise expressly contemplated hereby. Notwithstanding the foregoing, in the
event that Executive shall breach any of Executive's obligations under Sections
14, 15 or 16 of this Agreement, then, in addition to any other rights that
Roundy's may have under this Agreement or otherwise, Roundy's shall be relieved
from and shall have no further obligation to pay Executive any amounts to which
Executive would otherwise be entitled pursuant to this Section 13; provided that
in the event Executive is either terminated or resigns within six (6) months
following the consummation of a Change of Control, Roundy's shall not be
relieved from, and shall be obligated to provide, health coverage that Executive
is entitled to receive pursuant to the terms of this Section 13; provided
further that in order for Roundy's to be relieved of any of its obligations
pursuant to this Section 13, either Executive shall have agreed in writing that
a breach of his obligations under Sections 14, 15 or 16 has occurred, a court
shall have determined that a material breach of his obligations under Sections
14, 15 or 16 has occurred, or pursuant to Section 20(n) herein, an arbitrator
has determined that that a material breach of his obligations under Sections 14,
15 or 16 has occurred.
D. ADDITIONAL AGREEMENTS
14. Confidential Information. Executive acknowledges that by reason of
Executive's duties to and association with Roundy's and the Investors, Executive
has had and will have access to and has and will become informed of Confidential
Information. During the Employment Period, Executive agrees to keep in strict
confidence and not, directly or indirectly, make known, disclose, furnish, make
available or use, any Confidential Information, except for use in Executive's
regular authorized duties on behalf of Roundy's and the Investors. For a period
of three (3) years after the end of the Employment Period, Executive agrees to
keep in strict confidence and not, directly or indirectly, make known, disclose,
furnish, make available or use any Confidential Information in the Geographic
Area. Executive acknowledges and agrees that all documents and other property
including or reflecting Confidential Information furnished to Executive by
Roundy's or any of the Investors or otherwise acquired or developed by Roundy's
or any of the Investors or Executive or known by Executive shall at all times be
the sole and exclusive property of Roundy's and the Investors. During the
Employment Period and for a period of three (3) years thereafter, Executive
shall take all necessary and appropriate steps to safeguard Confidential
Information and protect it against disclosure, misappropriation, misuse, loss
and theft. Executive shall deliver to Roundy's at the termination of the
Employment Period, or at any other time Roundy's may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product or the business of Roundy's or any of the Investors
which Executive may then possess or have under Executive's control and shall
erase all embodiments of the Confidential Information from all storage devices.
If Executive is required to disclose Confidential Information pursuant to any
applicable law or court order, Executive shall provide Roundy's with prior
written notice of the requirement for disclosure that details the Confidential
Information to be disclosed and shall cooperate with Roundy's to preserve the
confidentiality of such information to the extent possible.
15. Inventions and Patents.
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(a) Executive acknowledges that all Work Product is the exclusive
property of Roundy's. Executive hereby assigns all right, title and interest in
and to all Work Product to Roundy's. Any copyrightable works that fall within
Work Product will be deemed "works made for hire" under Section 201(b) of the
1976 Copyright Act, and Roundy's shall own all of the rights comprised in the
copyright therein; provided, however, that to the extent such works may not, by
operation of law, constitute "works made for hire," Executive hereby assigns to
Roundy's all right, title and interest therein.
(b) Executive shall promptly and fully disclose all Work Product to
Roundy's and shall cooperate and perform at the expense of Roundy's all actions
reasonably requested by Roundy's (whether during or after the Employment Period)
to establish, confirm and protect Roundy's right, title and interest in such
Work Product. Without limiting the generality of the foregoing, Executive agrees
to assist Roundy's, at Roundy's expense, to secure Roundy's rights in the Work
Product in any and all countries, including the execution of all applications
and all other instruments and documents which Roundy's shall deem necessary in
order to apply for and obtain rights in such Work Product and in order to assign
and convey to Roundy's the sole and exclusive right, title and interest in and
to such Work Product. If Roundy's is unable because of Executive's mental or
physical incapacity or for any other reason (including Executive's refusal to do
so after request therefor is made by Roundy's) to secure Executive's signature
to apply for or to pursue any application for any United States or foreign
patents or copyright registrations covering Work Product belonging to or
assigned to Roundy's pursuant to Section 15(a) above, then Executive hereby
irrevocably designates and appoints Roundy's and each of its duly authorized
officers and agents as Executive's agent and attorney-in-fact to act for and in
Executive's behalf and stead to execute and file any such applications and to do
all other lawfully permitted acts to further the prosecution and issuance of
patents or copyright registrations thereon with the same legal force and effect
as if executed by Executive. Executive agrees not to apply for or pursue any
application for any United States or foreign patents or copyright registrations
covering any Work Product other than pursuant to this paragraph in circumstances
where such patents or copyright registrations are or have been or are required
to be assigned to Roundy's.
16. Non-Compete, Non-Solicitation; Non-Interference.
(a) Executive agrees that, during the Employment Period, Executive
shall not directly or indirectly own any interest in, manage, control,
participate in (whether as an officer, director, employee, partner, agent,
representative or otherwise), consult with, render services for, or in any other
manner engage in any business located in the Geographic Area, which is, directly
or indirectly, competitive with any business that the Company or any of its
Subsidiaries engages in or proposes to engage in during the Employment Period.
(b) Executive agrees that, during the Noncompete Period, Executive
shall not, in any capacity that requires Executive to provide, in any material
respect, services, advice, and/or consultation similar to the services, advice
and/or consultation he provided on behalf of the Company or any of its
Subsidiaries during the Reference Period, manage, control, participate in
(whether as an officer, director, employee, partner, agent, representative or
otherwise), consult
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with, render services for, or in any manner engage in any business located in
the Geographic Area which is, directly or indirectly, competitive with any
business of the Company or any of its Subsidiaries.
(c) Nothing herein shall prohibit Executive from being a passive
owner of not more than 2% of the outstanding securities of any class of a
corporation which is publicly traded, so long as Executive has no active
participation in the business of any such corporation.
(d) During the Employment Period and the Noncompete Period, Executive
shall not directly or indirectly through another Person solicit or attempt to
solicit, induce or attempt to induce any employee, consultant, agent,
independent contractor or any other person otherwise engaged in a services or
business relationship (including, without limitation, any customer, supplier,
licensee, licensor or franchisee) with the Company or any of its Subsidiaries to
leave the employ of or terminate or otherwise adversely alter such person's
relationship with the Company or any of its Subsidiaries, or in any way
interfere with the relationship between the Company or any of its Subsidiaries
and any such person; provided, however, Executive shall not be prohibited from
engaging any such person (other than any employee, or any consultant or agent
providing services substantially on a full-time basis to the Company or any of
its Subsidiaries relating primarily to the Food Industries) which is also
engaged by the Company or any of its Subsidiaries so long as any such engagement
would not constitute a breach of this Section 16(d).
(e) During the Employment Period and the Noncompete Period, Executive
shall not directly or indirectly through another Person hire or otherwise engage
services from any person who was an employee of the Company or any Subsidiary at
any time during the sixty (60) day period immediately preceding the Termination
Date.
(f) During the Employment Period and the Noncompete Period, Executive
shall not directly or indirectly through another Person acquire or attempt to
acquire any business in the United States of America to which the Company or any
of its Subsidiaries has made an acquisition proposal during the Reference Period
relating to the possible acquisition of such business (an "Acquisition Target")
by the Company or any of its Subsidiaries, or take any action to induce or
attempt to induce any Acquisition Target to consummate any acquisition,
investment or other similar transaction with any Person other than the Company
or any of its Subsidiaries).
17. Enforcement. If, at the time of enforcement of any covenant or
agreement contained in Section 14, 15 (a), 15(b), 16(a), 16(b), 16(d) or 16(e)
of this Agreement, a court shall hold that the duration, scope, or area
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area and that the court shall be allowed and directed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law. Because Executive's services are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that monetary damages would not be an adequate remedy for any breach of
this Agreement. Therefore, in the event a breach or threatened breach of this
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Agreement, Roundy's or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or similar relief in
order to enforce, or prevent any violations of, the provisions hereof; provided
that monetary damages for any breach of this Agreement shall be determined
pursuant to arbitration in accordance with Section 20(o) herein. In addition, in
the event of a breach or violation by Executive of any covenant or agreement in
Section 16(a), 16(b), 16(d) or 16(e), the Noncompete Period set forth in such
Section with respect to such covenant or agreement shall be tolled until such
breach or violation has been duly cured.
18. Definitions.
"Active Targets" means a company or a division of a company in the
Food Industries which either the Company or any of its Subsidiaries has spent a
significant amount of time investigating as a possible investment or acquisition
candidate.
"Affiliate" of a Person means any other Person or investment fund
controlling, controlled by or under common control with the Person and, in the
case of a Person which is a partnership, any partner of the Person.
"Agreement" has the meaning set forth in the Preamble.
"Articles of Incorporation" means the Company's articles of
incorporation in effect at the time as of which any determination is being made.
"Availability Notice" has the meaning set forth in Section 9(c)(i).
"Available Shares" has the meaning set forth in Section 9(c).
"Base Salary" has the meaning set forth in Section 10.
"Board" has the meaning set forth in Section 11(a).
"Cause" means (i) the commission by Executive of a felony or the
commission by Executive of fraud with respect to Roundy's, any of its
Subsidiaries or any of their customers or suppliers, and the fact of the
commission of the felony or fraud by Executive (A) causes financial or
reputational harm to Roundy's or any of its Subsidiaries, and (B) is determined
by the Board in its good faith, reasonable judgment, (ii) failure to perform
(other than due to Incapacity) duties of the office held by Executive as
reasonably directed by the Board which duties are within the control of
Executive, which failure, if curable, is not cured within fifteen (15) days
after notice thereof to Executive (for avoidance of doubt, a failure of Roundy's
or any of its Subsidiaries to achieve any level of financial performance,
targets or goals is not a breach of this provision), (iv) gross negligence or
willful misconduct with respect to Roundy's which causes financial or
reputational harm to Roundy's in the good faith determination of Roundy's Board,
or (v) any other breach of this Agreement, which breach, if curable, is not
cured within fifteen (15) days after written notice thereof to Executive
describing such breach with reasonable specificity. In the event that Executive
is terminated for Cause, Executive shall be entitled to deliver written
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notice to Roundy's within fifteen (15) days following such termination demanding
that the determination of the existence of the commission of the felony or fraud
by Executive which served as the basis of his termination for Cause be
determined by arbitration in accordance with the procedures set forth in Section
20(o) hereof. If the arbitrator determines that the commission of the felony or
fraud by Executive which served as the basis of his termination for Cause did
not exist, the termination shall be treated as a termination without Cause and
Roundy's shall promptly pay and provide to Executive the compensation payments
and other benefits that should have been made or provided since the Termination
Date and shall continue to pay and provide any compensation payments and
benefits that should continue to be provided in a termination without Cause and
Roundy's shall pay the fees and expenses of Executive related to such
arbitration. If the arbitrator determines that the commission of the felony or
fraud by Executive which served as the basis of his termination for Cause did
exist, Executive shall promptly pay the fees and expenses of Roundy's related to
such arbitration.
"Change of Control" means (i) any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934),
other than an existing record or beneficial shareholder of the Company or
Roundy's, as the case may be, shall become the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act of 1934), directly or indirectly of
more than 50% of the outstanding capital stock of the Company or Roundy's, as
applicable (ii) consummation by the Company or Roundy's of a complete
liquidation, or sale or disposition by the Company or Roundy's, as the case may
be, of all or substantially all of it assets (determined on a consolidated
basis); or (iii) consummation of any consolidation or merger involving the
Company or Roundy's in which the Company or Roundy's, as the case may be, is not
the continuing or surviving entity or pursuant to which the capital stock of the
Company or Roundy's, as the case may be, is converted into cash, securities or
other property, other than a merger or consolidation of the Company or Roundy's
in which the beneficial owners of the capital stock of the Company or Roundy's,
as the case may be, outstanding immediately prior to the consolidation or merger
hold, directly or indirectly, at least a majority of the capital stock of the
surviving entity immediately after such consolidation or merger; provided,
however, that notwithstanding anything to the contrary contained herein, a
Change of Control shall be deemed not to have occurred in the event that the
Company or Roundy's has completed an initial public offering of its securities
pursuant to the Securities Act of 1933.
"Code" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular Code section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"Common Stock" has the meaning set forth in the Preamble.
"Company" has the meaning set forth in the Preamble.
"Confidential Information" means all information of a confidential or
proprietary nature (whether or not specifically labeled or identified as
"confidential"), in any form or medium, that is or was disclosed to, or
developed or learned by, Executive in connection with
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Executive's relationship with the Company or any of its Affiliates prior to the
date hereof or during the Employment Period and that relates to the actual or
anticipated business, products, services, financing, research or development of
the Company or any of its Affiliates or their respective suppliers, distributors
or customers. Confidential Information includes, but is not limited to, the
following: (i) internal business information (including information relating to
strategic and staffing plans and practices, business, training, marketing,
promotional and sales plans and practices, cost, rate and pricing structures,
accounting and business methods); (ii) identities of, individual requirements
of, specific contractual arrangements with, information about and confidential
and proprietary information of any of the Company's or any of its Affiliates'
suppliers, distributors and customers; (iii) trade secrets, compilations of data
and analyses, techniques, systems, formulae, research, records, reports,
manuals, documentation, models, data and data bases relating thereto; (iv)
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable); and (v) Acquisition Targets and Active Targets. Confidential
Information shall not include information that (a) is or becomes publicly known
through no wrongful act or breach of obligation of confidentiality; (b) was
rightfully received by Executive from a third party (other than any of the
Company's Affiliates or any of the Company's or any of its Affiliates'
suppliers, distributors or customers) without a breach of any obligation of
confidentiality by such third party known to Executive or (c) was known to
Executive prior to his employment with Roundy's.
"Dominick's" has the meaning set forth in Section 5(f).
"Dominick's Agreement" has the meaning set forth in Section 5(f).
"EBITDA" for any fiscal year means the consolidated net income of
Roundy's and its Subsidiaries for such year plus, to the extent deducted in
determining such net income, interest expense (including writeoff of debt
issuance costs or debt discount), provisions for federal, state or local taxes,
depreciation and amortization of any type, non-operating charges (including but
not limited to stock option compensation charges and related charges),
transactions costs related to the Share Exchange or any other acquisitions that
ordinarily would be capitalized but were not capitalized in such fiscal year),
calculated before extraordinary gains and losses and excluding any gains and
losses on the disposition on any of the assets (other than inventory sold in the
ordinary course of business) of Roundy's or any of its Subsidiaries, and
calculated in accordance with generally accepted accounting principles and
determined from the Roundy's audited annual financial statements for such year.
Notwithstanding the foregoing, in the event Roundy's or any of its Subsidiaries
consummates an acquisition or divesture within any fiscal year, the Board may,
acting reasonably and in good faith, adjust the Base Case for the fiscal year in
which such acquisition or divesture is consummated.
"Effective Date" means the closing of the Share Exchange pursuant to
the terms and conditions set forth in the Share Exchange Agreement by and
between the Company and Roundy's.
"Election Notice" has the meaning set forth in Section 9(c)(i).
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"Employment Period" has the meaning set forth in Section 10.
"Executive" has the meaning set forth in the Preamble.
"Executive Note" has the meaning set forth in Section 2.
"Executive Stock" shall mean (i) the Vesting Shares and any other
Stock or equity securities hereafter acquired by Executive and (ii) any equity
securities issued or issuable directly or indirectly with respect to any of the
securities referred to in clause (i) above by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. Such stock shall continue to be Executive
Stock in the hands of any holder (except for the Company, the Investors and
transferees in a Public Sale consummated in accordance with this Agreement and
the Investor Rights Agreement), and except as otherwise provided herein, each
such other holder of Executive Stock shall succeed to all rights and obligations
attributable to Executive as a holder of Executive Stock hereunder. Executive
Stock shall include both vested and unvested Executive Stock and shall include
interests in the Company issued with respect to Executive Stock including,
without limitation, by way of any recapitalization.
"Fair Market Value" shall mean:
(a) with respect to each share of Vesting Shares which is listed on
any stock exchange or quoted in the NASDAQ System or the over-the-counter
market, the average of the closing prices of the sale of any such share on all
stock exchanges on which such security may at the time be listed, or, if there
have been no sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of such day, or, if
on any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or,
if on any day such security is not quoted in the NASDAQ System, the average of
the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day; and
(b) with respect to each Vesting Share which is not, as of the date
of determination, listed on any stock exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value thereof shall be the amount
which each such Vesting Share would receive upon a liquidating distribution, in
accordance with the Articles of Incorporation, of the proceeds of a sale of the
Company and its Subsidiaries as a going concern at market value as determined in
good faith mutually by the board of directors of the Company and Executive and
in accordance with the Articles of Incorporation and determined as of the
Termination Date, without any discount for minority interest; provided that if
the parties cannot agree on Fair Market Value within 30 days after the
Termination Date, the Fair Market Value will be decided by a mutually acceptable
independent investment bank and if the parties are unable to agree on such an
investment bank, one shall be chosen by lot from four nationally
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recognized investment banks, two of which shall be designated by the Company and
two of which shall be designated by Executive. The determination of the
investment bank pursuant hereto shall be final and binding (absent fraud or
manifest error) and the fees and expenses of such investment bank shall be borne
in proportion to success by the Company, on the one hand, and Executive, on the
other hand.
"Food Industries" means the grocery, including wholesale and retail,
industries .
"Geographic Area" means the States of Illinois, Indiana, Michigan,
Ohio, Wisconsin, any other state in which the Company or any of its Subsidiaries
conduct significant business after the date hereof, and any other state in which
an Active Target is located.
"Good Reason" shall mean the resignation of Executive within six (6)
months following the occurrence of: (a) the relocation of Roundy's principal
executive offices anywhere outside the greater Milwaukee, Wisconsin area, unless
Executive agrees to such relocation; (b) if Executive is forced or required to
relocate; (c) the requirement that Executive report to anyone other than the
Board; (d) the removal of any titles of Executive specified in Section 10 hereof
unless Executive agrees to the removal of any such titles; (e) a material
reduction in the scope of Executive's authorities, duties or responsibilities;
(f) a material breach of Roundy's obligations under this Agreement, which
breach, if curable, is not cured within fifteen (15) days after written notice
thereof to Roundy's describing such breach with reasonable specificity; or (g) a
Change of Control. In the event that Executive terminates his employment for
Good Reason, the Company shall be entitled to deliver written notice to
Executive within fifteen (15) days following such termination demanding that the
determination of the existence of Good Reason be determined by arbitration in
accordance with the procedures set forth in Section 20(o) hereof. If the
arbitrator determines that Good Reason did not exist, the termination shall be
treated as a Voluntary Termination and Roundy's shall have no obligations to pay
or provide to Executive the compensation payments and other benefits to which he
would have otherwise been entitled to pursuant to a Termination for Good Reason.
If the arbitrator determines that Good Reason did exist, in addition to the
compensation payments and other benefits payable to Executive based on a
termination for Good Reason, Roundy's shall pay the fees and expenses of
Executive related to such arbitration.
"Incapacity" means the disability of Executive caused by any physical
or mental injury, illness or incapacity as a result of which Executive is unable
to effectively perform the essential functions of Executive's duties as
determined by the board of directors of Roundy's in good faith, for a period of
ninety (90) consecutive days or a period of 120 days during any 180-day period.
"Investor Election Period" has the meaning set forth in Section
9(c)(ii).
"Investor Rights Agreement" has the meaning set forth in the Preamble.
"Investors" has the meaning set forth in the Preamble.
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"Noncompete Period" means the one (1) year period following the
Termination Date.
"Original Cost" of any share of Executive Stock means the price paid
by Executive for such share of Executive Stock (as appropriately adjusted for
stock splits, stock combinations and similar events).
"Permitted Transferee" means any permitted transferee of Stock
pursuant to a transfer in accordance with Section 2D of the Investor Rights
Agreement.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"Preferred Stock" has the meaning set forth in the Preamble.
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public through a broker, dealer or
market maker pursuant to the provisions of Rule 144 adopted under the Securities
Act.
"Reference Period" means the one (1) year period immediately preceding
the Termination Date.
"Repurchase Notice" has the meaning set forth in Section 9(b).
"Repurchase Option" has the meaning set forth in Section 9(a).
"Repurchase Shares" shall mean (i) the Vesting Shares and (ii) any
equity securities issued or issuable directly or indirectly with respect to any
of the securities referred to in clause (i) above by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. Such stock shall continue to be
Repurchase Shares in the hands of any holder (except for the Company, the
Investors and transferees in a Public Sale consummated in accordance with the
Investor Rights Agreement), and except as otherwise provided herein, each such
other holder of Repurchase Shares shall succeed to all rights and obligations
attributable to Executive as a holder of Repurchase Shares hereunder. Repurchase
Shares shall include both Vested and Unvested Repurchase Shares and shall
include interests in the Company issued with respect to Repurchase Shares
including, without limitation, by way of any recapitalization.
"Roundy's" has the meaning set forth in the Preamble.
"Salary Bonus" has the meaning set forth in Section 12(c).
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Share Exchange Agreement" means that certain Share Exchange Agreement
dated as of April 8, 2002 by and between the Company and Roundy's.
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"Stock" has the meaning set forth in the Preamble.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity (other than
a corporation), a majority of partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity (other than a corporation) if such Person or Persons shall
be allocated a majority of limited liability company, partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such limited liability company, partnership,
association or other business entity. For purposes hereof, references to a
"Subsidiary" of the Company shall be given effect only at such times that the
Company has one or more Subsidiaries, and, unless otherwise indicated, the term
"Subsidiary" refers to a Subsidiary of the Company.
"Supplemental Repurchase Notice" has the meaning set forth in Section
9(d).
"Termination" has the meaning set forth in Section 13(a).
"Termination Date" has the meaning set forth in Section 13(a).
"Transfer" has the meaning given such term in the Investor Rights
Agreement.
"Unvested Repurchase Shares" shall mean (i) Repurchase Shares which
have not become vested and (ii) any equity securities issued or issuable
directly or indirectly with respect to any of the securities referred to in
clause (i) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. Such stock shall continue to be Unvested Repurchase Shares in
the hands of any holder (except for the Company, the Investors and transferees
in a Public Sale consummated in accordance with the Investor Rights Agreement),
and except as otherwise provided herein, each such other holder of Unvested
Repurchase Shares shall succeed to all rights and obligations attributable to
Executive as a holder of Unvested Repurchase Shares hereunder.
"Unvested Shares" has the meaning set forth in Section 8.
"Vested Repurchase Shares" shall mean (i) Repurchase Shares which have
become vested and (ii) any equity securities issued or issuable directly or
indirectly with respect to any of the securities referred to in clause (i) above
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. Such
stock shall continue to be Vested Repurchase Shares in the hands of any holder
(except for the Company, the Investors and transferees in a Public Sale
consummated in
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accordance with the Investor Rights Agreement), and except as otherwise provided
herein, each such other holder of Vested Repurchase Shares shall succeed to all
rights and obligations attributable to Executive as a holder of Vested
Repurchase Shares hereunder.
"Vested Shares" has the meaning set forth in Section 8.
"Vesting Shares" has the meaning set forth in Section 1.
"Voluntary Termination" has the meaning set forth in Section 13(a).
"Work Product" means all inventions, innovations, improvements,
developments, methods, processes, designs, analyses, drawings, reports and all
similar or related information (whether or not patentable or reduced to practice
or comprising Confidential Information) and any copyrightable work, trade mark,
trade secret or other intellectual property rights (whether or not comprising
Confidential Information) and any other form of Confidential Information, any of
which relate to Roundy's or any of its Affiliates' actual or anticipated
business, research and development or existing or future products or services
and which were or are conceived, reduced to practice, contributed to, developed,
made or acquired by Executive (whether alone or jointly with others) while
employed (both before and after the date hereof) by Roundy's (or its
predecessors, successors or assigns) and its Affiliates.
19. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipients at the address indicated below:
If to Executive: 1321 North Green Bay Road
Lake Forest, IL 60045
with a copy to: Katten Muchin Zavis Rosenman
525 West Monroe
Chicago, IL 60661
Attn: Walter S. Weinberg
If to the Company: c/o Willis, Stein & Partners III, L.P.
One North Wacker Drive, Suite 4800
Chicago, IL 60606
Attn: Mark P. Michaels
with a copy to:
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and Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: John A. Weissenbach
David H.C. Lee
If to the Investors: Willis, Stein & Partners III, L.P.
One North Wacker Drive, Suite 4800
Chicago, IL 60606
Attn: Mark P. Michaels
with a copy to Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: John A. Weissenbach
David H.C. Lee
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been duly given or made as
follows: (a) if sent by registered or certified mail in the United States,
return receipt requested, upon actual receipt; (b) if sent by reputable
overnight air courier (such as DHL or Federal Express), two business days after
being so sent; (c) if sent by telecopy or facsimile transmission (and receipt is
confirmed), when transmitted at or before 5:00 p.m. local time at the location
of receipt on a business day, and if received after 5:00 p.m. or on a day other
than a business day, on the next following business day, but only if also sent
by reputable overnight air courier within one business day following
transmission; or (d) if otherwise actually personally delivered, when so
delivered.
20. General Provisions
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Stock in violation of any provision of this Agreement
or the Investors Rights Agreement shall be void, and the Company shall not
record such Transfer on its books or treat any purported transferee of such
Executive Stock as the owner of such Executive Stock for any purpose.
(b) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. The parties
specifically acknowledge and agree that each covenant and agreement contained in
Section 14, 15(a), 15(b), 16(a), 16(b), 16(d) or 16(e) of this Agreement is
separate and independent.
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(c) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way
(including, without limitation, any employment agreement or similar agreement
assumed by Roundy's or its Affiliates and Executive, which is hereby
terminated).
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, Roundy's, the Investors and their respective successors
and assigns; provided that the rights and obligations of Executive under this
Agreement shall not be assignable except in connection with a permitted transfer
of Executive Stock hereunder or under the Investor Rights Agreement; and
provided further that no assignment by Executive of any rights hereunder shall
relieve Executive of any obligations hereunder.
(f) Governing Law. The corporate law of the State of Delaware will
govern all issues concerning the relative rights of the Company and its
stockholders. All other issues concerning this Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Wisconsin or any other jurisdiction) that would cause the
application of the law of any jurisdiction other than the State of Wisconsin.
(g) Remedies. Each of the parties to this Agreement shall be entitled
to enforce its rights under this Agreement specifically, to recover damages and
costs (including reasonable attorney's fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages would not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
(h) Survival. The provisions set forth in Section 4, Section 9 and
Sections 13 through 20 shall survive and continue in full force and effect in
accordance with their terms notwithstanding any termination of the Employment
Period.
(i) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company, Executive
and Investors owning a majority of the Stock on a fully-diluted basis held by
all Investors.
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(j) Third-Party Beneficiaries. The parties hereto acknowledge and
agree that the Investors are third party beneficiaries of this Agreement. This
Agreement will inure to the benefit of and be enforceable by the Investors and
their respective successors and assigns, subject to amendment or waiver as
provided in subparagraph (i) foregoing.
(k) Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
(l) Other Laws. Nothing in this Agreement shall be construed to limit
or negate any common or statutory law, including, without limitation, any laws
of fiduciary duties, torts or trade secrets, where it provides the parties
hereunder with broader protection than that provided herein.
(m) Joint and Several Liability. The Company and Roundy's shall be
jointly and severally liable to the Executive for all obligations of the Company
and/or Roundy's under this Agreement.
(n) Expenses. Roundy's shall pay the reasonable fees and expenses,
including reasonable attorneys' fees, incurred by Executive in connection with
the preparation, negotiation, execution and delivery of this Agreement, the
Securities Purchase Agreement and the other agreements entered into in
connection herewith or therewith.
(o) Arbitration. In the event of any controversy among the parties
hereto arising out of, or relating to, this Agreement, which cannot be settled
amicably by the parties, such controversy shall be finally, exclusively and
conclusively settled by mandatory arbitration conducted expeditiously in
accordance with the American Arbitration Association rules for employment
disputes, by a single independent arbitrator; provided that notwithstanding the
foregoing Roundy's shall be entitled to seek a temporary restraining order and
any other injunctive relief, from a court of competent jurisdiction, restraining
Executive from committing or continuing any violation of Sections 14, 15 or 16
herein; provided further that monetary damages for any breach of this Agreement
shall be determined pursuant to this Section 20(o). If the parties are unable to
agree on the selection of an arbitrator, then any party may petition the
American Arbitration Association for the appointment of an arbitrator, which
appointment shall be made within ten (10) days of the petition therefore. Either
the Company or Executive may institute such arbitration proceeding by giving
written notice to the other party. A hearing shall be held by the arbitrator in
the City of Chicago, Illinois within thirty (30) days of his or her appointment.
In preparation for their presentation at such hearing, each party may depose a
maximum of four people. Each such deposition shall last no more than six (6)
hours. Each side may file with the arbitrator one brief not in excess of thirty
(30) pages, excluding exhibits. Each side shall have no more than eight (8)
hours to present its position to the arbitrator. The hearing shall be no more
than three (3) days in length. The decision of the arbitrator shall be final and
binding upon all parties hereto and shall be rendered pursuant a written
decision which contains
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a detailed recital of the arbitrator's reasoning. Judgment upon the award
rendered may be entered in any court having jurisdiction thereof.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Executive
Agreement on the date first written above.
ROUNDY'S ACQUISITION CORP.
By: /s/ Mark P. Michaels
-----------------------------------
Its: VP & Secretary
----------------------------------
ROUNDY'S, INC.
By: /s/ Edward G. Kitz
-----------------------------------
Its: VP, Secretary & Treasurer
----------------------------------
EXECUTIVE:
/s/ Robert A. Mariano
--------------------------------------
EXECUTION COPY
Salary Bonus Schedule
Executive shall be entitled to receive the following Salary Bonus
for each fiscal year beginning in fiscal year 2002, which Salary Bonus shall be
paid at the time the independent audit of Roundy's financial statements for such
fiscal year is completed:
(a) Fiscal Year 2002:
For fiscal year 2002 Executive shall be entitled to receive a
Salary Bonus as set forth below:
----------------------------------------------
% of Base Salary to
be Received as % of 2002 Base
Salary Bonus Case Achieved
----------------------------------------------
100% 105%
----------------------------------------------
97% 104%
----------------------------------------------
94% 103%
----------------------------------------------
91% 102%
----------------------------------------------
88% 101%
----------------------------------------------
85% 100%
----------------------------------------------
79% 99%
----------------------------------------------
73% 98%
----------------------------------------------
67% 97%
----------------------------------------------
61% 96%
----------------------------------------------
55% 95%
----------------------------------------------
49% 94%
----------------------------------------------
43% 93%
----------------------------------------------
37% 92%
----------------------------------------------
31% 91%
----------------------------------------------
25% 90%
----------------------------------------------
0% *90%
----------------------------------------------
* Denote less than
"2002 Base Case" means for fiscal year 2002, EBITDA for the twelve
month period ended December 31, 2002 equal to $127,600,000.
(b) Fiscal Years 2003 -2007:
For each of fiscal years 2003 through 2007 Executive shall be
entitled to a Salary Bonus as set forth below:
EXECUTION COPY
----------------------------------------------
% of Base Salary to % of Fiscal Year
be Received as Base Case
Salary Bonus Achieved
----------------------------------------------
100% 110%
----------------------------------------------
99% 109%
----------------------------------------------
98% 108%
----------------------------------------------
97% 107%
----------------------------------------------
96% 106%
----------------------------------------------
95% 105%
----------------------------------------------
94% 104%
----------------------------------------------
93% 103%
----------------------------------------------
92% 102%
----------------------------------------------
91% 101%
----------------------------------------------
90% 100%
----------------------------------------------
85.57% 99%
----------------------------------------------
81.33% 98%
----------------------------------------------
77% 97%
----------------------------------------------
72.67% 96%
----------------------------------------------
68.33% 95%
----------------------------------------------
64% 94%
----------------------------------------------
59.67% 93%
----------------------------------------------
55.33% 92%
----------------------------------------------
51% 91%
----------------------------------------------
46.67% 90%
----------------------------------------------
42.33% 89%
----------------------------------------------
38% 88%
----------------------------------------------
33.67% 87%
----------------------------------------------
29.33% 86%
----------------------------------------------
25% 85%
----------------------------------------------
0% *85%
----------------------------------------------
* Denote less than
For each fiscal year, the "Base Case" shall be an amount equal to the
projected EBITDA set forth in Roundy's budget for such fiscal year, as
determined by the Board acting reasonably and in good faith. Notwithstanding the
foregoing, in the event Roundy's or any of its Subsidiaries consummates an
acquisition or divesture within any fiscal year, the Board may, acting
reasonably and in good faith, adjust the Base Case for the fiscal year in which
such acquisition or divesture is consummated.
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SECURED PROMISSORY NOTE
$419,333 June 6, 2002
For value received, Robert A. Mariano ("Executive") promises to pay to
Roundy's Acquisition Corp., a Delaware corporation (the "Company"), the
aggregate principal sum of $419,333 together with interest thereon calculated
from the date hereof (the "Date of Issuance") in accordance with the provisions
of this Secured Promissory Note (this "Note"). This Note was issued pursuant to
and is subject to the terms of that certain Executive Agreement (the "Executive
Agreement"), dated as of June 4, 2002, by and between the Company and Executive.
Any capitalized terms used herein and not defined shall have the meaning
assigned to them in the Executive Agreement.
1. Payment and Capitalization of Interest
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 4.74% and (ii) the highest
rate permitted by applicable law. On each anniversary of the Date of Issuance (a
"Capitalization Date") on which any portion of the unpaid principal amount of
this Note remains outstanding, all accrued interest as of such date shall be
capitalized and made part of the unpaid principal amount hereunder as of such
date (the "Capitalized Interest"). Interest shall be computed on the basis of a
365-day year and the actual number of days elapsed. Any accrued interest
(including Capitalized Interest) which for any reason has not theretofore been
paid shall be paid in full on the date on which the final principal payment on
this Note is paid.
2. Payment of Principal on Note
(a) Scheduled Payments. Executive shall pay the entire principal
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on the later to occur of (i)
the fifth anniversary of the Date of Issuance and (ii) the end of the Employment
Period (the "Maturity Date").
(b) Voluntary Prepayment. Executive may prepay, at any time and from
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note plus all accrued and unpaid interest thereon.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with Executive's ownership of the Company's Stock,
Executive shall prepay an amount of this Note equivalent to the amount of all
such cash proceeds (net of any expenses and
EXECUTION COPY
taxes payable with respect to the transaction in which such proceeds were
received) received up to the amount of principal and unpaid interest due
hereunder.
(ii) Upon the consummation of a Change of Control prior to the
Maturity Date, this Note shall be immediately due and payable and Executive
shall prepay all of the outstanding principal amount of this Note, plus all
accrued and unpaid interest thereon, as of the date of the consummation of such
Change of Control.
(iii) If Executive's employment by Roundy's terminates for any
reason, this Note shall be immediately due and payable and Executive shall
prepay all of the outstanding principal amount of this Note, plus all accrued
and unpaid interest thereon, as of the date of such termination.
3. Collateral. The amounts due under this Note are secured by a pledge of
the Executive Stock, pursuant to a certain Stock Pledge Agreement, dated as of
the date hereof, by and between Executive and Company (the "Pledge Agreement").
4. Limited Recourse as to Principal. Executive shall have full personal
liability for all accrued and unpaid interest (including Capitalized Interest)
under this Note. Notwithstanding anything to the contrary herein, the Company
hereby agrees that Executive shall not have personal liability with respect to
any amounts owed under this Note, except as set forth in this paragraph and
except for the Company's rights of set off as set forth in Section 9(e) of the
Executive Agreement. Executive shall have personal liability under this Note for
the principal amount of this Note, but in no event shall such liability exceed
the Aggregate Recourse Amount determined as of the time of the Company's claim,
and only to the extent of any shortfall in repayment after any collateral which
secures this Note shall have been realized upon. "Aggregate Recourse Amount"
means as of any time an amount equal to (A) 50% of the aggregate original
principal amount of this Note, minus (B) the aggregate amount of all principal
and interest payments made under this Note from the Date of Issuance of this
Note through such time, including payments incident to Executive's declaring
bankruptcy. Nothing in this paragraph 4, however, shall affect any of the
Company's rights under the Pledge Agreement.
5. Miscellaneous
(a) In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of Delaware.
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* * * * *
3
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IN WITNESS WHEREOF, Executive has executed and delivered this Executive
Promissory Note as of the date first written above.
EXECUTIVE:
/s/ Robert A. Mariano
-------------------------------------
[Signature Page to Promissory Note]
EXECUTION COPY
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of June 6,
2002, by and between Robert A. Mariano ("Pledgor") and Roundy's Acquisition
Corp., a Delaware corporation (the "Company"). Any capitalized terms used herein
but not defined shall have the meanings assigned to them in the Executive
Agreement.
The Company and Pledgor are parties to an Executive Agreement (the
"Executive Agreement"), dated as of June 4, 2002, pursuant to which the Company
is selling to Pledgor 4,193.33 shares of the Company's Common Stock (the
"Pledged Interests"), all of which are pledged pursuant to this Agreement, and
the Company has permitted the Pledgor to pay the purchase price therefor by
delivery to the Company of a promissory note (the "Note") in the aggregate
principal amount of $419,333. This Agreement provides the terms and conditions
upon which the Note is secured by a pledge to the Company of the Collateral (as
defined below).
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company to accept the Note as
payment for the Pledged Interests, Pledgor and the Company hereby agree as
follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Interests and any related rights to
payment, profits, distributions thereon, as the case may be, and all proceeds
thereof, including any securities and moneys received (collectively the
"Collateral"), whether now existing or acquired, as security for the prompt and
complete payment when due of the unpaid principal of and interest on the Note
and full payment and performance of the obligations and liabilities of Pledgor
hereunder (including reasonable costs and attorneys fees associated with
enforcement hereunder).
2. Delivery of Pledged Interests. Pledgor agrees to deliver to the
Company any certificates or instruments representing the Pledged Interests or
other Collateral, duly endorsed in blank or accompanied by undated stock powers
duly executed in blank by such Pledgor or such other instruments of transfer as
are acceptable to the Company.
3. Uncertificated Stock. To the extent that the Pledged Interests or
other Collateral are uncertificated securities, Pledgor agrees to take all
actions required to perfect the security interest of the Company in such
Collateral under applicable law. The Pledgor further agrees to take such actions
as the Company deems necessary or desirable to effect the foregoing and to
permit the Company to exercise any of its rights and remedies hereunder.
4. Other Collateral. The Pledgor agrees that the Company may file UCC
Financing Statements in those jurisdictions which the Company determines
necessary or appropriate to perfect the security interests of the Company in any
of the Collateral and to take such other
EXECUTION COPY
action as the Company deems necessary or desirable to perfect the security
interests of the Company herein described.
5. Voting Rights; Cash Distribution. Notwithstanding anything to the
contrary contained herein, during the term of this Agreement until such time as
there exists a default in the payment of principal or interest on the Note or
any other default under the Note or hereunder, to the extent the Pledged
Interests have become vested in accordance with the Executive Agreement, Pledgor
shall be entitled to all voting rights with respect to the Pledged Interests and
shall be entitled to receive all cash distributions paid in respect of the
Pledged Interests. Upon the occurrence of and during the continuance of any such
default, at the option of the Company and upon notice by the Company to the
Pledgor, Pledgor shall not be able to vote the Pledged Interests, such voting
rights with respect thereto shall be exercisable by the Company and the Company
shall retain all such cash distributions payable on the Pledged Interests as
additional security hereunder. In furtherance of the Company's rights under this
Section, the Pledgor shall execute and deliver to the Company, or cause to be
executed and delivered to the Company, all such proxies, powers of attorney, and
other instruments as the Company may reasonably request for the purpose of
enabling the Company to exercise the voting rights which it is entitled to
exercise or refrain from exercising pursuant to this Section 5.
6. Other Distributions, etc. If, while this Agreement is in effect,
Pledgor becomes entitled to receive or receives any securities or other property
in addition to, in substitution of, or in exchange for any of the Pledged
Interests (whether as a distribution in connection with any recapitalization,
reorganization or reclassification), Pledgor shall accept such securities or
other property on behalf of and for the benefit of the Company as additional
security for Pledgor's obligations under the Note and shall promptly deliver
such additional security to the Company together with duly executed forms of
assignment, and such additional security shall be deemed to be part of the
Pledged Interests hereunder.
7. Default. If Pledgor (a) defaults in the payment of the principal under
the Note when it becomes due (whether upon demand, acceleration or otherwise) or
any other event of default under the Note or this Agreement occurs (including,
without limitation, the bankruptcy or insolvency of Pledgor) or (b) defaults in
the payment of interest or any other amount related to the Note, the Company may
(following five (5) days' notice to Executive, during which the default is not
cured) exercise any and all the rights, powers and remedies of any owner of the
Pledged Interests (including the right to vote the Pledged Interests and receive
any distributions with respect to such Pledged Interests) and shall have and may
exercise without demand any and all the rights and remedies granted to a secured
party upon default under the Uniform Commercial Code of Delaware or otherwise
available to the Company under applicable law. Without limiting the foregoing,
after the occurrence of and during the continuance of a default, the Company is
authorized to sell, assign and deliver at its discretion, from time to time, all
or any part of the Collateral at any private sale or public auction, on not less
than ten (10) days' written notice to Pledgor, at such price or prices and upon
such terms as the Company may deem advisable. Pledgor shall have no right to
redeem the Collateral after any such sale or assignment. At any such sale or
auction, the Company may bid for, and become the purchaser of, the whole or any
part of the Pledged Interests offered for sale. In case of any such sale, after
deducting the
2
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costs, attorneys' fees and other expenses of sale and delivery, the remaining
proceeds of such sale shall be applied to the principal of and accrued interest
on the Note and other amounts related thereto (including costs, attorneys' fees
associated with enforcement hereof); provided that after payment in full of the
indebtedness evidenced by the Note, the balance of the proceeds of sale then
remaining shall be paid to Pledgor and Pledgor shall be entitled to the return
of any of the Pledged Interests remaining in the hands of the Company. Pledgor
shall be liable for any deficiency (but only to the extent liable therefor under
the Note) if the remaining proceeds are insufficient to pay the indebtedness
under the Note in full, including the fees of any attorneys employed by the
Company to collect such deficiency.
8. Costs and Attorneys' Fees. All costs and expenses (including
reasonable attorneys' fees) incurred in exercising any right, power or remedy
conferred by this Agreement or in the enforcement thereof, shall become part of
the indebtedness secured hereunder and shall be repaid from the proceeds of the
sale of the Pledged Interests hereunder.
9. Payment of Indebtedness and Release of Pledged Interests. Upon payment
in full of the indebtedness evidenced by the Note and any amounts owed
hereunder, the Company shall take all necessary action required to release any
security interests the Company has with respect to the Collateral.
10. No Other Liens; No Sales or Transfers. Pledgor hereby represents and
warrants that Pledgor has good and valid title to all of the Collateral, free
and clear of all liens, security interests and other encumbrances (other than
pursuant to the Investor Rights Agreement or the Executive Agreement ), and
Pledgor hereby covenants that, until such time as all of the outstanding
principal of and interest on the Note and amounts due and owing hereunder have
been repaid, Pledgor shall not (i) create, incur, assume or suffer to exist any
pledge, security interest, encumbrance, lien or charge of any kind against the
Collateral or Pledgor's rights or a holder thereof, other than pursuant to the
Executive Agreement or this Agreement, or (ii) sell or otherwise transfer any of
the Collateral or any interest therein (other than pursuant to the Executive
Agreement or the Investor Rights Agreement).
11. Further Assurances. Pledgor agrees that at any time and from time to
time upon the written request of the Company, Pledgor shall execute and deliver
such further documents (including UCC financing statements) and do such further
acts and things as the Company may reasonably request to effect the purposes of
this Agreement.
12. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. No Waiver; Cumulative Remedies. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one
3
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occasion shall not be construed as a bar to any right or remedy which the
Company would otherwise have on any future occasion. No failure to exercise nor
any delay in exercising on the part of the Company, any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights or remedies provided by law.
14. Waivers, Amendments; Applicable Law. None of the terms or provisions
of this Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by the parties hereto. This Agreement and
all obligations of the Pledgor hereunder shall together with the rights and
remedies of the Company hereunder, inure to the benefit of the Company and its
successors and assigns. This Agreement shall be governed by, and be construed
and interpreted in accordance with, the laws of the State of Delaware, without
giving effect to any applicable principles of conflicts of laws.
* * * * *
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IN WITNESS WHEREOF, this Stock Pledge Agreement has been executed as of
the date first above written.
EXECUTIVE:
/s/ Robert A. Mariano
-----------------------------------
ROUNDY'S ACQUISITION CORP.
By: /s/ Mark P. Michaels
-------------------------------
Its: VP & Secretary
------------------------------
[Signature Page to Stock Pledge Agreement]
EXECUTION COPY
June 6, 2002
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
On June 6, 2002 (the "Effective Date"), the undersigned purchased from
Roundy's Acquisition Corp., a Delaware corporation (the "Company"), 4,193.33
shares of Common Stock of the Company, par value $.01 per share ("Executive
Securities"). Under certain circumstances, the Company and/or certain of the
Company's stockholders (the "Investors") have the right to repurchase the
Executive Securities at cost from the undersigned (or from the holder of the
Executive Securities, if different from the undersigned) should the undersigned
cease to be employed by Roundy's Inc. ("Roundy's"). Hence, the Executive
Securities are subject to a substantial risk of forfeiture and are
nontransferable. The undersigned desires to make an election to have the
Executive Securities taxed under the provision of Code (S)83(b) at the time the
undersigned purchased the Executive Securities.
Therefore, pursuant to Code (S)83(b) and Treasury Regulation (S)1.83-2
promulgated thereunder, the undersigned hereby makes an election with respect to
the Executive Securities (as described in paragraph 2 below), to report as
taxable income for calendar year 2002 the excess (if any) of the Executive
Securities' fair market value on June 6, 2002 over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation (S)1.83-2(e):
1) The name, address and social security number of the undersigned:
Robert A. Mariano
1321 North Green Bay Road
Lake Forest, IL 60045
SS#: ______--____--______
2) A description of the property with respect to which the election
is being made: 4,193.33 shares of Common Stock of the Company, par value $.01
per share.
3) The date on which the property was transferred: June 6, 2002. The
taxable year for which such election is made: calendar year 2002.
4) The Executive Securities shall become vested ratably, on a
quarterly basis, over the five year period commencing February 2, 2002, as long
as Executive remains employed by Roundy's, and shall be deemed to be unvested to
the extent not vested as of termination of such employment. Notwithstanding the
foregoing, in the event the Executive ceases to be
EXECUTION COPY
employed by Roundy's for cause, all of the Executive Securities shall be subject
to repurchase by the Company and/or the Investors at a price equal to the lesser
of original cost and fair market value.
5) The fair market value on June 6, 2002 of the property with respect
to which the election is being made, determined without regard to any lapse
restrictions: $419,333.
6) The amount paid for such property: $419,333.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations (S)1.83-2(e)(7).
Dated: June 6, 2002 /s/ Robert A. Mariano
----------------------------------
Robert A. Mariano
EXECUTION COPY
EXHIBIT D
GENERAL RELEASE
I, Robert A. Mariano, in consideration of and subject to the terms and
conditions set out in the Executive Agreement dated as of June 4, 2002 between
the Company and Executive (as amended from time to time, the "Agreement"), and
other good and valuable consideration, do hereby release and forever discharge
as of the date hereof Roundy's Inc., a Wisconsin corporation (the "Company"),
its parents, subsidiaries and affiliates and each of their respective present
and former directors, officers, partners, members, agents, representatives,
employees, successors and assigns (collectively, the "Released Parties") to the
extent provided below.
1. I understand and agree that I will not receive the benefits specified in
Section 13(d) of the Agreement unless I execute this General Release.
2. I knowingly and voluntarily release and forever discharge the Company and
the other Released Parties from any and all claims, known or unknown, which
I, my heirs, executors, administrators and assigns, may have, which arise
out of my employment with, and my separation from, Roundy's Inc. and the
other Released Parties (including, but not limited to, any allegation,
claim or violation, arising under: Title VII of the Civil Rights Act of
1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in
Employment Act of 1967, as amended (including the Older Workers Benefit
Protection Act); the Equal Pay Act of 1963, as amended; the Americans with
Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the
Civil Rights of 1866, as amended; the Worker Adjustment Retraining and
Notification Act; Section 510 of the Employee Retirement Income Security
Act of 1974; any applicable Executive Order Programs; the Fair Labor
Standards Act; or their state or local counterparts; or under any other
federal, state or local civil or human rights law, or under any other
local, state, or federal law, regulation or ordinance; or under any public
policy, contract or tort, or under common law, for wrongful discharge; or
arising under any policies, practices or procedures of the Companies; or
any claim for breach of contract, infliction of emotional distress,
defamation; or any claim for costs, fees, or other expenses including
attorney' fees, incurred in these matters); provided, however, that the
foregoing release and discharge shall not apply to rights and benefits I
have with respect to any equity I own in the Company or any of its
Affiliates (including rights and benefits under the Investor Rights
Agreement), to rights I have with respect to any severance or other
payments or health benefits pursuant to Section 13(d) of the Agreement or
to any benefits vested under any employee benefit plans.
3. I agree that this General Release does not waive or release any rights or
claims that I may have under the Age Discrimination in Employment Act of
1967 which arise after the date I execute this General Release.
4. I agree not to file any charge or complaint on my own behalf, based upon
claims arising from, or attributable in any way to, my employment with, and
the separation of my employment with Roundy's Inc. and any other of the
Released Parties, before any federal,
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state or local court, or administrative agency, or to participate in any
such charge or complaint which may be made by any other person or
organization on my behalf. I also agree to withdraw and/or dismiss any such
pending charges or complaints.
5. I agree that neither this General Release, nor the furnishing of the
consideration for this General Release, shall be deemed or construed at any
time to be an admission of any improper or unlawful conduct of myself or
any of the Released Parties.
6. I agree that if I challenge the validity of this General Release I will
immediately repay to the Company any amounts paid pursuant to Section 13(d)
of the Agreement, though I acknowledge that such repayment will not vitiate
any of the rights of the Released Parties under this General Release. I
also agree that if I violate this General Release by suing the Company or
any of the other Released Parties, I will pay all costs and expenses of
defending against the suit incurred by the Released Parties, including
reasonable attorneys' fees.
7. I agree that this General Release is confidential and agree not to disclose
any information regarding the terms of this General Release, except to my
immediate family and any tax, legal or other counsel I have consulted
regarding the meaning or effect hereof or as required by law, and I will
instruct each of the foregoing not to disclose the same to anyone.
8. Any non-disclosure provision in this General Release does not prohibit or
restrict me (or my attorney) from responding to any inquiry about this
General Release or its underlying facts and circumstances by the Securities
and Exchange Commission (SEC), the National Association of Securities
Dealers, Inc. (NASD), any other self-regulatory organization or
governmental entity.
9. I agree to make myself available to and cooperate with the Company in any
internal investigation or administrative, regulatory, or judicial
proceeding. I understand and agree that my cooperation will include, but
not be limited to, making myself available to the Company or the Released
Parties upon reasonable notice for interviews and factual investigations;
appearing at the Company's (or Released Parties') request to give testimony
without requiring service of a subpoena or other legal process;
volunteering to the Company or the Released Parties pertinent information;
and turning over all relevant documents which are or may come into my
possession. I understand that in the event the Company or the Released
Parties ask for my cooperation in accordance with this provision, the
Company or the Released Parties will reimburse me for reasonable expenses,
including travel, lodging, meals and attorneys employed by me in connection
with such availability and cooperation, upon my submission of receipts. The
Company and the Released Parties agree that any request for my cooperation
will not unreasonably interfere with my efforts to find new employment or
any new employment I may have following the termination of my employment
with the Company and further agree that, without my prior consent, I will
not be required to cooperate with the Company and the
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Released Parties for more than ten (10) hours per month or an aggregate of
fifty (50) hours per year.
10. Whenever possible, each provision of this General Release shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this General Release is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this General
Release shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been
contained herein.
BY SIGNING THIS GENERAL RELEASE, I STATE THAT:
1. I HAVE READ IT;
2. I UNDERSTAND IT AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING
BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT
OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1967, AS AMENDED;
THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;
3. I CONSENT TO EVERYTHING IN IT;
4. I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I
HAVE DONE SO;
5. I HAVE BEEN GIVEN WHAT I CONSIDER A SUFFICIENT PERIOD OF TIME TO REVIEW AND
CONSIDER THIS GENERAL RELEASE BEFORE SIGNING IT;
6. I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY; AND
7. I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED,
WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.
8.
DATE: ________________________ Signed:___________________________
Robert A. Mariano