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EXHIBIT 10.7
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made and entered into effective as of the 26th day of September, 1993 (the
"Effective Date"), by and between INGLES MARKETS, INCORPORATED, a North
Carolina corporation ("Employer") and ROBERT P. INGLE ("Employee").
W I T N E S S E T H T H A T:
WHEREAS, the parties have entered into an Employment Agreement (the
"Employment Agreement") dated as of December 6, 1992; and
WHEREAS, the parties desire to amend the Employment Agreement effective
with respect to all Base Salary and Bonus (each as herein defined) due on and
after the Effective Date, including, without limitation, all Bonus due with
respect to Employer's 1994 fiscal year.
WHEREAS, the parties desire to amend and restate the Employment
Agreement in its entirety.
NOW THEREFORE, the parties, for and in consideration of the mutual and
reciprocal covenants and agreements hereinafter contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, do contract and agree as follows:
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1. Employment. Employer hereby employs Employee and Employee hereby
accepts employment by Employer upon all of the terms and conditions as are
hereinafter set forth.
2. Duties. Employee's duties shall include serving as the Chairman of
the Board of Directors, if elected by the shareholders of Employer and as
Chairman of the Board by the Board of Directors of Employer, and as its Chief
Executive Officer of Employer. Employee shall be responsible for the general
supervision of Employer's operations, policies and financial affairs. Employer
agrees that Employee's principal place of employment shall be located in or
near Asheville, North Carolina, unless Employee shall agree otherwise in
writing.
3. Term. The term of this Agreement (the "Term") shall commence on the
effective date, and shall continue until the earlier of (i) three (3) years
from and after the Effective Date, (ii) disability or death of Employee
pursuant to Items 10 and 11 hereof, respectively, (iii) Employer's termination
of this Agreement for cause pursuant to Item 12 hereof, or (iv) Employee's
voluntary termination of this Agreement pursuant to Item 13 hereof.
4. Base Salary. Employer agrees to pay Employee, and Employee agrees
to accept from Employer, in payment for services rendered by Employee and work
to be performed by him under the terms of this Agreement, a "Base Salary" to be
determined by the Audit/Compensation Committee of Employer's Board of Directors
or any other committee of Employer's Board of Directors responsible for
compensation matters (the "Compensation Committee") with
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respect to each fiscal year of Employer during the Term of this Agreement (an
"applicable fiscal year") and, if earned, a Bonus, as provided in Item 5
hereof. The Base Salary for each applicable fiscal year shall not be less than
the Base Salary paid to Employee by Employer during the immediately preceding
fiscal year. Employee's Base Salary for Employer's 1993 fiscal year was One
Hundred Seventy Thousand and No/100 Dollars ($170,000.00). Employee's Base
Salary for Employer's 1994 fiscal year shall be One Hundred Seventy Thousand
and No/100 Dollars ($170,000.00). Employee's Base Salary for Employer's 1995
fiscal year shall be Two Hundred Thousand and No/100 Dollars ($200,000.00).
The Base Salary shall be paid to Employee no less frequently than monthly.
5. Bonus. Employer agrees to pay to Employee a bonus (a "Bonus") if
(a) certain financial results are achieved by Employer during an applicable
fiscal year commencing with the Employer's 1995 fiscal year and (b) the
Compensation Committee determines that payment of such Bonus is appropriate.
Employee acknowledges that he is not entitled to be paid a Bonus pursuant
hereto with respect to the Employer's 1993 and 1994 fiscal years. The Bonus
shall be determined and, if earned, shall be paid as follows:
A. Employer shall determine Employer's consolidated annual pre-tax
income for Employer's 1994 fiscal year and each subsequent applicable fiscal
year in accordance with generally accepted accounting principles as reflected
in the Company's audited financial statements but without regard to (i) any
cash bonus due Employee hereunder with respect to such applicable
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fiscal year and (ii) any unusual, nonrecurring or infrequent item or items of
income or expense with respect to such applicable fiscal year which the
Compensation Committee determines should not be reflected in the financial
results of Employer for purposes of calculating the amount of the Bonus to
Employee. With respect to any applicable fiscal year that is 53 weeks rather
than 52 weeks long, for purposes of this Agreement, consolidated annual
pre-tax income for such applicable fiscal year shall be an amount equal to the
consolidated annual pre-tax income for such applicable fiscal year divided by
53 and then multiplied by 52. The amount of such consolidated annual pre-tax
income as so determined is referred to herein as the "adjusted annual pre-tax
income."
B. At the end of each applicable fiscal year during the Term of
this Agreement, the adjusted annual pre-tax income for such applicable fiscal
year shall be compared to the adjusted annual pre-tax income for the immediately
preceding applicable fiscal year.
C. For each full increment of $500,000 by which the adjusted
annual pre-tax income for the current applicable fiscal year exceeds the
adjusted annual pre-tax income for the immediately preceding applicable fiscal
year, Employee's Bonus shall be as follows:
Income Bonus
------ -----
For the first full
increment of $500,000.00 $150,000.00
For each successive full
increment of $500,000.00 $150,000.00
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D. Notwithstanding anything in this Agreement to the contrary,
Employee's Bonus for any applicable fiscal year shall not exceed the lesser of
(a) one and one-half (1 1/2) times the amount of his Base Salary for that
applicable fiscal year or (b) such amount that, when added to all of Employee's
compensation (as defined for purposes of Section 162(m) of the Internal Revenue
Code of 1986, as amended [the "Code"] and applicable regulations promulgated
thereunder [("Treasury Regulations"]), equals the amount of any deduction cap
applicable to Employer and Employee under Section 162(m) of the Code and the
Treasury Regulations for purposes of determining the maximum amount deductible
by Employer for Employee's compensation (which for Employer's 1994 fiscal year
was $1 million of compensation).
E. Employee's Bonus may be estimated and payable in quarterly
installments and shall be adjusted, as necessary, within seventy-five (75) days
after the end of the applicable fiscal year. Employee and Employer each agree
to pay any amounts owed to the other with respect to such adjustment within a
reasonable period of time after the determination of any adjustment.
6. Advances. At any time, and from time to time, Employee may receive
advances from Employer against his Base Salary and estimated Bonus in an amount
not to exceed, at any one time, $500,000.00. Simple interest shall be
determined and charged quarter annually based upon the average outstanding
amount of such advances at the Applicable Federal Rate, as determined under
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Section 1274(d) of the Code and the Treasury Regulations promulgated
thereunder, for short term debts.
7. Extent of Services. Employee agrees to devote his full time and
undivided attention during normal business hours to Employer's businesses as
shall be necessary or appropriate to the business and affairs of Employer,
except for reasonable vacations and except for illness or incapacity, but
nothing in this Agreement shall preclude Employee from devoting reasonable
periods required for serving as a director or member of a committee of any
organization involving no conflict of interest with the interest of Employer
and from engaging in charitable and community activities, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities.
8. Vacation. Employee shall be entitled to up to six (6) weeks of
vacation time with pay during each applicable fiscal year in which this
Agreement is in effect.
9. Fringe Benefits. Employee shall be entitled to participate in any
employee benefit plans or agreements maintained by Employer in accordance with
their terms, as the same may from time to time be adopted or amended, unless
Employee is otherwise excluded from such plan. Employee shall also be entitled
to perquisites, including, without limitation, an office, secretarial,
clerical and accounting staff and other fringe benefits at least equal to those
enjoyed by Employee during Employer's 1994 fiscal year. From time to time,
Employer will provide Employee personal
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use of Employer's aircraft and Employee shall reimburse Employer for such cost.
10. Disability. If Employee shall become mentally or physically
disabled (i.e., an illness more serious than periodic or minor illnesses or
injuries) so as to be unable to perform his duties hereunder consistently on a
full-time basis for a period of six (6) calendar months after the commencement
of such disability, he shall receive seventy-five (75%) percent of his Base
Salary for the applicable fiscal year in which such disability commenced for
the remainder of the Term of this Agreement. Employee and Employee's spouse
shall remain covered by the major medical and hospitalization insurance
provided by Employer for its employees for the remainder of their respective
lives.
11. Death. If Employee shall die during the Term of this Agreement,
then the legal representative of his estate, or his designated beneficiary, as
the case may be, shall receive seventy-five (75%) percent of his Base Salary
for the applicable year of his death for the remainder of the Term of this
Agreement. Employee's surviving spouse shall remain covered by the major
medical and hospitalization insurance provided by Employer for its employees
for the remainder of her life.
Employer and Employee agree that this Agreement shall be amended upon
the adoption by the Employer of any deferred compensation program that is to
commence upon retirement, with or without life insurance.
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12. Termination For Cause. Employer may terminate this Agreement for
cause and without prior notice in the event Employee shall commit any act or
acts of material dishonesty which constitute a felony for which Employee could
be incarcerated for five (5) years or more and which result or were intended to
result, directly or indirectly, in Employee's gain or personal enrichment at
Employer's expense.
13. Termination Not For Cause. Employee may, without cause, terminate
this Agreement by giving to Employer one hundred eighty (180) days' written
notice by certified U.S. mail, Return Receipt Requested, at the office of
Employer and such termination shall be effective on the one hundred eightieth
(180th) day following the date of such notice. It is further agreed that upon
Employee's resignation, except for obligations of either party to the other
which have accrued as of the date such resignation shall become effective,
Employee and Employer shall become and remain fully and finally released from
all further and future obligations in performance under this Agreement.
14. Indemnity. To the extent Employee signs or has signed any
personal guarantee or obligation with respect to any of Employer's monetary or
lease obligations, Employer hereby agrees to indemnify Employee against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him with respect thereto.
15. Waiver of Breach or Violation Not Deemed Continuing. The waiver
by either party of any provision of this Agreement shall
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not operate as, or be construed to be, a waiver of any subsequent breach hereof.
16. Notices. Any and all notices required or permitted to be given
under this Agreement will be deemed given if in writing, upon three (3) days
following the sending of such notice by certified U.S. mail, return receipt
requested, (a) to Employee at the address indicated below Employee's signature
hereto, or, (b) to Employer, to the address of Employer's principal office in
Asheville, North Carolina. Either party shall have the right to change the
address to which notice is to be sent by written notice to the other party as
provided herein.
17. Amendment; Law Governing. This Agreement represents the entire
agreement between the parties with respect to the subject matter contained
herein, and all agreements entered into prior hereto and any attempt at oral
modification of this Agreement shall be void and of no effect. This Agreement
may be amended only by a written instrument signed by the parties hereto which
makes specific reference to this Agreement. This Agreement shall be construed
in accordance with the laws of the State of North Carolina. If any part or
portions hereof shall be determined to be invalid or illegal or unenforceable
in whole or in part, neither the validity of the remaining part of such term
nor the validity of any other Term of this Agreement shall in any way be
effected thereby.
18. Item Headings. The item headings contained in this Agreement are
for convenience only and shall in no manner be
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construed as a part of this Agreement.
19. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and together shall constitute one in
the same Agreement.
20. Assignment; Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
executors, administrators, heirs, personal representatives, successors and
assigns, but neither this Agreement nor any right hereunder may be assigned or
transferred by either party thereto, any beneficiary or any other person, nor
be subject to alienation, anticipation, sale, pledge, encumbrance, execution,
levy or other legal process of any kind against Employee, his beneficiary or
any other person. Notwithstanding the foregoing, Employer shall assign this
Agreement to any corporation or other business entities succeeding to
substantially all the business and assets of Employer by merger, consolidation,
sale of assets, or otherwise and shall obtain the assumption of this Agreement
by such successor.
21. No Salary or Bonus Owed. Employee acknowledges that he has been
paid all amounts owed to him under the Employment Agreement and this Agreement
with respect to all fiscal years of the Employer through and including fiscal
1994 and Employee agrees to make no claim against Employer seeking the payment
of any compensation pursuant to the Employment Agreement or this Agreement with
respect to any such fiscal year.
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22. Amendment of Employment Agreement. This Agreement shall be deemed
to amend and restate the Employment Agreement in its entirety as of the
Effective Date.
IN WITNESS WHEREOF, Employer has hereunto caused this Agreement to
be executed by its duly authorized officers and its seal to be affixed and
Employee has hereunto set his hand and seal on the day and year first above
written.
EMPLOYEE: EMPLOYER:
INGLES MARKETS, INCORPORATED
/s/ Robert P. Ingle (SEAL) By:/s/ Landy B. Laney
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ROBERT P. INGLE LANDY B. LANEY, President
Address:
P.O. Box 6676, Highway 70,
Asheville, N.C. 28816
Attest:/s/ Brenda S. Tudor
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BRENDA S. TUDOR,
Secretary
(CORPORATE SEAL)
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