EXHIBIT 10.24
THIS EMPLOYMENT AGREEMENT ("Agreement") dated as of December 6, 1999, is by and
between UNITED NATURAL FOODS, INC. (the "Company"), and STEVEN H. TOWNSEND
("Employee").
1. Employment.
The Company hereby agrees to employ Employee, and Employee agrees to be employed
by the Company, for the Term defined in Section 3, subject to earlier
termination as hereinafter provided, at the rate of compensation and upon the
other terms and conditions hereinafter set forth.
2. Position and Responsibilities.
During the Term of this Agreement, Employee agrees to serve in such executive
capacities as the Company and Employee may agree, and from and after January 28,
2000, as President for the Eastern Wholesale Region, with the duties,
responsibilities and authority consistent with such position. For purposes of
this Agreement, the "Eastern Wholesale Region" shall mean the Company's sales
operations in Atlanta, Georgia, Connecticut, New Hampshire and Pennsylvania,
provided that the Company may place the Atlanta operations in a different region
in the future. Employee's principal office shall be at Company headquarters in
Dayville, Connecticut, with such travel as is necessary to perform his duties.
Employee shall report to the Chief Executive Officer of the Company. During the
Term, Employee also agrees to perform such other executive services not
inconsistent with this position as shall from time to time be assigned to him.
3. Term and Duties.
3.1 Unless earlier terminated as provided herein, the Term of this Agreement
shall commence on the date of this Agreement and shall continue until January
31, 2002.
3.2 During the Term, except for illness, vacations and holidays in accordance
with then current Company policy, Employee shall devote all his business time,
attention, skill, undivided loyalty and best efforts to the faithful performance
of his duties hereunder.
4. Compensation; Reimbursement of Expenses.
4.1 For all services rendered by Employee in any capacity during the term of his
employment under this Agreement, Employee shall receive a base salary at an
annualized rate of One Hundred Fifty Thousand Dollars ($150,000) per annum,
payable in accordance with the customary payroll practices of the Company.
4.2 Employee shall receive a bonus equal to one half of one percent (0.5%) of
the operating profit of the Eastern Wholesale Region. The bonus will be paid on
a quarterly basis within forty-five (45) days of the end of each quarter,
beginning with the quarter ending April 30, 2000.
4.3 Employee is granted non-qualified options to purchase up to fifty thousand
(50,000) shares of the Company's Common Stock, said options to vest in four
equal annual installments beginning on the first anniversary of the date of
grant, provided that Employee is an employee of the Company on such vesting
date(s). Such options shall be subject to all of the terms and conditions of the
United Natural Foods, Inc. Amended and Restated 1996 Stock Option Plan, as
amended.
4.4 Consistent with established policies of the Company, the Company shall pay
or reimburse Employee for all reasonable travel and other expenses incurred by
Employee in performing his obligations under this Agreement.
4.5 Employee shall be entitled to participate in all Company benefits now in
effect or subsequently provided to other Company employees, to the extent he is
eligible. In determining such benefits, the Company shall give Employee service
credit for past service to the Company, and such benefits shall, at a minimum,
be restored to the same level as those to which Employee was entitled when
Employee previously left the Company. Such determination and restoration shall
be subject to the terms of each benefit plan and applicable law.
5. Termination of Employment; Payments.
5.1 Employee's employment hereunder shall terminate:
(a) automatically upon the death of Employee;
(b) at the election of the Company in the event of Employee's disability. As
used in this Agreement, the term "disability" shall mean the material inability,
in the reasonable opinion of the Chief Executive Officer, of Employee to render
his agreed upon full-time services to the Company due to physical and/or mental
infirmity for a period of one hundred twenty (120) consecutive days, or an
aggregate period of time exceeding one hundred twenty (120) days in any
consecutive twelve (12) month period;
(c) upon discharge of Employee by the Company for cause. As used in this
Agreement, "cause" shall mean (i) conviction of a felony or crime of moral
turpitude under applicable law, (ii) unauthorized acts intended to result in
Employee's personal enrichment at the material expense of the Company or its
reputation, (iii) any violation of Employee's duties or responsibilities to the
Company which constitutes willful misconduct or dereliction of duty, or breach
of Section 6, or (iv) Employee's other material breach of this
1
<PAGE>
Agreement which breach shall have continued unremedied for twenty (20) days
after written notice by the Company to Employee specifying such failure;
(d) upon discharge of Employee by the Company without cause; or
(e) upon Employee's election to terminate his employment.
5.2 Upon such termination, and subject only to Section 5.3 below, the Company
shall be obligated to make only the following payments to Employee:
(a) With respect to termination pursuant to subsections (a), (b), (c) and (e)
above, the Company shall be under no obligation other than to provide Employee
his base salary and benefits under Section 4.5 above accrued through the date of
such termination; provided, however, that with respect to a termination pursuant
to subsection (c), the Company may withhold any compensation due to Employee as
a partial offset against any damages suffered by the Company as a result of
Employee's actions.
(b) With respect to termination pursuant to subsection (d) above, the Company
shall be under no other obligation than to continue Employee's base salary and
benefits under Section 4.5 above for a period of one (1) year following such
termination.
(c) The benefits to be continued shall be limited to medical and insurance
benefits. All other benefits and perquisites shall cease upon termination.
(d) The Company will make withholdings from said termination payments in
accordance with the Company's generally applicable policies regarding employee
contributions for any insurance coverages.
5.3 Change In Control. If a Change in Control (as hereinafter defined) occurs,
Employee shall have the option of resigning from the Company. Employee must give
written notice to the Chief Executive Officer of the Company within thirty (30)
days of the occurrence of a Change in Control, specifying that such resignation
is the result of a Change in Control, and such resignation shall be effective
upon the Chief Executive Officer's receipt. Upon such receipt, the Company shall
continue Employee's base salary and benefits under Section 4.5 above for a
period of one year from the effective date of the resignation, and all unvested
options granted pursuant to Section 4.3 shall automatically vest.
"Change in Control" means the happening of any of the following:
(i) any "person", including a "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Act"), but excluding the
Company, any of its Affiliates, or any employee benefit plan of the Company or
any of its Affiliates) is or becomes the "beneficial owner" (as defined in Rule
13(d)(3) under the Act), directly or indirectly, of securities of the Company
representing the greater of 30% or more of the combined voting power of the
Company's then outstanding securities. "Affiliate" means any corporation which
is a subsidiary of the Company within the definition of "subsidiary corporation"
under Section 424(f) of the Internal Revenue Code of 1986, as amended;
(ii) the stockholders of the Company shall approve a definitive agreement (1)
for the merger or other business combination of the Company with or into another
corporation if (A) a majority of the directors of the surviving corporation were
not directors of the Company immediately prior to the effective date of such
merger or (B) the stockholders of the Company immediately prior to the effective
date of such merger own less than 50% of the combined voting power in the then
outstanding securities in such surviving corporation or (2) for the sale or
other disposition of all or substantially all of the assets of the Company; or
(iii) the purchase of 50% or more of the Stock pursuant to any tender or
exchange offer made by any "person", including a "group" (as such terms are used
in Sections 13(d) and 14(d) of the Act), other than the Company, any of its
Affiliates, or any employee benefit plan of the Company or any of its
Affiliates.
6. Certain Obligations of Employee.
6.1 Employee represents and warrants that (a) there are no restrictions,
agreements or understandings whatsoever to which Employee is a party which would
prevent or make unlawful his execution of this Agreement or his employment
hereunder, (b) his execution of this Agreement and his employment hereunder
shall not constitute a breach of any law, rule or regulation, or of any
contract, agreement or understanding, oral or written, to which he is a party or
by which he is bound and (c) he is free and able to execute this Agreement and
to enter into employment by the Company.
6.2 Employee further covenants with the Company as follows (as used in this
Section 6, "Company" shall include the Company and its subsidiaries and
affiliates):
(a) Employee shall, upon reasonable notice, furnish such information and proper
assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it is, or may become, a party. The
Company shall, upon reasonable notice, furnish such information and proper
assistance to Employee as may reasonably be required by Employee in connection
with any litigation in which he is, or may become, a party as a result of his
status as an employee of the Company.
(b) Employee shall not knowingly use for his own benefit or disclose or reveal
to any unauthorized person, any trade secret or other confidential information
relating to the Company, or to any of the businesses operated by it, including,
without limitation, any customer lists, customer needs, price and performance
information, processes, specifications, hardware, software, devices, supply
sources and characteristics, business opportunities, potential business
interests, marketing, promotional pricing and financing techniques, or other
information relating to the business of the Company, and Employee confirms that
such information constitutes the exclusive property of the Company. Such
restriction on confidential information shall remain in effect until such time
as the
2
<PAGE>
confidential information is (i) generally available in the industry, (ii)
disclosed in published literature or (iii) obtained by Employee during the term
of his employment or after the expiration or earlier termination of this
Agreement from a third party with the prior right to make such disclosure.
Employee agrees that he will return to the Company any physical embodiment of
such confidential information upon termination of employment.
(c) During the term of his employment, and for a period of one (1) year
following termination of such employment for any reason or payment of any
compensation in accordance with Section 5 herein, whichever occurs last,
Employee shall not engage, directly or indirectly (which includes, without
limitation, owning, managing, operating, controlling, being employed by, giving
financial assistance to, participating in or being connected in any material way
with any person or entity), anywhere in the United States or in Mexico or Canada
(each a "territory") in the wholesale distribution of natural foods; provided,
however, that: Employee's ownership as a passive investor of less than two
percent (2%) of the issued and outstanding stock of a publicly held corporation
so engaged, shall not by itself be deemed to constitute such competition.
Further, during such one-year period Employee shall not act to induce any of the
Company's vendors, customers or employees to take action which might be
disadvantageous to the Company.
(d) Employee hereby acknowledges that he will treat as for the Company's sole
benefit, and fully and promptly disclose and assign to the Company without
additional compensation, all ideas, information, discoveries, inventions and
improvements which are based upon or related to any confidential information
protected under Section 6.2(b) herein, and which are made, conceived or reduced
to practice by him during his employment by the Company and within one (1) year
after termination thereof. The provisions of this subsection 6.2(d) shall apply
whether such ideas, discoveries, inventions, improvements or knowledge are
conceived, made or gained by him alone or with others, whether during or after
usual working hours, either on or off the job, to matters directly or indirectly
related to the Company's business interests (including potential business
interests), and whether or not within the realm of his duties.
(e) Employee shall, upon request of the Company, but at no expense to Employee,
at any time during or after employment by the Company, sign all instruments and
documents and cooperate in such other acts reasonably required of him to protect
rights to the ideas, discoveries, inventions, improvements and knowledge
referred to above, including applying for, obtaining and enforcing patents and
copyrights thereon in any and all countries.
(f) Employee agrees that he will not disclose to the Company, or use during the
term of his employment, any proprietary or confidential information belonging to
any third party which Employee may have acquired because of an employment,
consulting or other relationship with such third party, whether such information
is in Employee's memory or embodied in a writing or other physical form.
(g) Employee recognizes that the possible restrictions on his activities which
may occur as a result of his performance of his obligations under this Section 6
are required for the reasonable protection of the Company and its investments,
and Employee expressly acknowledges that such restrictions are fair and
reasonable for that purpose. Employee further expressly acknowledges that
damages alone will be an inadequate remedy for any breach or violation of any of
the provisions of this Section 6, and that the Company, in addition to all other
remedies hereunder, shall be entitled, as a matter of right, to injunctive
relief, including specific performance, with respect to any such breach or
violation, in any court of competent jurisdiction. If any of the provisions of
this Section 8 are held to be in any respect an unreasonable restriction upon
Employee then they shall be deemed to extend only over the maximum period of
time, geographic area, and/or range of activities as to which they may be
enforceable.
6.3 Employee expressly agrees that all payments and benefits due Employee under
this Agreement shall be subject to Employee's compliance with the provisions set
forth in this Section 6.
6.4 This Section 6 shall survive the expiration or earlier termination of this
Agreement without time limitation.
7. General Provisions.
7.1 Neither Employee nor his beneficiaries or legal representatives may assign
this Agreement, or any rights or obligations hereunder, without the Company's
prior written consent.
7.2 This Agreement shall be binding upon, and inure to the benefit of, Employee
and the Company and their respective heirs, executors, administrators,
successors and permitted assigns.
7.3 This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
7.4 No term or condition of this Agreement shall be deemed to have been waived,
nor shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege nor shall any other
waiver of right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence.
7.5 If, for any reason, any provision of this Agreement is held invalid, such
invalidity shall not affect any other provision of this Agreement not held so
invalid, and each such other provision shall to the full extent consistent with
law continue in force and effect.
7.6 The sections headings are included solely for convenience of reference and
shall not control the meaning or interpretation of any of the provisions of this
Agreement.
3
<PAGE>
7.7 This Agreement has been executed and delivered in the State of Connecticut,
and its validity, interpretation, performance, and enforcement shall be governed
by the laws of said State.
7.8 This Agreement contains the entire understanding between the parties hereto
and supersedes any and all prior agreements, oral or written, on the subject
matter hereof between the Company and Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, intending
the Agreement to become binding and effective as of the date and year first
written above.
UNITED NATURAL FOODS, INC.
By ________________________ ________________________
Michael S. Funk Steven H. Townsend
Vice Chairman and
Chief Executive Officer
4
