SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended April 1, 2000
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______ to _____
Commission File Number: 1-1790
DI GIORGIO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-0431833
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
380 Middlesex Avenue
Carteret, New Jersey 07008
(Address of principal executive offices) (Zip Code)
(732) 541-5555
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No____
As of May 1, 2000, there were outstanding 78.1158 shares of Class A Common
Stock and 76.8690 shares of Class B Common Stock.
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DI GIORGIO CORPORATION AND SUBSIDIARIES
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
January 1, 2000 and April 1, 2000 (Unaudited).......................... 1
Consolidated Condensed Statements of Operations,
Thirteen Weeks Ended April 3, 1999
and April 1, 2000 (Unaudited).......................................... 2
Consolidated Condensed Statement of Stockholders' Equity,
Thirteen Weeks Ended April 1, 2000 (Unaudited)......................... 3
Consolidated Condensed Statements of Cash Flows,
Thirteen Weeks Ended April 3, 1999 and
April 1, 2000 (Unaudited)............................................. 4
Notes to Consolidated Condensed Financial Statements (Unaudited)......... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................. 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................................... 10
Signatures.................................................................. 11
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
January, 1 April, 1
2000 2000
(Unaudited)
ASSETS
Current Assets:
Cash ......................................... $ 988 $ 4,154
Accounts and notes receivable-net ............ 88,845 86,565
Inventories .................................. 61,546 61,990
Deferred taxes ............................... 7,655 5,920
Prepaid expenses ............................. 2,633 2,262
----- -----
Total current assets .................... 161,667 160,891
------- -------
Property, Plant & Equipment
Cost ......................................... 21,595 22,314
Accumulated depreciation ..................... (11,357) (11,667)
------- -------
Net .......................................... 10,238 10,647
------ ------
Long-term notes receivable ...................... 11,386 10,836
Other assets .................................... 11,719 11,329
Deferred financing costs ........................ 4,652 4,442
Excess of costs over net assets acquired ........ 73,744 73,137
------ ------
Total assets ............................... $ 273,406 $ 271,282
========= =========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable-revolver ....................... $ 6,782 $ 0
Accounts payable ............................. 72,410 73,841
Accrued expenses ............................. 25,911 28,417
Notes and leases payable within one year ..... 167 144
--- ---
Total current liabilities .................. 105,270 102,402
------- -------
Long-term debt .................................. 155,000 155,000
Capital lease liability ......................... 2,120 2,098
Other long-term liabilities ..................... 5,048 3,448
Minority interest ............................... -- 298
Stockholders' Equity:
Common stock ................................. -- --
Additional paid-in-capital ................... 8,002 8,002
(Accumulated deficit) Retained earnings ...... (2,034) 34
------ --
Total stockholders' equity ................. 5,968 8,036
----- -----
Total liabilities & stockholders' equity $ 273,406 $ 271,282
========= =========
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
Thirteen weeks ended
April 3, April 1,
1999 2000
Revenue:
Net sales ................................. $ 354,808 $ 359,880
Other revenue ............................. 2,058 1,919
----- -----
Total revenue ....................... 356,866 361,799
Cost of products sold ........................ 322,453 326,463
------- -------
Gross profit-exclusive of
warehouse expense shown below ............. 34,413 35,336
Warehouse expense ......................... 13,730 13,108
Transportation expense .................... 6,837 6,954
Selling, general and administrative expense 6,571 7,268
Amortization-excess of cost over
net assets acquired ..................... 606 606
--- ---
Operating income ............................. 6,669 7,400
Interest expense .......................... 4,353 4,078
Amortization-deferred financing costs ..... 180 210
Minority interest ......................... -- 4
Other (income)-net ........................ (691) (703)
---- ----
Pretax income ................................ 2,827 3,811
Income tax expense ........................... 1,349 1,743
----- -----
Net income ................................... $ 1,478 $ 2,068
========= =========
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
(unaudited)
Additional (Accumulated
Class A Class B Paid-In Deficit) Retained
Common Stock Common Stock Capital Earnings Total
------------ ------------ ------- -------- -----
Shares Amount Shares Amount
Balance at
January 1,
2000 78.1158 $ -- 76.8690 $ -- $ 8,002 ($2,034) $5,968
Net income -- -- -- -- -- 2,068 2,068
------- ---- ------- ---- ------- ------- -----
Balance at
April 1,
2000 78.1158 $ -- 76.8690 $ -- $ 8,002 $ 34 $8,036
======= ==== ======= ==== ======= ======= ======
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Thirteen weeks ended
April 3, April 1,
1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..................................... $ 1,478 $ 2,068
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization ............... 440 401
Amortization ................................ 1,322 1,292
Provision for doubtful accounts ............. 300 300
Non cash pension income ..................... -- (100)
Deferred taxes .............................. 1,349 1,735
Changes in assets and liabilities:
(Increase) decrease in:
Accounts & notes receivable ................. (5,360) 1,980
Inventory ................................... 2,335 (444)
Prepaid expenses ............................ 19 371
Long-term receivables ....................... (375) 550
Others assets ............................... 9 14
Increase in:
Accounts payable ............................ 1,881 1,431
Accrued expenses and other liabilities ...... 5,942 906
----- ---
Net cash provided by operating activities ...... 9,340 10,504
----- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant, & equipment ...... (780) (809)
---- ----
Net cash used in investing activities .......... (780) (809)
---- ----
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments under
revolving line-of-credit .................... (6,805) (6,782)
Capital lease payments ......................... (51) (45)
Net effect of minority interest ................ -- 298
Net cash used in financing activities .......... (6,856) (6,529)
------ ------
Increase in cash ............................... 1,704 3,166
Cash at beginning of period .................... 459 988
--- ---
Cash at end of period .......................... $ 2,163 $ 4,154
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest .................................. $ 543 $ 204
======== ========
Income Taxes .............................. $ 138 $ 64
======== ========
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated condensed balance sheet as of April 1, 2000, the consolidated
condensed statements of operations for the thirteen weeks ended April 3, 1999
and April 1, 2000, the consolidated condensed statements of cash flows for the
thirteen weeks ended April 3, 1999 and April 1, 2000, and consolidated condensed
statement of stockholders? equity for the thirteen weeks ended April 1, 2000,
and related notes are unaudited and have been prepared in accordance with
generally accepted accounting principles for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. The
accompanying unaudited interim consolidated condensed financial statements and
related notes should be read in conjunction with the financial statements and
related notes included in the Form 10-K for the fiscal year ended January 1,
2000 as filed with the Securities and Exchange Commission. The information
furnished herein reflects, in the opinion of the management of the Company, all
adjustments, consisting of normal recurring accruals, which are necessary to
present a fair statement of the results for the interim periods presented.
The interim figures are not necessarily indicative of the results to be expected
for the full fiscal year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward- Looking Statements
Forward-looking statements in this Form 10-Q include, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or achievement
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. These
factors include, among others, the following: general economic and business
conditions and those in particular in the New York City metropolitan area;
restrictions imposed by the documents governing the Company's indebtedness;
competition; the Company's reliance on several significant customers; potential
losses from loans to its retailers; potential environmental liabilities which
the Company may have; the Company's labor relations; dependence on key
personnel; changes in business regulation; business abilities and judgment of
personnel; and changes in, or failure to comply with government regulations.
Results of Operations
Thirteen weeks ended April 1, 2000 and April 3, 1999
Net sales for the thirteen weeks ended April 1, 2000 rose 1.4% to $359.9 million
as compared to $354.8 million for the thirteen weeks ended April 3, 1999. Other
revenue, consisting of recurring customer related services, remained relatively
flat at $1.9 million for the thirteen weeks ended April 1, 2000 as compared to
$2.1 million in the prior period. This modest decrease was a result of storage
income at the Garden City facility in the prior period. This storage business
ceased in the second quarter of 1999 and the Company's Garden City facility
lease expired on March 31, 2000 at which time the property was vacated.
Gross margin (excluding warehouse expense) increased to 9.8% of net sales or
$35.3 million for the thirteen weeks ended April 1, 2000 as compared to 9.7% of
net sales or $34.4 million for the prior period, as a result of a change in mix
of both customers and products sold. The Company has, and will continue to, take
steps to maintain and improve its margins; however, factors such as the
additions of high volume, low margin customers, the decrease in manufacturers'
promotional activities, changes in product mix, or competitive pricing pressures
may continue to have an effect on gross margin.
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Warehouse expense decreased as a percentage of net sales to 3.6% of net sales or
$13.1 million for the thirteen weeks ended April 1, 2000 as compared to 3.9% of
net sales or $13.7 million due to the effect of the Garden City warehouse in the
prior period. Excluding all expenses relating to the Garden City facility,
warehouse expense would have decreased slightly to 3.5% of net sales in the
current period from 3.6% of net sales in the prior period.
Transportation expense remained flat at 1.9% of net sales or $7.0 million for
the thirteen weeks ended April 1, 2000 as compared to 1.9% of net sales or $6.8
million in the prior period.
Selling, general and administrative expense increased to 2.0% of net sales or
$7.3 million for the thirteen weeks ended April 1, 2000 as compared to 1.9% of
net sales or $6.6 million for the prior period due in part to costs associated
with (i) EasyGrocer.com, (ii) the relocation of and related ongoing expenses
associated with the Company's data processing center, and (iii) increased costs
of medical and related benefits.
Interest expense decreased to $4.1 million for the thirteen weeks ended April 1,
2000 from $4.4 million for the prior period due to lower average outstanding
levels of the Company's debt.
The Company recorded an income tax provision of $1.7 million, resulting in an
effective income tax rate of 46% for the thirteen weeks ended April 1, 2000 as
compared to a provision of $1.3 million resulting in an effective rate of 48% in
the prior period. The Company's estimated effective tax rate is higher than the
statutory tax rate primarily because of the nondeductibility of certain of the
Company's amortization of the excess of cost over net assets acquired; however,
due to net operating loss carryforwards for tax purposes, the Company does not
expect to pay federal income tax for the current year until the fourth quarter
of 2000.
The Company recorded net income for the thirteen weeks ended April 1, 2000 of
$2.1 million as compared to a net income of $1.5 million in the prior period, an
increase of 40%.
Liquidity and Capital Resources
Cash flows from operations and amounts available under the Company's $90 million
bank credit facility are the Company's principal sources of liquidity. The
Company believes that these sources will be adequate to meet its anticipated
working capital needs, capital expenditures, dividend payments and debt service
requirements during fiscal 2000.
The Company's bank credit facility is scheduled to mature on June 30, 2004 and
bears interest at a rate per annum equal to (at the Company's option): (i) the
Euro dollar offering rate plus 1.625% or (ii) the bank's prime rate. Borrowings
under the Company's revolving bank credit facility were $0 (excluding $5.1
million of outstanding letters of credit) at April 1, 2000. The Company had $2.7
million invested in short term obligations at that date, as well as additional
borrowing capacity of $82.6 million available at that time under the Company's
then current borrowing base availability certificate.
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In April 2000, the Company declared and paid a $2.5 million dividend to its
shareholders. Also in April 2000, the Company lent approximately $8.4 million to
customers, the majority of which is expected to be repaid within one year.
During the thirteen weeks ended April 1, 2000, cash flows provided by operating
activities were $10.5 million, consisting primarily of (i) cash generated from
income before non-cash expenses and (ii) an increase in accounts payable,
accrued expenses and other liabilities of $2.3 million, and (iii) a decrease in
accounts and notes receivable and of $2.5 million.
Cash flows used in investing activities during the thirteen weeks ended April 1,
2000 were approximately $809,000, which were used exclusively for capital
expenditures. Net cash used in financing activities of approximately $6.5
million was utilized to reduce the amount outstanding under the Company's bank
credit facility.
EBITDA, defined as earnings before interest expense, income taxes, depreciation
and amortization, was $9.6 million during the thirteen weeks ended April 1, 2000
as compared to $8.9 million in the same period of the prior year. Excluding the
additional expense related to the shutdown and abandonment of the Garden City
facility, EBITDA would have been $10.0 million in the first fiscal quarter of
2000. The Company has presented EBITDA supplementally because management
believes this information is useful given the significance of the Company's
depreciation and amortization and because of its highly leveraged financial
position. This data should not be considered as an alternative to any measure of
performance or liquidity as promulgated under generally accepted accounting
principles (such as net income/loss or cash provided by/used in operating,
investing and financing activities), nor should they be considered as an
indicator of the Company's overall financial performance. Also, the EBITDA
definition used herein may not be comparable to similarly titled measures
reported by other companies.
The consolidated indebtedness of the Company decreased to $157.2 million at
April 1, 2000 as compared to $164.1 million at January 1, 2000.
Under the terms of the Company's revolving bank credit facility, the Company is
required to meet certain financial tests, including minimum interest coverage
ratios. As of April 1, 2000, the Company was in compliance with its covenants.
From time to time when the Company considered market conditions attractive, the
Company has purchased on the open market a portion of its public debt and may in
the future purchase and retire a portion of its outstanding public debt.
EasyGrocer.com
Through its website, EasyGrocer.com, the Company has developed a proprietary
electronic commerce system with the specific needs of its customers and their
retail consumer in mind. It allows consumers to do their grocery shopping online
24 hours a day from the convenience of their home or office. Unlike many other
services, EasyGrocer.com is a network of local grocery merchants familiar with
the specific needs, including ethnic products, of their respective community.
Consumers are able to shop the full inventory of specific stores they have
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frequented in the past. All products offered by the supermarket are included,
including groceries, meat, produce, dairy, frozen food and health and beauty
aids. Orders may be delivered or picked up at the store.
Once on-line, the consumer is presented with a list of participating stores and
the entire selection of products offered by the store selected. Just as in a
supermarket, weekly specials can be offered to internet customers. Employees of
the store will select the order and will either deliver to or have it available
for pickup by the consumer. Payment will be by means of secure credit card
transmission over the internet. Electronic mailing of ad flyers and coupons,
specifically geared to a particular shopper's buying history, is contemplated.
The plan is to give the consumer the same selection and flexibility as in the
supermarket, but with added convenience.
Through April 2000, the number of participating stores has more than doubled
from the beginning of the year to 28. EasyGrocer.com recently contracted with
its first two non-White Rose customers, including a prominent independent
retailer supplied by a competing national wholesaler. This broadens
EasyGrocer.com's service area to include New York City, Long Island, and
Westchester County in New York and parts of New Jersey and Pennsylvania.
Average order size was $93 in April 2000, a significant increase over the
participating stores' average order size and a 24% increase from December's
average order size of $75. Since EasyGrocer.com has entered into a series of
strategic alliances with both Yahoo and EdificeRex, approximately 50% of the
site's users have come from referrals from these sites. The Company intends to
continue these alliances through the end of 2000, as well as using more
traditional media campaigns such as radio and newspaper advertising. The Company
expects to spend less than $1 million during the remainder of 2000 in support of
EasyGrocer.com's marketing strategies.
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II-OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1+ - Second Amended and Restated Employment Agreement
effective as of April 1, 2000 between Di Giorgio Corporation and
Richard B. Neff.
Exhibit 10.3+- Third Amended and Restated Employment Agreement
effective as of April 1, 2000 between Di Giorgio Corporation and
Stephen R. Bokser.
(b) Reports on Form 8-K. None
- -----------------------------
+ Compensation plans and arrangements of executives and others.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
DI GIORGIO CORPORATION
By: /s/ Arthur M. Goldberg
Arthur M. Goldberg
Chairman, President and Chief
Executive Officer
By: /s/ Richard B. Neff
Richard B. Neff
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: May 10, 2000
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THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is
made effective as of April 1, 2000, between DiGIORGIO CORPORATION, a Delaware
corporation, with its principal office located at 380 Middlesex Avenue,
Carteret, New Jersey 07008 (the "Corporation"), and STEPHEN R. BOKSER, residing
at 47 Victoria Place East, Fort Lee, New Jersey 07024 (the "Executive").
W I T N E S S E T H:
WHEREAS, effective February 1, 1990, the Corporation and Executive
entered into an employment agreement pursuant to which the Executive agreed to
serve the Corporation as Executive Vice President -- President of the White Rose
Operations (the "1990 Agreement");
WHEREAS, as of January 1, 1994, the Corporation and Executive entered
into an Amended and Restated Employment Agreement pursuant to which the
Executive agreed to continue to serve as Executive Vice President -- President
of the White Rose Operations (the "1994 Agreement"); and
WHEREAS, as of June 30, 1997, the Corporation and Executive entered
into a Second Amended and Restated Employment Agreement pursuant to which the
Executive agreed to continue to serve as Executive Vice President -- President
of the White Rose Food Division (the "1997 Agreement");
WHEREAS, the Corporation desires to continue to employ Executive, and
Executive desires to continue to be so employed by the Corporation, on the terms
and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
<PAGE>
1. Employment; Term. The Corporation agrees to employ Executive, and
Executive agrees to furnish his services, on the terms and conditions herein set
forth, for a term of five (5) years commencing as of April 1, 2000 and ending on
April 1, 2005, unless sooner terminated as herein provided. The term of
Executive's employment hereunder may be extended for additional one (1) year
periods by the mutual written consent of both parties hereto given at least
ninety (90) days prior to the then scheduled termination of the Executive's
employment hereunder.
2. Office and Duties. During the term of this Agreement, Executive
agrees to serve the Corporation as Executive Vice President -- President of the
White Rose Food Division and as the Executive Vice President of the Corporation.
Executive shall manage the operations of the Corporation's White Rose Food
Division and shall report directly to the Chief Executive Officer of the
Corporation. Executive shall also perform such other duties and shall exercise
such other powers for the Corporation and for any of its divisions, operations,
subsidiaries, or affiliated companies as from time to time may be assigned to
him by the Chief Executive Officer or the Board of Directors without further
compensation other than that for which provision is made in this Agreement;
provided that any such other duties shall be consistent with Executive's
position as President -- White Rose Food Division and as Executive Vice
President of the Corporation; and provided further that Executive shall be
required to move his place of residence at the request of the Chief Executive
Officer or the Board of Directors only if such request is reasonable in view of
the Corporation's operations and Executive's duties hereunder.
3. Extent of Services; Other Business Activities. Executive agrees
that he shall devote his best efforts, energies, and skills to the discharge of
his duties and responsibilities hereunder. To this end, Executive agrees that he
shall devote his full business time and attention to the business and affairs of
the Corporation and its divisions, operations, subsidiaries, and affiliated
companies and shall not, without the consent of the Corporation, directly or
indirectly, engage or participate in, or become an officer or director of, or
become employed by, or render advisory or other services in connection with, any
other business enterprise. Notwithstanding the foregoing, during the term of
this Agreement Executive shall have the right to invest personally in any
corporation, partnership, or other entity or enterprise, engage in appropriate
civic, charitable, and religious activities, and devote a reasonable amount of
time to private investments, provided that (i) any such investment or other
activity shall not interfere with the execution of Executive's duties hereunder
or otherwise violate any provision of this Agreement, (ii) any such corporation,
partnership, or other entity or enterprise does not compete with the
Corporation, and (iii) notwithstanding the foregoing, Executive may purchase an
aggregate of one percent (1%) of any security publicly traded on an established
securities market.
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4. Compensation.
(a) In consideration of the services to be rendered by Executive
hereunder, the Corporation agrees to pay to Executive, and Executive agrees to
accept, a salary for each Employment Year (as hereinafter defined) during the
term of this Agreement at the rate of $400,000 per Employment Year, commencing
effective as of April 1, 2000 and ending upon the termination of this Agreement
(the "Salary"). The Salary shall be payable in accordance with the regular
payroll practices of the Corporation. During the term of this Agreement, the
Corporation agrees to review Executive's compensation prior to each anniversary
date of the date hereof, but any increase in compensation offered to Executive
under this Paragraph 4 resulting from such review shall be in the sole
discretion of the Board of Directors of the Corporation.
(b) For the purposes of this Paragraph 4, the following terms
shall mean:
(i) "Base Amount": The sum of (x) $43,639,753; plus (y) an
amount equal to the interest that would accumulate if interest was accrued from
February 1, 1990 at a cumulative annual rate equal to the Prime Rate as
announced from time to time by the Bankers Trust Company on the sum of
$43,639,753, as said sum may be reduced (but not below zero) from time to time
by any proceeds received (in respect of its ownership of stock of the
Corporation) by the Partnership after February 1, 1990.
(ii) "Employment Year": Provided that during each such
period Executive remains employed by the Corporation in accordance with the
terms of this Agreement, each complete one-year period commencing on February 1,
1990. The parties acknowledge that as of the date of this Agreement the
Executive has completed ten (10) Employment Years.
(iii) "Partnership": Rose Partners, L.P.
(iv) "Recognition Event": A distribution of any assets,
whether in cash or in any other form, by the Corporation to the Partnership in
respect of the stock owned by the Partnership, or the realization by the
Partnership of any amount upon the sale or transfer of its ownership interest in
the stock of the Corporation.
(v) "Final Recognition Event": The sale by the Partnership
of all of its stock of the Corporation or the complete liquidation of the
Corporation by the Partnership.
(vi) "Event": Any of a Recognition Event or a Final
Recognition Event.
(vii) "Recognition Proceeds": To the extent that it exceeds
the Base Amount, the aggregate amount of all proceeds received by the
Partnership from and after the date of this Agreement, in respect of its
ownership of stock of the Corporation, whether such proceeds are in the form of
a dividend or other distribution, liquidating or non-liquidating, or in
consideration for the sale or other disposition of such stock.
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(c) Subject to the qualifications and limitations set forth
below, Executive shall be entitled to be paid additional compensation (the
"Additional Compensation") upon the occurrence of each Event. The Additional
Compensation payable at each Event shall be the sum of: (i) six (6%) percent of
the Recognition Proceeds, less (ii) the cumulative amount of Additional
Compensation paid to the Executive prior to that particular Event; less (iii)
the amount, if any, paid to the Executors pursuant to Paragraph 4(i) below;
provided, however, that the six (6%) percent stated in (i) above may be reduced
(but not below zero) as provided for in Paragraph 4(f) below.
(d) Notwithstanding the provisions of Paragraph 4(d), the minimum
amount payable to the Executive as Additional Compensation upon the occurrence
of the Final Recognition Event shall be the sum of: (i) $1,000,000; less (ii)
the cumulative amount of all Additional Compensation paid to the Executive prior
to the Final Recognition Event.
(e) Notwithstanding anything contained in Paragraph 4(d) or 4(e)
to the contrary, the Executive shall not be entitled to any further payments of
Additional Compensation from and after any of the following events: (i) the
Executive's termination of employment for "cause" (as set forth in Paragraph
10); and (ii) if Executive resigns his employment prior to the end of the term
of this Agreement or any extended term of this Agreement.
(f) In measuring the six (6%) percent set forth in Paragraph
4(c)(i) above, the six (6%) percent shall be reduced by one (1) full percentage
point for each full twelve (12) months following any of the following events:
(i) the Executive's death; (ii) the Executive becomes disabled (as provided in
Paragraph 8); and (iii) the date the Executive's employment is terminated by the
Corporation for a reason other than "cause".
(g) Upon the occurrence of each Event, the Corporation shall
calculate the amount payable, if any, to the Executive under this Paragraph 4
and shall pay such amount to the Executive within thirty (30) days after the
Event.
5. Executive Benefits.
(a) Executive shall be entitled to participate, on the same basis
and subject to the same qualifications, in all employee benefit plans (the
"Plans"), including, but not limited to, pension and profit-sharing plans,
supplemental retirement benefit plans, and life, health, disability, and similar
plans, and fringe benefits (the "Benefits") which during the term hereof shall
be in effect from time to time and be applicable to the Corporation's employees
or senior executives generally. In the event Executive is asked by the
Corporation to relocate his place of residence, any reasonable moving (and
associated) expenses and costs shall be reimbursed by the Corporation.
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(b) If Executive's employment hereunder is terminated by the
Corporation prior to the scheduled termination of the term of Executive's
employment hereunder (other than a termination for "cause" (as hereinafter
defined) or as a result of Executive's voluntary resignation from his employment
by the Corporation), the Corporation shall either (i) continue through the
scheduled termination date of the term of Executive's employment hereunder
Executive's participation in the Plans and entitlement to the Benefits to which
Executive would have been entitled had he remained employed through the term of
this Agreement, or (ii) provide equivalent benefits (taking into account the tax
consequences of any benefits described in clause (i)) to Executive at no
additional cost to Executive, but only to the extent that essentially equivalent
and no less favorable benefits are not provided by a subsequent employer or
otherwise received by Executive. If the terms of any such Plans or Benefits do
not permit continued participation by Executive, the Corporation shall arrange
to provide to Executive benefits substantially similar to, and no less favorable
than, the benefits he was entitled to receive up until the end of the period of
coverage. Executive shall have the option to have assigned to him at no cost and
with no apportionment of prepaid premiums, any assignable insurance policy owned
by the Corporation and relating specifically to Executive.
(c) Recognizing that Executive will be required to do a
considerable amount of driving in connection with his duties as President --
White Rose Food Division and as Executive Vice President of the Corporation, the
Corporation shall provide to Executive a Cadillac, Lincoln, or equivalent
automobile of Executive's choice, and will pay all reasonable costs relating to
the operation of such automobile in connection with such duties, including gas,
maintenance, and insurance (including covering any deductible).
6. Expenses. It is contemplated that, in connection with his
employment hereunder, Executive may be required to incur reasonable travel,
entertainment, and other business expenses. To the extent not otherwise
reimbursed under paragraph 5(c), the Corporation agrees to pay, or reimburse
Executive for, all reasonable and necessary travel, entertainment, and other
business expenses incurred or expended by him incident to the performance of his
duties and responsibilities hereunder, upon submission by Executive to the
Corporation of vouchers or expense statements evidencing the expenses for which
reimbursement is sought.
7. Vacations. Executive shall be entitled to vacations in accordance
with the Corporation's normal vacation policies for senior executives, which
vacations shall be taken at times consistent with the effective discharge of
Executive's duties.
8. Disability. In the event that Executive shall be incapacitated by
reason of mental or physical disability or otherwise during the term of
employment so that he is prevented from substantially performing his duties and
services hereunder for a period of 180 days during any twelve (12) month period,
the Corporation shall have the right to terminate Executive's employment under
this Agreement by sending written notice of such termination to Executive, and
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thereupon his employment hereunder shall terminate. Upon such termination,
Executive shall be entitled, subject to the limitations provided herein, to
receive the compensation provided for in paragraph 4 hereof and the benefits
provided for in paragraph 5 hereof for one (1) year following the date of
termination, and shall continue to be entitled to any benefits in which he
otherwise is vested pursuant to this Agreement; provided that if Executive is
receiving payments through a disability policy maintained by the Corporation
(other than a group policy maintained in behalf of all executives), such
payments shall be deducted from the amounts to be paid by the Corporation to
Executive during such period. Executive shall accept such payment in full
discharge and release of the Corporation of and from any further obligations
under this Agreement.
9. Death. In the event of Executive's death during the term of this
Agreement, Executive's designated beneficiary or, if no such beneficiary shall
have been designated by Executive, the personal representative of Executive
shall be entitled to receive and shall be paid by the Corporation, the
compensation provided for in Paragraph 4 hereof, subject to the limits set forth
therein, and the benefits provided for in Paragraph 5 hereof for one (1) year
following the date of Executive's death, and shall continue to be entitled to
any benefits in which he otherwise is vested pursuant to this Agreement;
provided that if Executive is receiving or is entitled to receive payments
through a death benefit insurance policy maintained by the Corporation (other
than a group policy maintained in behalf of all executives) such payments shall
be deducted from the amounts to be paid by the Corporation to Executive during
such period. Executive's designated beneficiary or personal representative, as
the case may be, shall accept such payment in full discharge and release of the
Corporation of and from any further obligations under this Agreement.
10.Termination for Cause.
(a) The Corporation shall have the right to terminate the
employment of Executive hereunder for cause at any time if:
(i) Executive shall be convicted, by a court of competent
and final jurisdiction, of any crime (whether or not involving the Corporation
or any of its divisions, operations, subsidiaries or affiliated companies) which
constitutes a felony in the jurisdiction involved; or
(ii) Executive shall commit any act of fraud against or
shall breach a fiduciary obligation to the Corporation or any of its divisions,
operations, subsidiaries, or affiliated companies, provided that any such act
(or failure to act) shall be determined in good faith by the Board of Directors
to be material in respect of Executive's duties or functions hereunder; or
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(iii) Executive shall fail or refuse to perform any of his
duties and responsibilities as required by, or shall otherwise breach, this
Agreement, provided that termination of Executive's employment pursuant to this
subparagraph 10(a)(iii) shall not constitute valid termination for cause unless
Executive shall first have received written notice from the Board of Directors
or the Chief Executive Officer of the Corporation stating with specificity the
nature of such failure or refusal and affording Executive at least fifteen (15)
days to correct the act or omission complained of.
(b) In the event that the employment of Executive shall be
terminated by the Corporation for cause pursuant to subparagraph 10(a) hereof,
Executive shall be entitled to receive the salary provided for in Paragraph 4(a)
hereof, prorated through the end of the week in which such termination occurs
and such amounts as may be payable under the balance of the provisions in
Paragraph 4, as specifically limited thereunder and in accordance with the terms
thereof. Executive shall accept such payment in full discharge and release of
the Corporation of and from any other further obligations under this Agreement.
Nothing contained in this Paragraph 10 shall constitute a waiver or release by
the Corporation of any rights or claims it may have against Executive for
actions or omissions which may give rise to an event causing termination of this
Agreement pursuant to this Paragraph 10.
11. Confidentiality; Injunctive Relief.
(a) Executive recognizes and acknowledges that the knowledge,
information, and relationship with resources, suppliers, and customers of the
Corporation, and the knowledge of the Corporation's business methods, systems,
plans, and policies which he has heretofore and shall hereafter receive or
obtain as an employee of the Corporation, are valuable and unique assets of the
business of the Corporation. Accordingly, Executive agrees that he will not,
during or after the term of this Agreement, except if required in connection
with his duties as the Executive Vice President of the Corporation or as the
President -- White Rose Food Division, and for a period of three (3) years
thereafter, disclose or use, without the prior written consent of the Board of
Directors of the Corporation, directly or indirectly, any non-public information
(whether written or unwritten) relating to the Corporation or any of its
divisions, operations, subsidiaries or affiliated companies, or any of their
respective management, financial condition, subscription, mailing or customer
lists, sources of supply, business, personnel, policies, or prospects, to any
individual or entity for any purpose whatsoever. The provisions of this
subparagraph 11(a) shall not apply to information which is or shall become
generally known to the public or the trade (except by reason of Executive's
breach of his obligations hereunder), information which is or shall become
available in trade or other publications, or information which Executive is
required to disclose by order of a court of competent jurisdiction (but only to
the extent specifically ordered by such court and, when reasonably possible, if
Executive shall give the Corporation prior notice of such intended disclosure so
that it has the opportunity to seek a protective order if it deems appropriate).
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(b) Executive acknowledges and agrees that all memoranda, notes,
reports, records, and other documents made or compiled by Executive, or made
available to Executive prior to or during the term of this Agreement, concerning
the Corporation's business, shall be the Corporation's property and shall be
delivered to the Corporation on the termination of Executive's employment
hereunder or at any other time on request by the Board of Directors of the
Corporation.
(c) The provisions of this Paragraph 11 shall survive the
termination or expiration of Executive's employment hereunder, irrespective of
the reason therefor, for a period of three (3) years.
12. No Raid; Non-Compete.
(a) Executive agrees that, for a period of three (3) years after
the date of the termination of Executive's employment under this Agreement,
Executive shall not, without the prior written approval of the Board of
Directors of the Corporation, directly or indirectly though any other person,
firm or corporation, solicit, raid, entice, or induce any person who is, at the
time of such solicitation or was at any time during the eighteen (18) months
immediately preceding such solicitation, raid, enticement, or inducement, an
employee of the Corporation or any of its subsidiaries or affiliates, to become
employed by such person, firm, or corporation, and Executive shall not approach
any such employee for such purpose or authorize or knowingly approve the taking
of such actions by any other person.
(b) For a period of three (3) years after the date of the
termination of Executive's employment under this Agreement, Executive will not,
whether individually or as a partner, owner, officer, director, stockholder, or
employee, own, manage, operate, or control or have a financial interest in, or
serve as a consultant to, any person, firm, corporation, or other entity which
is engaged in any business activity in competition with the business of the
Corporation in the markets in which the Corporation competes. The foregoing
restrictions shall not be deemed to include Executive's direct or indirect
ownership of any securities in a publicly-traded business entity which does not,
and will not with the passage of time, result in his obtaining, directly or
indirectly, more than two percent (2%) of the securities of such entity.
Notwithstanding the foregoing, the restrictions imposed on Executive under this
paragraph 12(b) shall cease to apply as of the later of (x) the scheduled
termination (including any extension thereof) of Executive's employment under
paragraph 1 hereof, or (y) one (1) year after the occurrence of either of the
events described in the following clauses (i) and (ii) of this paragraph 12(b),
if either (i) Executive's employment with the Corporation (and any subsidiary or
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affiliate thereof) shall be terminated by the Corporation other than for
"cause," or (ii) the Partnership shall have disposed of all or substantially all
of its interest in the Corporation and the aggregate amounts payable to
Executive under subparagraph 4(c) shall be no greater than $1,000,000.
Notwithstanding the foregoing, in the event Executive's employment is terminated
by the Corporation other than for "cause" and the Corporation fails to satisfy
its obligation to pay Executive as required under this Agreement, the
restrictions imposed on Executive under this paragraph 12(b) shall cease to
apply one (1) year after such failure.
(c) The provisions of this Paragraph 12 shall survive the
termination or expiration of Executive's employment hereunder, irrespective of
the reason therefor.
13. Injunctive Relief.
(a) Executive acknowledges that the services to be rendered by
him are of a special, unique, and extraordinary character, and if he violates
any of the provisions of this Agreement with respect to confidentiality,
non-competition, or solicitation, the Corporation would sustain irreparable
harm. Accordingly, Executive consents and agrees that if he violates any of the
provisions of Paragraphs 12 or 13 hereof, in addition to any other remedies
which the Corporation may have under the Agreement or otherwise, the Corporation
shall be entitled to apply to any court of competent jurisdiction for an
injunction restraining Executive from committing or continuing any such
violation of this Agreement, and Executive shall not object to any such
application. Nothing in this Agreement shall be construed as prohibiting the
Corporation from pursuing any other remedy or remedies including, without
limitation, recovery of damages.
(b) The provisions of this Paragraph 13 shall survive the
termination or expiration of Executive's employment hereunder, irrespective of
the reason therefor.
14. Deductions and Withholding. Executive agrees that the Corporation
shall withhold from any and all payments and compensation required to be made to
Executive pursuant to this Agreement all Federal, state, local, and/or other
taxes which the Corporation determines are required to be withheld in accordance
with applicable statutes and/or regulations from time to time in effect.
15. No Conflict. Executive represents and warrants that there is no
restriction, agreement or limitation on his right or ability to enter into and
perform the terms of this Agreement.
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16. Miscellaneous.
(a) This Agreement cancels and supersedes any and all prior
agreements and understandings between the parties hereto respecting the
employment of Executive by the Corporation and constitutes the complete
understanding between the parties with respect to the employment of Executive
hereunder. No statement, representation, warranty, or covenant has been made by
either party with respect thereto except as expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written instrument
signed by each of the parties hereto.
(b) Waiver by either party hereto of any breach of default by the
other party to any of the terms and provisions of this Agreement, shall not
operate as a waiver of any other breach or default, whether similar to or
different from the breach or default waived.
(c) All notices, consents, requests, demands, and other
communications hereunder shall be in writing and shall be delivered personally
or sent by registered or certified mail, return receipt requested, first class
postage prepaid, to the other party hereto at its or his address as set forth in
the beginning of this Agreement. Either party may change the address to which
notices, requests, demands, and other communications hereunder shall be directed
by giving written notice of such change of address to the other party in the
manner above stated.
(d) This Agreement shall inure to the benefit of and shall be
binding upon the heirs, executors, administrators, successors, and legal
representatives of Executive and shall inure to the benefit of and be binding
upon the Corporation and its successors. This Agreement is personal as to
Executive and Executive may not assign, transfer, pledge, encumber, hypothecate,
or otherwise dispose of this Agreement or any of his rights hereunder and any
such attempt of assignment, transfer, pledge, encumbrance, hypothecation, or
other disposition shall be null and void and without effect. The Corporation
shall be entitled to assign this Agreement without the prior written consent of
Executive in connection with the merger or consolidation of the Corporation with
another corporation or the sale of all or substantially all of the assets and
business of the Corporation to another corporation, provided that:
(i) immediately after the consummation of such transaction,
the surviving or acquiring corporation shall have a net worth not less than the
net worth of the Corporation immediately prior to such transaction; and
(ii) the surviving or acquiring corporation shall agree in
writing to accept an assignment of this Agreement, thereby acquiring the
Corporation's rights and assuming the Corporation's obligations under this
Agreement.
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(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
(f) The paragraph headings of this Agreement are for convenience
of reference only and shall not limit or define the text thereof.
(g) In the event that any one or more of the provisions of this
Agreement shall be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected thereby.
(h) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which, when taken together
shall be deemed to constitute one and the same instrument.
(i) Any dispute regarding this Agreement shall be resolved
exclusively by arbitration in New Jersey in accordance with the rules of the
American Arbitration Association then in effect. The Corporation shall pay
Executive's reasonable legal expenses in connection with any such arbitration;
provided, however, that Executive shall reimburse the Corporation for such
expenses if the arbitrator(s) shall decide the material issues in favor of the
Corporation.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the day and year first above written.
DiGIORGIO CORPORATION
By: /s/ Arthur M. Goldberg
Name: Arthur M. Goldberg
Title: President
By: /s/ Stephen R. Bokser
STEPHEN R. BOKSER
11
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is
made effective as of April 1, 2000, between DiGIORGIO CORPORATION, a Delaware
corporation, with its principal office located at 380 Middlesex Avenue,
Carteret, New Jersey 07008 (the "Corporation"), and RICHARD B. NEFF, residing at
14 High Tor Drive, Watchung, New Jersey 07060 (the "Executive").
W I T N E S S E T H:
WHEREAS, effective May 1, 1992, the Corporation and the Executive,
among others, entered into an employment agreement pursuant to which the
Executive agreed to serve the Corporation as Executive Vice President and Chief
Financial Officer; and such agreement was amended August 31, 1992 (the "1992
Agreement") and effective October 31, 1997 the 1992 Agreement was amended and
restated (the "1997 Agreement");
WHEREAS, the Corporation desires to continue to employ Executive, and
Executive desires to continue to be so employed by the Corporation, on the terms
and conditions herein set forth:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereby agree as follows:
1. Employment; Term. The Corporation agrees to employ Executive, and
Executive agrees to furnish his services, on the terms and conditions herein set
forth, for a term of five (5) years commencing as of April 1, 2000 and ending on
April 1, 2005, unless sooner terminated as herein provided. The term of
Executive's employment hereunder may be extended for additional one (1) year
periods by the mutual written consent of both parties hereto, given at least
ninety (90) days prior to the then scheduled termination of the Executive's
employment hereunder.
2. Office and Duties. During the term of this Agreement, Executive
agrees to serve the Corporation as the Executive Vice President and Chief
Financial Officer of the Corporation and shall exercise such responsibilities
and perform such duties, consistent with his position and title, as shall be
assigned to him from time to time by the Company's Board of Directors or senior
management. The Executive's job functions shall relate primarily to finance and
administration. The Executive shall report to the Company's President/Chief
Executive Officer. Executive shall also perform such other duties and shall
exercise such other powers for the Corporation and for any of its divisions,
<PAGE>
operations, subsidiaries, or affiliated companies as from time to time may be
assigned to him by the Chief Executive Officer or the Board of Directors without
further compensation other than that for which provision is made in this
Agreement; provided that any such other duties shall be consistent with
Executive's position as Executive Vice President and Chief Financial Officer of
the Corporation.
3. Extent of Services; Other Business Activities. Executive agrees
that he shall devote his best efforts, energies, and skills to the discharge of
his duties and responsibilities hereunder. To this end, Executive agrees that he
shall devote his full business time and attention to the business and affairs of
the Corporation and its divisions, operations, subsidiaries, and affiliated
companies and shall not, without the consent of the Corporation, directly or
indirectly, engage or participate in, or become an officer or director of, or
become employed by, or render advisory or other services in connection with, any
other business enterprise. Notwithstanding the foregoing, during the term of
this Agreement, Executive shall have the right to invest personally in any
corporation, partnership, or other entity or enterprise, engage in appropriate
civic, charitable, and religious activities, and devote a reasonable amount of
time to private investments, provided that (i) any such investment or other
activity shall not interfere with the execution of Executive's duties hereunder
or otherwise violate any provision of this Agreement, (ii) any such corporation,
partnership, or other entity or enterprise does not compete with the
Corporation, and (iii) notwithstanding the foregoing, Executive may purchase an
aggregate of one percent (1%) of any security publicly traded on an established
securities market.
4. Compensation.
(a) In consideration of the services to be rendered by Executive
hereunder, the Corporation agrees to pay to Executive, and Executive agrees to
accept, a salary for each Employment Year (as hereinafter defined) during the
term of this Agreement at the rate of $390,000 per Employment Year, commencing
effective as of April 1, 2000 and ending upon the termination of this Agreement
(the "Salary"). The Salary shall be payable in accordance with the regular
payroll practices of the Corporation. During the term of this Agreement, the
Corporation agrees to review Executive's compensation prior to each anniversary
date of the date hereof, but any increase in compensation offered to Executive
under this Paragraph 4 resulting from such review shall be in the sole
discretion of the Board of Directors of the Corporation.
(b) For the purposes of this Paragraph 4, the following terms
shall mean:
(i) "Base Amount": The sum of (x) $43,639,753; plus (y) an
amount equal to the interest that would accumulate if interest was accrued from
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February 1, 1990 at a cumulative annual rate equal to the Prime Rate as
announced from time to time by the Bankers Trust Company on the sum of
$43,639,753, as said sum may be reduced (but not below zero) from time to time
by any proceeds received (in respect of its ownership of stock of the
Corporation) by the Partnership after February 1, 1990.
(ii) "Employment Year": Provided that during each such
period Executive remains employed by the Corporation in accordance with the
terms of this Agreement, each complete one-year period commencing on February 1,
1990. The parties acknowledge that as of the date of this Agreement the
Executive has completed ten (10) Employment Years.
(iii) "Partnership": Rose Partners, L.P.
(iv) "Recognition Event": A distribution of any assets,
whether in cash or in any other form, by the Corporation to the Partnership in
respect of the stock owned by the Partnership, or the realization by the
Partnership of any amount upon the sale or transfer of its ownership interest in
the stock of the Corporation.
(v) "Final Recognition Event": The sale by the Partnership
of all of its stock of the Corporation or the complete liquidation of the
Corporation by the Partnership.
(vi) "Event": Any of a Recognition Event or a Final
Recognition Event.
(vii) "Recognition Proceeds": To the extent that it exceeds
the Base Amount, the aggregate amount of all proceeds received by the
Partnership from and after the date of this Agreement, in respect of its
ownership of stock of the Corporation, whether such proceeds are in the form of
a dividend or other distribution, liquidating or non-liquidating, or in
consideration for the sale or other disposition of such stock.
(c) Subject to the qualifications and limitations set forth
below, Executive shall be entitled to be paid additional compensation (the
"Additional Compensation") upon the occurrence of each Event. The Additional
Compensation payable at each Event shall be the sum of: (i) six (6%) percent of
the Recognition Proceeds, less (ii) the cumulative amount of Additional
Compensation paid to the Executive prior to that particular Event; provided,
however, that the six (6%) percent stated in (i) above may be reduced (but not
below zero) as provided for in Paragraph 4(f) below.
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(d) Notwithstanding the provisions of Paragraph 4(d), the minimum
amount payable to the Executive as Additional Compensation upon the occurrence
of the Final Recognition Event shall be the sum of: (i) $1,000,000; less (ii)
the cumulative amount of all Additional Compensation paid to the Executive prior
to the Final Recognition Event.
(e) Notwithstanding anything contained in Paragraph 4(d) or 4(e)
to the contrary, the Executive shall not be entitled to any further payments of
Additional Compensation from and after any of the following events: (i) the
Executive's termination of employment for "cause" (as set forth in Paragraph
10); and (ii) if Executive resigns his employment prior to the end of the term
of this Agreement or any extended term of this Agreement.
(f) In measuring the six (6%) percent set forth in Paragraph
4(c)(i) above, the six (6%) percent shall be reduced by one (1) full percentage
point for each full twelve (12) months following any of the following events:
(i) the Executive's death; (ii) the Executive becomes disabled (as provided in
Paragraph 8); and (iii) the date the Executive's employment is terminated by the
Corporation for a reason other than "cause".
(g) Upon the occurrence of each Event, the Corporation shall
calculate the amount payable, if any, to the Executive under this Paragraph 4
and shall pay such amount to the Executive within thirty (30) days after the
Event.
5. Executive Benefits.
(a) Executive shall be entitled to participate, on the same basis
and subject to the same qualifications, in all employee benefit plans (the
"Plans"), including, but not limited to, pension and profit-sharing plans,
supplemental retirement benefit plans, and life, health, disability, and similar
plans, and fringe benefits (the "Benefits") which during the term hereof shall
be in effect from time to time and be applicable to the Corporation's employees
of senior executives generally.
(b) If Executive's employment hereunder is terminated by the
Corporation prior to the scheduled termination of the term of Executive's
employment hereunder (other than a termination for "cause" [as hereinafter
defined] or as a result of Executive's voluntary resignation from his employment
by the Corporation), the Corporation shall either (i) continue through the
scheduled termination date of the term of Executive's employment hereunder
Executive's participation in the Plans and entitlement to the Benefits to which
Executive would have been entitled had he remained employed through the term of
this Agreement, or (ii) provide equivalent benefits (taking into account the tax
consequences of any benefits described in clause (i)) to Executive at no
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additional cost to Executive, but only to the extent that essentially equivalent
and no less favorable benefits are not provided by a subsequent employer or
otherwise received by Executive. If the terms of any such Plans or Benefits do
not permit continued participation by Executive, the Corporation shall arrange
to provide to Executive benefits substantially similar to, and no less favorable
than, the benefits he was entitled to receive up until the end of the period of
coverage. Executive shall have the option to have assigned to him at no cost and
with no apportionment of prepaid premiums, any assignable insurance policy owned
by the Corporation and relating specifically to Executive.
(c) Recognizing that Executive will be required to do a
considerable amount of driving in connection with his duties as Executive Vice
President, Chief Financial Officer, the Corporation shall either: (i) provide to
Executive a Cadillac, Lincoln, or equivalent American automobile of Executive's
choice; or (ii) provide a monthly car allowance in an amount to be agreed upon
by the Executive and the Chairman of the Board of Directors; and, in either
case, the Corporation will pay all reasonable costs relating to the operation of
such automobile in connection with such duties, including gas, maintenance, and
insurance (including covering any deductible).
6. Expenses. It is contemplated that, in connection with his
employment hereunder, Executive may be required to incur reasonable travel,
entertainment, and other business expenses. To the extent not otherwise
reimbursed under paragraph 5(c), the Corporation agrees to pay, or reimburse
Executive for, all reasonable and necessary travel, entertainment, and other
business expenses incurred or expended by him incident to the performance of his
duties and responsibilities hereunder, upon submission by Executive to the
Corporation of vouchers or expense statements evidencing the expenses for which
reimbursement is sought.
7. Vacations. Executive shall be entitled to vacations in accordance
with the Corporation's normal vacation policies for senior executives, which
vacations shall be taken at times consistent with the effective discharge of
Executive's duties.
8. Disability. In the event that Executive shall be incapacitated by
reason of mental or physical disability or otherwise during the term of
employment so that he is prevented from substantially performing his duties and
services hereunder for a period of 180 days during any twelve (12) month period,
the Corporation shall have the right to terminate Executive's employment under
this Agreement by sending written notice of such termination to Executive, and
thereupon his employment hereunder shall terminate. Upon such termination,
Executive shall be entitled, subject to the limitations provided herein, to
receive the compensation provided for in paragraph 4 hereof and the benefits
provided for in paragraph 5 hereof for one (1) year following the date of
termination, and shall continue to be entitled to any benefits in which he
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otherwise is vested pursuant to this Agreement; provided that if Executive is
receiving payments through a disability policy maintained by the Corporation
(other than a group policy maintained in behalf of all executives), such
payments shall be deducted from the amounts to be paid by the Corporation to
Executive during such period. Executive shall accept such payment in full
discharge and release of the Corporation of and from any further obligations
under this Agreement.
9. Death. In the event of Executive's death during the term of this
Agreement, Executive's designated beneficiary or, if no such beneficiary shall
have been designated by Executive, the personal representative of Executive
shall be entitled to receive and shall be paid by the Corporation, the
compensation provided for in Paragraph 4 hereof, subject to the limits set forth
therein, and the benefits provided for in Paragraph 5 hereof for one (1) year
following the date of Executive's death, and shall continue to be entitled to
any benefits in which he otherwise is vested pursuant to this Agreement;
provided that if Executive is receiving or is entitled to receive payments
through a death benefit insurance policy maintained by the Corporation (other
than a group policy maintained in behalf of all executives) such payments shall
be deducted from the amounts to be paid by the Corporation to Executive during
such period. Executive's designated beneficiary or personal representative, as
the case may be, shall accept such payment in full discharge and release of the
Corporation of and from any further obligations under this Agreement.
10. Termination for Cause.
(a) The Corporation shall have the right to terminate the
employment of Executive hereunder for cause at any time if:
(i) Executive shall be convicted, by a court of competent
and final jurisdiction, of any crime (whether or not involving the Corporation
or any of its divisions, operations, subsidiaries or affiliated companies) which
constitutes a felony in the jurisdiction involved; or
(ii) Executive shall commit any act of fraud against or
shall breach a fiduciary obligation to the Corporation or any of its divisions,
operations, subsidiaries, or affiliated companies, provided that any such act
(or failure to act) shall be determined in good faith by the Board of Directors
to be material in respect of Executive's duties or functions hereunder; or
(iii) Executive shall fail or refuse to perform any of his
duties and responsibilities as required by, or shall otherwise breach, this
Agreement, provided that termination of Executive's employment pursuant to this
subparagraph 10(a)(iii) shall not constitute valid termination for cause unless
Executive shall first have received written notice from the Board of Directors
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or the Chief Executive Officer of the Corporation stating with specificity the
nature of such failure or refusal and affording Executive at least fifteen (15)
days to correct the act or omission complained of.
(b) In the event that the employment of Executive shall be
terminated by the Corporation for cause pursuant to subparagraph 10(a) hereof,
Executive shall be entitled to receive the salary provided for in Paragraph 4(a)
hereof, prorated through the end of the week in which such termination occurs
and such amounts as may be payable under the balance of the provisions in
Paragraph 4, as specifically limited thereunder and in accordance with the terms
thereof. Executive shall accept such payment in full discharge and release of
the Corporation of and from any other further obligations under this Agreement.
Nothing contained in this Paragraph 10 shall constitute a waiver or release by
the Corporation or any rights or claims it may have against Executive for
actions or omissions which may give rise to an event causing termination of this
Agreement pursuant to this Paragraph 10.
11. Confidentiality; Injunctive Relief.
(a) Executive recognizes and acknowledges that the knowledge,
information, and relationship with resources, suppliers, and customers of the
Corporation, and the knowledge of the Corporation's business methods, systems,
plans, and policies which he has heretofore and shall hereafter receive or
obtain as an employee of the Corporation, are valuable and unique assets of the
business of the Corporation. Accordingly, Executive agrees that he will not,
during or after the term of this Agreement, except if required in connection
with his duties as the Executive Vice President of the Corporation and Chief
Financial Officer, and for a period of three (3) years thereafter, disclose or
use, without the prior written consent of the Board of Directors of the
Corporation, directly or indirectly, any non-public information (whether written
or unwritten) relating to the Corporation or any of its divisions, operations,
subsidiaries or affiliated companies, or any of their respective management,
financial condition, subscription, mailing or customer lists, sources of supply,
business, personnel, policies, or prospects, to any individual or entity for any
purpose whatsoever. The provisions of this subparagraph 11(a) shall not apply to
information which is or shall become generally known to the public or the trade
(except by reason of Executive's breach of his obligations hereunder),
information which is or shall become available in trade or other publications,
or information which Executive is required to disclose by order of a court of
competent jurisdiction (but only to the extent specifically ordered by such
court and, when reasonably possible, if Executive shall give the Corporation
prior notice of such intended disclosure so that it has the opportunity to seek
a protective order if it deems appropriate).
-7-
<PAGE>
(b) Executive acknowledges and agrees that all memoranda, notes,
reports, records, and other documents made or compiled by Executive, or made
available to Executive prior to or during the term of this Agreement, concerning
the Corporation's business, shall be the Corporation's property and shall be
delivered to the Corporation on the termination of Executive's employment
hereunder or at any other time on request by the Board of Directors of the
Corporation.
(c) The provisions of this Paragraph 11 shall survive the
termination or expiration of Executive's employment hereunder, irrespective of
the reason therefor, for a period of three (3) years.
12. No Raid; Non-Compete.
(a) Executive agrees that, for a period of three (3) years after
the date of the termination of Executive's employment under this Agreement,
Executive shall not, without the prior written approval of the Board of
Directors of the Corporation directly or indirectly through any other person,
firm or corporation, solicit, raid, entice, or induce any person who is, at the
time of such solicitation or was at any time during the eighteen (18) months
immediately preceding such solicitation, raid, enticement, or inducement, an
employee of the Corporation or any of its subsidiaries or affiliates, to become
employed by such person, firm, or corporation, and Executive shall not approach
any such employee for such purpose or authorize or knowingly approve the taking
of such actions by any other person.
(b) For a period of three (3) years after the date of termination
of Executive's employment under this Agreement, Executive will not, whether
individually or as a partner, owner, officer, director, stockholder, or
employee, own, manage, operate, or control or have a financial interest in, or
serve as a consultant to, any person, firm, corporation, or other entity which
is engaged in any business activity in competition with the business of the
Corporation in the markets in which the Corporation competes. The foregoing
restrictions shall not be deemed to include Executive's direct or indirect
ownership of any securities in a publicly-traded business entity which does not,
and will not with the passage of time, result in his obtaining, directly or
indirectly, more than two (2) percent of the securities of such entity.
Notwithstanding the foregoing, the restrictions imposed on Executive under this
paragraph 12(b) shall cease to apply as of the later of (x) the scheduled
termination (including any extension thereof) of Executive's employment under
paragraph 1 hereof, or (y) one (1) year after the occurrence of either of the
events described in the following clauses (i) and (ii) of this paragraph 12(b),
if either (i) Executive's employment with the Corporation (and any subsidiary or
affiliate thereof) shall be terminated by the Corporation other than for
"cause," or (ii) the Partnership shall have disposed of all or substantially all
of its interest in the Corporation and the aggregate amounts payable to
Executive under subparagraph 4(c) shall be no greater than $1,000,000.
-8-
<PAGE>
Notwithstanding the foregoing, in the event Executive's employment is terminated
by the Corporation other than for "cause" and the Corporation fails to satisfy
its obligation to pay Executive as required under this Agreement, the
restrictions imposed on Executive under this paragraph 12(b) shall cease to
apply one (1) year after such failure.
(c) The provisions of this Paragraph 12 shall survive the
termination or expiration of Executive's employment hereunder, irrespective of
the reason therefor.
13. Injunctive Relief.
(a) Executive acknowledges that the services to be rendered by
him are of a special, unique, and extraordinary character, and if he violates
any of the provisions of this Agreement with respect to confidentiality,
non-competition, or solicitation, the Corporation would sustain irreparable
harm. Accordingly, Executive consents and agrees that if he violates any of the
provisions of Paragraphs 12 or 13 hereof, in addition to any other remedies
which the Corporation may have under the Agreement or otherwise, the Corporation
shall be entitled to apply to any court of competent jurisdiction for an
injunction restraining Executive from committing or continuing any such
violation of this Agreement, and Executive shall not object to any such
application. Nothing in this Agreement shall be construed as prohibiting the
Corporation from pursuing any other remedy or remedies including, without
limitation, recovery of damages.
(b) The provisions of this Paragraph 13 shall survive the
termination or expiration of Executive's employment hereunder, irrespective of
the reason therefor.
14. Deductions and Withholding. Executive agrees that the Corporation
shall withhold from any and all payments and compensation required to be made to
Executive pursuant to this Agreement all Federal, state, local, and/or other
taxes which the Corporation determines are required to be withheld in accordance
with applicable statutes and/or regulations from time to time in effect.
15. No Conflict. Executive represents and warrants that there is no
restriction, agreement or limitation on his right or ability to enter into and
perform the terms of this Agreement.
16. Miscellaneous.
(a) This Agreement cancels and supersedes any and all prior
agreements and understandings between the parties hereto respecting the
-9-
<PAGE>
employment of Executive by the Corporation and constitutes the complete
understanding between the parties with respect to the employment of Executive
hereunder. No statement, representation, warranty, or covenant has been made by
either party with respect thereto except as expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written instrument
signed by each of the parties hereto.
(b) Waiver by either party hereto of any breach of default by the
other party to any of the terms and provisions of this Agreement, shall not
operate as a waiver of any other breach or default, whether similar to or
different from the breach or default waived.
(c) All notices, consents, requests, demands, and other
communications hereunder shall be in writing and shall be delivered personally
or sent by registered or certified mail, return receipt requested, first class
postage prepaid, to the other party hereto at its or his address as set forth in
the beginning of this Agreement. Either party may change the address to which
notices, requests, demands, and other communications hereunder shall be directed
by giving written notice of such change of address to the other party in the
manner above stated.
(d) This Agreement shall inure to the benefit of and shall be
binding upon the heirs, executors, administrators, successors, and legal
representatives of Executive and shall inure to the benefit of and be binding
upon the Corporation and its successors. This Agreement is personal as to
Executive and Executive may not assign, transfer, pledge, encumber, hypothecate,
or otherwise dispose of this Agreement or any of his rights hereunder and any
such attempt of assignment, transfer, pledge, encumbrance, hypothecation, or
other disposition shall be null and void and without effect. The Corporation
shall be entitled to assign this Agreement without the prior written consent of
Executive in connection with the merger or consolidation of the Corporation with
another corporation or the sale of all or substantially all of the assets and
business of the Corporation to another corporation, provided that:
(i) immediately after the consummation of such transaction,
the surviving or acquiring corporation shall have a net worth not less than the
net worth of the Corporation immediately prior to such transaction; and
(ii) the surviving or acquiring corporation shall agree in
writing to accept an assignment of this Agreement, thereby acquiring the
Corporation's rights and assuming the Corporation's obligations under this
Agreement.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
-10-
<PAGE>
(f) The paragraph headings of this Agreement are for convenience
of reference only and shall not limit or define the text thereof.
(g) In the event that any one or more of the provisions of this
Agreement shall be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected thereby.
(h) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which, when taken together
shall be deemed to constitute one and the same instrument.
(i) Any dispute regarding this Agreement shall be resolved
exclusively by arbitration in New Jersey in accordance with the rules of the
American Arbitration Association then in effect. The Corporation shall pay
Executive's reasonable legal expenses in connection with any such arbitration;
provided, however, that Executive shall reimburse the Corporation for such
expenses if the arbitrator(s) shall decide the material issues in favor of the
Corporation.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the day and year first above written.
DiGIORGIO CORPORATION
By: /s/ Arthur M. Goldberg
Name: Arthur M. Goldberg
Title: President
By: /s/ Richard B. Neff
RICHARD B. NEFF
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS, STATEMENTS OF OPERATIONS, STATEMENT OF
STOCKHOLDERS' EQUITY AND STATEMENTS OF CASH FLOWS FROM FORM 10K FOR THE PERIOD
ENDED APRIL 1, 2000</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> APR-01-2000
<CASH> 4,154
<SECURITIES> 0
<RECEIVABLES> 91,495
<ALLOWANCES> 4,930
<INVENTORY> 61,990
<CURRENT-ASSETS> 160,891
<PP&E> 22,314
<DEPRECIATION> 11,667
<TOTAL-ASSETS> 271,282
<CURRENT-LIABILITIES> 102,402
<BONDS> 155,000
0
0
<COMMON> 0
<OTHER-SE> 8,036
<TOTAL-LIABILITY-AND-EQUITY> 271,282
<SALES> 359,880
<TOTAL-REVENUES> 361,799
<CGS> 326,463
<TOTAL-COSTS> 353,793
<OTHER-EXPENSES> 4,195
<LOSS-PROVISION> 300
<INTEREST-EXPENSE> 4,078
<INCOME-PRETAX> 3,811
<INCOME-TAX> 1,743
<INCOME-CONTINUING> 2,068
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,068
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
