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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made effective June 1, 2000,
by and between STATER BROS. MARKETS, a California corporation, hereinafter
referred to as "Employer" and JACK H. BROWN, hereinafter referred to as
"Employee". Employer and Employee are sometimes herein referred to as "party" or
collectively as "parties".
RECITALS
This Agreement is made with reference to the following facts:
A. Employee was employed by Employer as President and Chief Executive
Officer in May of 1981, and currently is serving as Chairman of the Board,
President and Chief Executive Officer of Employer and its parent and affiliated
companies, which positions he has held since July of 1986.
B. Employer desires to obtain the continued services of Employee as
Chairman of the Board, President and Chief Executive Officer.
C. Employee is willing to continue serving in such capacities on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereby agree as follows:
1. Employment. Employer hereby engages Employee and Employee hereby
accepts employment with Employer in the capacities of Chairman of the Board,
President and Chief Executive Officer.
2. Term. The term of this Agreement ("Term") shall commence on the date
hereof and shall continue for a period of five (5) years. The Term shall be
renewed automatically on each anniversary of the date of this Agreement for an
additional five (5) year period unless, during the twelve (12) months preceding
any such anniversary, Employee's employment has been terminated pursuant to
Section 8 of this Agreement in which event Employee shall be paid all amounts
due him under Section 9 hereof through the remaining Term. The Term of this
Agreement shall also be renewed automatically upon a Change of Control. A
"Change of Control" shall mean and include any of the following:
1. The purchase or other acquisition by any person, entity or
group of persons, within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934 ("Act"), or
any comparable successor provisions, of beneficial
ownership (within the meaning of Rule 13 d-3 promulgated
under the Act) of fifty percent (50%) or more of either
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the outstanding shares of common stock of Employer's then
outstanding voting securities entitled to vote generally;
2. The approval by the stockholders of Employer of a
reorganization, merger, or consolidation, in each case,
with respect to which persons who were stockholders of
Employer immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more
than fifty percent (50%) of the combined voting power
entitled to vote generally in the election of directors of
the reorganized, merged or consolidated Employer's then
outstanding securities;
3. The sale of fifty percent (50%) or more of the assets of
the Employer.
3. Duties. Employee shall assume and perform such reasonable
responsibilities and duties similar in nature and scope to those customary to
the offices of Chairman of the Board, President and Chief Executive Officer as
may be reasonably assigned to him by the Board of Directors of Employer.
Employee shall not be obligated to perform any duties under the terms of this
Agreement other than those customary to the offices of Chairman of the Board,
President and Chief Executive Officer. Such duties shall be performed in the
Southern California area and, without his written consent, employee shall not be
required to perform his duties at a location outside of a thirty (30) mile
radius from the existing company headquarters at 21700 Barton Road in Colton,
California.
4. Compensation.
4.1 Salary. Employee shall be entitled to a basic salary in an
amount equal to that which Employee is currently receiving from Employer.
Employee's basic salary shall be increased on March 1 of each year during the
Term of this Agreement in an amount determined by Employer's Board of Directors,
provided, however, that in no event shall Employee's basic salary, increased as
provided above, be less than one hundred ten percent (110%) of the basic salary
paid to Employee during the prior year.
4.2 Bonus. In addition to Employee's basic salary, Employee shall
be entitled to receive such incentive and performance bonuses that have been
earned by Employee but not yet paid as of the date of this Agreement. Employee
also shall be entitled to receive from Employer such incentive and performance
bonuses consistent with Employer's bonus policy for senior officers as the same
may exist from time to time, but not less than that which would have been earned
under the terms of Employer's bonus policy for senior officers in effect as of
the date of this Agreement.
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4.3 Additional Benefits.
4.3.1 Business Expenses. Employee shall be entitled to
reimbursement for reasonable and necessary expenses incurred by Employee in the
performance of his duties, provided, however, all such expenses shall be
substantiated and in accordance with reasonable standards established from time
to time by Employer's Board of Directors.
4.3.2 Company Car. Throughout the Term of this Agreement,
Employee shall be entitled to the exclusive use of a company car of at least the
same type and quality as that furnished to Employee as of the date of this
Agreement. Employer shall replace such company car from time to time with new
vehicles so that the company car provided to Employee shall at no time be older
than two (2) years. All expenses of maintenance, operation and insurance shall
be paid by Employer or reimbursed by Employer to Employee.
4.3.3 Benefits Generally Offered. In addition to any other
compensation or benefits to be received by Employee pursuant to the terms of
this Agreement, Employee shall be entitled to participate, to the extent
allowable in accordance with his status, in all employee benefits offered from
time to time by Employer to its senior officers, including, without limitation,
pension plans, profit sharing plans, group life insurance, group health
insurance and group disability insurance.
5. Vacation and Sick Leave. Employee shall be entitled to a paid
vacation of four (4) weeks annually. In addition, Employee shall be entitled to
paid time off for personal illness in accordance with Employer's policy for such
leave as the same may exist from time to time.
6. Devotion of Time. Employee shall devote his full time, attention and
energies to the business of Employer allowing time off for illness and vacation.
Notwithstanding the foregoing, Employee may engage in other personal business so
long as the performance of such activities do not interfere with the efficient
and timely performance of Employee's duties hereunder.
7. Restrictive Covenants.
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7.1 Non-Competition. During the Term of Employee's employment
under this Agreement, Employee shall not own or have any interest directly in,
or act as an officer, director, agent, employee or consultant of, or assist in
any way or in any capacity, any person, firm, association, partnership,
corporation, or entity which shall be competitive with the supermarket business
then engaged in by Employer, in the Counties of San Bernardino and Riverside,
California the principal market area of Employer's business operations. The
restrictions of this Section prohibiting ownership in a competitive business
shall not apply to (i) any ownership or interest held by Employee at the time of
execution of this Agreement, (ii) any ownership of publicly traded stock, or
(iii) any investment in real property (whether made directly or through the
vehicle of a partnership, corporation, investment trust or other entity),
notwithstanding the fact that a supermarket in competition with Employer might
be a lessee of some or all of such real property.
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7.2 Delivery of Records. Upon termination of Employee's
employment with Employer, Employee shall deliver to Employer all books, records,
lists of suppliers and customers, samples, price lists, brochures and other
property belonging to Employer or developed in connection with the business of
Employer.
7.3 Confidentiality. Except in the course of Employer's business,
Employee shall not at any time during or after his employment with Employer,
reveal, divulge or make known to any person, firm or corporation any
confidential knowledge or information or any confidential facts concerning any
suppliers, customers, methods, processes, developments, schedules, lists or
plans of or relating to the business of Employer and will retain all
confidential knowledge and information which he has acquired or which he will
acquire during his employment therewith relating to such suppliers, customers,
methods, processes, developments, schedules, lists or plans and the business of
Employer for the sole benefit of Employer, its successors and assigns, provided,
however, that this restriction shall not apply to any knowledge, information or
fact held by or known to Employee which is generally available from sources
other than Employee or which was acquired by Employee other than in his capacity
as Employee.
7.4 Reasonableness. In the event any court shall finally hold
that the time or territory or any other provision of this Section 7 constitutes
an unreasonable restriction against Employee, the provisions hereof shall not be
rendered void but shall apply as to such time, territory and other provision to
such extent as such court may judicially determine or indicate constitutes a
reasonable restriction under the circumstances involved.
7.5 Survival. The provisions of this Section 7 shall survive the
termination of the Term of this Agreement and shall run, and inure, to the
benefit of Employer, its successors and assigns.
8. Termination.
8.1 Termination at Will. Employee's employment hereunder may be
terminated at any time by either party upon one hundred eighty (180) days
written notice to the other party.
8.2 Termination for Cause.
8.2.1 Employee's employment hereunder may be terminated
immediately, at the option of Employer, if Employee defaults in the performance
of any material covenant, agreement, term or provision of this Agreement to be
kept, observed or performed by him, and such default continues for a period of
thirty (30) days after written notice from Employer describing the default with
particularity.
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8.2.2 In the event that criminal charges involving a
felony of moral turpitude are filed against Employee, Employee's employment
under the terms of this Agreement may be suspended without pay immediately, at
the option of Employer. In the event that Employee is convicted of such crime,
any such suspension shall automatically become a termination for cause. In the
event that Employee is acquitted of such crime, or in the event such charges are
dismissed, any such suspension shall be terminated and employee shall be
reinstated retroactively with full salary, bonuses, and employee benefits.
9. Payments upon Termination of Employment.
9.1 Payment to Employee. In the event Employee's employment
hereunder terminates prior to the expiration of the Term of this Agreement for
any reason whatsoever, Employer shall pay to Employee compensation in the
amounts set forth in Sections 9.1.1 and 9.1.2 herein through the end of the
Term, which compensation, at the sole election of Employee, shall be paid either
(i) in a lump sum within fourteen (14) days from the date of termination, or
(ii) in biweekly payments throughout the balance of the Term of this Agreement
as provided below. Whether or not Employer pays Employee compensation in a lump
sum or in biweekly payments, Employee shall be entitled to all benefits as set
forth in this Section 9 until the end of the Term.
9.1.1 Calculation of Payment. Upon termination of
Employee's employment, Employee's compensation shall be determined as the
greater of (i) the highest total annual compensation (including basic salary and
all incentive, performance and extraordinary bonuses) paid by Employer, its
affiliates and/or successors to Employee during any of the five (5) fiscal years
of Employer immediately preceding Employee's termination of employment
hereunder, or (ii) the amount of Employee's total compensation (including basic
salary and all incentive, performance and extraordinary bonuses) paid by
Employer, its affiliates and/or successors to Employee during the twelve (12)
month period immediately preceding Employee's termination of employment. If
Employee elects to receive the amount due him in installments, the first
twenty-six (26) payments shall each be equal to 1/26th of the amount calculated
in this Section 9.1.1. Thereafter, the biweekly payments shall increase annually
in accordance with Section 9.1.2. If Employee elects to receive a lump sum
payment, Employee shall receive an amount equal to the annual amount calculated
in this Section 9.1.1 multiplied by the number of years, and fractions thereof,
left in the Term which shall include annual increases to which Employee would be
entitled under Section 9.1.2.
9.1.2 Annual Increases. On each anniversary of Employee's
termination of employment, any remaining amounts to be paid during the next year
pursuant to this Section 9 shall be increased to an amount equal to one hundred
ten percent (110%) of the amounts required to be paid by Employer hereunder
during the preceding year.
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9.2 Payments Upon Death. In the event of Employee's death,
Employer shall pay to Employee's estate, or in such other manner as Employee may
specify in writing to Employer, all sums due Employee under this Section 9 for
the balance of the Term of this Agreement which amount shall be paid within
thirty (30) days from Employee's death. For purposes of funding this obligation
to make payments upon Employee's death, Employer may purchase and hold such life
insurance policies on the life of Employee as may be appropriate, provided,
however, that if the total funds available to Employer under the terms of such
life insurance policies exceed the amount which would otherwise be payable to
Employee by Employer under the terms of this Section 9, Employer's payment
obligation under this Section 9 shall be increased to the total amount received
by Employer under any such insurance policies.
9.3 Benefits. In addition to all payments due Employee under this
Section 9 Employee shall also be entitled to receive from Employer through the
balance of the Term of this Agreement all benefits provided by Employer to its
Senior Officers and effect on the date of termination of Employee's employment
including without limitation all benefits described in Sections 4 and 5 hereof.
9.4 Termination of Payments. All payments and benefits due
Employee under this Section 9 shall cease in the event Employee is employed to
perform management services for compensation for any supermarket chain located
in any area where Employer engages in the supermarket business.
10. Prior Agreements. All prior employment agreements between Employer
and Employee are hereby superseded and any such agreement or agreements shall be
of no further force or effect.
11. Personal Nature. This Agreement is personal, and is entered into
based upon the singular skill, qualifications and experience of Employee.
Employee shall not assign this Agreement or any rights hereunder without the
express written consent of Employer.
12. Notices. Any and all notice or other communications required or
permitted by this Agreement or by law to be given by any of the parties hereto
shall be in writing and shall be deemed duly served and given when personally
delivered to the party to whom such notice or communication is directed or, in
lieu of such personal service, when deposited in the United States mail,
certified, return receipt requested, postage prepaid, addressed as follows:
Employer Employee
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Stater Bros. Markets Jack H. Brown
21700 Barton Road 21700 Barton Road
Colton, CA 92324 Colton, CA 92324
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Each party may change the address for notice hereunder by giving
written notice of such change in the manner provided for in this Section.
13. Good Faith. All approvals required to be given by each party shall
be given or denied in good faith and may not be unreasonably denied. Each party
shall use due diligence in its attempt to accomplish any act required to be
accomplished by that party.
14. Attorneys' Fees. In the event that it should become necessary for
any party to bring an action, including arbitration, either at law or in equity,
to enforce or interpret the terms of this Agreement, the prevailing party in
such action shall be entitled to recover its reasonable attorneys' fees as a
part of any judgment therein, in addition to any other award which may be
granted.
15 Applicable Law/Venue. This Agreement shall be construed and
interpreted in accordance with the internal laws of the State of California,
with proper venue for any litigation or arbitration in San Bernardino County,
California.
16. Integrated Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter of this Agreement.
17. Heirs and Assigns. Subject to any restriction on assignment
contained herein, this Agreement shall be binding upon and shall inure to the
benefit of the respective party's heirs and assigns.
18. Severability. Any provision in this Agreement which is illegal,
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity or unenforceability
without invalidating the remaining provisions hereof or affecting the legality,
validity, or enforceability of such provision in any other jurisdiction. The
parties hereto agree to negotiate in good faith to replace any illegal, invalid
or unenforceable provision of this Agreement with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement, or otherwise to amend this Agreement, including the provision
relating to choice of law, to achieve such result.
19. Indemnity. Employer shall indemnify and hold Employee harmless from
and against any and all loss, cost, liability and damage (including attorneys'
fees) arising out of or connected with, or claimed to arise out of or to be
connected with, any act performed or omitted to be performed under this
Agreement, unless it be shown that the act or omission was not in good faith, or
in the event of criminal proceedings that Employer had reasonable cause to
believe his conduct
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was unlawful. An adverse judgment or plea of nolo contendere shall not create a
presumption that Employer did not act in good faith or that he had reasonable
cause to believe his conduct was unlawful. Expenses incurred in defending a
civil or criminal action shall be paid by Employer upon receipt of an
undertaking by or on behalf of the Employer to repay such expense if it is later
determined that Employee was not entitled to indemnification.
This Agreement is executed to be effective as of the date first above
set forth.
Employee
/s/ Jack H. Brown
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Jack H. Brown
Employer
Stater Bros. Markets,
a California corporation
By: /s/ Bruce D. Varner
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Bruce D. Varner, Secretary
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