Document:

exv10w4

 

EXHIBIT 10.4

SEPARATION AGREEMENT AND MUTUAL RELEASES

          This Separation Agreement (“Agreement”) is between Orion Energy Systems Ltd., a Wisconsin
corporation (“Orion”) and James Prange (“Prange”).

     1. Background. Orion ended Prange’s employment with it, effective March 12, 2007.
Both Prange and Orion desire an amicable separation and to fully and finally compromise and settle
any differences that may exist between them on the terms set forth in this Agreement.

     2. Employment Termination. Prange understands that his employment with Orion ended
effective March 12, 2007, based on reasons that have been explained to him. Orion does not
generally provide severance pay or benefits of any sort to employees when it terminates their
employment. However, subject to the terms and conditions of this Agreement, Orion is willing to
provide the benefits and consideration specified in paragraph 3 below in return for Prange’s
execution of this Agreement, it becoming effective (see paragraph 19), and his continued compliance
with each of the covenants in this Agreement, including those regarding confidentiality,
non-competition, and non-solicitation.

     3. Consideration. In return for the execution of this Agreement, it becoming
effective (see paragraph 19), and Prange honoring all of its terms, Orion will provide/do the
following:

     a. Allegedly Unpaid Back Pay And Compensation. Within 10 business days of the
date on which this Agreement becomes effective (see paragraph 19), Orion shall pay to Prange
the sum of Forty Thousand, Three Hundred, Six dollars and One cent ($40,306.01) in allegedly
owed back pay and compensation, less applicable withholding and deductions. Prange
specifically acknowledges that the payment of the amount specified in this subparagraph is
the full and complete amount of back pay and compensation allegedly owed to him. This
payment shall be made payable to the “Johns, Flaherty & Collins, S.C. Trust Account” and
mailed to Prange’s attorney, Thomas H. Taylor.

     b. Reimbursement of Allegedly Owed Employee Business Expenses. Within 10
business days of the date on which this Agreement becomes effective (see paragraph 19),
Orion shall pay to Prange the sum of Seven Thousand, Seven Hundred, Twenty-five dollars and
Fifty-six cents ($7,725.56) for allegedly owed business expenses incurred by Prange during
the course of his employment. Prange specifically acknowledges that the payment of the
amount specified in this subparagraph is the full and complete amount allegedly owed to him
for reimbursement of business expenses incurred by him during his employment. This payment
shall be made payable to the “Johns, Flaherty & Collins, S.C. Trust Account” and mailed to
Prange’s attorney, Thomas H. Taylor.

     c. Stock Options.

     i. Stock Options Fully Vested. If this Agreement becomes effective
(see paragraph 19), Orion shall amend Prange’s Stock Option Agreement such that
Prange’s rights and interests in Two Hundred Twenty Thousand, Two Hundred Twenty-Two
(220,222) Orion common stock options shall be treated as having fully vested as of
March 11, 2007.

 

 

     ii. Exercise of A Portion of Stock Options. If this Agreement becomes
effective (see paragraph 19), Orion shall amend Prange’s Stock Option Agreement such
that Forty-eight Thousand (48,000) of Prange’s fully-vested common stock options may
be exercised by Prange at a strike price of Sixty-eight and Three-quarters cents
($0.6875) per share at any time within Ninety (90) days of the date on which this
Agreement becomes effective (see paragraph 19). Once exercised, Prange may do
whatever he wishes with the common stock so acquired.

     iii. Identification of Interested Purchaser. If this Agreement becomes
effective (see paragraph 19), then within 5 business days of the date on which this
Agreement becomes effective, Orion shall provide him with the identity of a party
willing to purchase all Forty-Eight Thousand (48,000) shares of common stock at a
price not less than Three dollars and no cents ($3.00) per share. The
identification shall include a firm commitment from the party so identified to
purchase the shares of common stock at a price not less than the amount specified in
this subparagraph.

Prange specifically acknowledges receipt of information from Orion sufficient to
allow him to determine the current fair market value of the common stock referred to
in this subparagraph, and that he has had the opportunity to request any additional
information he deems necessary or appropriate in connection with making such a
determination. Prange further acknowledges that he is not under any obligation to
sell any of his Forty-Eight Thousand (48,000) shares of common stock to the
potential purchaser identified by Orion pursuant to this subparagraph, and that he
may sell any of his shares of common stock to any person he deems appropriate for
whatever price he may negotiate.

     iv. Exercise of Remaining Stock Options. So long as Prange honors and
continues to honor all of his obligations in this Agreement, and only after the
effective date of this Agreement (see paragraph 19), Orion shall amend Prange’s
Stock Option Agreement in order to allow Prange to exercise his rights and interests
in the remaining One Hundred Seventy-two Thousand, Two Hundred, Twenty-Two (172,222)
Orion common stock options at a strike price of Sixty-Eight and Three-Quarters cents
($0.6875) per share as follows:

     A. Except as otherwise provided in subparagraph 3.c.iv.B. below, Prange
shall be allowed to exercise his rights and interests in the remaining One
Hundred Seventy-Two Thousand, Two Hundred, Twenty-Two (172,222) Orion common
stock options during a ninety (90)-day period (the “Stock Option Exercise
Period”) commencing on March 12, 2009 and expiring at 5:00 p.m. on June 10,
2009, subject to the limitation that all common stock options not exercised
within the Stock Option Exercise Period shall expire at the end of such
period. Except as otherwise provided in subparagraph 3.c.iv.B. below, under
no circumstances shall Prange be permitted to exercise such remaining common
stock options prior to the commencement of the Stock Option Exercise Period.

 

 

     B. In the event of an Initial Public Offering by Orion prior to March
12, 2009, Prange shall be allowed to exercise his rights and interests in
Seventeen Thousand, Two Hundred and Twenty-Two (17,222) Orion common stock
options during the ninety (90)-day period commencing with Orion’s issuance
and sale of common or preferred stock pursuant to the Initial Public
Offering. If Prange should exercise any of the Orion common stock options
referenced in this subparagraph, the amount of Orion common stock options
available for exercise pursuant to subparagraph 3.c.iv.A. above shall be
reduced by the number of Orion common stock options exercised under this
subparagraph. All common stock options not exercised within the ninety
(90)-day period commencing with Orion’s issuance and sale of common or
preferred stock pursuant to the Initial Public Offering under this
subparagraph shall still be available for exercise consistent with
subparagraph 3.c.iv.A. above.

     d. Unemployment Compensation. Orion shall not challenge any claim by Prange
for unemployment compensation benefits.

     4. Acknowledgement. Prange understands that the benefits provided in paragraph 3 will
not be provided unless (a) he accepts this Agreement, (b) it becomes effective (see paragraph 19),
and (c) he continues to comply with all of the applicable terms of this Agreement.

     5. Restrictive Covenants.

     a. Non-competition. Prange agrees that, for a period of twenty-four (24)
months after the date on which his employment ended, he will not, anywhere in the United
States, on his own behalf or for another person, business or organization, provide services
of the same nature that he provided while employed by Orion to any Orion Competitor.
“Competitor” means Cooper Lighting, Ruud Lighting, GE Lighting Systems, Lithonia Lighting,
an Acuity Brands Company or any other person, business or organization that is engaged in
the business of, or makes money from:

     i. designing, developing, manufacturing or selling application-specific high
performance lighting systems for use in industrial, warehouse, retail, commercial,
institutional, agricultural and/or healthcare environments, or controls,
technologies and/or products related thereto, including the “Light Pipe” or similar
technology, and the Tridium control systems or similar technology (hereafter
referred to collectively as “Competing Products”), or 

     ii. providing energy management services or project financing related
to such Competing Products, controls or technologies, including project management
or installation services, emissions offset trading or consulting services,
or energy capacity and/or usage trading or consulting services, for use in
industrial, warehouse, retail, commercial, institutional, agricultural and/or
healthcare environments (hereafter referred to as “Competing Services”).

     b. No Solicitation. Prange agrees that for a period of twenty-four (24) months
after the date on which his employment ended, he will not initiate contact in order

 

 

to induce, solicit, or encourage a client, customer, reseller or shareholder of Orion
or Orion products or services with whom Prange had direct contact, during the 12-month
period prior to the end of his employment, to purchase Competing Products or Competing
Services from an Orion Competitor or to invest in an Orion Competitor. Additionally, Prange
agrees that, for a twenty-four (24) month period after the date on which his employment
ended, he will not initiate contact in order to induce, solicit, or encourage any person to
leave Orion’s employ. Nothing in this paragraph is meant to, nor does it, prohibit an
employee of Orion that is not a party to this Agreement from becoming employed by another
organization or person.

     6. Release. Prange understands and agrees that his acceptance of this Agreement means
that, except as stated in paragraph 9, he is forever waiving and giving up any and all claims he
may have, whether known or unknown, against Orion, its subsidiaries, and related companies, their
employees and agents for any personal monetary relief for himself, benefits or remedies that are
based on any act or failure to act that occurred before he signed this Agreement. He understand
that this release and waiver of claims includes claims relating to his employment and the
termination of his employment; any Orion policy, practice, contract or agreement; any tort or
personal injury; any policies, practices, laws or agreements governing the payment of wages,
commissions or other compensation; any laws governing employment discrimination including, but not
limited to, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act, the
Employee Retirement Income Security Act, the Americans with Disabilities Act, the Wisconsin Fair
Employment Act and/or any state or local laws; any laws governing whistle blowing or retaliation,
including but not limited to, the Sarbanes-Oxley Act; any laws or agreements that provide for
punitive, exemplary or statutory damages; and any laws or agreements that provide for payment of
attorney fees, costs or expenses.

     7. No Disparagement. Prange agrees not to make critical, negative or disparaging
remarks about Orion, its services, its products, its employees, officers, directors, shareholders,
investors or agents to any other person, business or organization. He also agrees not to disclose
personal or private information about Orion or its employees, officers or directors, agents or
clients to any other person, business or organization. Prange understands that Orion is relying
upon Prange’s promises in this Agreement, including this paragraph, in agreeing to provide the
benefits outlined in subparagraph paragraph 3.c. above. Orion similarly agrees not to make any
critical, negative or disparaging remarks about Prange to any other person, business or
organization.

     8. Future Employment. Prange agrees that he is not now or hereafter entitled to
employment or reemployment with Orion and he agrees not to knowingly seek such employment, whether
directly on his own or through an employment agency. Prange further agrees and acknowledges that
should he apply for any position in contradiction of this paragraph, Orion may completely ignore
such application and fail to consider it based on this paragraph.

     9. Claims Not Waived. Prange understands that this Agreement does not waive
any claims that he may have: (a) for compensation for illness or injury or medical expenses under
any worker’s compensation statute; (b) for benefits under any plan currently maintained by Orion
that provides for retirement benefits; (c) under any law or any policy or plan currently maintained
by Orion that provides health insurance continuation or conversion rights; or (d) any claim that by
law cannot be released or waived.

 

 

     10. Government Cooperation. Nothing in this Agreement prohibits Prange from
cooperating with any government agency.

     11. Confidentiality/Non-Disclosure. Prange agrees that Orion is a private corporation
whose stock is not publicly held. Information about its financing (debt and equity), financial
performance, stock valuation, capital structure, revenues, expenses, profits, ownership, investors,
business strategies, financial strategies, sales and marketing strategies, management salaries and
compensation, consultants and consultant relationships (current and former), customers and customer
relationships (current and former), shareholder and shareholder relationships (current and former),
suppliers and supplier relationships (current and former), products, services, engineering and
manufacturing, research and development, computer systems, training materials, business strategies
and plans, including financial, marketing, sales and other matters, and other information stamped,
marked or kept as confidential information is considered private and confidential by Orion
(“Confidential Information”). Prange further agrees to not use or disclose any Confidential
Information without Orion’s prior written consent. Nothing in this provision is intended to, nor
shall it, restrict Prange from any employment opportunities or employment with another. Future
employment restrictions are provided in paragraph 5.a. above.

          In addition, Prange agrees that the existence and terms of this Agreement are not to be
disclosed to anyone other than his attorneys, tax advisors, or immediate family, except as required
by law, and that whenever disclosure is made, Prange will advise such persons to whom disclosure is
provided that they may not disclose the existence or terms of this Agreement to others except as
required by law. However, Prange may be required to share the terms of the restrictive covenants
in paragraphs 5.a. and 5.b. with a future employer as Orion requests or instructs, and in such
case, such disclosure shall be permitted.

     12. Trade Secret Law Unaffected. Prange agrees and understands that this Agreement
does not reduce his obligations to comply with applicable laws relating to trade secrets,
confidential information or unfair competition.

     13. No Admission of Liability or Wrongdoing. Nothing in this Agreement shall be
construed or represented by either party to be an admission of liability or wrongdoing by either
party. Any and all allegations of liability or wrongdoing are expressly denied by each party. Nor
is anything in this Agreement meant to suggest that Orion has violated any law or contract or that
Prange has any claim against Orion.

     14. Voluntary Agreement. Prange acknowledges and states that he has entered into this
Agreement knowingly and voluntarily.

     15. Consulting An Attorney. Prange acknowledges that Orion has told him that he
should consult an attorney of his own choice about this Agreement and every matter that it covers
before signing this Agreement. Prange further acknowledges that he has consulted Attorney Thomas
H. Taylor of Johns, Flaherty & Collins, S.C. regarding the terms of this Agreement and every matter
that it covers.

     16. Obligation to Pay Attorney Fees and Costs. Prange understands and agrees that if
he violates the commitments he has made in this Agreement, Orion may seek to recover any

 

 

payments and/or benefits provided in this Agreement and that, except as provided in paragraph 17,
he will be responsible for paying the actual attorney fees and costs incurred by Orion in enforcing
this Agreement or in defending a claim released by paragraph 6.

     17. Exception to Attorney Fees Obligation. The obligation to pay Orion’s attorney
fees and costs does not apply to an action by Prange regarding the validity of this Agreement under
the ADEA.

     18. Complete Agreement. Prange understands and agrees that this document contains the
entire agreement between he and Orion relating to his employment and the termination of his
employment, that this Agreement supersedes and displaces any prior agreements and discussions
relating to such matters and that he may not rely on any such prior agreements or discussions.

     19. Effective Date and Revocation. This Agreement shall not be effective until seven
days after Prange signs it and returns it to Orion’s attorney — Daniel A. Kaplan of Foley &
Lardner LLP. During that seven-day period Prange may revoke his acceptance of this Agreement by
delivering to Kaplan a written statement stating he wishes to revoke this Agreement or not be bound
by it.

     20. Severability. Paragraphs 5.a., 5.b., 11, or 24 of this Agreement shall be
considered separate and independent from the other paragraphs of this Agreement (as well as
separate and independent of each other) and no invalidity of any one of those paragraphs shall
affect any other paragraph or provision of this Agreement.

     21. Final and Binding Effect. Prange understands that if this Agreement becomes
effective it will have a final and binding effect and that by signing and not timely revoking this
Agreement he may be giving up legal rights.

     22. Return of Property. Prange represents and warrants that he has an obligation and
agrees to return and has returned all Orion property. This includes all files, working papers and
notes, memoranda, documents, records, including customer and client and potential customer and
client business cards and information, credit cards, keys and key cards, computers, laptops,
personal digital assistants, cellular telephones, Blackberry devices or similar instruments,
printers, other equipment of any sort, badges, vehicles, and any other property of Orion. In
addition, to the extent he has not already done so, Prange agrees to provide any and all access
codes or passwords necessary to gain access to any computer, program or other equipment that
belongs to Orion or is maintained by Orion or on Orion property. Further, he acknowledges an
obligation and agrees not to destroy, delete or disable any Orion property, including items, files
and materials on computers and laptops.

     23. Future Cooperation. Prange agrees to cooperate with Orion in the future and to
provide to Orion with answers to questions and truthful information, testimony or affidavits
requested in connection with any matter that arose during his employment. This cooperation may be
performed at reasonable times and places and in a manner as to not interfere with any other
employment Prange may have at the time of request. Orion agrees to reimburse Prange for expenses
incurred in providing such cooperation, so long as such expenses are approved in advance by Orion.

 

 

     24. No Contact. Prange agrees that for a period of twenty-four (24) months after the
date on which his employment ended, he will not initiate contact with any client, customer,
reseller or shareholder of Orion or Orion products or services for the purpose of circumventing any
obligation, restriction or covenant in this Agreement.

     25. Representations. By signing this Agreement Prange represents that he has read
this entire document and understands all of its terms.

     26. 21-Day Consideration Period. Prange may consider whether to sign and accept this
Agreement for a period of twenty-one days (21) from the day he received it. If this Agreement is
not signed, dated and returned to Kaplan within twenty-two (22) days, the offer of benefits
described in paragraph 3.c. will no longer be available.

          Date Agreement was given to Prange: June 29, 2007.

	 	 	 	 	 	 	 	 	 	 	 
	ACCEPTED:	 	 	 	ACCEPTED:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Orion Energy Systems, Ltd.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	/s/ James Prange	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	James Prange	 	 	 	By:	 	/s/ Neal Verfuerth	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	Dated:

	 	July 5, 2007
	 	 	 	Name:
	 	Neal Verfuerth	 	 
	 

	 	 	 	 	 	Title:
	 	President	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reviewed and Approved as to Form:	 	 	 	Reveiwed and Approved as to Form	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Johns, Flaherty & Collins, S.C.	 	 	 	Foley & Lardner LLP	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	/s/ Thomas H. Taylor	 	 	 	/s/ Danial A. Kaplan	 	 
	 	 	 	 	 	 	 
	Thomas H. Taylor, Esq.	 	 	 	Daniel A. Kaplan, Esq.	 	 
	Attorneys for James Prange	 	 	 	Attorneys for Orion Energy Systems, Ltd.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dated: July 10, 2007	 	 	 	Dated: July 11, 2007exv10w1

 

John B. Sanfilippo & Son, Inc.

Sanfilippo Value Added Plan (“SVA Plan”)

	I.	 	Purposes of the Plan
	 
	 	 	The purpose of the Plan is to more closely link incentive cash compensation to the creation
of shareholder value. The Plan is intended to foster a culture of performance and ownership,
promote employee accountability, and establish a framework of manageable risks imposed by
variable pay. The Plan is also intended to reward long-term, continuing improvements in
shareholder value with an opportunity to participate in a portion of the wealth created.
	 
	II.	 	Definitions
	 
	 	 	“Actual Improvement” means the annual change in SVA, as determined under Section V(B)(1) of
the Plan, which can be positive or negative.
	 
	 	 	“Annual Salary” means, with respect to a Participant, his or her annual base salary rate in a
particular fiscal year of the Company.
	 
	 	 	“Board” means the Board of Directors of the Company.
	 
	 	 	“Bonus Bank” means the amount of a Plan Participant’s Bonus potential that is not yet earned
and which is accounted for by the Company in a non-interest bearing book entry account until
such time as it may be earned and paid in the form of Bonus Paids under the Plan.
	 
	 	 	“Bonus Declared” means the annual bonus amount for a Plan Year, as determined under Section V
of the Plan.
	 
	 	 	“Bonus Interval” means the amount of SVA growth or diminution as a variance from Target SVA
Improvement that would either (i) result in the doubling of the Target Bonus for SVA
performance above Target SVA Improvement; or, (ii) result in the realization of no Target
Bonus for SVA performance below Target SVA Improvement.
	 
	 	 	“Bonus Paid” has the meaning set forth in Section VI.B.
	 
	 	 	“Capital Charge” means the Cost of Capital multiplied by the Company’s aggregate
capital, as determined by the Committee.

 

 

John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	 	“Cause” means the Participant’s (i) commission of an act of fraud, embezzlement or theft in
connection with the Participant’s employment, (ii) commission of intentional wrongful damage
to property of the Company, (iii) failure to perform the material duties of employment after
receipt of written notice from the Company, or (iv) conviction of a felony (or plea of guilty
or nolo contendre).
	 
	 	 	“Change in Control” means the later of: (i) date on which no shares of the Company’s Class A
common stock, $.01 par value per share, remain outstanding, and (ii)(A) a change in the
ownership of the Company, (B) a change in effective control of the Company or (C) a change in
the ownership of a substantial portion of the assets of the Company (each of A, B and C as
defined in Section 409A).
	 
	 	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	 	“Committee” has the meaning set forth in Section IV.A.
	 
	 	 	“Company” means John B. Sanfilippo & Son, Inc., a Delaware corporation, and its successors
and assigns.
	 
	 	 	“Cost of Capital” means the Company’s cost of equity plus its cost of debt, expressed as a
percentage, as determined by the Committee using a weighted average of the expected return on
the Company’s debt and equity capital. Cost of Capital is intended to reflect the rate of
return that an investor could earn by choosing another investment with equivalent risk.
	 
	 	 	“Declared Bonus Multiple” means the multiple determined in accordance with Section V(B)(4) of
the Plan for purposes of determining a Participant’s Bonus Declared.
	 
	 	 	“Disability” means a Participant is (i) unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not less than 12
months, or (ii) by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering employees of the Company or Subsidiary; or,
if different, as may be defined for purposes of Section 409A.
	 
	 	 	“Key Employee” means a Participant who is a “specified employee” for purposes of Section
409A.

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	 	“NOPAT” means the Company’s net operating profit after tax, as determined by the Committee
from the Company’s audited financial statements.
	 
	 	 	“Participant” shall be as defined in Section III.
	 
	 	 	“Performance Target Bonus” means the annual Bonus Declared a Participant would earn, if any,
for a Plan Year if Actual Improvement equaled Target SVA Improvement, determined by
multiplying a Participant’s Annual Salary for that Plan Year by the Participant’s Performance
Target Bonus Percentage for that Plan Year.
	 
	 	 	“Performance Target Bonus Percentage” means the percentage of a Participant’s Annual Salary,
as established or approved by the Committee for purposes of determining a Participant’s
Performance Target Bonus.
	 
	 	 	“Plan” means the John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan.
	 
	 	 	“Plan Year” means the fiscal year of the Company.
	 
	 	 	“Retirement” means a Participant’s termination of employment, other than for Cause, either:
(i) on or after age 65, or (ii) on or after age 55 if the Participant has been credited with,
at least, 10 full years of employment at the time of his termination of employment.
	 
	 	 	“Section 409A” means Code Section 409A and all applicable rules and regulations related
thereto.
	 
	 	 	“Subsidiary” means any corporation at least eighty percent (80%) of the outstanding
voting stock of which is owned by the Company.
	 
	 	 	“SVA” means the “shareholder value added” of the Company determined each Plan Year by
deducting the Company’s Capital Charge from NOPAT, as determined by the Committee.
	 
	 	 	“Target Bonus” means the annual bonus a Participant may earn which shall be based on one or
more of the following with weightings as determined by the Committee: Actual Improvement
(with a minimum weighting of eighty percent (80%))and individual Participant performance.
	 
	 	 	“Target SVA Improvement” means the targeted improvement in annual SVA growth for the Bonus
Declared Percentage to be earned in full.
	 
	 	 	III. Eligibility

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	 	An employee of the Company or a Subsidiary who, individually or as part of a group, is
selected by the Committee to be eligible to participate in the Plan for the Plan Year shall
become a Participant as of the first day of such Plan Year, unless otherwise determined by
the Committee.

	IV.	 	Administration

	 	A.	 	The Committee
	 
	 	 	 	The Compensation, Nominating and Corporate Governance Committee of the Board shall be
the Committee hereunder unless a new, independent committee is selected by the Board.
For this purpose, a new Committee will be deemed independent if it is comprised solely
of two or more directors who are “independent directors” within the meaning of the The
Nasdaq Stock Market, Inc.’s rules and regulations.
	 
	 	B.	 	Powers
	 
	 	 	 	The Committee shall have full and exclusive discretionary power to:

	 	1.	 	Interpret the Plan,
	 
	 	2.	 	To determine those employees of the Company and its Subsidiaries who
are eligible to participate in the Plan, and
	 
	 	3.	 	Adopt such rules, regulations, and guidelines (including the
establishment of performance criteria), for administering the Plan as the
Committee may deem necessary or proper, including the full discretion not to make
payment of any or all of the Bonus Paid determined in Section V.

	 	C.	 	Adjustment to Payments
	 
	 	 	 	Subject to final approval of the Committee, individual Participant payments may be
subject to change by recommendation of the Participant’s manager and senior management
team, with consideration given to the individual’s successful job performance. The
Company retains the right to declare forfeited any payment amounts determined hereunder
for any Participant who violates any Company policy.

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	D.	 	Third-Party Advisors
	 
	 	 	 	The Committee may employ attorneys, consultants, accountants, and other persons. The
Board, Committee, the Company and its officers shall be entitled to rely upon the
advice or opinion of such persons.
	 
	 	E.	 	Binding Effect of Committee Actions
	 
	 	 	 	All actions taken and all interpretations and determinations made by the Committee
shall be final and binding upon the Participants, the Company, and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination, or interpretations made in good faith with respect to the Plan. All
members of the Committee shall be fully protected and indemnified by the Company, to
the fullest extent permitted by applicable law, in respect of any such action,
determination, or interpretation of the Plan.
	 
	 	F.	 	Foreign Jurisdiction
	 
	 	 	 	The Committee shall have the discretion to modify or amend the Plan, or adopt
additional terms and/or conditions, as may be deemed necessary or advisable in order to
comply with the local laws and regulations of any jurisdiction.

	V.	 	Determination of Bonus Declared

	 	A.	 	Determination of SVA and Actual Improvement

	 	1.	 	Beginning of Plan Year Determinations. At the beginning of each
applicable Plan Year, the following determinations shall be made:

	 	a)	 	The Committee shall determine the Company’s annual SVA as
of the end of the preceding Plan Year.
	 
	 	b)	 	The Committee shall determine or approve Performance
Target Bonus Percentages for each Participant and the Company’s Cost of
Capital for the applicable Plan Year.
	 
	 	c)	 	The Committee shall establish the Target SVA Improvement
and the Bonus Interval for the applicable Plan Year, which standards may be
set by the Committee for one or more Plan Years.

	 	2.	 	End of Plan Year Determinations. As of the end of each applicable
Plan Year, the following determinations shall be made:

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	a)	 	The Committee shall determine the Company’s annual SVA as
of the end of the Plan Year and the resulting Actual Improvement.
	 
	 	b)	 	The Committee shall determine, or approve the
determination of, the Declared Bonus Multiple for such Plan Year, consistent
with the terms of the Plan.

	 	B.	 	Determination of Bonus Declared
	 
	 	 	 	Each Participant shall be credited with a Bonus Declared, if any, for a Plan Year
according to the following:

	 	1.	 	The Actual Improvement in SVA for a Plan Year shall be determined by
subtracting the SVA for the immediately preceding Plan Year from the SVA for the
Plan Year.
	 
	 	2.	 	If the Actual Improvement exceeds the Target SVA Improvement, the
amount of that excess shall be the “Excess Improvement”;
	 
	 	3.	 	If the Target SVA Improvement exceeds the Actual Improvement, the
amount of that excess shall be the “Shortfall”;
	 
	 	4.	 	The Declared Bonus Multiple shall be determined by comparing the
Excess Improvement or Shortfall to the Target SVA Improvement and Bonus Interval,
according to the following:

	 	a)	 	If the Actual Improvement equals the Target SVA
Improvement, the Declared Bonus Multiple shall equal one (1).
	 
	 	b)	 	If the Actual Improvement exceeds the Target SVA
Improvement, the Declared Bonus Multiple shall equal the Excess Improvement
divided by the Bonus Interval, plus one (1).
	 
	 	c)	 	If the Actual Improvement is less than the Target SVA
Improvement, the Declared Bonus Multiple shall equal the Shortfall
(expressed as a negative number) divided by the Bonus Interval, plus one
(1).

	 	5.	 	The Bonus Declared for each Participant shall equal the Participant’s
Performance Target Bonus, multiplied by the Declared Bonus Multiple, with such
amount being credited to the Participant’s Bonus Bank in accordance with Section
VI of this Plan;

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	6.	 	A Participant’s Bonus Declared may be based upon the Declared Bonus
Multiple for the Company only, or at the discretion of the Committee, a
Participant’s Bonus Declared
may be based upon the Declared Bonus Multiple for a particular division,
operation, or Subsidiary of the Company, or combination thereof as determined by
the Committee.

	VI.	 	Payment of Bonus Paid

	 	A.	 	Bonus Bank Determination
	 
	 	 	 	Each Participant shall have a Bonus Bank to which the Bonus Declared shall be credited.
For each applicable Plan Year the Bonus Bank shall be increased by the amount of any
positive Bonus Declared or decreased by the amount of any negative Bonus Declared. The
bonus payable to a Participant with respect to the applicable Plan Year, if any (“Bonus
Paid”), shall be determined as set forth in Section VI.B..
	 
	 	B.	 	Determination of Bonus Paid
	 
	 	 	 	After the end of each applicable Plan Year, after first crediting the Participant’s
Bonus Bank with the Participant’s Bonus Declared (which may be positive or negative),
the Company shall pay each Participant a Bonus Paid equal to the sum of (i) the
Participant’s Bonus Declared, if positive (but not exceeding 120% of the Performance
Target Bonus), plus (ii) one-third (1/3) of the Participant’s remaining Bonus Bank
balance as of the payment date (after reducing for (i)); provided that the Bonus Paid
may not exceed the Participant’s Bonus Bank. If the amount in a Participant’s Bonus
Bank prior to determining the Bonus Paid is less than the Participant’s Bonus Declared,
the entire amount of the Participant’s Bonus Bank shall be paid. No Bonus Paid shall
be payable to a Participant unless and until the Participant has a positive balance in
his or her Bonus Bank as of an applicable payment date. The Bonus Paid shall be paid by
the Company within thirty (30) days following the Committee’s determination of the
Declared Bonus Multiple, but in no event earlier than the first day of the Plan Year
following the applicable Plan Year and no later than the fifteenth (15th)
day of the third month following the end of the applicable Plan Year. The Bonus Paid
determined under this subsection shall not be earned and vested by the Participant
until such time as the date on which it is paid.

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	C.	 	Payment Upon Termination of Employment

	 	1.	 	In General. Except as specified below, in the event a Participant’s
employment is terminated for any reason or the Participant becomes ineligible to
participate in the Plan, (i) the Participant shall not earn, and Participant’s
Bonus Bank shall not be credited with, any Bonus Declared for the Plan Year in
which the termination occurs, and (ii) in the event that the prior Plan Year Bonus
Paid has not yet been paid, the Participant shall not earn, and Participant’s
Bonus Bank shall not be credited with, any Bonus Declared for such prior Plan
Year. The full amount of the Participant’s Bonus Bank shall be forfeited in its
entirety as of the termination date and the Participant shall have no rights or
interests in the Plan thereafter. However, the Committee, in its sole discretion,
may elect to pay some or all of such Participant’s Bonus Bank on such terms as it
deems appropriate, provided that any such payment is made within 2 and 1/2 months
following the end of the Plan Year in which employment termination occurs.
	 
	 	2.	 	Upon Death, Disability, Retirement or Termination by the Company
Other than for Cause. In the event of a Participant’s termination of employment
due to death, Disability, Retirement or by the Company other than for Cause, the
Participant’s Bonus Bank shall be credited as of the end of the Plan Year in which
the termination occurs
(the “Termination Year”), with a Bonus Declared determined in accordance with
Section VI(B) of the Plan, multiplied by a fraction (the “Completion Multiple”),
the numerator of which shall equal the total number of days during the
Termination Year in which the Participant was employed by the Company, and the
denominator of which shall be 365. Thereafter, following the payment, if any, of
the Bonus Paid for the Termination Year, the full amount of the Participant’s
Bonus Bank (if a positive balance then exists) shall be considered earned as of
the termination date and shall be paid by the Company to the former Participant,
or in the event of his or her death, to his or her estate or designated
beneficiary, in one lump sum within the time set forth in Section VI(B) above and
the Participant shall have no rights or interests in the Plan thereafter. At the
discretion of the Committee, any payment hereunder that is due to termination of
employment by the Company other than for Cause may be subject to a requirement
that the Participant execute a release of claims

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	 	 	(including claims relating to
age discrimination) against the Company and related persons at the time and in
the form determined by the Company from time to time.

	VII.	 	General Provisions

	 	A.	 	No Right to Employment or Participation
	 
	 	 	 	No Participant or other person shall have any claim or right to be retained in the
employment of the Company or a Subsidiary by reason of the Plan or any Bonus Declared
or Bonus Bank. Selection for eligibility to participate in the Plan for any given Plan
Year shall not entitle the Participant to participate in any subsequent Plan Year. In
the event a Participant is not selected to participate in a subsequent Plan Year, such
Participant’s Bonus Bank shall remain unchanged for such year and Participant shall not
be entitled to any payment of such Bonus Bank unless and until such Participant again
becomes eligible or is again selected to participate in the Plan.
	 
	 	B.	 	Plan Expenses
	 
	 	 	 	The expenses of the Plan and its administration shall be borne by the Company.
	 
	 	C.	 	Plan Not Funded
	 
	 	 	 	The Plan shall be unfunded. The Company shall not be required to establish any special
or separate fund or to make any other segregation of assets to assure the payment of
any Bonus Declared or Bonus Bank under the Plan.
	 
	 	D.	 	Reports
	 
	 	 	 	The appropriate officers of the Company shall cause to be filed any reports, returns,
or other information regarding the Plan, as may be required by applicable statute,
rule, or regulation.
	 
	 	E.	 	Governing Law
	 
	 	 	 	The validity, construction, and effect of the Plan, and any actions relating to the
Plan, shall be determined in accordance with the laws of the state of Illinois and
applicable federal law, without regard to the conflicts of laws provisions of any
state.

VIII. Amendment and Termination of the Plan

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	 	The Board may, from time to time, amend the Plan in any respect, or may discontinue or
terminate the Plan at any time, provided, however, that:

	 	A.	 	Impact on Existing Rights
	 
	 	 	 	No amendment, discontinuance or termination of the Plan shall alter or otherwise affect
the amount credited to a Participant’s Bonus Bank or affect the amount of a Bonus
Declared which may be earned prior to the date of termination;
	 
	 	B.	 	Impact on SVA Performance Measurement System
	 
	 	 	 	No amendment shall be made which would replace the SVA performance measurement system
for purposes of determining the Bonus Declared under the Plan during a Plan Year for
such Plan Year, provided that the Board or Committee shall have the authority to adjust
and establish Target SVA Improvement, Performance Target Bonus Percentages, and other
criteria utilized in the SVA performance measurement system;
	 
	 	C.	 	Consequence of Full Termination of Plan
	 
	 	 	 	In the event of the termination of this Plan, the full amount, if any, then credited to
a Participant’s Bonus Bank shall be paid in full within sixty (60) days following the
effective date of termination, but in no event later than the fifteenth
(15th) day of the third month following the Plan Year in which the Plan is
terminated. If the Plan is terminated prior to the end of a Plan Year, the Bonus
Declared for that Plan Year shall be determined and credited to a Participant’s Bonus
Bank as set forth in Section VI of the Plan, assuming that Target SVA Improvement for
that Plan Year had been achieved, then pro-rated for the actual number of days in the
Plan Year before the Plan was terminated; and
	 
	 	D.	 	Consequence of Change in Control
	 
	 	 	 	In the event of a Change in Control, the Bonus Declared for that Plan Year shall be
determined and credited to a Participant’s Bonus Bank as set forth in Section VI of the
Plan, assuming that Target SVA Improvement for that Plan Year had been achieved, then
pro-rated for the actual number of days in the Plan Year before the Change in Control,
except that the Bonus Paid shall equal one hundred percent (100%) of the Participant’s
Bonus Bank after such pro-rated Bonus Declared is credited, and shall be paid at the
effective time of the Change in Control.
	 
	 	E.	 	Section 409A
	 
	 	 	 	Notwithstanding anything to the contrary in this Plan:

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John B. Sanfilippo & Son, Inc. Sanfilippo Value Added Plan

	 	1.	 	To the extent required in order to avoid accelerated taxation and/or
tax penalties under Section 409A, amounts that would otherwise be payable pursuant
to this Plan during the six-month period immediately following the Participant’s
termination of employment shall instead be paid on the first business day after
the date that is six months following the Participant’s “separation from service”
within the meaning of Section 409A; and
	 
	 	2.	 	A Participant shall not be entitled to any payments resulting from or
arising due to a “termination of employment”, “termination” or “retirement” (or
other similar term having a similar import) unless (and until) such Participant
has “separated from service” within the meaning of Section 409A.

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