Document:

exv10w4

 

Exhibit 10.4

June 16, 2006

Kathleen E. McDermott

29 East Churchill Drive

Salt Lake City, UT 84103

Dear Ms. McDermott:

     This letter agreement (the “Agreement”) will confirm our understanding regarding your
separation from Nash Finch Company (the “Company”).

SECTION 1

RESIGNATION 

     The effective date of your resignation as an executive officer of the Company, as an officer
and director of its Affiliates (as defined in subsection 5.2) and as an officer and director of the
NFC Foundation is February 14, 2006, and the effective date of your resignation from employment
with the Company and its Affiliates is February 28, 2006 (your “Termination Date”). Commencing on
February 14, 2006, you had no authority to bind the Company.

SECTION 2

PAYMENTS, BENEFITS AND RIGHTS

     2.1. Unpaid Salary and Unused Vacation. The Company has paid you (a) the amount of
all earned and previously unpaid base salary for the period ending on your Termination Date and (b)
an amount equal to the cash equivalent of your unused accrued vacation as of your Termination Date,
and which is in settlement of any and all vacation that you have accrued, and to which you are
entitled from the Company. You will not accrue or be entitled to any vacation after your
Termination Date.

     2.2. Benefits, Generally.

	(a)	 	Cessation of Benefits. Your active participation in the employee benefit plans
maintained by the Company and its Affiliates will cease as of your Termination Date, subject
to your right to elect continuation coverage under the Company’s group medical, dental and
vision benefits plans in accordance with the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”).

	(b)	 	Indemnification. You will continue to be eligible for indemnification pursuant to
the existing Indemnification Agreement between you and the Company dated April 16, 2002. The
terms and conditions of the Indemnification Agreement are in full force and effect and are
unchanged by this Agreement.

	(c)	 	Withholding With Respect to Restricted Shares. You acknowledge and agree that you
are liable for payment of the applicable withholding taxes of $2,517.68 with respect to the
two hundred ten (210) shares of restricted Company Common Stock that vested on or

 

 

	 	 	about February 23, 2006, and your ownership of those shares is subject to your payment of
that withholding obligation.

	(d)	 	Eligibility for Benefits. Except as otherwise provided in this Agreement with
respect to plans or arrangements specifically identified in this Agreement, you shall be
entitled to benefits after your Termination Date under the employee benefit plans and
arrangements maintained by the Company and its Affiliates, as in effect from time to time,
based on the benefits you earned up to your Termination Date under those benefit plans and
arrangements, and based on the fact that your employment with the Company ceased on your
Termination Date. A schedule of your benefits under such plans and arrangements is set forth
in Exhibit 1 to this Agreement.

     2.3. Benefits after Termination. You shall be entitled to compensation, benefits,
payments, and distributions from the Company in accordance with this Section 2.3.

	(a)	 	Severance Payments. Subject to the terms of this Agreement, you shall be entitled to
Severance Payments (the “Severance Payments”) as described in this subsection (a):

	 	(i)	 	On the first regular payday after the Initial Payment Date, you will receive an
initial Severance Payment of $147,500.00 On each regular weekly payday thereafter, you
will receive an additional Severance Payment installment of $5,673.08. The payments
shall continue until the Payment Termination Date. In no event shall the aggregate
gross Severance Payments exceed $295,000.
	 
	 	(ii)	 	The Severance Payments shall not be considered compensation or earnings for
purposes of any employee benefit plan or arrangement of the Company and its Affiliates.

	(b)	 	Medical Benefits. For the period beginning on your Termination Date, and ending on
the earlier of (i) the Payment Termination Date, or (ii) the date on which your COBRA
continuation coverage period otherwise ends in accordance with COBRA, you shall be entitled to
COBRA continuation coverage under the group medical, dental and vision benefits plans of the
Company and its Affiliates in accordance with COBRA (provided you properly and timely elect
such COBRA coverage) at a monthly cost equal to the monthly cost applicable to active
employees of the Company. Such period of subsidized COBRA coverage shall be counted toward,
and shall not be in addition to or otherwise extend the duration of, the maximum COBRA period
applicable to you, your spouse or any of your dependents, and such period of subsidized COBRA
coverage shall not in any way amplify the benefits to which you are entitled under COBRA.
With respect to the COBRA premiums you pay during the period commencing with your Termination
Date and ending on the date this Agreement becomes final and binding as described in
subsection 4.1, the Company shall reimburse you an amount equal to the difference between the
aggregate COBRA premiums you paid during such period for the COBRA coverage you elected and
the aggregate active employee premiums for the same coverage during such period.

2

 

	(c)	 	Life Insurance. You will be eligible for life insurance coverage under the Company’s
group term life insurance policy until the one-year anniversary following the Termination Date
or, if earlier, on the date on which you obtain other employment. The life insurance coverage
shall be at the same level as you had in place on the Termination Date.

	(d)	 	Legal Fees. The Company will reimburse you up to $5,000 for the reasonable legal
fees you incur in connection with the negotiation of the Agreement. Such reimbursement shall
be made as soon as practicable after the later of the Initial Payment Date or the date on
which you have submitted evidence to the Company of having incurred such fees.

     2.4. Withholding. All amounts otherwise payable under the Agreement shall be subject
to customary withholding and other employment taxes, and shall be subject to such other withholding
as may be required in accordance with the terms of this Agreement; provided that reimbursement of
your legal fees in connection with the negotiation of this Agreement, as described in subsection
2.3(d), shall not be subject to withholding.

     2.5. Other Payments. Except as specified in this Section 2, or otherwise expressly
provided in or pursuant to the Agreement, you shall be entitled to no compensation, benefits or
other payments or distributions, and references in the Executive Release to the release of claims
against the Company shall be deemed to also include reference to the release of claims against all
compensation and benefit plans and arrangements established or maintained by the Company and its
Affiliates.

     2.6. Mitigation, Alienation, and Set-Off.

	(a)	 	Should you obtain employment in a new position that is substantially comparable to your
former position as General Counsel of the Company prior to the first anniversary of your
Termination Date, you shall promptly notify the Company in writing and the Company’s remaining
obligation to make the Severance Payments described in subsection 2.3(a), above, shall cease.
For purposes of this subsection 2.6(a), a new position is “substantially comparable” to your
former position as General Counsel with the Company if the annual salary associated with the
new position are nearly equivalent to or greater than your salary at the time of your
resignation from employment with the Company. Neither this subsection 2.6(a) nor any other
provision of this Agreement in any way obligates you to search for or accept any new position.
As a condition of continued receipt of Severance Payments, the Company may require that you
certify that you have not obtained employment as described in this subsection 2.6(a).

	(b)	 	The Company shall be entitled to set off against the amounts payable to you under this
Agreement any amounts owed to the Company by you, provided that the Company provides to you
reasonable documentation of such amounts that it asserts are owed to the Company by you.

	(c)	 	This Agreement is personal to you and may not be assigned by you without the written consent
of the Company. Your interests under this Agreement are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of you or your beneficiaries.

3

 

     2.7. Initial Payment Date. For purposes of this Agreement, the “Initial Payment Date”
shall be the first business day following the later of (a) the expiration of your right to revoke
the execution of this Agreement in accordance with subsection 2(d) of Exhibit 2 (relating to the
Executive Release) of this Agreement (which period of permitted revocation is sixteen (16) days
from the date of execution of this Agreement, as set forth in such subsection 2(d)) and in no event
earlier than the first business day following the day on which you have (i) returned to the Company
all property belonging to the Company and its Affiliates in accordance with subsection 3.1 and (ii)
satisfied your withholding obligation in accordance with subsection 2.2(c) or (b) the six- (6-)
month anniversary of your Termination Date.

     2.8. Payment Termination Date. The “Payment Termination Date” shall be the earliest
to occur of: (a) the date on which you are employed by a new employer as described in subsection
2.6(a); (b) the date you receive the 26th weekly Severance Payment installment of
$5,673.08 as described in subsection 2.3(a)(i); (c) the date of your death; or (d) the date, if
any, of any breach by you of the provisions of Section 3. The occurrence of a Payment Termination
Date by reason of a breach of this Agreement shall be in addition to, and not in lieu of, any other
remedies to which the Company may be entitled by reason of your breach of this Agreement.
Notwithstanding anything in this Agreement to the contrary, if the Payment Termination Date occurs
prior to the date the initial Severance Payment of $147,500.00 is to be made, that initial
Severance Payment shall be reduced to an amount equal to the product of (i) the number of full
weeks between the Termination Date and the Payment Termination Date and (ii) $5,673.08.

     2.9. Access to Company Computers. You acknowledge that, pursuant to the Company’s
handbook and code of business conduct, the Company’s e-mail and computer system is the property of
the Company. However, within thirty (30) days after the Executive Release and Waiver attached as
Exhibit 2 becomes effective, the Company will provide you with electronic copies of the following
personal documents from Lotus Notes and the personal computer that you used that you used during
your employment:

	 	•	 	Your Lotus Notes address book, except for those entries that the Company
reasonably determines to be purely business-related;
	 
	 	•	 	Electronic copies of personal photos stored in your computer Desktop;
	 
	 	•	 	E-mail folders identified with the terms “Christmas,” “Murray,” “McDermott,” and
“passwords,” or substantially similar terms, except for such information in these
folders that the Company reasonably determines to be purely business-related; and
	 
	 	•	 	Personal documents stored on the P Drive and the C Drive and folders identified
with the terms “Kathy,” “McDermott,” “Murray,” “Katie, “Mary Rose” and “personal,”
including documents that may be found within subfolders under files labeled “my
documents,” except for such documents in these folders that the Company reasonably
determines to be purely business-related.

Within thirty (30) days after the Executive Release and Waiver attached as Exhibit 2 becomes
effective, the Company will also provide you

4

 

with a
list of folders created by you on the P Drive and C Drive and in Lotus Notes. You may, within twenty (20) days of receiving such list of
folders, submit to the Company a written request for additional documents, and the Company will
provide to you electronic copies of such documents within twenty (20) days of receiving your
written request, if the Company reasonably determines that such documents are personal. You will
not have access to the Company’s email or computer system on either a supervised or unsupervised
basis.

SECTION 3

REPRESENTATIONS AND COVENANTS

     3.1. Return of Company Property. You represent and warrant that you have (a) removed
your personal effects from your office at the Company, (b) vacated such office, (c) returned to the
Company all property of the Company and its Affiliates, including, without limitation, the Company
laptop computer and BlackBerry that the Company provided for your use while you were an
employee and executive officer of the Company, any keys, credit cards, passes, files, confidential
documents or material, or other property belonging to the Company or the Affiliates, and (d)
returned all writings, files, records, correspondence, notebooks, notes and other documents and
things (including any copies thereof) containing any trade secrets relating to the Company or the
Affiliates. For purposes of the preceding sentence, the term “trade secrets” shall have the
meaning ascribed to it under the Minnesota Uniform Trade Secrets Act, Chapter 325C, or, if such act
is repealed, the Uniform Trade Secrets Act (on which the Minnesota statute is based). You further
represent and warrant that (i) prior to your Termination Date, you have not deleted or altered any
documents, files or information in the Company laptop computer or BlackBerry, or in the Company’s
electronic or other records, or duplicated, downloaded or otherwise retained any documents, files
or other information belonging to the Company or its Affiliates, other than a routine deletion or
alteration in the ordinary course of business or (ii) after February 13, 2006, you have not deleted
or altered any documents, files or information in the Company laptop computer or BlackBerry, or
duplicated, downloaded or otherwise retained any documents, files or other information belonging to
the Company or its Affiliates, other than a routine deletion in the ordinary course of business.
This subsection 3.1 shall not require you to return copies of documents that you provided to your
legal counsel; provided that (1) such copies are used solely in representing you in any
governmental investigation of or action against you; (2) you have delivered to the Company the
originals of all such documents; (3) neither you nor your legal counsel shall use such copies for
any purpose other than for your representation as described above and except as required by law or
legal process; (4) neither you nor your legal counsel shall provide such copies (or disclose the
contents thereof) to any other person or entity without the Company’s prior written consent; and
(5) you or your counsel either destroy such copies or return them to the Company at the end of the
investigation or related litigation.

     3.2. Assistance with Claims. You agree that, for a reasonable period after your
Termination Date, and continuing until such time as the cases and investigations listed below are
finally concluded, and in any event for a period of not less than twenty four (24) months after
your Termination Date, you shall reasonably assist the Company and its Affiliates in the defense of
any claims that may be made against the Company and/or its Affiliates, and shall assist the Company
and its Affiliates in the prosecution of any claims that may be made by the Company or any
Affiliate, to the extent that such claims may relate to services performed by you for the Company
or its Affiliates. The

5

 

Company
shall consult with you, and make reasonable efforts to schedule such assistance so as not to materially disrupt your business and personal affairs.
You agree, unless precluded by law, to promptly inform the Company in writing if you are asked to
participate (or otherwise become involved) in any lawsuits involving such claims that may be filed
against the Company or any Affiliate. You agree that you shall not provide consultation or
cooperation to any person or entity whose interests are adverse to the interests of Company or the
Affiliates in defending such litigation, except as otherwise provided by law or legal process. You
also agree, unless precluded by law or by request of a governmental agency, to promptly inform the
Company in writing if you are asked to assist in any investigation (whether governmental or
private) of the Company or any Affiliate (or their actions), regardless of whether a lawsuit has
then been filed against the Company or any Affiliate with respect to such investigation. The
Company agrees to reimburse you for all of your reasonable out-of-pocket expenses associated with
such assistance to the Company, including travel expenses, in accordance with the Company’s
reimbursement policy. The cases and investigations referred to in this subsection 3.2 are:

	(a)	 	Brennan et al. v. Nash Finch Company.
	 
	(b)	 	Alfred A. Umberger Trust v. Nash Finch Company, et al.
	 
	(c)	 	Any case that is a consolidation of the cases that are named in (a) and (b) above.
	 
	(d)	 	Any investigation or inquiry conducted by the Securities Exchange Commission, or other
governmental body, with the exception of routine employment charges of discrimination.
	 
	(e)	 	Any disputes with Roundy’s concerning the Company’s acquisition of certain of Roundy’s assets
in 2005, including but not limited to claims by Roundy’s against the Company related to the
purchase price, and claims by the Company against Roundy’s related to the acquisition.

Nothing in this subsection 3.2 shall prevent you from honestly testifying at a legal proceeding in
response to a lawful and properly served subpoena in a proceeding involving the Company or its
Affiliates or from cooperating with any governmental investigation.

     3.3. Noncompetition and Disclosure. You agree that for the period beginning on your
Termination Date and ending on the twelve (12) month anniversary of your Termination Date you will
not, without the prior written consent of the Company, alone or in any capacity (other than by way
of holding shares of a publicly traded company in an amount not exceeding five percent (5%) of the
outstanding class or series so traded) with any other person or entity, directly or indirectly
engage in competition with the Company or any Affiliate, in association with or as an officer,
director, employee, principal, agent or consultant of or to SuperValu, Inc. or Spartan Stores,
Inc.; however, the foregoing restriction shall not prevent you from affiliating with or becoming
employed by a law firm that represents SuperValu, Inc. or Spartan Stores, Inc., provided that you
do not personally represent or advise SuperValu, Inc. or Spartan Stores, Inc. prior to the twelve
(12) month anniversary of your Termination Date. You warrant that, in so far as you are aware, you
have not withheld or failed to disclose any material fact concerning matters which you were dealing
with solely on behalf of the Company and its Affiliates prior to your Termination Date where
withholding such

6

 

material
fact would reasonably be expected to be significantly detrimental to the financial results of the Company and its Affiliates as a
whole and so far as you are aware you are not in breach of any material term (express or implied)
of any agreement between you and the Company or any Affiliate.

     3.4. Non-Solicitation. You agree that for the period beginning on your Termination
Date and ending on the twelve (12) month anniversary of your Termination Date, you will not employ,
offer to employ, engage as a consultant, or form an association with any person who is then, or who
during the preceding one (1) year was, an employee of the Company or any Affiliate, nor will you
assist any other person in soliciting for employment or consultation any person who is then, or who
during the preceding one (1) year was, an employee of the Company or any Affiliate.

     3.5. Confidential Information. You agree that at all times:

	(a)	 	To keep secret and confidential indefinitely, all Confidential Information, and not to
disclose the same, either directly or indirectly, to any other person, firm, or business
entity, or to use it in any way, except (i) as may be required by the lawful order of a court
or agency of competent jurisdiction or similar legal process, or (ii) as is requested by a
governmental agency in the course of a governmental investigation, or (iii) to the extent that
you have express written authorization from the Chief Executive Officer of the Company.

	(b)	 	To the extent that any court or agency seeks to have you disclose Confidential Information,
you shall promptly inform the Company, in writing, and you shall take reasonable steps to
prevent disclosure of Confidential Information until the Company has been informed of such
requested disclosure, and the Company has an opportunity to respond to such court or agency.
To the extent that you obtain information on behalf of the Company or any of the Affiliates
that may be subject to attorney-client privilege as to the Company’s attorneys, you shall take
reasonable steps to maintain the confidentiality of such information and to preserve such
privilege.

	(c)	 	Nothing in the foregoing provisions of this subsection 3.5 shall be construed so as to
prevent you from using, in connection with your employment for yourself or an employer other
than the Company or any of the Affiliates, knowledge which was acquired by you during the
course of your employment with the Company and the Affiliates, and which is generally known to
persons of your experience in other companies in the same industry.

	(d)	 	This subsection 3.5 shall not be construed to unreasonably restrict your ability to disclose
confidential information in an arbitration proceeding or a court proceeding in connection with
the assertion of, or defense against any claim of breach of this Agreement. If there is a
dispute between the Company and you as to whether information may be disclosed in accordance
with this subsection (d), the matter shall be submitted to the tribunal for decision.
Further, nothing in this subsection 3.5 shall prohibit you from disclosing Confidential
Information to your own legal counsel as you deem appropriate and necessary in the context of
the attorney-client relationship.

7

 

	(e)	 	For purposes of this Agreement, the term “Confidential Information” shall include all
non-public information (including, without limitation, information regarding litigation and
pending litigation) concerning the Company and the Affiliates which was acquired by or
disclosed to you during the course of your employment with the Company, or during the course
of your consultation with the Company following your Date of Termination (regardless of
whether consultation is pursuant to subsection 3.2), and which the Company itself treated as
sensitive and confidential information. For purposes of this Agreement, the term
“Confidential Information” shall also include all non-public information concerning any other
company that was shared with the Company or an Affiliate subject to an agreement to maintain
the confidentiality of such information.

     3.6. Disparagement. You agree that you will not make any statement or disclosure
(whether orally or in writing, including electronically) that disparages the Company or its
Affiliates (or its or their employees, officers or directors) and is intended or reasonably likely
to result in harm to the Company or its Affiliates (or its or their employees, officers or
directors); provided that this subsection 3.6 shall in no way restrict your ability to testify
truthfully as a witness or cooperate fully in any governmental investigation, your compliance with
other legal obligations, your assertion of or defense against any claim of breach of this Agreement
(including the Exhibits thereto and the referenced plans and arrangements), or your statements or
disclosures to officers or directors of the Company or its Affiliates, and (b) shall not require
you to make false statements or disclosures. The Company agrees that it shall not via a press
release make any statement that disparages you; provided that the Company’s officers, directors,
employees and agents shall at all times remain free to provide truthful testimony or other
information to governmental agencies or in the course of any investigations, litigation or other
legal proceedings. Upon this Agreement becoming final and binding as described in subsection 4.1,
the Company shall instruct its officers and directors verbally (but not necessarily in writing)
that they are prohibited from making disparaging statements about you to the press or in any other
public forum (subject to their remaining free to provide truthful testimony and other information
as described above).

     3.7. Effect of Covenants. Nothing in this Section 3 shall be construed to adversely
affect the rights that the Company would possess in the absence of the provisions of such Section.
For the avoidance of doubt, it is recited here that the provisions of this Section 3 shall be
subject to any applicable state bar requirements.

SECTION 4

RELEASE OF CLAIMS

     4.1. Waiver and Release. As part of this Agreement, and in consideration of the
additional payments provided to you in accordance with this Agreement, you are required to execute
the Executive Release and Waiver, in the form set forth as Exhibit 2 of this Agreement, which is
attached to and forms a part of this Agreement (the “Executive Release”). This Agreement
(including all Exhibits to this Agreement), and the commitments and obligations of all parties
hereunder:

8

 

	(a)	 	shall become final and binding immediately following the expiration of your right to revoke
the execution of this Agreement in accordance with subsection 2(d) of Exhibit 2 (the Executive
Release);
	 
	(b)	 	shall not become final and binding until the expiration of such right to revoke; and
	 
	(c)	 	shall not become final and binding if you revoke such execution.

     4.2. Benefits under Retention Letter and Change in Control Letter. You acknowledge
and agree that you are not entitled to any benefits, and have no rights, under either the retention
letter agreement between you and the Company dated September 15, 2005 (the “Retention Agreement”)
or the change in control letter agreement between you and the Company dated January 13, 2003 (the
“Change in Control Agreement”).

SECTION 5

MISCELLANEOUS

     5.1. Amendment. This Agreement may be amended or canceled only by mutual agreement of
the parties in writing without the consent of any other person. So long as you live, no person,
other than the parties hereto, shall have any rights under or interest in this Agreement or the
subject matter hereof.

     5.2. Successors and Affiliates. This Agreement shall be binding on, and inure to the
benefit of, the Company and its successors and assigns and any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets
and business. For purposes of this Agreement, the term “Affiliate” means (a) any corporation,
partnership, joint venture or other entity which, as of your Termination Date, owns, directly or
indirectly, at least fifty percent (50%) of the voting power of all classes of stock of the Company
(or any successor to the Company) entitled to vote; and (b) any corporation, partnership, joint
venture or other entity in which, as of your Termination Date, at least a fifty percent (50%)
voting or profits interest is owned, directly or indirectly, by the Company, by any entity that is
a successor to the Company, or by any entity that is an Affiliate by reason of clause (a) next
above.

     5.3. Effect of Breach. You acknowledge that the Company would be irreparably injured
by your violation of the covenants of Section 3, and you agree that the Company and its Affiliates,
in addition to any other remedies available to it for such breach or threatened breach, shall be
entitled to a preliminary injunction, temporary restraining order, or other equivalent relief,
restraining you from any actual or threatened breach of the covenants in Section 3. If a bond is
required to be posted in order for the Company to secure an injunction or other equitable remedy,
the parties agree that said bond need not be more than a nominal sum. In the event that you have
breached any covenant in this Agreement, you shall forfeit all Severance Payments for periods after
the date of such breach and your right to receive subsidized COBRA continuation coverage (but you
shall not forfeit your right to receive COBRA continuation coverage at your expense in accordance
with COBRA).

9

 

     5.4. Waiver of Breach. The waiver by the Company (or the Affiliates) of a breach of
any provision of this Agreement by you shall not operate as or be deemed a waiver of any subsequent
breach by the Company. Continuation of benefits hereunder by the Company following a breach
by you of any provision of this Agreement shall not preclude the Company from thereafter exercising
any right that it may otherwise independently have to terminate said benefits based upon the same
violation.

     5.5. Severability. The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable provision were omitted
(but only to the extent that such provision cannot be appropriately reformed or modified);
provided, however, that if one or more provisions of Section 3, Section 4, or the Executive Release
is invalid or unenforceable, the Company may, in its sole discretion, elect to have the entire
Agreement treated as invalid and unenforceable.

     5.6. Other Agreements. Except as otherwise specifically provided in this Agreement,
this instrument constitutes the entire agreement between you and the Company and supersedes all
prior agreements and understandings, written or oral, including, without limitation, the Change in
Control Agreement, the Retention Agreement, and any other employment agreements that may have been
made by and between you and the Company or its predecessors or Affiliates. As of your Termination
Date, all rights, duties and obligations of both you and the Company pursuant to the Change in
Control Agreement and Retention Letter terminated.

     5.7. Notices. Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid, or sent by facsimile or prepaid overnight courier to the
parties at the addresses set forth below (or such other addresses as shall be specified by the
parties by like notice). Such notices, demands, claims and other communications shall be deemed
given:

	(a)	 	in the case of delivery by overnight service with guaranteed next day delivery, the next day
or the day designated for delivery;

	(b)	 	in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S.
mail; or

	(c)	 	in the case of facsimile, the date upon which the transmitting party received confirmation of
receipt by facsimile, telephone or otherwise;

provided, however, that in no event shall any such communications be deemed to be given later than
the date they are actually received. Communications that are to be delivered by the U.S. mail or
by overnight service are to be delivered to the addresses set forth below:

to the Company:

Nash Finch Company

7600 France Avenue South

Edina, MN 55435

or to you:

10

 

Kathleen E. McDermott

29 East Churchill Drive

Salt Lake City, UT 84103

All notices to the Company shall be directed to the attention of the Secretary and General Counsel
of the Company. Each party, by written notice furnished to the other party, may modify the
applicable delivery address, except that notice of change of address shall be effective only upon
receipt.

     5.8. Disputes. Any controversy or claim arising out of or relating to this Agreement
(or the breach thereof) shall be settled in the federal courts of Minnesota if the prerequisites
for diversity jurisdiction are met. If the federal courts do not have jurisdiction over the
dispute, the controversy shall be resolved in the state courts of Minnesota.

     5.9. Governing Law. This Agreement shall be construed in accordance with the laws of
the State of Minnesota, without regard to the conflict of law provisions of any state.

     5.10. Exhibits, Other Documents. Except as otherwise expressly provided in this
Agreement, or except where the context clearly requires otherwise, all references in this Agreement
to “the Agreement” or “this Agreement” shall be deemed to include references to each of the
Exhibits to this Agreement. To the extent that the terms of this Agreement (including the Exhibits
to this Agreement) provide that your rights or obligations set forth in this Agreement (including
the Exhibits to this Agreement) are to be determined under, or are to be subject to, the terms of
any other plan or other document, this Agreement (including the Exhibits to this Agreement) shall
be deemed to incorporate by reference such plan or other document.

     5.11. Counterparts. This Agreement may be executed in more than one counterpart, but
all of which together will constitute one and the same agreement.

     5.12. Definitions. Capitalized terms in this Agreement shall be defined as set forth
in this Agreement.

11

 

     If you accept the terms of this Agreement, please indicate your acceptance by signing and
returning a copy of this letter to the undersigned, along with a signed and notarized copy of
Exhibit 2 (Executive Release).

Very truly yours,

NASH FINCH COMPANY

	 	 	 	 	 
	By:

	 	/s/ Alec C. Covington	 	 
	 

	 	 

	 	 
	Its: President & CEO	 	 
	 
	 	 	 	 
	Accepted and agreed to this

30th day of June, 2006.	 	 
	 
	 	 	 	 
	/s/ Kathleen E. McDermott	 	 
	 	 	 
	Kathleen E. McDermott	 	 

12

 

EXHIBIT 1

SCHEDULE OF BENEFITS

This Schedule describes the benefits referenced in subsection 2.2(d) of the separation agreement
between Kathleen E. McDermott (the “Executive”) and Nash Finch Company (the “Company”) dated June
16, 2006 (the “Separation Agreement”). This schedule is subject to the terms of the applicable
benefit plans.

	1.	 	The Executive has received all bonus amounts and payments to which she is entitled under the
Nash Finch Company 2005 Executive Incentive Program (the “EIP”), and is entitled to no
payments under the EIP for fiscal year 2005 or fiscal year 2006.

	2.	 	All performance unit awards previously granted to the Executive under the Nash Finch Company
Long-Term Incentive Program Utilizing Performance Unit Awards for any performance period that
includes 2005 or 2006 were canceled as of the Termination Date.

	3.	 	The Executive is scheduled to vest in two hundred ten (210) shares of restricted stock as of
February 23, 2006, subject to payment by her of the applicable payroll tax withholding of
$2,517.08. All other unvested restricted stock awards previously granted to the Executive
were canceled as of the Termination Date.

	4.	 	For plan year 2005, the Executive is eligible to receive a Company matching contribution to
her account in the Nash Finch Company Profit Sharing Plan (the “Profit Sharing Plan”) in an
amount equal to fifty percent (50%) of the lesser of (i) her contributions (other than
“catch-up contributions”) to the Profit Sharing Plan for the 2005 plan year, or (ii) six
percent (6%) of her eligible earnings for Plan purposes for the 2005 plan year. For plan year
2005, the Executive is also eligible to receive a profit sharing contribution to her account
in the Profit Sharing Plan. The Executive is not eligible to receive a Company matching
contribution or a profit sharing contribution to her account in the Profit Sharing Plan with
respect to plan year 2006 or any plan year thereafter.

	5.	 	The Executive did not vest in any portion of her account balance under the Nash Finch Company
Supplemental Executive Retirement Plan (“SERP”), and the Executive will not receive a
distribution under the SERP.

	6.	 	The Executive will be entitled to the following distributions under the Nash Finch Company
Income Deferral Plan (“IDP”) and Deferred Compensation Plan (“DCP”). The Executive’s IDP
account balance was $171,147.30 as of February 28, 2006 (the “Valuation Date”), and such
amount has been paid. The Executive’s DCP account balance was $$36,261.52 as of the Valuation
Date, and such amount and any contributions to the account made after the Valuation Date, will
be distributed as soon as practicable after the six-month anniversary of the Executive’s
Termination Date.

	7.	 	The Executive shall not be eligible for any long term disability coverage or benefits after
her Termination Date except to the extent that the Executive is entitled by law to convert, at
her own expense, the group disability policy coverage to an individual policy after the
Termination Date.

13

 

	8.	 	The Executive has been paid all accrued/unused vacation.
	 
	9.	 	The Executive is eligible for COBRA coverage under the arrangements listed below for the same
levels of coverage as the Executive had in place on the Termination Date. The cost of such
coverage to be made available to the Executive during the one- (1-) year period following the
Termination Date pursuant to the Separation Agreement is to be the same as the cost paid by
active employees for the same level of coverage. The current cost to employees is listed
below next to the type of coverage the Executive elected. The cost of coverage for employees
and the levels of coverage available may be revised by the Company from time to time, which
will result in a corresponding revision in the Executive’s cost.
	 
	 	 	Medical — child weekly cost $16.73
	 
	 	 	Dental — employee plus child weekly cost $2.36
	 
	 	 	Vision — employee plus child weekly cost $2.21
	 
	10.	 	The Executive will be eligible for life insurance coverage under the Company’s group term
life insurance policy until the one-year anniversary following the Termination Date or, if
earlier, on the date on which she obtains other employment. The life insurance coverage shall
be at the same level as the Executive had in place on the Termination Date. The current
employee monthly cost for such coverage is $0. The cost of coverage for employees and the
levels of coverage available may be revised by the Company from time to time, which will
result in a corresponding revision in the Executive’s cost.

14

 

EXHIBIT 2

EXECUTIVE RELEASE AND WAIVER

     1. This document is attached to, is incorporated into, and forms a part of, the separation
agreement dated June 16, 2006 (the “Agreement”) by and between Kathleen E. McDermott (the
“Executive”) and Nash Finch Company (the “Company”). The Executive, on behalf of herself and the
other Executive Releasors, releases and forever discharges the Company and the other Company
Releasees from any and all Claims which the Executive now has or claims, or might hereafter have or
claim (or the other Executive Releasors may have, to the extent that it is derived from a Claim
which the Executive may have), against the Company Releasees based upon or arising out of any
matter or thing whatsoever, occurring or arising on or before the date of this Release and Waiver,
to the extent that the Claim arises out of or relates to the Executive’s employment by the Company
and its Affiliates (including her service as an executive officer of the Company and its
Affiliates) and/or the Executive’s termination or resignation therefrom. However, nothing in this
Release and Waiver shall constitute a release of any Claims of the Executive (or other Executive
Releasors) that may arise under the Agreement, or under the Indemnification Agreement dated April
16, 2002, or release any claims that may not lawfully be released.

For purposes of this Release and Waiver, the terms set forth below shall have the following
meanings:

	(a)	 	The term “Agreement” shall include the Agreement and the Exhibits thereto, and including the
plans and arrangements under which the Executive is entitled to benefits in accordance with
the Agreement and the Exhibits.

	(b)	 	The term “Claims” shall include any and all rights, claims, demands, debts, dues, sums of
money, accounts, attorneys’ fees, complaints, judgments, executions, actions and causes of
action of any nature whatsoever, cognizable at law or equity (except for claims arising out of
the Agreement), and Claims arising under (or alleged to have arisen under) (i) the Age
Discrimination in Employment Act of 1967, as amended; (ii) Title VII of the Civil Rights Act
of 1964, as amended; (iii) The Civil Rights Act of 1991; (iv) Section 1981 through 1988 of
Title 42 of the United States Code, as amended; (v) the Employee Retirement Income Security
Act of 1974, as amended; (vi) The Immigration Reform Control Act, as amended; (vii) The
Americans with Disabilities Act of 1990, as amended; (viii) The National Labor Relations Act,
as amended; (ix) The Fair Labor Standards Act, as amended; (x) The Occupational Safety and
Health Act, as amended; (xi) The Family and Medical Leave Act of 1993; (xii) the Minnesota
Human Rights Act; (xiii) any state antidiscrimination law; (xiv) any state wage and hour law;
(xv) any other local, state or federal law, regulation or ordinance; (xvi) any public policy,
contract, tort, or common law; or (xvii) any allegation for costs, fees, or other expenses
including attorneys’ fees incurred in these matters. The term “Claims” shall not include any
claims for attorneys fees that the Executive may assert pursuant to this Agreement or the
April 16, 2002 Indemnification Agreement.

	(c)	 	The term “Company Releasees” shall include the Company and its Affiliates (as defined in the
Agreement), and their officers, directors, 

15

 

	 	 	trustees, members, representatives, agents, employees, shareholders, partners, attorneys, assigns, administrators and
fiduciaries under any employee benefit plan of the Company and its Affiliates, and insurers,
and their predecessors and successors.

	(d)	 	The term “Executive Releasors” shall include the Executive and her family, heirs, executors,
representatives, agents, insurers, administrators, successors, assigns, and any other person
claiming through the Executive.

     2. The following provisions are applicable to and made a part of the Agreement and this
Release and Waiver:

	(a)	 	By this Release and Waiver, the Executive Releasors do not release or waive any right or
claim which they may have under the Age Discrimination in Employment Act, as amended by the
Older Workers Benefit Protection Act, which arises after the date of execution of this Release
and Waiver.

	(b)	 	In exchange for this Release and Waiver, the Executive hereby acknowledges that she has
received separate consideration beyond that to which she is otherwise entitled under the
Company’s policy or applicable law.

	(c)	 	The Company hereby expressly advises the Executive to consult with an attorney of her
choosing prior to executing this Release and Waiver.

	(d)	 	The Executive has twenty-one (21) days from the date of presentment to consider whether or
not to execute this Release and Waiver. In the event of such execution, the Executive has a
further period of sixteen (16) days from the date of said execution in which to revoke said
execution. This Release and Waiver will not become effective until expiration of such
revocation period.

	(e)	 	This Release and Waiver, and the commitments and obligations of all parties under the
Agreement:

	 	(i)	 	shall become final and binding immediately following the expiration of the
Executive’s right to revoke the execution of this Release and Waiver in accordance with
subsection 2(d) of this Exhibit 2;
	 
	 	(ii)	 	shall not become final and binding until the expiration of such right to
revoke; and
	 
	 	(iii)	 	shall not become final and binding if the Executive revokes such execution.

16

 

     3. The Executive hereby acknowledges that she has carefully read and understands the terms of
the Agreement and this Release and Waiver and each of her rights as set forth therein.

	 	 	 	 	 
	 

	 	/s/ Kathleen E. McDermott
 

Kathleen E. McDermott
	 	 
	 
	 	 	 	 
	 

	 	Date: June 29, 2006	 	 

	 	 	 	 	 
	State of Utah
	 	 	 	 
	County of Salt Lake
	 	 	 	 
	 
	 	 	 	 
	Subscribed Before Me This
	 	 	 	 
	 
	 	 	 	 
	29th Day of June, 2006.
	 	 	 	 
	 
	 	 	 	 
	/s/ Kathleen L. Moroney

	 	[Seal]	 	 
	 
	 	 	 	 
	Notary Public
	 	 	 	 

17exv10w18

 

EXHIBIT 10.18

EMPLOYMENT AGREEMENT

      This Employment Agreement (this “Agreement”), effective on the 22 of May, 2006, is entered
into in Richardson, Texas by and between Remote Dynamics, Inc., a Delaware corporation, with its
principal place of business located at 1155 Kas Drive, Suite 100, Richardson, Texas, 75081
(“Employer”), and Erik M. Bailey, an individual residing 13831 Peyton Drive, Dallas, Texas, 75240
(“Employee”).

      NOW, THEREFORE, in consideration of the mutual covenants set forth herein, Employer and
Employee, intending to be legally bound, hereby agree as follows:

	1.	 	Employment Relationship. Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions set forth in this Agreement. Such
employment relationship shall continue for the stated term of this Agreement, as described in
Paragraph 7 hereof, unless earlier terminated pursuant to Paragraph 5 hereof.

	2.	 	Position and Responsibilities of Employee. Employee shall be employed as Vice
President of Sales and Marketing with job responsibilities related thereto, and such job
responsibilities may be expanded at the sole discretion of the of Employer. Employee shall
report to J. Raymond Bilbao, President, Chief Operating Officer and Secretary of Employer and
shall devote such time, skill and attention to the business of Employer as shall be required
for the efficient management thereof, and shall manage and supervise such business, and shall
devote his full time best efforts to the faithful performance of his duties on behalf of
Employer. Employee shall also perform such other duties, and may have job responsibilities and
titles modified from time to time as may be requested by Employer. Employee’s duties shall be
performed at the Employer’s corporate headquarters in Richardson, Texas. The location at which
Employee performs his duties shall not be relocated more than 30 miles from Employer’s
corporate headquarters on the date hereof, without Employee’s written consent, provided that
the Employee may be required to travel and/or work from time to time on a non-permanent basis
wherever the Employer shall reasonably require. Employee shall not engage in additional
gainful employment of any kind or undertake any role or position, whether or not for
compensation, with any competitor of Employer during the term of this Agreement without
advance written approval of Employer.

	3.	 	Compensation. For all services rendered by Employee pursuant to this Agreement,
Employer shall pay to Employee, and Employee shall accept as full compensation hereunder the
following:

	 	a.	 	Base Salary. Employee shall receive a base salary of $10,000.00 per
month payable by Employer in semi-monthly amounts in Richardson, Texas. Employee’s
base salary shall be subject to all appropriate federal and state withholding taxes and
shall be payable in accordance with the normal payroll procedures of Employer.
Employer shall not reduce Employee’s base salary without Employee’s written consent.

 

 

	 	b.	 	Commissions. Employee shall be entitled to receive twelve dollars ($12.00) per REDIview unit sold by the Employer with the
accrual and timing of commission payments as set forth on Exhibit A attached hereto.

	 	c.	 	Participation in Remote Dynamics, Inc. Equity Incentive Plan. Employee
shall be entitled to participate in the Remote Dynamics, Inc. Equity Incentive Plan at
the level of Vice President.

	 	d.	 	Benefits and Perquisites. Employee shall be entitled to participate in
the Employee benefit plans provided by Employer for all employees generally. Employer
shall be entitled to change such plans from time to time, and the parties acknowledge
that at the initial date of this Agreement the fringe benefits provided to Employee
include a corporate 401(k) plan, health, dental, life, short and long-term disability
insurance for the Employee, and reimbursement of certain expenses in accordance with
the policies and procedures of Employer. Employee shall be entitled to three (3) weeks
paid vacation each calendar year.

	4.	 	Protective Covenants. Employee recognizes that his employment by Employer is one of
the highest trust and confidence because (i) Employee has become and/or in the future will
become fully familiar with all aspects of Employer’s business during the period of his
employment with Employer, (ii) certain information of which Employee will gain knowledge
during his employment by Employer is proprietary and confidential information and is of
special and peculiar value to Employer, and (iii) if any such proprietary and confidential
information were imparted to or became known by any person, including Employee, engaging in a
business in competition with that of Employer, hardship, loss and irreparable injury and
damage could result to Employer, the measurement of which would be difficult if not impossible
to ascertain. Employee further acknowledges that Employer has developed unique skills,
concepts, sales presentations, marketing programs, marketing strategy, business practices,
methods of operation, pricing information, production cost information, trademarks, licenses,
technical information, proprietary information, computer software programs, tapes and discs
concerning its operations systems, customer lists, customer leads, documents identifying past,
present and future customers, customer profile and preference data, hiring and training
methods, investment policies, financial and other confidential and proprietary information
concerning its operations and expansion plans (“Trade Secrets”). Therefore, Employee agrees
that it is necessary for Employer to protect its business and that of its affiliates from such
damage, and Employee further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both Employee and Employer, to protect
Employer or its affiliates against damage due to loss or disclosure of proprietary information
or Trade Secrets and shall apply to and be binding upon Employee as provided herein:

	 	a.	 	Trade Secrets. Employee recognizes that his position with Employer is
one of the highest trust and confidence by reason of Employee’s access to and contact
with certain Trade Secrets of Employer. Employee agrees and covenants that, except as

2

 

may be required by Employer in connection with this Agreement, or with the prior written
consent of Employer, Employee shall not, either during the term of this Agreement or
at any time thereafter, directly or indirectly, use for Employee’s own benefit or
for the benefit of another, or disclose, disseminate, or distribute to another,
except as directed by Employer or as required for the performance of Employee’s
duties on behalf of the Employer, any Trade Secret (whether or not acquired,
learned, obtained, or developed by Employee alone or in conjunction with others) of
Employer or of others with whom Employer has a business relationship. All Trade
Secrets, and all memoranda, notes, records, drawings, documents, or other writings
whatsoever made, compiled, acquired, or received by Employee at any time during his
employment with Employer, including during the term of this Agreement, arising out
of, in connection with, or related to any activity or business of Employer,
including, but not limited to, the customers, suppliers, or others with whom
Employer has a business relationship, the arrangements of Employer with such
parties, and the pricing and expansion policies and strategy of Employer, are, and
shall continue to be, the sole and exclusive property of Employer and shall,
together with all copies thereof, any and all documents constituting or relating to
Employer’s proprietary information and Trade Secrets, and all advertising
literature, be returned and delivered to Employer by Employee immediately, without
demand, upon the termination of this Agreement, or at any time upon Employer’s
demand.

     Employee acknowledges that Employer would not employ Employee or provide
Employee access to Employer’s Trade Secrets and proprietary and confidential
information but for Employee’s covenants in this Paragraph 4.

     Employee represents and warrants that he is not bound by any agreement with any
prior employer or other party that will be breached by execution and performance of
this Agreement, or which would otherwise prevent him from performing his duties with
Employer as set forth in this Agreement. Employee represents and warrants that he
has not retained any copies of proprietary and confidential information of any prior
employer, and he will not use or rely on any confidential and proprietary
information of any prior employer in carrying out her duties for Employer.

	 	b.	 	Covenant Not to Compete. In consideration of the numerous mutual
promises contained in the Agreement between Employer and the Employee, including,
without limitation, those involving access to Trade Secrets and confidential
information and training, and in order to protect Employer’s Trade Secrets and the
confidential information and to reduce the likelihood of irreparable damage which would
occur in the event such information is provided to or used by a competitor of Employer,
Employee agrees that during his employment and for an additional period of twelve (12)
months immediately following the voluntary or involuntary termination of his employment
for any reason whatsoever (the “Non-Competition Term”), Employee will not, without the
prior written consent of Employer (which consent may be withheld in its sole discretion), enter the employ of any person or

3

 

entity, either directly or indirectly either as principal, agent, representative,
shareholder (except owning publicly traded stock for investment purposes only in
which Employee owns less than 5%) consultant, officer, business partner, associate,
Employee or otherwise, with a place of business in the United States of America,
which sells or offers to sell services and/or products which compete directly with
the services and/or products offered or to be offered for sale by Employer.

     Employee hereby acknowledges that the geographic boundaries, scope of
prohibited activities and the time duration of the provisions of this Section 4 are
reasonable and are no broader than are necessary to protect the legitimate business
interests of the Employer.

The Employer and Employee agree and stipulate that the agreements and covenants not
to compete contained in Paragraph 4 hereof are fair and reasonable in light of all
of the facts and circumstances of the relationship between Employee and Employer;
however, Employee and Employer are aware that in certain circumstances courts have
refused to enforce certain provisions of agreements not to compete. Therefore, in
furtherance of, and not in derogation of the provisions of Paragraph 4, Employer and
Employee agree that in the event a court should decline to enforce the provisions of
Paragraph 4, that Paragraph 4 shall be deemed to be modified or reformed to restrict
Employee’s competition with Employer or its affiliates to the maximum extent, as to
time, geography and business scope, which the court shall find enforceable;
provided, however, in no event shall the provisions of Paragraph 4 be deemed to be
more restrictive to Employee than those contained herein.

	 	c.	 	Non-Solicitation. Employee agrees that during his employment, and for a
period of twelve (12) months following the termination of his employment for any reason
whatsoever, that neither he nor any individual, partner(s), limited partnership,
corporation or other entity or business with which he is in any way affiliated,
including, without limitation, any partner, limited partner, director, officer,
shareholder, Employee, or agent of any such entity or business, will (i) request,
induce or attempt to influence, directly or indirectly, any employee of Employer to
terminate their employment with Employer or (ii) employ any person who as of the date
of this Agreement was, or after such date, is an employee of Employer. Employee
further agrees that during the period beginning with the commencement of Employee’s
employment with Employer and ending twelve (12) months after the termination of
Employee’s employment with Employer for any reason whatsoever, he shall not, directly
or indirectly, as an Employee, agent, consultant, stockholder, director, partner or in
any other individual or representative capacity of Employer or of any other person,
entity or business, solicit or encourage any present or future customer, supplier,
contractor, partner or investor of the Employer to terminate or otherwise alter his,
her or its relationship with Employer.

4

 

	 	d.	 	Work Product. For purposes of this Paragraph 4, “Work Product” shall
mean all intellectual property rights, including all trade secrets, U.S. and
international copyrights, patentable inventions, discoveries and other intellectual
property rights in any programming, design, documentation, technology, or other work
product that is created in connection with Employee’s work. In addition, all rights in
any preexisting programming, design, documentation, technology, or other Work Product
provided to Employer during Employee’s employment shall automatically become part of
the Work Product hereunder, whether or not it arises specifically out of my “Work.”
For purposes of this Agreement, “Work” shall mean (1) any direct assignments and
required performance by or for the Employer, and (2) any other productive output that
relates to the business of the Employer and is produced during the course of Employee’s
employment or engagement by Employer. For this purpose, Work may be considered present
even after normal working hours, away from Employer’s premises, on an unsupervised
basis, alone or with others. Unless otherwise approved in writing by the Board of
Directors of Employer, this Agreement shall apply to all Work Product created in
connection with all Work conducted before or after the date of this Agreement.
	 
	 	 	 	Employer shall own all rights in the Work Product. To this end, all Work Product
shall be considered work made for hire for Employer. If any of the Work Product may
not, by operation of law or agreement, be considered Work made by Employee for hire
for the Employer (or if ownership of all rights therein do not otherwise vest
exclusively in the Employer immediately), Employee agrees to assign, and upon
creation thereof does hereby automatically assign, with further consideration, the
ownership thereof to the Employer. Employee hereby irrevocably relinquishes for the
benefit of Employer and its assigns any moral rights in the Work Product recognized
by applicable law. Employer shall have the right to obtain and hold, in whatever
name or capacity it selects, copyrights, registrations, and any other protection
available in the Work Product.
	 
	 	 	 	Employee agrees to perform upon the request of Employer, during or after Employee’s
Work or employment, such further acts as may be necessary or desirable to transfer,
perfect, and defend the Employer’s ownership of the Work Product, including by (1)
executing, acknowledging, and delivering any requested affidavits and documents of
assignment and conveyance, (2) obtaining and/or aiding in the enforcement of
copyrights, trade secrets, and (if applicable) patents with respect to the Work
Product in any countries, and (3) providing testimony in connection with any
proceeding affecting the rights of the Employer in any Work Product.
	 
	 	 	 	Employee warrants that Employee’s Work for Employer does not and will not in any way
conflict with any remaining obligations Employee may have with any prior employer or
contractor. Employee also agrees to develop all Work Product in a manner that
avoids even the appearance of infringement of any third party’s intellectual
property rights.

5

 

	 	e.	 	Survival of Covenants. Each covenant of Employee set forth in this
Paragraph 4 shall survive the termination of this Agreement and shall be construed as
an agreement independent of any other provision of this Agreement, and the existence of
any claim or cause of action of Employee against Employer whether predicated on this
Agreement or otherwise shall not constitute a defense to the enforcement by Employer of
said covenant. No modification or waiver of any covenant contained in Paragraph 4
shall be valid unless such waiver or modification is approved in writing by the Board
of Directors of Employer.
	 
	 	f.	 	Remedies. In the event of breach or threatened breach by Employee of
any provision of this Paragraph 4, Employer shall be entitled to relief by temporary
restraining order, temporary injunction, or permanent injunction or otherwise, in
addition to other legal and equitable relief to which it may be entitled, including any
and all monetary damages which Employer may incur as a result of said breach, violation
or threatened breach or violation. Employer may pursue any remedy available to it
concurrently or consecutively in any order as to any breach, violation, or threatened
breach or violation, and the pursuit of one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any other of such
remedies as to such breach, violation, or threatened breach or violation, or as to any
other breach, violation, or threatened breach or violation.

     Employee hereby acknowledges that Employee’s agreement to be bound by the
protective covenants set forth in this Paragraph 4 was a material inducement for
Employer entering into this Agreement, agreeing to pay Employee the compensation and
benefits set forth herein, and providing Employee access to Employer’s Trade Secrets
and other confidential information.

	5.	 	Termination. The employment relationship between Employee and Employer created
hereunder shall terminate before the expiration of the stated term of this Agreement upon the
occurrence of any one of the following events:

	 	a.	 	Death or Permanent Disability. The employment relationship shall be
terminated effective on the death or permanent disability of the Employee. However,
Employee shall be entitled to leaves of absence from the Company in accordance with the
policy of the Company generally applicable to Employees for illness or temporary
disabilities for a period or periods not exceeding six (6) months in any calendar year,
and his status as an Employee shall continue during such periods. However, if the
Employee qualifies for short term disability payments under Employer’s standard short
term disability plan during such leave, Employee shall apply to receive such short term
disability payments. Employer shall supplement such short term disability payments
during the first three (3) months of any such six (6) month period so that Employee
receives such monthly amounts when combined with the short term disability payments to
equal Employee’s monthly compensation as set forth in paragraph 3(a) of this Agreement.
However, during

6

 

	 	 	 	the last three (3) months of any such six (6) month period, Employee shall accept
payments under Employer’s standard short term disability plan in lieu of any salary
payments set forth in Section 3(a) above. If Employee is incapacitated due to
physical or mental illness and such incapacity prevents Employee from satisfactorily
performing his duties for the Company on a full time basis for six (6) months or
more during a single fiscal year, Employee shall be deemed to have experienced a
permanent disability and the Company may terminate this Agreement upon thirty (30)
days written notice. In the event that Employer terminates this Agreement on the
basis of the Employee’s permanent disability, the Employee shall be entitled to a
cash payment equal to the Employee’s annual salary as of the date of termination.
The Company shall make such payment within thirty (30) days of such termination.
	 
	 	b.	 	Termination for Cause. The following events, which for purposes of this
Agreement shall constitute “cause” for termination:

	 	i.	 	Any act of fraud, misappropriation or embezzlement by Employee
with respect to any aspect of Employer’s business;
	 
	 	ii.	 	The breach by Employee of any provision of Paragraphs 1, 2 or 4
(including but not limited to a refusal to follow lawful directives of Employer
or their designees which are not inconsistent with the duties of Employee’s
position and the provisions of this Agreement) of this Agreement;
	 
	 	iii.	 	The conviction of Employee by a court of competent jurisdiction
of a felony or of a crime involving moral turpitude;
	 
	 	iv.	 	The intentional and material breach by the Employee of any
non-disclosure or non-competition/non-solicitation provision of any agreement
to which the Employee and Employer or any of its subsidiaries are parties; or
	 
	 	v.	 	The intentional and continual failure by the Employee to
perform in all material respects his duties and responsibilities (other than as
a result of death or disability) and the failure of the Employee to cure the
same in all material respects within thirty (30) days after written notice
thereof from Employer;
	 
	 	vi.	 	The illegal use of drugs by Employee during the term of this
Agreement that, in the determination of the Board of Directors of Employer,
substantially interferes with Employee’s performance of his duties hereunder;
	 
	 	vii.	 	acceptance of employment with any other employer except upon
written permission of the Board of Directors of Employer.

7

 

	 	c.	 	Termination by Employer with Notice. Employer may terminate this
Agreement without cause at any time upon thirty (30) days written notice to Employee,
during which period Employee shall not be required to perform any services for Employer
other than to assist Employer in training his successor and generally preparing for an
orderly transition; PROVIDED, HOWEVER, that Employee shall be entitled to compensation
upon such termination as provided in Paragraph 6(a), (b), (c) and (d).

	6.	 	Compensation Upon Termination. Upon the termination of Employee’s employment under
this Agreement before the expiration of the stated term hereof for any reason, Employee shall
be entitled to:

	 	a.	 	the salary earned by him before the effective date of termination as provided
in Paragraph 3(a) hereof (including salary payable during any applicable notice
period), prorated on the basis of the number of full days of service rendered by
Employee during the salary payment period to the effective date of termination;
	 
	 	b.	 	any accrued, but unpaid, vacation benefits; and
	 
	 	c.	 	any previously authorized but unreimbursed business expenses.

     If Employee’s employment hereunder terminates because of the death or permanent
disability of Employee, all amounts that may be due to him under this Paragraph 6 or
Paragraph 5(a) shall be paid to him or his administrators, personal representatives, heirs
and legatees, as may be appropriate.

	 	d.	 	Additional Compensation and Benefits Upon Termination Without Cause. If
Employee’s employment hereunder terminates without cause pursuant to Paragraph 5(c)
above, Employer shall provide to Employee in addition to the amounts set forth in
Subparagraphs 6(a), 6(b) and 6(c) above:

	 	i.	 	a cash payment equal to the monthly base salary as set forth in
paragraph 3. a. of this Agreement multiplied by the number of months remaining
in the Initial Term of this Agreement at the time of the effective date of the
termination.

     The Employer shall pay the severance amounts referenced in this Paragraph 6(d) within
thirty (30) days of the date of termination. Employee shall have no obligation to mitigate
any severance obligation of Employer under this Agreement by seeking new employment.
Employer shall not be entitled to set off or reduce any severance payments owed to Employee
under this Agreement by the amount of earnings or benefits received by Employee in future
employment. The provisions of Paragraphs 4, 5 and 6 hereof shall survive the termination of
the employment relationship hereunder and this Agreement.

8

 

	7.	 	Term. This Agreement shall be binding and enforceable against Employer and Employee
immediately upon its execution by both such parties. The stated term of this Agreement and
the employment relationship created hereunder shall begin on the date this Agreement is
executed by Employer (with Employee to be bound by confidentiality and other provisions set
forth in Paragraph 4 herein to the extent confidential information is provided to Employee
prior to such date), and shall remain in effect for one (1) year thereafter, unless sooner
terminated in accordance with Paragraph 5 hereof. This Agreement shall be deemed to be
renewed for a month-to-month term after its initial term (“Renewal Term”), unless the parties
execute an express written renewal agreement which specifies a different term or either party
exercises its right to terminate the Agreement pursuant to the provisions herein.

	 	a.	 	Notwithstanding any provision of this Agreement to the contrary, the parties’
respective rights and obligations under Paragraphs 3, 4, 5 and 6 shall survive any
termination or expiration of this Agreement or the termination of the Employee’s
employment for any reason whatsoever.

	8.	 	Remedies. Each of the parties to this Agreement will be entitled to enforce its rights
under this Agreement specifically, to recover damages by reason of any breach of any provision
of this Agreement and to exercise all other rights existing in its favor. Notwithstanding
Paragraph 9 below, the parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any party may in
its sole discretion apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.

	9.	 	Arbitration. Except as Provided in Paragraph 8 above, any controversy or claim
arising out of or relating to this Agreement or relating to Employee’s rights, compensation
and responsibilities as an Employee shall be determined by arbitration in Dallas County, Texas
in accordance with the rules of the American Arbitration Association then in effect. The
arbitration shall be submitted to a single arbitrator selected in accordance with the American
Arbitration Association’s procedures then in effect for the selection of employment
arbitrators. The parties shall split the cost of the arbitrator. The arbitrator shall have
the authority to award any remedy that could be awarded by a court of competent jurisdiction.
This Paragraph 9 shall survive termination of this Agreement for any reason.

	10.	 	Assignment. This Agreement is personal to Employee and may not be assigned in any way
by Employee without the prior written consent of Employer. This Agreement shall not be
assignable or delegable by Employer, other than to an affiliate of Employer; provided,
however, that in the event of the acquisition, merger or consolidation of Employer, the
obligations of Employer hereunder shall be binding upon the surviving or resulting entity of
such acquisition, merger or consolidation. The rights and obligations under this Agreement
shall inure to the benefit of and shall be binding upon the heirs, legatees, administrators
and personal representatives of Employee and upon the successors, representatives and assigns
of Employer.

9

 

	11.	 	Severability and Reformation. The parties hereto intend all provisions of this
Agreement to be enforced to the fullest extent permitted by law. If, however, any provision
of this Agreement is held to be illegal, invalid, or unenforceable under present or future
law, such provision shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and
the remaining provisions shall remain in full force and effect and shall not be affected by
the illegal, invalid, or unenforceable provision or by its severance.

	12.	 	Notices. All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by overnight delivery
service, cable, telegram, facsimile transmission or telex to the parties at the following
addresses or at such other addresses as shall be specified by the parties by like notice:

	 	 	 	 	 
	 

	 	If to Employer:
	 	J. Raymond Bilbao
	 

	 	 	 	President, Chief Operating Officer & Secretary
	 

	 	 	 	1155 Kas Drive, Suite 100
	 

	 	 	 	Richardson, Texas 75081
	 

	 	 	 	(972) 301-2263 Facsimile
	 
	 	 	 	 
	 

	 	If to Employee:
	 	Erik M. Bailey
	 

	 	 	 	13831 Peyton Drive
	 

	 	 	 	Dallas, Texas, 75240

	 	 	Notice so given shall, in the case of notice so given by mail, be deemed to be given and
received on the fourth calendar day after posting, in the case of notice so given by
overnight delivery service, on the date of actual delivery and, in the case of notice so
given by cable, telegram, facsimile transmission, telex or personal delivery, on the date of
actual transmission or, as the case may be, personal delivery.
	 
	13.	 	Further Actions. Whether or not specifically required under the terms of this
Agreement, each party hereto shall execute and deliver such documents and take such further
actions as shall be necessary in order for such party to perform all of his or its obligations
specified herein or reasonably implied from the terms hereof.

	14.	 	GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS (RULES) OR
CHOICE OF LAWS (RULES) THEREOF.

	15.	 	Entire Agreement and Amendment. This Agreement contains the entire understanding and
agreement between the parties, and supersedes any other agreement between Employee and
Employer, whether oral or in writing, with respect to the subject matter hereof.. This
Agreement may not be altered, amended, or rescinded, nor may any of its

10

 

	 	 	provisions be waived, except by an instrument in writing signed by both parties hereto or,
in the case of an asserted waiver, by the party against whom the waiver is sought to be
enforced. Any modification of this Agreement shall be null and void unless approved by the
Board of Directors of Employer.
	 
	16.	 	Counterparts. This Agreement may be executed in counterparts, with the same effect as
if both parties had signed the same document. All such counterparts shall be deemed an
original, shall be construed together and shall constitute one and the same instrument.

11

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

EMPLOYER:

REMOTE DYNAMICS, INC.

	 	 	 	 	 
	By:

	 	/s/ J. Raymond Bilbao
	 	 
	 

	 	 	 	 
	 

	 	J. Raymond Bilbao,

President, Chief Operating Officer & Secretary	 	 

EMPLOYEE:

	 	 	 
	/s/ Erik M. Bailey
 

	 	  
	Erik M. Bailey

	 	 

12

 

EXHIBIT A

Accrual of Commissions

Commissions accrue as follows:

	1)	 	The initial 50% of a commission payment accrues when ALL of the following criteria have been
satisfied:

	 	a)	 	The receipt by REDI of: (1) a REDIview Equipment & Webhost Subscription Agreement (the
“Purchase Contract”) executed by the customer; or (2) a Purchase Order issued by a third
party distributor of the REDIview product line pursuant to an Independent Distributor
Agreement between Remote Dynamics, Inc. (“REDI”) and a third party distributor
(“Distributor PO”);

	 	b)	 	Execution of the Purchase Contract or acceptance of the Distributor PO by any of the
following officers of REDI: (1) the Vice President of Sales & Marketing; (2) the Vice
President, Chief Financial Officer & Treasurer; or (3) the President, Chief Operating
Officer & Secretary; and

	 	c)	 	If a lease-financed purchase, execution of a third party lease financing contract by
the customer for the REDIview product; or

	 	d)	 	If a cash purchase, the receipt by REDI from customer of a cash deposit, if required by
the Company, on the Purchase Contract.

	2)	 	The remaining 50% of a commission payment accrues when ALL of the following additional
criteria have been satisfied:

	 	a)	 	For cash purchases, completion of installation of all Units purchased by customer;

	 	b)	 	For lease-financed transactions, completion of installation of all Units purchased by
customer and execution by customer of the appropriate acceptance documents required by the
third party lessor in order for the third party lessor to pay the purchase price for the
Units to REDI.

Timing of Payment of Accrued Commissions

1) Commissions are paid on the 15th day of the month following the month during which the
commission accrued.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]