EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made this 27th day of February,
1997, between FOOD LION, INC., a North Carolina corporation with
its principal place of business in Salisbury, North Carolina (the
"Company"), and R. XXXXXXX XxXXXXXXX, an individual residing at
000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Xx.
XxXxxxxxx"),
W I T N E S S E T H:
WHEREAS, Xx. XxXxxxxxx is currently employed by the Company
as its Senior Vice President of Administration and Chief
Administrative Officer;
WHEREAS, the Board of Directors of the Company recognizes
that it is in the best interests of the Company and its
shareholders to retain capable and experienced executive officers
such as Xx. XxXxxxxxx;
WHEREAS, the Board of Directors recognizes that Xx.
XxXxxxxxx has made substantial contributions to the growth and
success of the Company and desires to provide for the continuing
employment of Xx. XxXxxxxxx and to encourage the continued
dedication and attention of Xx. XxXxxxxxx to the Company;
WHEREAS, Xx. XxXxxxxxx is willing to continue to serve the
Company; and
WHEREAS, the Company and Xx. XxXxxxxxx desire to enter into
this Employment Agreement.
NOW, THEREFORE, in consideration of the premises, and the
mutual agreements herein contained, the Company and Xx. XxXxxxxxx
hereby agree as follows:
1. Continue to Employ. The Company hereby agrees to
continue to employ Xx. XxXxxxxxx as Senior Vice President of
Administration and Chief Administrative Officer of the Company
for the Term of Employment as herein set forth, and Xx. XxXxxxxxx
hereby agrees to continue to serve the Company as Senior Vice
President of Administration and Chief Administrative Officer for
such term.
2. Term of Employment. The "Term of Employment," as used
herein, will commence on the date hereof and, unless sooner
terminated as hereinafter provided, shall terminate on the
fifth (5th) anniversary of such date; provided, however, that the
Term of Employment shall automatically be extended for additional
periods of one (1) year each on the terms and conditions provided
herein unless either party shall give the other party no less
than one hundred eighty (180) days' written notice prior to the
expiration of the applicable Term of Employment.
3. Employment During the Term. During the Term of
Employment, Xx. XxXxxxxxx shall devote his full professional time
to the business of the Company, shall use his best efforts to
promote the interests of the Company and shall serve as Senior
Vice President of Administration and Chief Administrative Officer
of the Company and in such other senior executive capacities as
the Board of Directors of the Company shall hereafter designate
from time to time.
4. Vacation. Xx. XxXxxxxxx shall be entitled to annual
vacations in accordance with the vacation policy and practices of
the Company.
5. Compensation.
(a) Base Salary. As compensation for Xx. XxXxxxxxx'
services hereunder and for his covenants set forth in Sections
10, 11, and 12 below, the Company shall pay to Xx. XxXxxxxxx a
base salary which shall not be less than Three Hundred Forty-
Seven Thousand Five Hundred Ninety-Three Dollars ($347,593) per
annum; provided, however, such amount shall be increased from
time to time by the Board of Directors of the Company to assure
that the compensation paid to Xx. XxXxxxxxx under this Employment
Agreement remains competitive with amounts paid to other
executive officers in similar positions in the large supermarket
chain industry and reflects the performance of Xx. XxXxxxxxx and
the financial performance of the Company. In no event shall such
annual review result in any reduction in base salary provided in
this Employment Agreement. Such compensation shall be payable in
accordance with the Company's payroll practices for executive
employees.
(b) Bonus Plans. In addition, Xx. XxXxxxxxx shall be
eligible to participate in the Company's annual incentive bonus
plan, stock option plans and other compensation plans of the
Company, as they shall be administered by the Board of Directors
of the Company and the relevant committees thereof (referred to
herein as the "Bonus Plans").
(c) Deferral Arrangement.
(i) Right to Defer. Xx. XxXxxxxxx may elect
to defer some or all of his bonus compensation and up
to fifty percent (50%) of his base salary payable to
him pursuant to this Employment Agreement. Any
deferral of bonus compensation shall be irrevocable and
must be requested by Xx. XxXxxxxxx in writing prior to
the start of the fiscal year to which such bonus
relates (except that any deferral election for the
fiscal year 1997 may be made within thirty (30) days
following the effective date of this Employment
Agreement). Any deferral of base salary shall be
irrevocable and must be requested by Xx. XxXxxxxxx in
writing prior to the start of the fiscal year to which
such salary relates (except that the deferral election
for the 1997 fiscal year may be made within thirty (30)
days following the Effective Date, but will relate only
to amounts payable after the election is received by
the Company). An election for a given fiscal year
shall be deemed a continuing election for each
subsequent fiscal year, unless a subsequent written
election to defer (or not to defer) is provided to the
Company by Xx. XxXxxxxxx prior to the start of such
fiscal year.
(ii) Bookkeeping Account and Grantor Trust.
Any amounts deferred by Xx. XxXxxxxxx hereunder will be
credited to a bookkeeping account established on the
books and records of the Company for this purpose. In
addition, the Company will maintain in a separate,
irrevocable grantor trust established by the Company an
amount in cash equal to the amounts deferred by Xx.
XxXxxxxxx. In connection with the deferral election,
Xx. XxXxxxxxx shall have the right to specify the
investments in which his bookkeeping account shall be
deemed invested; provided, however, the Company shall
be under no obligation to purchase any such investments
chosen by Xx. XxXxxxxxx. Xx. XxXxxxxxx' bookkeeping
account shall be credited to reflect all income, gains
and losses of such deemed investments. The parties
hereto agree that, to the extent that any investment
vehicle that Xx. XxXxxxxxx selects results in a loss to
the bookkeeping account, the Company will have no
obligation to compensate Xx. XxXxxxxxx for such loss or
to make any compensatory adjustment to the bookkeeping
account to make up for such loss.
(iii) Distribution. The timing of the
payment of all amounts deferred by Xx. XxXxxxxxx shall
be specified in his initial deferral election and may
not be subsequently changed by Xx. XxXxxxxxx without
the prior written approval of the Board of Directors.
The initial deferral may specify a lump sum payment of
up to five (5) annual installment payments to be paid
out in their entirety by no later than the sixth
anniversary of the Date of Termination (as defined
below); provided, however, that, notwithstanding Xx.
XxXxxxxxx' deferral election, all amounts will be paid
to Xx. XxXxxxxxx within thirty (30) days following a
termination of this Employment Agreement for any reason
specified in Sections 7(c) or 7(e).
6. Benefits. Xx. XxXxxxxxx shall be entitled to
participate in all health, accident, disability, medical, life
and other insurance programs and other benefit and compensation
plans maintained by the Company for the benefit of Xx. XxXxxxxxx
and/or other executive employees of the Company in accordance
with the Company's policies. In addition, the Company shall
maintain in full force and effect on the life of Xx. XxXxxxxxx a
life insurance policy subject to a split dollar arrangement in
the face amount of three and one-half (3.5) times Xx. XxXxxxxxx'
base salary if his death occurs prior to his retirement (provided
his retirement is on terms consistent with the terms of the life
insurance policy and any split dollar arrangements between Xx.
XxXxxxxxx and the Company relating thereto ) and two (2) times
Xx. XxXxxxxxx' last base salary if his death occurs after any
such retirement. Xx. XxXxxxxxx shall be the owner of such policy
with the authority to designate the beneficiary thereof.
7. Termination. Termination of Xx. XxXxxxxxx' employment
under any of the following circumstances shall not constitute a
breach of this Employment Agreement:
(a) Death. Termination upon the death of
Xx. XxXxxxxxx.
(b) Cause. Termination by the Company for "Cause" as
described in this Section 7(b). For purposes of this Employment
Agreement, "Cause" shall mean (i) willful failure (other than by
reason of incapacity due to physical or mental illness) to
perform his material duties hereunder and his inability or
unwillingness to correct such failure within thirty (30) days
after receipt of such notice, (ii) conviction of Xx. XxXxxxxxx of
a felony or plea of no contest to a felony, or (iii)
perpetration of a material dishonest act or fraud against the
Company or any affiliate thereof. The definition of "Cause"
expressly excludes any mistake of fact or judgment made by Xx.
XxXxxxxxx in good faith with respect to the Company's business.
(c) Good Reason. Termination by Xx. XxXxxxxxx for
"Good Reason" as described in this Section 7(c). For purposes of
this Employment Agreement, "Good Reason" shall mean (i) a
material diminution of the professional responsibilities of Xx.
XxXxxxxxx, (ii) assignment of inappropriate duties to Xx.
XxXxxxxxx, (iii) failure of the Company to comply with
compensation and benefits obligations to Xx. XxXxxxxxx, (iv)
transfer of Xx. XxXxxxxxx more than 50 miles from Salisbury,
North Carolina, without good business reasons, as determined by
the Company's Board of Directors, (v) a purported termination of
this Employment Agreement by the Company other than in accordance
with the terms hereof, (vi) the occurrence of a Change in Control
of the Company (as defined below), or (vii) failure of the
Company to require any successor to the Company to assume and
comply with this Employment Agreement. For purposes of this
Employment Agreement, a determination in good faith by Xx.
XxXxxxxxx of "Good Reason" shall be conclusive.
For purposes of this Employment Agreement, "a Change in
Control of the Company" shall mean a change in control of a
nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 as amended (the "Exchange Act");
provided that, without limitation, a Change in Control of the
Company shall be deemed to have occurred if:
(A) an acquisition (other than directly from
the Company) by a Person (as defined below) (excluding
the Company or an employee benefit plan of the Company
or an entity controlled by the Company's shareholders)
results in the aggregate number of shares of the
Company's voting securities beneficially owned by any
other Person to exceed the number of shares of the
Company's voting securities beneficially owned by
Etablissements Delhaize Freres et Cie "Le Lion" S.A.
("Delhaize") and Delhaize "Le Lion" America, Inc.;
(B) at any time during the term of this
Employment Agreement there is a change in the
composition of the Board of Directors of the Company
resulting in a majority of the directors of the Company
who are in office on the date hereof ("Incumbent
Company Directors") no longer constituting a majority
of the directors of the Company; provided that, in
making such determination, persons who are elected to
serve as directors of the Company and who are approved
by all of the directors in office on the date of such
election (other than in connection with an actual or
threatened proxy contest) shall be treated as Incumbent
Company Directors;
(C) consummation of a complete liquidation
or dissolution of the Company or a merger,
consolidation or sale of all or substantially all of
the Company's assets (collectively, a "Business
Combination") other than a Business Combination in
which all or substantially all of the shareholders of
the Company receive fifty percent (50%) or more of the
stock of the Company resulting from the Business
Combination, at least a majority of the board of
directors of the resulting corporation were Incumbent
Company Directors and after which no person or entity
owns twenty percent (20%) or more of the stock of the
resulting corporation, who did not own such stock
immediately before the Business Combination; or
(D) occurrence of any of the events
described in Section 7(c)(B) or (C) to Delhaize or the
acquisition by any Person of more than thirty
percent (30%) of the stock of Delhaize.
For the purpose of this paragraph, the term "beneficially owned"
shall have the meaning set forth in Rule 13d-3 promulgated under
the Exchange Act, and the term "Person" shall have the meaning
set forth in Sections 3(a)(2) and 13(d)(3) of the Exchange Act.
An election by Xx. XxXxxxxxx to terminate his employment
under this Section 7(c) hereof shall not be deemed a voluntary
termination of employment by Xx. XxXxxxxxx for the purpose of
this Employment Agreement or any plan, arrangement or program of
the Company.
(d) Disability. Termination by the Company or Xx.
XxXxxxxxx upon Disability of Xx. XxXxxxxxx. For the termination
by the Company to be valid, (i) the Company must first give forty-
five (45) days' written Notice of Termination, as defined below
(which may occur before or after the end of the 180-day period
specified in the definition of Disability below), and (ii) Xx.
XxXxxxxxx shall not have returned to the performance of his
duties hereunder on a full-time basis during such 180-day period.
For purposes of this Employment Agreement, "Disability" shall
mean Xx. XxXxxxxxx' absence from continuous full-time employment
with the Company for a period of at least 180 consecutive days by
reason of a mental or physical illness. The Company shall have
the right to have Xx. XxXxxxxxx examined at such reasonable times
by such physicians satisfactory to Xx. XxXxxxxxx as the Company
may designate, and Xx. XxXxxxxxx will make himself available for
and submit to such examination as and when requested. Except as
otherwise provided in this Section 7(d), the inability of Xx.
XxXxxxxxx to perform his duties hereunder, whether by reason of
injury, illness (physical or mental), or otherwise shall not
result in the termination of Xx. XxXxxxxxx' employment hereunder,
and he shall be entitled to continue to receive his base salary
and other benefits as provided herein.
(e) Without Cause. Termination by the Company without
Cause.
(f) Date and Notice of Termination. Any termination
of Xx. XxXxxxxxx' employment by the Company or by Xx. XxXxxxxxx
(other than termination pursuant to Section 7(a) above) shall be
communicated by written Notice of Termination to the other party
hereto. For purposes of this Employment Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the
specific termination provision in this Employment Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Xx. XxXxxxxxx' employment under the provision so indicated.
"Date of Termination" shall mean (i) if Xx. XxXxxxxxx'
employment is terminated by his death, the date of his death, and
(ii) if Xx. XxXxxxxxx' employment is terminated pursuant to a
Notice of Termination, the date specified in the Notice of
Termination; provided that, if within thirty (30) days after any
Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the
date which is finally determined to be the Date of Termination,
either by mutual written agreement of the parties, by a binding
and final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
8. Effect of Termination. In the event of termination of
employment as described in Section 7 hereof, the Company shall
compensate Xx. XxXxxxxxx as follows:
(a) Death. If Xx. XxXxxxxxx' employment is terminated
as a result of his death, as specified in Section 7(a), the
Company shall pay Xx. XxXxxxxxx' beneficiary the benefit called
for under his Salary Continuation Agreement with the Company.
Xx. XxXxxxxxx' beneficiary shall accept the payment provided for
in this Section 8(a) in full discharge and release of the Company
of and from any further obligations under this Employment
Agreement, except for any other benefits due under any applicable
plan or policy of the Company (including life insurance policies
and pension or similar plans), as determined under the provisions
of such plans or policies.
(b) Disability. If Xx. XxXxxxxxx' employment is
terminated by the Company or Xx. XxXxxxxxx as a result of his
disability as specified in Section 7(d), then the Company shall
pay Xx. XxXxxxxxx his full compensation until the Date of
Termination. Within thirty (30) days after the termination of
his employment, the Company shall pay Xx. XxXxxxxxx a lump sum
payment equal to fifty percent (50%) of the present value of the
future base salary payable to Xx. XxXxxxxxx during the remainder
of his Term of Employment under this Employment Agreement or for
a period of two (2) years, whichever is longer. Such lump sum
amount shall be calculated by using a discount rate equal to the
applicable Federal rate that is in effect on the date of payment
as determined under Section 1274(d) of the Internal Revenue Code
of 1986 (the "Code") and the regulations thereunder, and by
assuming that Xx. XxXxxxxxx' annual salary in effect on the Date
of Termination would continue for the remainder of the Term of
Employment, or for a period of two (2) years, whichever is
longer. This payment shall be in addition to any payments Xx.
XxXxxxxxx shall be entitled to receive under any applicable
disability insurance policies maintained by the Company for Xx.
XxXxxxxxx.
(c) Cause. If Xx. XxXxxxxxx' employment is terminated
for any reason specified in Section 7(b) hereof, the Company
shall no longer be obligated to make any payments to Xx.
XxXxxxxxx pursuant to this Employment Agreement, except for the
full amount of his base salary and all compensation earned prior
to the Date of Termination and payments pursuant to plans,
programs, or arrangements, as determined under the provisions of
such plans or policies.
(d) Good Reason or Without Cause. If Xx. XxXxxxxxx'
employment is terminated by Xx. XxXxxxxxx for Good Reason as
specified in Section 7(c) hereof, or if his employment is
terminated by the Company without Cause as specified in
Section 7(e), the Company shall pay Xx. XxXxxxxxx the full amount
of his base salary and other compensation earned prior to the
Date of Termination. The Company shall also pay Xx. XxXxxxxxx,
within thirty (30) days after his termination, a lump sum payment
equal to three (3) (or the number of years left in the Term of
this Employment Agreement, whichever is greater) times his
current base salary. Such lump sum amount shall be calculated by
using a discount rate equal to the applicable Federal rate that
is in effect on the date of payment as determined under
Section 1274(d) of the Code and the regulations thereunder, and
by assuming that Xx. XxXxxxxxx' annual salary in effect on the
Date of Termination would continue for the remainder of the Term
of Employment, or for a period of three (3) years, whichever is
longer.
(e) Benefits. From the Date of Termination of Xx.
XxXxxxxxx' employment for Good Reason, as specified in
Section 7(c) hereof, or without Cause as specified in
Section 7(e), the Company shall pay Xx. XxXxxxxxx the full amount
of his base salary and all compensation earned prior to the Date
of Termination. The Company shall maintain in full force and
effect for the continued benefit of Xx. XxXxxxxxx and his
eligible dependents for the greater of three (3) years and the
number of years (including partial years) remaining in the Term
of Employment hereunder, all employee benefit plans and programs
(such as medical, dental, health and life insurance) in which Xx.
XxXxxxxxx was entitled to participate immediately prior to the
Date of Termination, if Xx. XxXxxxxxx' continued participation is
possible under the general terms and provisions of such plans
and programs. In the event that Xx. XxXxxxxxx' participation in
any such plan or program is barred, the Company shall arrange to
provide Xx. XxXxxxxxx with benefits substantially similar to
those to which Xx. XxXxxxxxx would otherwise have been entitled
to receive under such plans and programs.
9. Business Expenses. The Company agrees that during the
Term of Employment, the Company will reimburse Xx. XxXxxxxxx for
actual travel and other out-of-pocket expenses reasonably
incurred by him in connection with the performance of his duties
hereunder and accounted for in accordance with the policies and
procedures currently established by the Company.
10. No Competing Employment. Xx. XxXxxxxxx agrees that,
during the Term of Employment and for a period of two (2) years
after the Date of Termination ("Restricted Period"), he will not,
without the written consent of the Board of Directors, engage in
any retail or wholesale grocery business which is directly
competitive with the business of the Company or any affiliate
thereof in any geographic area in which the Company or any
affiliate operates on the Date of Termination. Xx. XxXxxxxxx
understands and agrees that a portion of the amounts paid to him
under Section 5(a) hereof is in consideration for his covenants
set forth in Sections 10, 11, and 12.
11. No Solicitation. Xx. XxXxxxxxx agrees that, during the
Restricted Period, he will not, without the prior written consent
of the Board of Directors, directly or indirectly solicit or
recruit any employee or independent contractor of the Company for
the purpose of being employed by Xx. XxXxxxxxx, directly or
indirectly, or any other person or entity on behalf of which Xx.
XxXxxxxxx is acting as an agent, representative or employee.
Notwithstanding the above, if Xx. XxXxxxxxx' employment is
terminated for any reason specified in Section 7 hereof prior to
the first anniversary of the date on which a Change in Control
(as defined above) occurred, the covenants of Sections 10 and 11
shall not be applicable.
12. Confidentiality. Xx. XxXxxxxxx agrees that, during the
Term of Employment and thereafter, he will not, without the
written consent of the Company, disclose to anyone not entitled
thereto, any confidential information relating to the business,
sales, financial condition or products of the Company or any
affiliate thereof. Xx. XxXxxxxxx also recognizes and
acknowledges that he has a common law obligation not to disclose
trade secrets and other proprietary information of the Company.
Xx. XxXxxxxxx further agrees that, should he leave the active
service of the Company, he will not take with him or retain,
without the written authorization of the Board of Directors, any
papers, files or other documents or copies thereof or other
confidential information of any kind belonging to the Company
pertaining to its business, sales, financial condition or
products. Xx. XxXxxxxxx understands and agrees that the rights
and obligations set forth in this Section 12 are perpetual and,
in any case, shall extend beyond the Restricted Period.
13. Injunctive Relief. Without limiting the remedies
available to the Company, Xx. XxXxxxxxx acknowledges that a
breach of the covenants contained in Sections 10, 11 and 12
herein may result in material irreparable injury to the Company
for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that,
in the event of such a breach or threat thereof, the Company
shall be entitled to obtain a temporary restraining order or a
preliminary injunction restraining Xx. XxXxxxxxx from engaging in
activities prohibited by Sections 10, 11 and 12 or such other
relief as may be required to specifically enforce any of the
covenants in such Sections.
14. Indemnification. The Company shall indemnify and hold
harmless Xx. XxXxxxxxx to the fullest extent permitted under
North Carolina law, including, without limitation, the provisions
of Part 5 (or any successor provision) of the North Carolina
Business Corporation Act, from and against all losses, claims,
damages, liabilities, costs and expenses (including, without
limitation, attorneys' fees), which may, at any time, be suffered
by Xx. XxXxxxxxx as a result of the fact that Xx. XxXxxxxxx is or
was an officer of the Company, or is or was serving at the
request of the Company as an officer, employee or agent of an
affiliate of the Company. The expenses incurred by Xx. XxXxxxxxx
in any proceeding shall be paid promptly by the Company in
advance of the final disposition of any proceeding at the written
request of Xx. XxXxxxxxx to the fullest extent permitted under
North Carolina law. The indemnification provision of this
Section 14 shall survive the termination or expiration of this
Employment Agreement.
15. Gross-Up Payment. In the event that any payments to
which Xx. XxXxxxxxx becomes entitled under this Employment
Agreement (the "Agreement Payments") will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any
similar tax that may hereafter be imposed), the Company shall pay
to Xx. XxXxxxxxx at the time specified below, an additional
amount (the "Gross-Up Payment") such that the net amount retained
by Xx. XxXxxxxxx (taking into account the Total Payments (as
hereinafter defined) and the Gross-Up Payment), after deduction
of any Excise Tax on the Total Payments and any federal, state
and local income tax and Excise Tax upon the Gross-Up Payment
provided for by this Section 15, but before deduction for any
federal, state or local income tax on the Total Payments, shall
be equal to the "Total Payments," as defined below. Except as
otherwise provided below, the Gross-Up Payment or portion thereof
provided for in this Section 15 shall be paid not later than the
thirtieth (30th) day following payment of any amounts under the
Employment Agreement that will be subject to the Excise Tax;
provided, however, that if the amount of such Gross-Up Payment or
portion thereof cannot be finally determined on or before such
day, the Company shall pay on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined, but in
no event later than the forty-fifth (45th) day after payment of
any amounts under the Employment Agreement that will be subject
to the Excise Tax. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to Xx.
XxXxxxxxx, payable on the fifth (5th) day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
For purposes of determining whether any of the Agreement
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments, accruals, vestings or other
compensatory benefits received or to be received by Xx. XxXxxxxxx
in connection with a Change in Control of the Company or the
termination of Xx. XxXxxxxxx' employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such person (which, together with the Agreement
Payments, shall constitute the "Total Payments") shall be treated
as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b((1) of the Code shall be treated as
subject to the Excise Tax, unless, in the opinion of tax counsel
selected by the Company's independent auditors, such other
payments or benefits (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (ii) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (a) the total amount of the
Total Payments, or (b) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i) above), and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up
Payment, Xx. XxXxxxxxx shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation for
the calendar year in which the Gross-Up Payment is to be made and
the applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the
Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of
such state and local taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-Up Payment is made, Xx.
XxXxxxxxx shall repay to the Company, at the time that the amount
of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the
portion of the Gross-Up Payment being repaid) if such repayment
results in a reduction in Excise Tax and/or a federal, state and
local income tax deduction, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time the Gross-Up
Payment is made (including, by reason of any payment, the
existence or amount of which cannot be determined at the time of
the Gross-Up Payment), the Company shall make an additional
gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount
of such excess is finally determined.
16. Vesting. Upon a Change in Control of the Company or if
Xx. XxXxxxxxx' employment is terminated for reasons specified in
Sections 7(a), 7(c), 7(d) or 7(e) hereof, all of the rights
granted to Xx. XxXxxxxxx by the Company to own or acquire stock
of the Company (including, without limitation, stock options and
restricted stock granted under the Company's Stock Option Plan)
shall automatically vest upon the date of such Change in Control
or Date of Termination, respectively, without the need for
further action or consent by the Company; provided, however, that
(assuming no occurrence of a Change of Control) such rights shall
not vest if Xx. XxXxxxxxx' employment is terminated for Xx.
XxXxxxxxx' failure to adequately perform his duties hereunder as
determined by an affirmative vote of at least seventy percent
(70%) of the Board of Directors of the Company.
17. Legal Expenses. The Company shall reimburse Xx.
XxXxxxxxx for all reasonable legal fees incurred in an effort to
establish entitlement to compensation and benefits under this
Employment Agreement.
18. Mitigation. The Company recognizes that Xx. XxXxxxxxx
has no duty to mitigate the amounts due to him upon termination
of this Employment Agreement, and the obligations of the Company
will not be diminished in the event Xx. XxXxxxxxx is employed by
another employer after the termination of his employment with the
Company.
19. Successors. This Employment Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns and upon Xx. XxXxxxxxx and his legal representatives.
The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business or assets of the Company to
expressly assume and agree to perform this Employment Agreement
in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
20. Amendments. This Employment Agreement, which contains
the entire contractual understanding between the parties, may not
be changed orally but only by a written instrument signed by the
parties hereto.
21. Governing Law. This Employment Agreement shall be
governed by and construed in accordance with the laws of the
State of North Carolina.
22. Waiver. The waiver of breach of any term or condition
of this Employment Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or
condition.
23. Severability. In the event that any provision or
portion of this Employment Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions
and portions of this Employment Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest
extent provided by law.
24. Notices. Any notices or other communications required
or permitted hereunder shall be deemed sufficiently given if sent
by registered mail, postage prepaid, as follows:
(a) If to Xx. XxXxxxxxx:
R. Xxxxxxx XxXxxxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
(b) If to the Company:
Food Lion, Inc.
Xxxx Xxxxxx Xxx 0000
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Secretary
with a copy to:
Xxxxx X. Xxxxxxxxxx
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
or to such other address as shall have been specified in writing
by either party to the other. Any such notice or communication
shall be deemed to have been given on the second day (excluding
any days U.S. Post Offices are not open) after the date so
mailed.
IN WITNESS WHEREOF, the Company has caused this Employment
Agreement to be executed by its duly authorized representative,
and Xx. XxXxxxxxx has hereunto set his hand as of the date first
above written.
FOOD LION, INC.
By:Xxx X. Xxxxx
Attest:
Xxxxxx Xxxxxx
R. Xxxxxxx XxXxxxxxx
R. Xxxxxxx XxXxxxxxx
