EXHIBIT 10aag
RETENTION AND SEVERANCE AGREEMENT
This Retention and Severance Agreement ("Agreement") is made this 25th
day of October, 2001, by and between Homeland Stores, Inc., a Delaware
corporation ("Company"), and Xxxxx X. Xxxxxxxx ("Executive").
Recitals
A. The Company and the Executive are parties to that certain letter
agreement dated July 6, 1998 ("Severance Agreement").
B. The Company and the Executive are parties to that certain letter
agreement dated December 26, 2000 ("Change in Control Agreement").
C. The Company and the Executive are parties to that certain
Supplemental Compensation Agreement dated May 18, 2001 ("Supplemental
Compensation Agreement").
D. To encourage the continued provision by the Executive of services to
the Company, which services are critical to the successful implementation by the
Company of its proposed strategies, the Company desires to provide to the
Executive retention benefits and severance benefits on the terms and subject to
the conditions contained herein. This Agreement is expressly intended to
supersede the Change in Control Agreement, the Severance Agreement and the
Supplemental Compensation Agreement.
E. This Agreement has been approved by the United States Bankruptcy
Court for the Western District of Oklahoma ("Bankruptcy Court").
NOW THEREFORE, for valuable consideration, the receipt and the
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree as follows:
1. Retention Benefit. To the extent that the Executive is employed by
the Company on a date on which the Retention Payment (as defined herein) (or any
portion thereof) is payable by the Company to the Executive hereunder or is
terminated by the Company without Cause prior to a date on which the Retention
Payment (or any portion thereof) would otherwise payable to the Company
hereunder, the Company shall pay to the Executive the Retention Payment (or such
portion). The Company shall not pay to the Executive any Retention Payment (or
any portion thereof) (a) to the extent that the Executive has terminated his
employment on or before the date on which the Retention Payment (or such
portion) would otherwise be payable or (b) to the extent that the Company has
terminated the employment of the Executive for Cause (as defined herein) on or
prior to the date on which the Retention Payment (or such portion) would
otherwise be payable.
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The Retention Payment shall (a), in the event of a Restructuring (as
defined herein) be equal to 120% of the base annual salary of the Executive as
of the date of this Agreement and (b), in the event of a Liquidation (as defined
herein) or a termination by the Company other than for Cause, be equal to 100%
of the base annual salary of the Executive as of the date of this Agreement;
provided, however, if, on or prior to January 15, 2002, the Board of Directors
of the Company votes, for any reason, to liquidate the Company, the Retention
Payment shall be equal to 60% of the base annual salary of the Executive as of
the date of this Agreement.
The Company shall pay to the Executive (a) 40% of the Retention Payment
(as though a Restructuring were occurring) on January 15, 2002, and (b) the
balance of the Retention Payment shall be paid on, (i), in the case of a
Restructuring, the effective date of the plan of reorganization confirmed by the
Bankruptcy Court or (ii), in the case of a Liquidation, on the completion of the
Liquidation (as determined by the Board of Directors of the Company).
2. Severance Benefit. In the event that the Company terminates the
employment of the Executive (other than for Cause), the Company shall pay to the
Executive the Severance Payment (as defined herein). The Executive shall not be
entitled to a Severance Payment if (a) the Executive terminates his employment
or (b) the Company terminates the employment of the Executive for Cause.
The Severance Payment shall be equal to 100%] of the base annual salary
of the Executive as of the date of this Agreement.
The Company shall pay the Severance Payment to the Executive within
thirty days after a termination of his employment by the Company that entitles
the Executive to the Severance Payment.
3. Implementation of Management Bonus Programs. The Company shall
implement a management incentive bonus program for Fiscal Years 2001 and 2002.
Each such management incentive bonus program shall contain the provisions that
are listed on Exhibit A.
4. Definitions. As used herein, the term "Cause" means (a) the willful
failure of the Executive to perform substantially his duties as an officer and
employee of the Company (other than due to physical or mental illness), (ii) the
engagement by the Executive in serious misconduct that is injurious to the
Company, (iii) the conviction of the Executive of, or the entry by the Executive
of a plea of nolo contendere to, a crime that constitutes a felony, (iv) the
unauthorized disclosure by the Executive of confidential information (other than
to the extent required by an order of a court having competent jurisdiction or
under subpoena from an appropriate government agency) that has resulted or is
likely to result in material economic damage to the Company or (v) any act of
moral turpitude by the Executive which has or may have an adverse effect on the
Company, including, without limitation, commission of a felony or a misdemeanor
involving moral turpitude.
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As used herein, the term "Liquidation" means a transaction or a series
of transactions as result of which the Company ceases to operate as a retail
grocery chain, regardless of the structure of the transaction or the series of
transactions, and, as used herein, the term "Restructuring" means a transaction
or a series of transactions as a result of which the Company continues to
operate as a retail grocery chain, regardless of the structure of the
transaction or the series of transactions. The term "Liquidation" and the term
"Restructuring" are mutually exclusive and the determination whether a
particular transaction or a particular series of transactions constitutes a
Liquidation or a Restructuring shall be made by the Board of Directors of the
Company.
5. Absence of Guaranty of Continued Employment. Nothing contained
herein shall limit the ability of the Company or the Executive to terminate the
employment by the Company of the Executive at any time.
6. Determinations. The Company and the Executive recognize that
determinations and interpretations may be required in connection with this
Agreement. All of such determinations and such interpretations shall be made by
the Board of Directors and, absent bad faith or manifest error, any such
determination or any such interpretation shall be conclusive and binding upon
the Company and the Executive.
Notwithstanding anything else contained herein, all determinations and
all interpretations by the Board of Directors shall be consistently applied to
all persons with whom the Company enters into a supplemental compensation
arrangement of the type embodied in this Agreement.
7. Prior Agreements; Other Agreements. This Agreement supersedes the
Change in Control Agreement and the Supplemental Compensation Agreement, both of
which shall cease to be of further force and effect on the execution and the
delivery of this Agreement. This Agreement also supersedes the provisions of
Section 9 of the Severance Agreement with respect to the severance benefits to
be provided by Homeland.
The Company may attempt to negotiate or may request emergence bonuses
or other retention or severance benefits as part of its plan of reorganization,
if any. The Company and the Executive understand that there is no assurance that
the Company will be successful or that the plan of reorganization, if any, will
contain any emergence bonus or any other retention or severance benefits.
8. Withholding. Notwithstanding anything else contained herein, all
amounts payable by the Company to the Executive hereunder shall be paid net of
any applicable income or employment taxes which the Company is required to
withhold under any applicable federal, state or local law or regulation.
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IN WITNESS WHEREOF, the Company and the Executive have executed and
delivered this Supplemental Compensation Agreement.
Homeland Stores, Inc.
By:
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Xxxxx X. Xxxxx, President/CEO
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Xxxxx X. Xxxxxxxx
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Exhibit A
(Management Incentive Bonus Plan)
Fiscal Year 2001
Maximum aggregate payment of $225,000
Maximum payment to Xxxxx X. Xxxxx of $50,000
Maximum aggregate payment to Xxxxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxx Xxxxxxxx and Xxxx Xxxxxx of $125,000
Maximum aggregate payment to other employees of $50,000
Payment criteria to be based on EBITDAR targets for November,
2001, and December, 2001, mutually agreed by Homeland Stores, Inc. and
Official Unsecured Creditors' Committee (Submission by Homeland
Stores, Inc. of projections by November 2, 2001).
Eligibility criteria: individual employed by the Company on December 31,
2001.
Fiscal Year 2002
Program substantially similar to present management incentive bonus program
Payment to Xxxxx X. Xxxxx based at target of 75% of his base annual
salary
Payments to Xxxxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxx
Xxxxxxxx and Xxxx Xxxxxx based at target of 50% of his or her base
annual salary
Payment criteria to be based on EBITDAR targets for Fiscal Year 2002,
mutually agreed by Homeland Stores, Inc. and Official Unsecured
Creditors' Committee (deadline for mutual agreement: February 15,
2002)
Eligibility criteria: individual employed by the Company on December 31,
2002.
Similar consistent programs to be implemented for other employees
in accordance with prior practice
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