RETIREMENT AGREEMENT
THIS AGREEMENT (this "Agreement"), made and entered into as
of this 7th day of April, 1999, by and between Food Lion, Inc., a
North Carolina corporation (the "Company"), and Xxx X. Xxxxx (the
"Executive"),
W I T N E S S E T H:
WHEREAS, the Executive is serving as the Chairman of the
Board of Directors, President and Chief Executive Officer of the
Company; and
WHEREAS, in recognition of the Executive's long and
distinguished service with the Company; and
WHEREAS, by mutual agreement between the Executive and the
Company, the Executive shall retire from the Company as of the
date hereof (the "Retirement Date") and the Executive's
employment with the Company and his service as Chairman shall
terminate as of such Retirement Date.
NOW, THEREFORE, for and in consideration of the mutual
promises, covenants and obligations contained herein, the Company
and the Executive agree as follows:
ARTICLE I: RETIREMENT AND CONSULTANCY
Section 1.1 Retirement. The Executive hereby retires and
resigns as an employee, officer and director of the Company and
its affiliates, effective as of the end of the meeting of the
Board of Directors of the Company held on the Retirement Date.
Notwithstanding any provision of the Employment Agreement between
the Company and the Executive dated August 1, 1991 (the
"Employment Agreement") to the contrary, such retirement and
resignation shall not be deemed to be a breach by the Executive
of the Employment Agreement, and the Employment Agreement shall
terminate as of the Retirement Date.
Section 1.2 Consulting Services. The Executive agrees to
be available from time to time during the period beginning on the
Retirement Date and ending July 31, 2001, for consulting with the
Chief Executive Officer and the Chairman of the Company, as
either the Chief Executive Officer or the Chairman may reasonably
request. Reasonable unavailability of the Executive for such
consulting at any time shall not be deemed a breach of this
Agreement.
ARTICLE II: RETIREMENT PAYMENTS AND BENEFITS
Section 2.1 Retirement Payments. The Executive shall
continue to receive the annual salary he currently receives
through July 31, 2001. The Executive shall receive annual
bonuses of $432,315 (which would be the amount of his 1999 bonus)
through April 7, 2002. In addition, the Executive shall receive
$36,950 (the amount that would have been paid to the Executive as
a "wellness bonus" for 1999) annually through April 7, 2002.
Such annual salary and bonus payments shall be made on the same
schedule as currently made for the Executive and shall be
prorated as applicable.
Section 2.2 Options. As provided in the stock option
agreements governing such stock options, all vested stock options
held by the Executive as of the Retirement Date shall remain
exercisable for three months following the Retirement Date, and
thereafter any of such stock options that remain unexercised
shall terminate and cease to be exercisable. All other stock
options that have been granted to the Executive that vest on or
before December 31, 2000, shall remain outstanding and shall vest
on the same schedule as if the Executive had remained employed
with the Company through December 31, 2000, and, once each such
options are vested, shall remain exercisable for three months
following the respective vesting dates of each such options. As
of the Retirement Date, all stock options that have been granted
to the Executive that would vest after December 31, 2000, shall
terminate as of the Retirement Date. For purposes of
clarification, Schedule B attached hereto sets forth the stock
options that have been granted to the Executive as of the date
immediately prior to the Retirement Date and sets forth whether
such options will survive the Retirement Date.
Section 2.3 Restricted Stock. The Executive shall
continue to be vested in all restricted stock that has vested as
of the Retirement Date. All restricted stock under awards to the
Executive that vest on or before December 31, 2000, shall remain
outstanding following the Retirement Date and shall vest on the
same schedule as if the Executive had remained employed with the
Company through December 31, 2000. All restricted stock under
awards to the Executive that would vest after December 31, 2000,
shall be forfeited as of the Retirement Date. For purposes of
clarification, Schedule B attached hereto sets forth the
restricted stock that has been awarded to the Executive as of the
date immediately prior to the Retirement Date and sets forth
whether such restricted stock awards will survive the Retirement
Date.
Section 2.4. Put Right. The Executive shall have a one-
time right, exercisable within 30 trading days after the
Retirement Date, to sell to the Company, and, in the event the
Executive exercises such right, the Company shall be obligated to
purchase from the Executive for cash, up to 33% of the shares of
Class A Common Stock and Class B Common Stock of the Company
owned by the Executive on the date of exercise of such right (the
"Put"). The per share purchase price of the shares subject to
the Put shall be the average closing price of the Class A Common
Stock or Class B Common Stock, as the case may be, for the 30
trading days preceding the date of exercise as reported on NASDAQ
(National Market System). Payments by the Company pursuant to
the Put will be made within five business days of proper notice
of exercise of the Put by the Executive, subject to proper
delivery in proper form by the Executive of the relevant shares
of Common Stock
Section 2.5. Split-Dollar Life. The Company shall
continue to pay the premiums on and shall maintain in effect the
two split-dollar life insurance policies currently in effect with
respect to the Executive (Policy No. 2,161,371 and Policy No.
3123424) through December 31, 2001. As of December 31, 2001,
such insurance policies shall be transferred to the Executive,
and thereafter the Executive shall be responsible for all
premiums under such policies, and the Company shall waive its
right to receive reimbursement for premiums paid on such
policies.
Section 2.6 Company Benefits. For a period of three
years following the Retirement Date, the Executive shall be
entitled to participate in the benefit plans of the Company set
forth on Schedule A attached hereto. With respect to the
Company's Profit Sharing Plan and Profit Sharing Restoration
Plan, the Executive shall be entitled to all accrued amounts to
which the Executive is eligible under such plans and agreement.
In addition, following the Retirement Date, the Executive shall
receive cash payments from the Company in the amounts that would
have been contributed to the Profit Sharing Plan and the Profit
Sharing Restoration Plan for the Executive (and on the same
schedule) as if he remained employed by the Company through April
7, 2002. If the Company is unable to include the Executive and
his spouse in the Executive Medical Plan or the Food Lion Group
Benefit Plan, it shall secure similar benefits for the Executive
and his spouse for such three-year period. Following such three-
year period, the Executive shall receive COBRA continuation of
health care. As soon as practicable after the Retirement Date,
the Company shall transfer title to the vehicle currently used by
the Executive to the Executive. Thereafter, the Executive shall
be responsible for all maintenance, insurance and other expenses
relating to such vehicle, and the Company shall have no further
obligations with respect to such vehicle.
Section 2.7 Withholding of Taxes. The Company may
withhold from any benefits or compensation payable under this
Agreement all federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or
ruling.
Section 2.8 Miscellaneous. Except as specifically
provided herein or as otherwise may be required by law, the
Executive shall not be entitled to receive any other payments,
benefits or severance amounts from the Company following the
Retirement Date.
ARTICLE III: CONFIDENTIAL INFORMATION
The Executive acknowledges that during his service and
employment with the Company as its Chairman, Chief Executive
Officer and President that he has been privy and made party to
confidential information, including but not limited to knowledge
or data relating to the Company and its businesses and
investments, information regarding vendors, employees, strategic
and business plans, and analysis of competitors ("Confidential
Information") and Trade Secrets (as defined below). Following
the Retirement Date, the Executive shall hold in a fiduciary
capacity for the benefit of the Company all Trade Secrets and
Confidential Information, which shall have been obtained by the
Executive during the Executive's employment by the Company and
which is not generally available public knowledge (other than by
acts by the Executive in violation of this Agreement). For three
years following the Retirement Date, the Executive shall not,
without the prior written consent of the Company or as may
otherwise be required by law or any legal process, or as is
necessary in connection with any adversarial proceeding against
the Company (in which case the Executive shall use his reasonable
best efforts in cooperating with the Company in obtaining a
protective order against disclosure by a court of competent
jurisdiction), communicate or divulge any such Trade Secrets or
Confidential Information to anyone other than the Company and
those designated by the Company. All records, files, drawings,
documents, models, equipment, and the like relating to the
Company's business, which the Executive has control over, shall
not be removed from the Company's premises and, if so removed,
shall be returned to the Company by the Retirement Date. The
Executive acknowledges that he has assigned to the Company all
rights to Trade Secrets and other products relating to the
Company's business developed by him alone or in conjunction with
others at any time while employed by the Company. For purposes
of this Agreement, Trade Secrets shall mean all information,
without regard to form, including, but not limited to, technical
or non-technical data, formulae, patterns, compilations,
programs, devices, methods, techniques, drawings, processes,
financial data, financial plans, business projects, product
plans, distribution lists or lists of actual or potential
customers, advertisers or suppliers which is not commonly known
by or available to the public and which information: (i) derives
economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure
or use and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.
ARTICLE IV: NON-COMPETITION; NON-SOLICITATION; NON-DISPARAGEMENT
Section 4.1 Acknowledgements. The Executive acknowledges
(i) that during his service and employment as Chairman, Chief
Executive Officer and President of the Company, he required
special expertise and talent in conducting his duties and that
the Executive had substantial contacts with customers, suppliers,
advertisers and vendors of the Company and its affiliates; (ii)
that the Executive was placed in a position of trust and
responsibility and had access to a substantial amount of
Confidential Information and Trade Secrets and that the Company
placed him in such position and gave him access to such
information in reliance upon his agreement not to compete with
the Company during the time periods set forth below, including,
but not limited to, the review and preparation of strategic plans
and business strategies to expand the Company's business
operations; (iii) that due to the Executive's management and
supervising duties, the Executive is a repository of a
substantial portion of the goodwill of the Company and would have
an unfair advantage in competing with the Company; (iv) that due
to the Executive's special experience and talent, the breach of
this Article 4 cannot be reasonably or adequately compensated
solely by damages in an action at law; (v) that the Executive is
capable of competing with the Company and its subsidiaries; (vi)
that the Executive is capable of obtaining gainful employment
that does not violate the restrictions contained in this
Agreement; and (vii) that a material inducement for the Company
in executing this Agreement and making the payments hereunder was
the Executive's willingness to be bound by the terms of this
Article 4.
Section 4.2 Non-Competition. In light of the
acknowledgements set forth above and in consideration of the
payments made to the Executive hereunder, for three years
following the Retirement Date, the Executive shall not, directly
or indirectly, own, manage, operate, control, be employed by, or
perform services for any business, howsoever organized and in
whatsoever form, that engages in any retail or wholesale grocery
or supermarket business and which is located anywhere within the
continental United States.
Section 4.3. Non-Solicitation. To protect the goodwill of
the Company and the Company's legitimate business interests and
in consideration of the payments made to the Executive hereunder,
for three years after the Retirement Date, the Executive shall
not, directly or indirectly, solicit the customers, suppliers or
employees of the Company or its affiliates to terminate their
relationship with the Company or its affiliates (or to modify
such relationship in a manner that is adverse to the interests of
the Company or its affiliates), or to violate any valid contracts
they may have with the Company or its subsidiaries; provided,
however, that nothing in this Section 4.3 shall prohibit the
Executive from responding to an unsolicited request from any
third party for an employment reference with respect to any
person who was an employee of the Company during the period of
the Executive's employment with the Company.
Section 4.4. Non-Disparagement. Following the Retirement
Date, the Executive shall not disparage the Company or any of the
Company's subsidiaries, affiliates, and their respective
officers, directors, employees, agents, successors and assigns,
and the Company shall not disparage the Executive or any of his
representatives or agents, or any of their respective heirs and
assigns. A proceeding brought by any party to enforce its rights
shall not be deemed to be a breach of this Section 4.4.
Section 4.5. Miscellaneous. The Executive acknowledges
that the restrictions, prohibitions and other provisions of this
Article 4 are reasonable, fair and equitable in scope, term and
duration, are necessary to protect the legitimate business
interests of the Company and its affiliates and are a material
inducement to the Company to enter into this Agreement and make
the payments hereunder. It is the intention of the parties
hereto that the restrictions contained in this Article 4 be
enforceable to the fullest extent permitted by applicable law.
Therefore, if, at any time, the provisions of this Article 4
shall be determined to be invalid or unenforceable, by reason of
being vague or unreasonable as to area, duration or scope of
activity, this Article 4 shall be considered divisible and shall
become and be immediately amended to only such area, duration and
scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over
the matter and the Executive agrees that this Article 4 as so
amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.
ARTICLE V: MISCELLANEOUS
Section 5.1 Remedy. Should the Executive engage in or
perform, either directly or indirectly, any of the acts
prohibited by Articles 3 and 4, it is agreed that the Company
shall be entitled to immediately withhold any payments or
benefits to be made to the Executive under Article 2 of this
Agreement and all outstanding stock options held by the Executive
shall immediately be canceled and cease to be exercisable (and to
the extent such payments and benefits have already been made, the
Executive shall immediately repay such amounts to the Company
upon such breach, including, but not limited to, any gain
realized upon the lapse of restricted stock or exercise of stock
options, as provided in Sections 2.2 and 2.3 hereof) and the
Company shall be entitled to full injunctive relief, to be issued
by any competent court of equity, enjoining and restraining the
Executive and each and every other person, firm, organization,
association, or corporation concerned therein, from the
continuance of such violative acts. The foregoing remedy shall
not be deemed to limit or prevent the exercise by the Company of
any or all further rights and remedies which may be available to
the Company hereunder or at law or in equity.
Section 5.2 Notices. For purposes of this Agreement,
notices and all other communications provided for herein shall be
in writing and shall be deemed to have been duly given when
personally delivered, sent by facsimile or when mailed by United
States registered or certified mail, return receipt requested,
postage prepaid, addressed to such address or sent to such
facsimile number as each party may furnish to the other in
writing from time to time.
Section 5.3 Applicable Law, Jurisdiction and Venue. This
Agreement is entered into under, and shall be governed for all
purposes by, the laws of the State of North Carolina. In any
such litigation, each party hereto waives personal service of any
summons, complaint or other process and agrees that the service
thereof may be made by certified mail directed to such party at
his or its address for purposes of notice under Section 5.1
hereof.
Section 5.4 No Waiver. No failure by either party hereto
at any time to give notice of any breach by the other party of,
or to require compliance with, any condition or provision of this
Agreement shall (i) be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time or (ii) preclude insistence upon strict
compliance in the future.
Section 5.5 Severability. If a court of competent
jurisdiction determines that any provision of this Agreement is
invalid or unenforceable, then the invalidity or unenforceability
of that provision shall not affect the validity or enforceability
of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
Section 5.6 Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be
an original, but all of which together will constitute one and
the same Agreement.
Section 5.7 Headings. The paragraph headings have been
inserted for purposes of convenience and shall not be used for
interpretive purposes.
Section 5.8 Gender and Plurals. Wherever the context so
requires, the masculine gender includes the feminine or neuter,
and the singular number includes the plural and conversely.
Section 5.9 Affiliate. As used in this Agreement, unless
otherwise indicated, "affiliate" shall mean any person or entity
which directly or indirectly through any one or more
intermediaries owns or controls, is owned or controlled by, or is
under common ownership or control with the Company.
Section 5.10 Assignment. This Agreement is binding on the
Executive and the Company and their successors and assigns;
provided, however, that the rights and obligations of the Company
under this Agreement may be assigned to a successor entity which
assumes (either by operation of law or otherwise) the Company's
obligations hereunder. Any such assignment by the Company will
not release the Company unless and until all obligations to the
Executive hereunder are fully discharged. No rights or
obligations of the Executive hereunder may be assigned by the
Executive to any other person or entity, except by will or the
laws of descent and distribution. In the event of the
Executive's death prior to receipt by the Executive of all
amounts payable by the Company hereunder, such amounts shall be
payable to the Executive's designated beneficiaries on the same
schedule as provided for in this Agreement.
Section 5.11 Entire Agreement. Except as otherwise
specifically provided herein, this Agreement constitutes the
entire agreement of the parties with regard to the subject matter
hereof, contains all the covenants, promises, representations,
warranties and agreements between the parties with respect to the
Executive's resignation of employment with the Company, and
amends and supersedes all prior employment or severance
agreements between the Executive and the Company or any of its
predecessors, including, but not limited to, the Employment
Agreement. The Executive acknowledges and agrees that the
consideration provided for herein is adequate consideration for
the Executive waiving his rights under the Employment Agreement.
Except as otherwise provided herein, each party to this Agreement
acknowledges that no representation, inducement, promise or
agreement, oral or written, has been made by either party, or by
anyone acting on behalf of either party, which is not embodied
herein, and that no agreement, statement, or promise relating to
the Executive's resignation of employment with the Company, which
is not contained in this Agreement, shall be valid or binding.
Any modification of this Agreement will be effective only if it
is in writing and signed by the party to be charged..
Section 5.12 Arbitration. Except as otherwise necessary
to secure the remedy specified in Section 5.1 of this Employment
Agreement, any dispute arising between the Company and the
Executive with respect to the performance or interpretation of
this Retirement Agreement shall be submitted to arbitration in
Salisbury, North Carolina, for resolution in accordance with the
commercial arbitration rules of the American Arbitration
Association, modified to provide that the decision by the
arbitrators shall be binding on the parties, shall be furnished
in writing, separately and specifically stating the findings of
fact and conclusions of law on which the decision is based, and
shall be rendered within 90 days following impanelment of the
arbitrators. The cost of arbitration shall initially be borne by
the party requesting arbitration. Following a decision by the
arbitrators, the costs of arbitration shall be divided as
directed by the arbitrators.
ARTICLE VI: EXECUTIVE ACKNOWLEDGEMENTS
The Executive acknowledges that:
(a) He has read and understands the terms of this
Agreement and has voluntarily agreed to their terms without
coercion or undue persuasion by the Company or any officer,
director or other agent thereof;
(b) He has been encouraged by the Company to seeks,
and has sought, competent legal counsel in his review and
consideration of this Agreement and its terms; and
(c) This Agreement does not purport to waive, and does
not waive, any rights the Executive may have which arise
after the date on which this Agreement is finally executed.
[The next page is the signature page]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
FOOD LION, INC.
By: \s\ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx,
Chairman Senior Management Compensation
Committee
\s\ Xxx X. Xxxxx
Xxx X. Xxxxx, Individually
SCHEDULE A
Food Lion Group Benefit Plan (including life insurance coverage
but excluding disability coverage)
Executive Medical Plan
Financial planning services up to $1,500 per year, reduced in
1999 for the value of any services already received
SCHEDULE B
STOCK OPTIONS
Grant No. Grant No. of Amount and Exercise Survives
Date Options Date of Price Retirement
Granted Vesting Date
4241 11/6/91 75,000 60,000 vested $12.4166 Yes
7,500 on 11/6/99 Yes
7,500 on 11/6/00 Yes
4242 5/3/96 246,607 82,202 on 5/3/99 $7.3750 Yes
82,202 on 5/3/00 Yes
82,203 on 5/3/01 No
4243 5/1/97 342,598 114,199 on 5/1/00 $6.6875 Yes
114,199 on 5/1/01 No
114,200 on 5/1/02 No
41704 5/7/98 225,662 75,220 on 5/7/01 $10.2200 No
75,221 on 5/7/02 No
75,221 on 5/7/03 NO
RESTRICTED STOCK
Grant No. Grant No. of Amount and Survives
Date Options Date of Retirement
Granted Vesting Date
41175 5/3/96 47,031 11,758 vested Yes
11,758 on 5/3/99 Yes
11,758 on 5/3/00 Yes
11,757 on 5/3/01 No
41332 5/1/97 68,227 17,057 on 5/1/99 Yes
17,057 on 5/1/00 Yes
17,057 on 5/1/01 No
17,056 on 5/1/02 No
41705 5/7/98 45,596 11,399 on 5/7/00 Yes
11,399 on 5/7/01 No
11,399 on 5/7/02 No
11,399 on 5/7/03 No
