Deferral Agreement and Election
The parties hereto desire to provide for the deferral
of certain compensation payable to Xxx X. Xxxxx (the
"Executive") by Food Lion, Inc.
Pursuant to the terms of this agreement (the
"Agreement"), the Executive hereby elects to defer a portion
of his annual compensation in connection with the
performance of the Executive's services as an employee of
the Company for each calendar year, including 1997, in the
amount (the "Annual Deferral Amount") that is necessary each
calendar year to prevent the Executive from being
compensated in excess of the $1,000,000 cap on non-
performance-based compensation set forth in section 162(m)
of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder. This election shall
be irrevocable and shall last until the earliest of (i) the
termination of Executive's employment with the Company, (ii)
retirement (at either early or normal retirement age
pursuant to the Company's pension plan), (iii) death or (iv)
total disability (as defined in the Company's long term
disability plan).
The sum of all Annual Deferral Amounts plus earnings
(collectively referred to as the "Benefits") shall be
payable to the Executive at the earliest of: his retirement
from the Company, his total disability, death, or
termination of employment for any reason.
The Annual Deferral Amount shall be recorded each year
by the Company in a deferral compensation account (the
"Account") maintained in the name of the Executive. The
Account shall be credited on each date that any portion of
the Annual Deferral Amount would be otherwise payable, in
accordance with the Company's normal practices. The Company
shall furnish the Executive with an annual statement of his
Account. The Company shall also credit interest or other
earnings on all amounts in the Account from the date
received until final distribution of the Account to the
Executive or his beneficiary or estate, as the case may be.
All amounts credited to the Account shall be credited with
interest at a rate equal to 10 percentage points per annum.
Payment of the Benefits shall be in one lump-sum;
provided, however, that the Executive may elect to receive
his Benefits in annual installments over five, ten or
fifteen years (the "Payment Election"). For a Payment
Election to be effective, it must be made at least twelve
months prior to the time when payment of Benefits is due.
If the Executive makes a Payment Election revoking an
earlier Payment Election, the earlier Payment Election will
remain in effect until twelve months have passed since the
Executive has made the later Payment Election. Once the
Benefits are payable, no change in Payment Election may be
made. In the event of the Executive's death prior to
complete distribution to him of the entire balance of his
Account, the balance of his Account on the date of his
death, shall be payable to the Executive's designated
beneficiary in one lump sum, and if no such designation is
in existence, to the Executive's spouse and if the Executive
does not have a spouse on the date of his death, to the
Executive's estate.
The right of the Executive or his designated
beneficiary to receive a distribution shall be an unsecured
claim against the general assets of the Company. All
amounts credited to the Account shall constitute general
assets of the Company and may be disposed of by the Company
at such time and for such purposes as it may deem
appropriate. An Account may not be encumbered or assigned
by the Executive or any beneficiary. The Company may
establish a grantor trust to fund amounts payable pursuant
to this Agreement. The amounts in said trust will be held
separate and apart from other Company funds and shall be
used exclusively for the purposes set forth in this
Agreement and the applicable trust agreement. The creation
of said trust shall not cause this Agreement to be
considered other than "unfunded" for purposes of the
Employee Retirement Income Security Act of 1974, as amended.
The Executive acknowledges that any payroll taxes (FICA
and Medicare) due and owing with respect to any amounts
deferred hereunder are the Executive's responsibility for
payment. The Company's payroll department shall consult
with the Executive regarding any applicable payroll taxes
owed and procedures to be implemented to effectuate the
above-described deferral.
Food Lion, Inc.
By: R.Xxxxxxx XxXxxxxxx
Date:December 18, 1997
Agreed to:
Xxx X.Xxxxx
Date: December 18, 1997
