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August 18, 1997
EMPLOYMENT AGREEMENT
This Agreement dated as of August 25, 1997 by and between Xxxxxxx Xxxxx
("Employee"), and SHOPPERS FOOD WAREHOUSE, a Delaware corporation ("Employer").
W I T N E S S E T H:
WHEREAS, the parties hereto desire by this Agreement to provide for the
employment of Employee by Employer;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and other good and valuable consideration, the
receipt, sufficiency and adequacy of which the parties conclusively
acknowledge, the parties hereto, intending to be legally bound, agree as
follows:
1. EMPLOYMENT
(a) Duties. Employer hereby employs Employee, and Employee accepts
employment by Employer, as President of Shoppers Food Warehouse during the
Employment period (as defined in Section 2), with such duties, responsibilities
and authority as are commensurate with and appropriate to such position and as
are from time to time set forth in the bylaws of the Employer and otherwise
delegated to him by the Board of Directors of the Employer ("the Board of
Directors"), and shall report to the Executive Committee of the Board, the
Board of Directors, or other Senior Executive as directed by the Board.
Employee agrees to observe and comply with the rules and regulations of
Employer as adopted by the Board of Directors respecting the performance of his
or her duties and to carry out and follow the orders, policies and directions
stated by Employer to him or her from time to time, provided, however, that
such regulations and directions are consistent with the authority and
responsibility of the position specified above.
(b) Full Time Employment. During the Employment period Employee shall
devote all his or her time and attention to his services for Employer and shall
diligently perform his or her duties and responsibilities under this Agreement.
Employee acknowledges that the proper performance of his or her duties and
responsibilities may require the rendering of services not only during normal
business hours, but over and beyond those hours as well.
(c) Place of Employment and Travel. Employee's principal place of
employment shall be at the executive offices of Employer in Lanham, Maryland.
If Employer's executive offices are moved from Lanham, Maryland, Employee's
principal place of employment shall be changed to the location where such
executive offices are moved. Employee agrees to travel for the performance of
his or her duties under this Agreement as Employer may request from time to
time. If Employer's executive offices are relocated a distance greater than 100
miles from Lanham, Maryland, Employee's relocation expenses will be paid by
Employer if Employee elects to relocate. At the Employee's option, if Employee
decides not to relocate, the relocation of the executive offices will be deemed
a termination without cause and the Employee will be eligible to receive
severance benefits as outlined in Section 7 (e) of this Agreement.
2. TERM
The term of Employee's employment under this Agreement (the
"Employment Period") shall commence on August 25, 1997 and end on August 25,
1998. If the Employer decides not to renew this Agreement, notice will be
delivered in writing at least 30 days prior to the end of the term of this
Agreement. If such notice is not delivered then the Agreement will continue for
an additional one (1) year after which it will automatically expire, unless it
is renewed.
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3. COMPENSATION
(a) Base Salary. Employee's annual base salary shall be Three Hundred
Thousand Dollars ($300,000.00), subject to an annual increase as recommended to
the Board of Directors by the Compensation Committee of the Board of Directors
following review and performance appraisal of Employee, and following approval
by the Board of Directors. Employee's base salary shall be paid in accordance
with Employer's normal payroll procedure.
(b) Bonus. A target bonus of 40% of base salary. Any payments made
will be based on the components of Employee's target bonus program. This bonus
payment is subject to approval by the Board of Directors. Receipt of this bonus
is subject to Employee's active employment at Shoppers Food Warehouse at the
time of bonus payments. This bonus is not payable if Employee has been, or is
being terminated pursuant to Section 7.
(c) Withholding Tax. All compensation shall be subject to the
customary withholding tax and other employment taxes as required with respect
to compensation paid by a corporation to an employee.
4. STOCK OPTIONS
(a) Stock Options. Employee shall be eligible for the annual award of
stock options pursuant to the stock option plans under which the Employee is
currently a participant, as determined by the Board(s) of Directors of the
company(s), pursuant to the individual company(s) stock option plan(s).
(b) Exercise upon Certain Terminations of Employment. In the event of
the termination of Employee's employment hereunder for any reason other than
pursuant to Section 7 (d), Employee shall have the right to exercise, on or
before the effective date of the termination of this Agreement, any option
which has vested in Employee hereunder coincident with or prior to the
effective date of the termination of Employee's employment hereunder, subject
to the other terms and conditions of such option plan(s). In addition, in the
event of the termination of Employee's employment due to his or her death, the
personal representative of the Employee shall have the right to exercise any
such option within the later of (i) thirty (30) days notice of such right by
Employer to Employee's personal representative or (ii) sixty (60) days of the
date of Employee's death.
5. EMPLOYEE BENEFITS
During the Employment Period, Employer shall provide Employee with the
following benefits:
(a) Health Plan Coverage. Employer shall provide Employee with health
benefits, including major medical health insurance, Accidental Death and
Dismemberment (AD&D) and such other benefits that are in effect at the time of
this Agreement for the Employee and his or her immediate family all in
accordance with Employer's "Executive Health Plan" as now in effect.
(b) Further Benefits. Employee shall, during the term of this
Agreement (and thereafter to the extent provided herein), be eligible to
participate in all applicable profit sharing and 401 (k) plans and insurance
benefits in effect for all salaried employees of the Employer, together with
any future improvements in such plans or benefits, subject to the eligibility
requirements of such plans. In addition, Employee shall be entitled during the
term of this Agreement, and thereafter to the extent provided for herein or in
any such plan, to receive such other and further benefits as shall be generally
made applicable to key executive employees of the Employer, and such additional
benefits, as may be granted from time-to-time by the Board of Directors, in
it's sole discretion.
(c) Vacation. Employee shall be entitled to paid vacation leave of
three (3) weeks in every year of employment, increased pursuant to Employer's
vacation policy. Effective with this Agreement, all vacation earned subsequent
to the date of this Agreement shall be taken no later than by the end of the
following year or be forfeited,
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unless prior approval is granted by the Compensation Committee of the Board of
Directors.
(d) Business Expenses. Employer shall reimburse Employee pursuant to
Employer's policy of employee expense reimbursement of all items of travel,
entertainment and miscellaneous expenses reasonably incurred by Employee on
behalf of Employer and presented to Employer on the appropriate voucher.
(e) Automobile Allowance: Employer shall pay to Employee as an
automobile allowance the sum of Eight Hundred Fifty Dollars ($850.00) per
month.
6. PROPRIETARY DATA
(a) Trade Secrets and Other Confidential Information. During the
Employment Period and for three (3) years thereafter, Employee shall keep
confidential any data, documents, or financial or other information of a trade
secret or confidential nature relating to Employer's past, present or future
operations (the "Proprietary Data"), shall not disclose the Proprietary Data to
any third parties other than officers, employees or agents of Employer on a
"need to know" basis, shall take all necessary steps to ensure that such
officers, employees or agents keep such Proprietary Data confidential, and
shall use the Proprietary Data only in connection with rendering services to
Employer. Upon the end of the Employment Period, Employee shall promptly return
to Employer the originals and all copies of the Proprietary Data in the
possession of Employee, and shall not use any of the Proprietary Data for his
or her own benefit or for the benefit of any third parties. The covenants
contained in this Section 6 (a) shall not apply to Proprietary Data which is or
becomes a matter of general knowledge in the industry otherwise than by a
breach of the provisions of this Section 6 (a).
(b) Injunctive Relief. Employee acknowledges that the covenants
contained in Sections 6 (a) are necessary for the protection of the legitimate
business interests of Employer and are reasonable limitations of activities,
that the rights of Employer are of a specialized and unique character, and that
immediate and irreparable damage will result to Employer if Employee fails to
or refuses to perform or comply with such covenants. Therefore, notwithstanding
any election by Employer to claim damages from Employee as a result of any such
failure or refusal, Employer may, in addition to any other remedies and damages
available, seek an injunction in a court of competent jurisdiction to restrain
any such failure or refusal (and no bond or other security shall be required in
connection therewith). In that connection, Employee represents and warrants
that his or her expertise and capabilities are such that performance or
compliance with the covenants (and the enforcement thereof by injunction or
otherwise) will not prevent him or her from earning a livelihood. If a court
refuses to enforce the covenants set forth in Section 6 (a) because they are
found to be unreasonable, Employee and Employer agree to abide by any lesser
restrictions (for instance, as to duration and geographic area) that are found
to be reasonable.
7. TERMINATION
(a) Definition of Compensation: For purposes of termination,
compensation at the time of termination shall be deemed to include accrued sick
and vacation and salary through the effective date of termination, plus any and
all benefits normally granted by Employer to Employees upon termination.
(b) Death. The Employment Period shall forthwith terminate upon the
death of Employee, whereupon Employer shall not have any further obligations or
liability hereunder except to pay the Employee's estate the unpaid portion, if
any, of Employee's compensation accrued for the period up to the date of
Employee's death.
(c) Total Disability. In the event of the Total Disability (as that
term is hereafter defined) of Employee for a period of six (6) consecutive full
calendar months, Employer shall have the right to end the Employment Period by
giving Employee ten (10) days' written notice. Upon the expiration of such ten
(10) day period, the Employment Period shall end and Employer shall not have
any further obligations hereunder except to pay Employee the unpaid portion,
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if any, of Employee's compensation accrued for the period up to the date of
termination of Employee's employment. As used in this Agreement, the term
"Total Disability" shall mean a mental or physical condition which, in the
opinion of Employer and in the opinion of two consulting physicians, renders
Employee unable or incompetent to carry out his obligations hereunder,
provided, however that said disability must also be in accordance with
disability as defined in the Company's Long Term Disability coverage and,
therefore, Employee shall be eligible for such Long Term Disability coverage.
(d) With Cause. Employer shall have the right to immediately terminate
the employment of Employee at any time for just cause. For purposes of the
foregoing, "just cause" shall include, but not be limited to: (i) Employee's
commission of any act which constitutes an offense involving moral turpitude
under federal, state or local law; (ii) Employee's material breach of any of
the terms of this Agreement; (iii) Employee's refusal to follow lawful and
reasonable directive(s) of the Board of Directors made in compliance with
Section 1(a) hereof; (iv) documented performance problems; or (v) violation of
any part of the Shoppers Food Warehouse Statement of Business Ethics, a copy of
which is incorporated with this Agreement. Upon such termination, Employer
shall have no further obligations or liability hereunder except to pay Employee
the unpaid portion, if any, of Employee's compensation accrued for the period
up to the date of termination of Employee's employment.
(e) Dissatisfaction by Employer Without Cause. Employer shall have the
right to terminate the employment of Employee without cause upon at least
thirty (30) days written notice to Employee. If Employer shall terminate the
employment of Employee pursuant to this Section 7 (e), the Employment Period
shall end at the expiration of the notice period and Employer shall not have
any further obligations or liability hereunder except (i) to pay Employee the
unpaid portion, if any, of Employee's compensation accrued for the period up to
the date of termination of Employee's employment, together with an additional
amount of one (1) year of base salary as severance in accordance with
Employer's normal payroll schedule to commence immediately following the
effective date of the termination of the Employee's employment hereunder; and
(ii) to pay to Employee in a lump sum an amount equal to the number of days of
accrued and unused vacation and sick leave computed at the Employee's base
salary in effect on the date of termination. If new employment (defined as
employment for another company, or self-employment) for the Employee commences
at any time during the severance period and the base salary is the same or more
than that paid by the Employer, then Employer shall cease payments under this
section. If the base salary paid by the new employment is less than the base
salary paid by the Employer then the Employer will continue to pay the
difference between the new base salary and that paid by the Employer for the
balance of the one (1) year severance period. Employee must notify Employer
immediately in writing upon starting new employment. If Employee does not
notify Employer immediately upon starting new employment, then Employee agrees
that should Employer need to hire legal counsel to retrieve monies that should
not have been paid, that Employee will be responsible for the Employer's
reasonable legal costs. Employer shall offer health insurance continuation
under COBRA commencing upon the termination of employment, the cost of which
will be paid by the Company until , the earlier of, (i) thirty (30) days after
the date the Employee starts new employment or (ii) the severance period ends.
Employee may continue COBRA at their own expense for the balance of the COBRA
period. The COBRA cost paid by the Employer will be added to the Employee's
income and taxed. Lastly, Employee shall be entitled to utilize the services of
a professional out placement service, the reasonable cost and duration of which
shall be determined and borne by Employer.
(f) Dissatisfaction by Employee. If Employee at any time is for any
reason dissatisfied with the terms and conditions of his or her employment
hereunder, Employee shall have the right to terminate his or her employment
upon at least thirty (30) days written notice to Employer. If Employee shall
terminate his or her employment pursuant to this Section 7 (f), the Employment
Period shall end at the expiration of the notice period and Employer shall have
no further obligations or liability hereunder except to pay to Employee the
unpaid portion, if any, of Employee's compensation accrued for the period up to
the date of termination. (If Employee gives thirty (30) days written notice due
solely to Employer's decision not to renew this Agreement as set forth in
Section 2, or Employee's dissatisfaction with the terms of a new Agreement,
then the Employee will be eligible for the severance terms outlined in Section
7(e).) Such written
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notice by the Employee must be given no later than the 30th day after the
termination or expiration of the Agreement outlined in Section 2. If Employee
does not give written notice to the Employer within said thirty (30) day period
then Employee understands and acknowledges that he or she will not be eligible
to receive the severance and other benefits outlined in Section 7(e) and agrees
that if he or she continues to be employed, his or her employment will be
at-will and for no definite or determinable period and may be terminated at any
time, with or without notice, at the option of the Employee or the Company.
8. MISCELLANEOUS
(a) Governing Law. This Agreement shall be governed by the laws of the
State of Delaware applicable to agreements made by and to be performed by
Delaware corporations.
(b) Amendment of Agreement. No amendment or variation of the terms of
this Agreement, with or without consideration, shall be valid unless made in
writing and signed by the Employee and a duly authorized representative of the
Employer (other than Employee).
(c) Waiver of Conditions. Any waiver agreed to between Employer and
Employee of any provision should not be construed as a general waiver of the
provision, or waiver of any other provision of this Agreement.
(d) Entire Agreement. This Agreement contains the entire agreement
between then parties and supersedes all prior oral and written agreements,
understandings, commitments, and practices between the parties, whether or not
fully performed by Employee before the date of this Agreement.
(e) Headings. The section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
(f) Notice. All notices, requests and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or upon receipt when sent by an express mail service, provided that
in each case a copy is mailed by first-class, registered mail, return receipt
requested, addressed as follows (or as may otherwise have been specified by the
intended recipient by notice as herein provided)
If to Employee:
Xxxxxxx Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxx 00000
If to Employer:
Director and Chairman of the Executive Committee
Shoppers Food Warehouse
0000 00xx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
General Counsel
Shoppers Food Warehouse
0000 Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
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(g) Severability. If any provision of this Agreement is held invalid
or unenforceable, the remainder of this Agreement shall nevertheless remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
(h) Merger or Consolidation. This Agreement shall not be terminated by
any merger, consolidation, transfer of any or all of the assets of the Employer
or voluntary or involuntary dissolution of the Employer. In the event of a
merger or consolidation or upon the transfer of assets, the surviving or
resulting corporation or the transferee of the Employer's assets shall be bound
by and shall have the benefit of the provisions of this Agreement, and the
Employer shall take all actions necessary to ensure that such corporation or
transferee is bound by the provisions of this Agreement. This Agreement shall
be binding upon the Employer notwithstanding any change in the composition of
the Board of Directors or change in ownership of the Employer.
(i) No Covenants. Employee hereby represents and warrants that he or
she is not subject to or bound by any employment contract, restrictive covenant
or other agreement or any order or decree that prevents him or her from
entering into this Agreement or from performing his or her responsibilities as
contemplated by this Agreement.
(j) Attorney's Fees. If a dispute arises with respect to the
Employer's obligations or the Employee's rights under this Agreement, or if any
legal proceedings shall be brought to enforce or interpret any provisions
contained herein, or to recover damages for breach hereof, or in the event of
any other litigation involving this Agreement, Employee shall recover from the
Employer all reasonable attorney's fees and costs and disbursements incurred as
a result of such dispute. In addition, Employee shall recover from Employer all
reasonable attorney's fees and costs and disbursements incurred as a result of
any legal proceeding filed by Employee, unless the Employee's pursuit of legal
proceedings is deemed frivolous or in bad faith as determined by the court in
any such action.
(k) Assignment; Binding Effect. This Agreement shall be binding upon,
and shall inure to the benefit of, and be enforceable by , the parties hereto
and their respective successors and assigns, provided, that (i) this Agreement
is a personal service agreement and no right hereunder may be assigned by
Employee, except that it shall inure to the benefit of and be enforceable by
the Employee's personal or legal representatives, executors or administrators;
and (ii) unless Employer shall have complied with Section 8 (h) hereof, no
right hereunder may be assigned or transferred by Employer by operation of law
or otherwise. Any purported assignment or transfer in violation of this Section
8 (k) shall be null and void.
IN WITNESS WHEREOF, this Agreement has been signed by a duly authorized officer
of Employer and by Employee as of the date first above-written.
SHOPPERS FOOD WAREHOUSE
X. X. XXXXXXXX August 18, 1997
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Xxxxx X. Xxxxxxxx Date
Director
XXXX X. XXXXX August 18, 1997
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Xxxx X. Xxxxx Date
Chief Executive Officer
EMPLOYEE
XXXXXXX X. XXXXX August 26, 1997
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Xxxxxxx X. Xxxxx Date
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