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Exhibit 10(h)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made as of this 31st day of July, 2000 (the
"Effective Date"), between DELHAIZE AMERICA, INC., a North Carolina corporation
with its principal place of business in Salisbury, North Carolina (the
"Company"), and XXXX X. XXXXXXXXXX, an individual residing at 00 Xxxxxxxxxx
Xxxxx Xxxx, Xxxx Xxxxxxxxx, Xxxxx ("Xx. Xxxxxxxxxx"),
W I T N E S S E T H:
WHEREAS, as of the date hereof, the Company is acquiring Hannaford
Bros. Co. ("Hannaford") in a merger transaction in which Hannaford will become a
wholly-owned subsidiary of the Company;
WHEREAS, Xx. Xxxxxxxxxx has served as the Chief Executive Officer of
Hannaford;
WHEREAS, the Company and Xx. Xxxxxxxxxx desire to enter into this
Employment Agreement to provide for the employment of Xx. Xxxxxxxxxx as Vice
Chairman of the Company and Chief Executive Officer of Hannaford.
NOW, THEREFORE, in consideration of the premises, and the mutual
agreements herein contained, the Company and Xx. Xxxxxxxxxx hereby agree as
follows:
1. Employment. The Company hereby agrees to employ Xx. Xxxxxxxxxx as
Vice Chairman of the Company and Chief Executive Officer of Hannaford for the
Term of Employment as herein set forth, and Xx. Xxxxxxxxxx hereby agrees to
serve as Vice Chairman of the Company and Chief Executive Officer of Hannaford
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 written notice to the other party no less
than one hundred eighty (180) days prior to the expiration of the applicable
Term of Employment.
3. Employment During the Term. During the Term of Employment, Xx.
Xxxxxxxxxx shall devote his full professional time to the business of the
Company and Hannaford, shall use his best efforts to promote the interests of
the Company and Hannaford and shall serve as Vice Chairman of the Company and
Chief Executive Officer of Hannaford and in such other senior executive
capacities as the Board of Directors of the Company, with Xx. Xxxxxxxxxx'x
consent, shall hereafter designate from time to time.
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4. Vacation. Xx. Xxxxxxxxxx shall be entitled to annual vacations in
accordance with the vacation policy and practices of the Company, provided that
the minimum number of weeks of vacation to which he shall be entitled each year
shall be six (6).
5. Compensation.
(a) Base Salary. As compensation for Xx. Xxxxxxxxxx'x services
hereunder and for his covenants set forth in Sections 10, 11 and 12 below, the
Company shall pay to Xx. Xxxxxxxxxx a base salary which shall not be less than
Six Hundred Sixty-Eight Thousand Four Hundred Seventy-Six Dollars ($668,476) 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. Xxxxxxxxxx under this Employment Agreement remains competitive with amounts
paid to other chief executive officers in the large supermarket chain industry
and reflects the performance of Xx. Xxxxxxxxxx and the financial performance of
the Company and Hannaford. 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. Xx. Xxxxxxxxxx annually shall be eligible to receive
up to forty-five percent (45%) of his base salary in the form of a bonus under
the Company's Key Executive Annual Incentive Bonus Plan, as it shall be
administered by the Board of Directors of the Company and the relevant
committees thereof. In addition, Xx. Xxxxxxxxxx shall be eligible to participate
in the Company's stock option plans and Hannaford's compensation plans, as they
shall be administered by the Board of Directors of the Company or Hannaford, as
applicable, and the relevant committees thereof. Xx. Xxxxxxxxxx shall not be
eligible to participate in the Company's Annual Incentive Bonus Plan.
(c) Deferral Arrangement.
(i) Right to Defer. Xx. Xxxxxxxxxx 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. Xxxxxxxxxx in
writing prior to the start of the fiscal year to which such bonus relates. Any
deferral of base salary shall be irrevocable and must be requested by Xx.
Xxxxxxxxxx in writing prior to the start of the fiscal year to which such salary
relates. Any deferral of base compensation or bonus compensation for fiscal year
2000 shall be made in accordance with procedures established 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. Xxxxxxxxxx prior to the start of such
fiscal year.
(ii) Bookkeeping Account and Grantor Trust. Any amounts
deferred by Xx. Xxxxxxxxxx hereunder will be credited to a bookkeeping account
established on the books and records of the Company for the purpose of
accounting for the amounts deferred by Xx. Xxxxxxxxxx. 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. Xxxxxxxxxx.
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In connection with the deferral election, Xx. Xxxxxxxxxx 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. Xxxxxxxxxx. Xx. Xxxxxxxxxx'x
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. Xxxxxxxxxx selects results in a loss to the
bookkeeping account, the Company will have no obligation to compensate Xx.
Xxxxxxxxxx for such loss or to make any compensatory adjustment to the
bookkeeping account to make up for such loss. Notwithstanding the foregoing, at
no time shall Xx. Xxxxxxxxxx'x rights to any amounts deferred under this Section
5(c)(ii) be greater than those of general unsecured creditors of the Company.
(iii) Distribution. The timing of the payment of all amounts
deferred by Xx. Xxxxxxxxxx shall be specified in his initial deferral election
and may not be subsequently changed by Xx. Xxxxxxxxxx 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. Xxxxxxxxxx'x
deferral election, all amounts deferred hereunder (and all amounts to which Xx.
Xxxxxxxxxx is entitled under any Hannaford nonqualified deferred compensation
plan) will be paid to Xx. Xxxxxxxxxx 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. Xxxxxxxxxx shall be entitled to participate in all
health, accident, disability, medical, life and other insurance programs and
other benefit and compensation plans maintained by Hannaford or the Company, as
applicable, for the benefit of Xx. Xxxxxxxxxx and/or other executive employees
of Hannaford in accordance with Hannaford's policies.
7. Termination. Termination of Xx. Xxxxxxxxxx'x employment under any of
the following circumstances shall not constitute a breach of this Employment
Agreement:
(a) Death. Termination upon the death of Xx. Xxxxxxxxxx.
(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 (other than
by reason of incapacity due to physical or mental illness) or unwillingness to
correct such failure within thirty (30) days after receipt of written notice,
(ii) conviction of Xx. Xxxxxxxxxx of a felony or plea of guilty or 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. Xxxxxxxxxx in good faith with
respect to the Company's or Hannaford's business. The written notice referred to
in this section shall contain sufficient detail to permit Xx. Xxxxxxxxxx to take
corrective action, and such notice shall be given only after it has been
determined by an affirmative vote of at least seventy percent (70%) of the Board
of Directors of the Company that Xx. Xxxxxxxxxx has willfully failed to perform
his material duties under this Employment Agreement.
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(c) Good Reason. Termination by Xx. Xxxxxxxxxx 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. Xxxxxxxxxx, (ii) assignment of inappropriate duties to
Xx. Xxxxxxxxxx, (iii) failure of the Company to comply with compensation and
benefits obligations to Xx. Xxxxxxxxxx, (iv) transfer of Xx. Xxxxxxxxxx more
than 50 miles from Scarborough, Maine, (v) a purported termination of this
Employment Agreement by the Company other than in accordance with the terms
hereof or (vi) 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. Xxxxxxxxxx of "Good
Reason" shall be conclusive.
An election by Xx. Xxxxxxxxxx to terminate his employment under this
Section 7(c) shall not be deemed a voluntary termination of employment by Xx.
Xxxxxxxxxx for the purpose of this Employment Agreement or any plan, arrangement
or program of the Company or Hannaford.
(d) Disability. Termination by the Company or Xx. Xxxxxxxxxx upon
Disability of Xx. Xxxxxxxxxx. 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.
Xxxxxxxxxx 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. Xxxxxxxxxx'x absence from continuous
full-time employment with the Company or Hannaford 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. Xxxxxxxxxx examined at such reasonable times by such
physicians satisfactory to Xx. Xxxxxxxxxx as the Company may designate, and Xx.
Xxxxxxxxxx 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. Xxxxxxxxxx to perform his duties hereunder, whether by reason of injury,
illness (physical or mental) or otherwise shall not result in the termination of
Xx. Xxxxxxxxxx'x 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) Without Good Reason. Termination of Xx. Xxxxxxxxxx without "Good
Reason," upon ninety (90) days' advance written notice.
(g) Date and Notice of Termination. Any termination of Xx. Xxxxxxxxxx'x
employment by the Company or by Xx. Xxxxxxxxxx (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. Xxxxxxxxxx'x employment under the provision so indicated.
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"Date of Termination" shall mean (i) if Xx. Xxxxxxxxxx'x employment is
terminated by his death, the date of his death, and (ii) if Xx. Xxxxxxxxxx'x
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). The notification
of a dispute shall be given in writing and shall set forth in reasonable detail
the facts and circumstances being disputed.
8. Effect of Termination. In the event of termination of employment as
described in Section 7 hereof, the Company shall compensate Xx. Xxxxxxxxxx as
follows:
(a) Death. If Xx. Xxxxxxxxxx'x employment is terminated as a result of
his death, as specified in Section 7(a), the Company shall pay Xx. Xxxxxxxxxx'x
beneficiary the benefit called for under his Salary Continuation Agreement with
the Company, if any. Xx. Xxxxxxxxxx'x 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. Xxxxxxxxxx'x employment is terminated by the
Company or Xx. Xxxxxxxxxx as a result of his disability as specified in Section
7(d), then the Company shall pay Xx. Xxxxxxxxxx his full compensation until the
Date of Termination. Within thirty (30) days after the termination of his
employment, the Company shall pay Xx. Xxxxxxxxxx a lump sum payment equal to
fifty percent (50%) of the present value of the future base salary payable to
Xx. Xxxxxxxxxx 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. Xxxxxxxxxx'x 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. Xxxxxxxxxx shall be entitled to
receive under any applicable disability insurance policies maintained by
Hannaford for Xx. Xxxxxxxxxx.
(c) Cause. If Xx. Xxxxxxxxxx'x employment is terminated for any reason
specified in Section 7(b) hereof, the Company and Hannaford shall no longer be
obligated to make any payments to Xx. Xxxxxxxxxx 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.
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(d) Good Reason or Without Cause.
(i) If Xx. Xxxxxxxxxx'x employment is terminated by Xx.
Xxxxxxxxxx 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): (A) the Company shall pay Xx. Xxxxxxxxxx the full amount of his base
salary and other compensation earned prior to the Date of Termination; and (B)
the Company shall pay Xx. Xxxxxxxxxx, within thirty (30) days after the Date of
Termination, a lump sum payment equal to the present value of three (3) (or the
number of years left in the Term of this Agreement, whichever is greater) times
his current annual 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.
(ii) If prior to a Change in Control of the Company (as defined
below), Xx. Xxxxxxxxxx'x employment is terminated by Xx. Xxxxxxxxxx for Good
Reason or by the Company without Cause, the Company or Hannaford, as applicable,
shall maintain in full force and effect for the continued benefit of Xx.
Xxxxxxxxxx and his eligible dependents for three (3) years after the Date of
Termination (or for the number of years remaining in the Term of this Agreement,
whichever is greater), employee fringe benefit plans and programs such as
medical, dental, health and life insurance in which Xx. Xxxxxxxxxx was entitled
to participate immediately prior to the Date of Termination, but not including
the Company's Key Executive Annual Incentive Bonus Plan, the Wellness Bonus
Plan, the Profit Sharing Plan and the Profit Sharing Restoration Plan and any
other bonus, retirement or similar compensation plan; provided, however, if such
participation in any such plan or program is not permitted under the terms
thereof, the Company shall provide Xx. Xxxxxxxxxx (and his eligible dependents)
with benefits substantially similar to those which were being provided
immediately prior to his termination of employment.
(iii) If (A) Xx. Xxxxxxxxxx'x employment is terminated by the Company
without Cause within six (6) months prior to a Change in Control or (B) Xx.
Xxxxxxxxxx'x employment is terminated by the Company without Cause or by Xx.
Xxxxxxxxxx with Good Reason within one (1) year following a Change in Control of
the Company, the Company shall pay Xx. Xxxxxxxxxx the compensation and fringe
benefits set forth in clauses (i) and (ii) above, and in addition, for three (3)
years following the Date of Termination (or for the number of years remaining in
the Term of this Agreement, whichever is greater), Xx. Xxxxxxxxxx shall be paid
an annual amount equal to the amounts, if any, which would have been payable to
him under the Company's Key Executive Annual Incentive Bonus Plan, and any plan
of Hannaford in which Xx. Xxxxxxxxxx was entitled to participate immediately
prior to the Date of Termination (or such other plans in which Xx. Xxxxxxxxxx
was entitled to participate as of the Date of Termination) assuming Xx.
Xxxxxxxxxx had remained employed for such three (3) year (or greater) period and
received an annual salary at the rate in effect on his Date of Termination.
Wherever the terms "remainder of his Term of Employment," "number of
years left in the Term of this Agreement," or similar terms are used herein,
they shall include the fractional portion of partial years.
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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, in the aggregate, by Etablissements Delhaize Freres
et Cie "Le Lion" S.A. ("Delhaize") and Delhaize The 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 holders of voting securities of the Company receive fifty percent
(50%) or more of the voting securities of the company or entity
resulting from the Business Combination ("Resulting Company"), at least
a majority of the board of directors of the resulting corporation were
Incumbent Company Directors, and after which no person or entity
beneficially owns twenty percent (20%) ("Beneficial Ownership
Threshold") or more of the voting securities of the Resulting Company,
who did not beneficially own such stock immediately before the Business
Combination; or
(D) occurrence of any of the events described in Section
8(d)(iii)(B) or (C) to Delhaize or the acquisition by any Person of
more than thirty percent (30%) of the voting securities of Delhaize.
Notwithstanding any other provision of this paragraph, for purposes of
the definition of "Change in Control of the Company," a change in
control of Delhaize shall not constitute a Change in Control of the
Company unless it involves an event contemplated by this Section
8(d)(iii)(D). With respect to Section 8(d)(iii)(C) as it applies to
Delhaize under this Section 8(d)(iii)(D), the Beneficial Ownership
Threshold shall be thirty percent (30%).
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, the term
"Person" shall have the meaning
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set forth in Sections 3(a)(2) and 13(d)(3) of the Exchange Act and the term
"voting securities" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act.
9. Business Expenses. The Company agrees that during the Term of
Employment, the Company or Hannaford, as applicable, will reimburse Xx.
Xxxxxxxxxx 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 and Hannaford, as applicable.
10. No Competing Employment. Xx. Xxxxxxxxxx agrees that, during the
Term of Employment and for a period of two (2) years after the Date of
Termination specified in the Notice 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. Xxxxxxxxxx
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. Xxxxxxxxxx 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 any
affiliate thereof for the purpose of being employed by Xx. Xxxxxxxxxx, directly
or indirectly, or any other person or entity on behalf of which Xx. Xxxxxxxxxx
is acting as an agent, representative or employee. Notwithstanding the above, if
Xx. Xxxxxxxxxx'x 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. Xxxxxxxxxx agrees that, during the Term of
Employment and thereafter, he will not, without the prior 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. Xxxxxxxxxx also recognizes and acknowledges that
he has a common law obligation not to disclose trade secrets and other
proprietary information of the Company or Hannaford. Xx. Xxxxxxxxxx further
agrees that, should he leave the active service of the Company or Hannaford, 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 or Hannaford
pertaining to their business, sales, financial condition, or products. Xx.
Xxxxxxxxxx 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. Xxxxxxxxxx acknowledges that a breach of the covenants contained in
Sections 10, 11 and 12 herein may result in material irreparable injury to the
Company or Hannaford 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.
Xxxxxxxxxx
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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.
Xxxxxxxxxx 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. Xxxxxxxxxx as a
result of the fact that Xx. Xxxxxxxxxx is or was an officer of the Company, or
is or was serving at the request of the Company as an officer, employee,
fiduciary or agent of an affiliate of the Company or a trust or employee benefit
plan maintained by the Company or an affiliate of the Company. The expenses
incurred by Xx. Xxxxxxxxxx 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. Xxxxxxxxxx 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.
Xxxxxxxxxx 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. Xxxxxxxxxx at the time specified below, an additional amount
(the "Gross-Up Payment") such that the net amount retained by Xx. Xxxxxxxxxx
(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. Xxxxxxxxxx, 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. Xxxxxxxxxx in connection with a Change in Control of the Company
or the termination of Xx. Xxxxxxxxxx'x employment (whether pursuant to the terms
of this Agreement or any other plan, arrangement, or agreement with the
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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 and (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.
Xxxxxxxxxx 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.
Xxxxxxxxxx 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.
Xxxxxxxxxx'x 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. Xxxxxxxxxx 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 in
Control) such rights shall not vest if Xx. Xxxxxxxxxx'x employment is terminated
for Xx. Xxxxxxxxxx'x failure (other than by reason of incapacity due to physical
or mental illness) to adequately perform his duties hereunder as determined by
an affirmative vote of at least seventy percent (70%) of the Board of Directors
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of the Company, and further provided that Xx. Xxxxxxxxxx is given written notice
of such failure and is unable (other than by reason of incapacity due to
physical or mental illness) or unwilling to correct such failure within thirty
(30) days after receipt of such written notice. For purposes of the preceding
sentence, "Change in Control of the Company" shall have the meaning set forth in
Section 8(d)(iii) hereof.
17. Legal Expenses. The Company shall reimburse Xx. Xxxxxxxxxx for all
reasonable legal fees incurred in a successful effort to establish entitlement
to compensation and benefits under this Employment Agreement.
18. Mitigation. The Company recognizes that Xx. Xxxxxxxxxx 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. Xxxxxxxxxx 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.
Xxxxxxxxxx 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. The Employment
Continuity Agreement, dated May 19, 1998, but effective as of January 1, 1998,
between Hannaford and Xx. Xxxxxxxxxx is hereby terminated and shall be of no
further force and effect.
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:
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(a) If to Xx. Xxxxxxxxxx:
Xxxx X. Xxxxxxxxxx
00 Xxxxxxxxxx Xxxxx Xxxx
Xxxx Xxxxxxxxx, Xxxxx 00000
(b) If to the Company:
Delhaize America, Inc.
Xxxx Xxxxxx Xxx 0000
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Secretary
with a copy to:
Xxxxxxx X. Xxxxx, Xx.
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.
[The next page is the signature page]
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IN WITNESS WHEREOF, the Company has caused this Employment Agreement
to be executed by its duly authorized representative, and Xx. Xxxxxxxxxx has
hereunto set his hand as of the date first above written.
DELHAIZE AMERICA, INC.
By: /s/ R. Xxxxxxx XxXxxxxxx
------------------------
R. Xxxxxxx XxXxxxxxx
Chief Executive Officer
/s/ Xxxx X. Xxxxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxxxx
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