EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made this 14 day of March,
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 Xxxxx X.
Xxxxxxx, an individual residing at 00000 Xxxxx Xxxx Xxxx,
Xxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Employee"),
W I T N E S S E T H:
WHEREAS, Employee is currently employed by the Company at
the Company level as its Vice President and Chief Financial
Officer and in its Food Lion division as its Executive Vice
President of Finance and Chief Financial Officer;
WHEREAS, the Board of Directors of the Company recognizes
that it is in the best interests of the Company and its
shareholders to retain capable and experienced executive officers
such as Employee;
WHEREAS, the Board of Directors recognizes that Employee has
made substantial contributions to the growth and success of the
Company and desires to provide for the continuing employment of
Employee and to encourage the continued dedication and attention
of Employee to the Company;
WHEREAS, the Company is in the process of converting into a
holding company and will transfer substantially all of the assets
of the Food Lion division to a newly-formed, wholly-owned
subsidiary (the "Subsidiary") (such transfer is referred to
herein as the "Holding Company Restructuring");
WHEREAS, at the time of the Holding Company Restructuring,
Employee will continue in Employee's position as Vice President
of Finance and Chief Financial Officer at the Company level, and
Employee will continue in Employee's position as Executive Vice
President and Chief Financial Officer at the Subsidiary level;
WHEREAS, Employee is willing to continue to serve the
Company and, from and after the Holding Company Restructuring,
the Subsidiary; and
WHEREAS, the Company and Employee desire to enter into this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, and the
mutual agreements herein contained, the Company and Employee
hereby agree as follows:
1. Continue to Employ. The Company hereby agrees to
continue to employ Employee (i) as Vice President of Finance and
Chief Financial Officer at the Company level and (ii) prior to
the Holding Company Restructuring, as Executive Vice President
and Chief Financial Officer at the Food Lion division level and,
after the Holding Company Restructuring, at the Subsidiary level,
for the Term of Employment as herein set forth, and Employee
hereby agrees to continue to serve the Company in such positions
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
third (3rd) 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 ninety (90) days prior to the expiration of
the applicable Term of Employment.
3. Employment During the Term. During the Term of
Employment, Employee shall devote Employee's full professional
time to the business of the Company, shall use Employee's best
efforts to promote the interests of the Company and shall serve
(i) as Vice President of Finance and Chief Financial Officer of
the Company and (ii) prior to the Holding Company Restructuring,
as Executive Vice President of Finance and Chief Financial
Officer of the Food Lion division and, from and after the Holding
Company Restructuring, of the Subsidiary, and in such other
senior executive capacities (at the Company or at subsidiaries of
the Company) as the Board of Directors of the Company shall
hereafter designate from time to time.
4. Vacation. Employee shall be entitled to annual
vacations in accordance with the vacation policy and practices of
the Company.
5. Compensation.
(a) Base Salary. As compensation for Employee's
services hereunder and for Employee's covenants set forth in
Sections 10, 11 and 12 below, the Company shall pay to Employee a
base salary which shall not be less than Three Hundred Thirty-Six
Thousand Two Hundred Six Dollars ($336,206) per annum; provided,
however, such amount may be reviewed for increase from time to
time by the Board of Directors of the Company. In no event shall
such 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. In addition, Employee shall be
eligible to participate in the Company's annual incentive bonus
plan, stock option plans and other compensation plans of the
Company, as they shall be administered by the Board of Directors
of the Company and the relevant committees thereof and in their
sole discretion.
6. Benefits. Employee shall be entitled to participate in
all health, accident, disability, medical, life and other
insurance programs and other benefit and compensation plans
maintained by the Company for the benefit of Employee and/or
other executive employees of the Company in accordance with the
Company's policies.
7. Termination. Termination of Employee's employment
under any of the following circumstances shall not constitute a
breach of this Employment Agreement:
(a) Death. Termination upon the death of Employee.
(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 Employee's material duties hereunder and Employee's
inability or unwillingness to correct such failure within
thirty (30) days after receipt of written notice, (ii) conviction
of Employee of a felony or plea of guilty or no contest to a
felony, (iii) perpetration of a material dishonest act or fraud
against the Company or any affiliate thereof or (iv) a material
violation of any Company policy or any state, federal or other
governmental statute or regulation. The definition of "Cause"
also includes the termination of Employee's employment by the
Company in connection with an assignment of this Employment
Agreement to a successor or subsidiary of the Company, including
but not limited to the Subsidiary, in accordance with Section 18
hereof. The definition of "Cause" also includes the termination
of Employee's employment at either the Company or any direct or
indirect subsidiary so long as Employee is also then employed by
any direct or indirect subsidiary of the Company or a successor
to the Company. The definition of "Cause" also includes
subsequent terminations of Employee's employment in connection
with subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company. The definition of "Cause" expressly excludes any
mistake of fact or judgment made by Employee in good faith with
respect to the Company's business.
(c) Good Reason. Termination by Employee for "Good
Reason" as described in this Section 7(c). For purposes of this
Employment Agreement, "Good Reason" shall mean the occurrence of
any of the following circumstances without Employee's consent,
provided that Employee has provided notice to the Company of
Employee's intention to terminate his or her employment for Good
Reason within thirty (30) days after the occurrence of such event
and the Company has failed to cure such circumstance, if curable,
within thirty (30) days after receipt of notice thereof: (i) a
material diminution of the professional responsibilities of
Employee as such responsibilities existed on the date of this
Agreement, (ii) assignment of duties to Employee which are
materially adverse to and inconsistent with Employee's position,
(iii) failure of the Company to provide compensation and benefits
obligations to Employee as set forth herein, (iv) transfer of
Employee more than 50 miles from Salisbury, North Carolina,
without good business reasons, as determined by the Company's
Board of Directors or (v) failure of the Company to require any
successor to the Company to assume and comply with this
Employment Agreement. The definition of "Good Reason" expressly
excludes any assignment of this Employment Agreement to a
successor or subsidiary of the Company, including but not limited
to the Subsidiary, in accordance with Section 18 hereof and any
changes in responsibilities or duties resulting therefrom. The
definition of "Good Reason" also expressly excludes subsequent
terminations of Employee's employment in connection with
subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company. In addition, the definition of "Good Reason"
expressly excludes the termination of Employee's employment at
either the Company or any direct or indirect subsidiary so long
as Employee is also then employed by any direct or indirect
subsidiary of the Company or a successor to the Company.
An election by Employee to terminate his or her employment
under this Section 7(c) shall not be deemed a voluntary
termination of employment by Employee for the purpose of this
Employment Agreement or any plan, arrangement or program of the
Company.
(d) Disability. Termination by the Company or
Employee upon Disability of Employee. 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)
Employee shall not have returned to the performance of Employee's
duties hereunder on a full-time basis during such 180-day period.
For purposes of this Employment Agreement, "Disability" shall
mean Employee's absence from continuous full-time employment with
the Company 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 Employee examined at such reasonable times by
such physicians satisfactory to Employee as the Company may
designate, and Employee 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
Employee to perform Employee's duties hereunder, whether by
reason of injury, illness (physical or mental), or otherwise
shall not result in the termination of Employee's employment
hereunder, and Employee shall be entitled to continue to receive
Employee's base salary and other benefits as provided herein.
(e) Without Cause. Termination by the Company without
Cause.
(f) Date and Notice of Termination. Any termination
of Employee's employment by the Company or by Employee (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
Employee's employment under the provision so indicated.
"Date of Termination" shall mean (i) if Employee's
employment is terminated by Employee's death, the date of
Employee's death, and (ii) if Employee's 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).
8. Effect of Termination. In the event of termination of
employment as described in Section 7 hereof, and provided that
Employee (or Employee's beneficiary in the event of death) has
signed and agreed to be bound by a general release of claims
against the Company in form reasonably satisfactory to the
Company, the Company shall compensate Employee as follows:
(a) Death. If Employee's employment is terminated as
a result of Employee's death, as specified in Section 7(a), the
Company shall pay Employee's beneficiary the benefit called for
under the Salary Continuation Agreement, if any, between Employee
and the Company. Employee's 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 Employee's employment is
terminated by the Company or Employee as a result of Employee's
disability as specified in Section 7(d), then the Company shall
pay Employee his or her full compensation until the Date of
Termination. Within thirty (30) days after the termination of
Employee's employment, the Company shall pay Employee a lump sum
payment equal to fifty percent (50%) of the present value of the
future base salary payable to Employee during the remainder of
the Term of Employment under this Employment Agreement or for a
period of one (1) year, 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 Employee's annual salary in effect on the Date of
Termination would continue for the remainder of the Term of
Employment, or for a period of one (1) year, whichever is longer.
This payment shall be in addition to any payments Employee shall
be entitled to receive under any applicable disability insurance
policies maintained by the Company for Employee.
(c) Cause. If Employee's employment is terminated for
any reason specified in Section 7(b) hereof, the Company shall no
longer be obligated to make any payments to Employee pursuant to
this Employment Agreement, except for the full amount of
Employee's 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.
(d) Good Reason or Without Cause.
(i) If Employee's employment is terminated by
Employee for Good Reason as specified in Section 7(c) hereof, or
if Employee's employment is terminated by the Company without
Cause as specified in Section 7(e): (A) the Company shall pay
Employee the full amount of Employee's base salary and other
compensation earned prior to the Date of Termination; and (B) the
Company shall pay Employee an amount (the "Termination Payment")
equal to the product of the Employee's current monthly base
salary multiplied by the greater of (x) twelve (12) months or (y)
the number of full months remaining in the Term of this
Agreement. The Company may elect to pay the Termination Payment
(i) in monthly installments, beginning thirty (30) days after the
Date of Termination and payable thereafter on the date of the
last regularly scheduled payroll for each month, or (ii) in one
lump sum payment, due and payable thirty (30) days after the Date
of Termination, in an amount equal to the present value of all
such monthly payments 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) (and if Section 8(d)(iii) hereof does not
apply), Employee's employment is terminated by Employee for Good
Reason or by the Company without Cause, the Company shall
maintain in full force and effect for the continued benefit of
Employee and Employee's eligible dependents for one (1) year
after the Date of Termination (or for the number of years
remaining in the Term of this Agreement, whichever is greater),
the employee fringe benefit plans and programs relating to
medical, dental, health and life insurance in which Employee was
entitled to participate immediately prior to the Date of
Termination, if Employee's continued participation is permitted
under the general terms and provisions of such plans and programs
and applicable law, but not including the 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.
(iii) If (A) Employee's employment is terminated by
the Company without Cause in contemplation of a Change in Control
of the Company within six (6) months prior to such Change in
Control or (B) Employee's employment is terminated by the Company
without Cause or by Employee with Good Reason within one (1) year
following a Change in Control of the Company, the Company shall
pay Employee the compensation and benefits set forth in clauses
(i) and (ii) above, and in addition, for one (1) year following
the Date of Termination (or for the number of years remaining in
the Term of this Agreement, whichever is greater), Employee shall
be paid an annual amount equal to the amounts, if any, which
would have been payable to Employee under the Annual Incentive
Bonus Plan, the Wellness Bonus Plan, the Profit Sharing Plan and
the Profit Sharing Restoration Plan (or such other plans in which
Employee was entitled to participate as of the Date of
Termination) assuming Employee had remained employed for such one
(1) year (or greater) period and received an annual salary at the
rate in effect on Employee's Date of Termination.
(iv) 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.; or
(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 at least 70% of the Incumbent Company 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; or
(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 beneficial holders of voting securities of the Company
receive or retain 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%) or more of the voting securities ("Beneficial
Ownership Threshold") 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)(iv)(B) or (C) to Delhaize or the acquisition by
any Person of more than thirty percent (30%) of the stock 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)(iv)(D). With respect to Section 8(d)(iv)(C) as it
applies to Delhaize under Section 8(d)(iv)(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 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 will reimburse Employee for
actual travel and other out-of-pocket expenses reasonably
incurred by Employee in connection with the performance of
Employee's duties hereunder and accounted for in accordance with
the policies and procedures currently established by the Company.
10. No Competing Employment.
(a) Employee agrees that, during the Term of Employment and for
a period of two (2) years after the date specified in the Notice
of Termination or, if applicable, the date of Employee's
resignation ("Restricted Period"), Employee will not, without the
written consent of the Board of Directors, own, operate, control
or be employed as an officer, director, manager or consultant, or
as an employee with management or executive level duties or
responsibilities, in any case, for or by any business engaged in
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or any
subsidiary thereof on the date on which Employee's employment
with the Company ends; provided, however, that this restriction
contained in this Section 10(a) shall not apply if Employee
works, consults or accepts employment with a business that does
not directly compete with the Company or any subsidiary thereof.
(b) Employee agrees that, during the Restricted Period, Employee
will not, without the written consent of the Board of Directors,
own, operate, control or be employed as an officer, director,
manager or consultant, or as an employee with management or
executive level duties or responsibilities, in any case, for or
by any entity whose business, or whose direct or indirect parent
entity's or direct or indirect subsidiary entity's business is
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or any
subsidiary thereof on the date on which Employee's employment
with the Company ends.
(c) Employee understands and agrees that a portion of the
amounts payable to Employee under Section 5(a) and Section 8, if
applicable, is in consideration for Employee's covenants set
forth in Sections 10, 11 and 12.
11. No Solicitation. Employee agrees that, during the
Restricted Period, Employee will not, without the prior written
consent of the Board of Directors, directly or indirectly solicit
or recruit any employee or independent contractor of the Company
for the purpose of being employed by Employee, directly or
indirectly, or any other person or entity on behalf of which
Employee is acting as an agent, representative or employee.
Notwithstanding the above, if Employee's 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. Employee agrees that, during the Term
of Employment and thereafter, Employee 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. Employee also recognizes and
acknowledges that Employee has a common law and statutory law
obligation not to disclose trade secrets and other proprietary
information of the Company. Employee further agrees that, should
Employee leave the active service of the Company, Employee will
not take 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 pertaining to its business, sales,
financial condition or products. Employee 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. Failure to Comply. All payments to Employee hereunder,
including without limitation all such payments made pursuant to
Section 8 of this Agreement, are conditional upon Employee's full
compliance with the provisions of this Agreement, including
specifically Sections 10, 11 and 12 hereof, which provisions are
hereby expressly incorporated by reference as conditions to all
such payment. The provisions of sections 10, 11 and 12 will
remain incorporated as conditions to payments under this
Agreement, regardless of any judicial declaration of their
invalidity or unenforceability as affirmative covenants. In the
event that the Employee shall fail to comply with any provision
of Sections 10, 11 and 12, (a) all rights hereunder of the
Employee and any person claiming under or through him shall
thereupon terminate and no person shall be entitled to receive
any payments or benefits under this Agreement and (b) the
Employee agrees to immediately pay to the Company any and all
amounts previously paid to the Employee by the Company pursuant
to Section 8 of this Agreement. In addition to the foregoing and
without limiting any other remedies available to the Company,
Employee acknowledges that a breach of the covenants contained in
Sections 10, 11 and 12 herein may result in material irreparable
injury to the Company 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 Employee 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 Employee to the fullest extent permitted under North
Carolina law, including, without limitation, the provisions of
Article 8, 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 Employee as a result of the fact that Employee is or
was an officer of the Company, or is or was serving at the
request of the Company as an officer, employee or agent of an
affiliate of the Company. The expenses incurred by Employee in
any proceeding shall be paid promptly by the Company in advance
of the final disposition of any proceeding at the written request
of Employee 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 Employee 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
Employee at the time specified below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by Employee
(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
Employee, 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 Employee in
connection with a Change in Control of the Company or the
termination of Employee's employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the 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, Employee 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, Employee
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
Employee's employment is terminated for reasons specified in
Sections 7(a), 7(c), 7(d) or 7(e) hereof, all of the rights
granted to Employee 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 Employee's employment is terminated for Employee's
failure to adequately perform Employee's duties hereunder as
determined by an affirmative vote of at least seventy percent
(70%) of the Board of Directors of the Company. For purposes of
the preceding sentence, "Change in Control of the Company" shall
have the meaning set forth in Section 8(d)(iv) hereof except for
the portion thereof describing a Change in Control at Delhaize as
set forth in subsection 8(d)(iv)(D).
17. Mitigation. The Company recognizes that Employee has
no duty to mitigate the amounts due to Employee upon termination
of this Employment Agreement, and the obligations of the Company
will not be diminished in the event Employee is employed by
another employer after the termination of Employee's employment
with the Company.
18. Successors. This Employment Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns and upon Employee and his or her 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. For purposes of this Section
18, the Subsidiary shall be deemed a successor to which this
Employment Agreement may be assigned. In addition, this
Employment Agreement may be assigned to an existing or future
direct or indirect subsidiary of the Company. Furthermore, from
and after the Holding Company Restructuring and after an
assignment of this Employment Agreement to the Subsidiary or any
other existing or future direct or indirect subsidiary of the
Company, this Employment Agreement may be reassigned to the
Company.
19. Amendments. This Employment Agreement contains the
entire contractual understanding between the parties and
supersedes all prior agreements and understandings, both written
and oral, between the parties hereto with respect to the subject
matter hereof (except for the Salary Continuation Agreement, if
any, between Employee and the Company). This Employment
Agreement may not be changed orally but only by a written
instrument signed by the parties hereto.
20. Governing Law. This Employment Agreement shall be
governed by and construed in accordance with the laws of the
State of North Carolina without regard to the conflicts of law
principles thereof.
21. 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.
22. Arbitration. Except as otherwise necessary to secure
the remedy specified in Section 13 of this Employment Agreement
(which remedy may be secured in a court of competent
jurisdiction), any dispute arising between the Company and
Employee with respect to the performance or interpretation of
this Employment 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 ninety (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. Pursuant to North Carolina General
Statutes section 1-567.2, the provisions of Chapter 1, Subchapter
XV, Article 45A of the North Carolina General Statutes shall
apply to this Employment Agreement.
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:
(a) If to Employee:
Xxxxx X. Xxxxxxx
18900 River Xxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 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:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
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]
IN WITNESS WHEREOF, the Company has caused this Employment
Agreement to be executed by its duly authorized representative,
and Employee has hereunto set Employee's hand as of the date
first above written.
DELHAIZE AMERICA, INC.
Attest:
/s/Xxxxxxx Xxxxxxx BY: /s/R. Xxxxxxx XxXxxxxxx
R. Xxxxxxx XxXxxxxxx
Chief Executive Officer
EMPLOYEE:
Attest:
/s/ Xxxxxxx Xxxxxxx /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
