EXHIBIT 10.31
XXXXXXX FOOD AND DRUG STORES COMPANY
000 0xx Xxxxxx X.X.
Xxxxx Xxxxx, Xxxxxxx 00000
August 29, 1996
Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Xxxxxxx Food and Drug Stores Company
000 0xx Xxxxxx X.X.
Xxxxx Xxxxx, Xxxxxxx 00000
Re: Third Amendment to Employment Agreement dated as of March 1, 1993
entered into among Xxxxxxx Food and Drug Stores Company, Xxxxxxx
Food and Drug Company and Xxxxxx X. Xxxxxxxxx,
as amended on March 10, 1995 and April 24, 1995
-----------------------------------------------
Dear Xxx:
Reference is made to that certain Employment Agreement dated as of
March 1, 1993 entered into among Xxxxxxx Food and Drug Stores Company, a
Delaware corporation ("Holding"), Xxxxxxx Food and Drug Company, a Delaware
corporation (the "Company"), and yourself, as amended on March 10, 1995 and
April 24, 1995 (the "Employment Agreement"). The purpose of this letter is to
further amend the Employment Agreement in certain ways in order to memorialize
certain actions recently taken by the Boards of Directors of Holding and the
Company (the "Board") with respect to your employment. Upon your execution of
this letter where indicated, the Employment Agreement will be amended further as
follows:
1. The parties acknowledge and the Employment Agreement is hereby
amended to extend its term until March 1, 2001. In addition, subject to the
other terms and conditions set forth herein and in the Employment Agreement, the
Employment Agreement is hereby amended at Section 1 to reflect that your
position is, effective upon action by the Board taken this date, Chairman of the
Board, President and Chief Executive Officer of Holding and the Company.
Holding and the Company hereby agree to continue to employ you, and you agree to
be employed by Holding and the Company, as Chairman of the Board, President and
Chief Executive Officer of Holding and the Company, for a term commencing as of
September 1, 1993 and continuing until the earlier of March 1, 2001 or the date
such employment shall have been terminated as provided in the Employment
Agreement.
2. Beginning on September 1, 1996, the salary to be paid to you by
the Company will be at the annual rate of $350,000 for each 12 month period of
the term of the
Xxxxxx X. Xxxxxxxxx
August 29, 1996
Page 2
Employment Agreement remaining, prorated for any portion thereof, and payable in
substantially equal monthly installments on or before the last day of each
monthly period with respect to each such period, less required withholdings, and
that this salary level shall still be subject to annual review as provided in
Section 3 of the Employment Agreement.
3. Your "Target Bonus" under the Company's key management Incentive
Plan (or any successor plan) shall be set at 80% of your annual salary from time
to time (as fixed in accordance with the terms of such Plan).
4. Subsection (e) of Section 4 of the Employment Agreement is hereby
amended by adding at the end thereof the following additional language:
"or; (v) a "Change of Control" (as defined herein) shall have a
occurred; provided that the Executive shall exercise his right to
terminate this Agreement under this clause (v) not later than 30 days
after the Change of Control has occurred. For purposes of this
subsection "Change of Control" shall mean any of the following: (i) a
successful tender offer for greater than 50% of the outstanding
capital stock of the Holding; (ii) a sale of all or substantially all
of the assets of Holding or the Company; or (iii) a merger or
consolidation of Holding or the Company with any other corporation in
which the stockholders of Holding or the Company, as the case may be,
immediately preceding such merger or consolidation will not hold a
majority of the outstanding capital stock of the surviving corporation
(whether or not Holding or the Company is the surviving corporation)
immediately after such merger."
5. The following proviso shall be added to the end of the first
sentence of subparagraph (h) of Section 4 of the Employment Agreement:
"; provided, however, that the aggregate amount payable to and
benefits received or to be received by Executive under this Agreement
and under all other existing or future agreements or arrangements that
would be considered "parachute payments" under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), shall in no
event exceed one dollar less than the amount that would trigger the
application of the excise tax imposed by Section 4999 of the Code on
such payments or benefits."
Xxxxxx X. Xxxxxxxxx
August 29, 1996
Page 3
6. Section 6 of the Employment Agreement is amended by modifying the
first two clauses of the first sentence thereof to read as follows:
"If the Executive is terminated by the Company for cause in
accordance with subsection 4(b) hereof, or if the Executive terminates
his employment other than for "good reason" in accordance with clauses
(i)-(iv) (but not clause (v)) of subsection 4(e) hereof,..."
7. Section 6 of the Employment Agreement is amended further by
adding as a new last sentence the following:
"Notwithstanding anything contained in this Agreement to the contrary,
in the event that Executive terminates his employment for "good
reason" in accordance with clause (v) of subsection 4(e) hereof, the
term "the Company" as used in this Section 6 shall refer only to
Holding and its wholly-owned subsidiary, Xxxxxxx Food and Drug Company
("Xxxxxxx") prior to such Change of Control (as defined in clause
(v)), and not to any successor into which Holding and Xxxxxxx shall
merge or consolidate or to which all or substantially all of their
respective businesses or assets shall be transferred in any manner in
connection with such Change of Control."
8. Subsection (a) of Section 11 of the Employment Agreement is
hereby amended by adding the following introductory clause to the first sentence
thereof to read as follows:
"Subject to the last sentence of Section 6 of this
Agreement, . . ."
Except as set forth above, all other provisions of the Employment
Agreement, as previously amended, shall remain in full force and effect,
including without limitation, Section 3 and Section 4 of the Employment
Agreement relating to your compensation and to your rights and obligations upon
the termination of your employment with Holding and the Company.
Xxxxxx X. Xxxxxxxxx
August 29, 1996
Page 4
Please indicate your agreement with and acceptance of the terms of
this letter by executing in the space provided below and returning this letter
to us.
This letter may be executed in counterparts, each of which when taken
together with the others shall constitute one and the same instrument.
XXXXXXX FOOD AND DRUG
STORES COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
------------------------
Xxxxx X. Xxxxxxxx
Vice President, Chief Financial Officer and
Secretary
XXXXXXX FOOD AND DRUG COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxx
Vice President, Chief Financial Officer and
Secretary
THE FOREGOING TERMS AND CONDITIONS
OF THIS LETTER ARE HEREBY AGREED TO
AND ACCEPTED.
/s/ Xxxxxx X. Xxxxxxxxx Dated: 8/29/96
------------------------ -------
Xxxxxx X. Xxxxxxxxx
