1
Exhibit 10(ad)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made this 20th day of January, 2000 (the
"Effective Date"), between FOOD LION, a division of Delhaize America, Inc., a
North Carolina corporation with its principal place of business in Salisbury,
North Carolina (the "Company"), and Xxxxxx X. Xxxxxxx, an individual residing at
000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Employee"),
W I T N E S S E T H:
WHEREAS, Employee is currently employed by the Company in its Food Lion
division as its Senior Vice President of Category Management/Procurement;
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 Senior Vice President of Category
Management/Procurement but at the Subsidiary level only, and this Employment
Agreement will be assigned to and assumed by the Subsidiary;
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:
2
1. Continue to Employ. The Company hereby agrees to continue to employ
Employee, prior to the Holding Company Restructuring, as Senior Vice President
of Category Management/Procurement at the Food Lion division level and, after
the Holding Company Restructuring, as Senior Vice President of Category
Management/Procurement at the Subsidiary level, for the Term of Employment as
herein set forth, and Employee hereby agrees to continue to serve 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, prior to the Holding Company Restructuring, as Senior Vice
President of Category Management/Procurement of the Food Lion division and,
after the Holding Company Restructuring, as Senior Vice President of Category
Management/Procurement 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 Two Hundred Thirty-Eight Thousand Seven Hundred Eight Dollars ($238,708)
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.
-2-
3
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 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
-3-
4
Subsidiary, in accordance with Section 18 hereof and any changes in
responsibilities or duties resulting therefrom. In addition, the definition of
"Good Reason" 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.
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
-4-
5
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.
-5-
6
(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
-6-
7
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.;
(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;
(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
-7-
8
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.
-8-
9
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.
-9-
10
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
-10-
11
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;
-11-
12
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.
-12-
13
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:
Xxxxxx X. Xxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, 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
-13-
14
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]
-14-
15
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.
FOOD LION,
a division of Delhaize America, Inc.
Attest:
By: /s/ R. Xxxxxxx XxXxxxxxx
------------------------------- --------------------------------
R. Xxxxxxx XxXxxxxxx
Chief Executive Officer
EMPLOYEE:
Attest:
/s/ Xxxxxx X. Xxxxxxx
------------------------------- ------------------------------------
Xxxxxx X. Xxxxxxx
-15-
