Exhibit 10.13
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this day of ,
199 , but effective January 1,1998, by and between HANNAFORD BROS. CO., a
Maine corporation with its principal place of business in Scarborough,
Maine (the "Company") and XXXX X. XXXXXXXXXX ("Xxxxxxxxxx"), of Cape
Xxxxxxxxx, Maine.
WHEREAS, Xxxxxxxxxx has been employed by the Company since August of
1968, serving since 1981 as a director, since 1984 as its President and
since 1992 as its Chief Executive Officer; and
WHEREAS, Xxxxxxxxxx'x creativity, ability to work with people,
experience, knowledge and business skills are extremely valuable to the
Company and its stockholders; and
WHEREAS, in the current business climate an attempted acquisition of
the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the continued
employment of Xxxxxxxxxx and the benefit of his independent judgment in the
operation of the Company in the event that any such attempted acquisition
were made, in light of the disruption resulting from any such attempt; and
WHEREAS, the Company and Xxxxxxxxxx entered into an Employment
Continuity Agreement, dated March 15, 1991 ("Agreement"); and
WHEREAS, Section 11 of the Agreement provides that the Agreement may
be amended in writing by the parties, and the Agreement was amended on two
occasions thereafter; and
WHEREAS, the parties desire to amend and restate the Agreement as set
forth herein;
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged by each of
the parties, Xxxxxxxxxx and the Company agree as follows:
1. TERM OF THE AGREEMENT AND RENEWAL. The term of this Agreement
shall be for a period beginning January 1, 1998, and ending December 31,
2000. On January 1, 2001, and on January 1 of each period of three (3)
years thereafter (in each case such date to be a "Renewal Date") this
Agreement automatically shall be renewed for an additional three (3) year
term, unless at least one (1) year prior to any such Renewal Date, either
party shall have given written notice to the other that such renewal shall
not take place. Such notice may be given by the Company only upon the
affirmative vote of the Human Resources Committee of the Board of
Directors.
2. "Change in Control Event." Each of the following events shall
constitute a "Change in Control Event" for purposes of this Agreement:
(a) Any person acquires beneficial ownership of Company securities and
is or thereby becomes a beneficial owner of securities entitling such
person to exercise twenty-seven percent (27%) or more of the combined
voting power of the Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities Exchange
Act of 1934, or any similar successor regulation or rule; and the term
"person" shall include any natural person, corporation, partnership, trust
or association, or any group or combination thereof whose ownership of
Company securities would be required to be reported under such Regulation
13D, or any similar successor regulation or rule.
(b) Within any twenty-five (25) month period, individuals who were
Outside Directors at the beginning of such period, together with any other
Outside Directors first elected as directors of the Company pursuant to
nominations approved or ratified by at least two-thirds (2/3) of the
Outside Directors in office immediately prior to such respective elections,
cease to constitute a majority of the board of directors of the Company.
For purposes of this Agreement an "Outside Director" as of a given
date shall mean a member of the Company's board of directors who has been a
director of the Company throughout the six (6) months prior to such date
and who has not been an employee of the Company at any time during such six
(6) month period.
(c) The Company ceases to be a reporting company pursuant to Section
13(a) of the Securities Exchange Act of 1934 or any similar successor
provision.
(d) The Company's stockholders approve:
(i) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of Company common stock would be converted into cash, securities or
other property, other than a merger or consolidation of the Company in
which the holders of the Company's common stock immediately prior to the
merger or consolidation have substantially the same proportionate ownership
and voting control of the surviving corporation immediately after the
merger or consolidation; or
(ii) any sale, lease, exchange, liquidation or other transfer (in
one transaction or a series of transactions) of all or substantially all of
the assets of the Company.
Notwithstanding subparagraphs (i) and (ii) above, the term "Change in
Control Event" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the
outstanding voting stock of the Company is owned, directly or indirectly,
by a holding company, and the holders of the Company's common stock
immediately prior to the transaction have substantially the same
proportionate ownership and voting control of the holding company.
3. Rights Upon Involuntary Termination of Employment. If, within
twelve (12) months after the occurrence of a Change in Control Event, the
Company terminates Xxxxxxxxxx'x employment for any reason other than Good
Cause as defined in Paragraph 5, or if Xxxxxxxxxx voluntarily terminates
employment for Good Reason as defined in Paragraph 4, the Company shall
provide Xxxxxxxxxx with the following:
(a) Within thirty (30) days of such termination, a lump sum cash
payment in an amount equal to the sum of:
(i) three hundred percent (300%) of Xxxxxxxxxx'x annual base
salary in effect upon the date of the Change in Control Event, and
(ii) three Hundred Percent (300%) of the award Xxxxxxxxxx would
have received for the year in which such termination occurs, pursuant to
the Hannaford Bros. Co. Annual Incentive Plan, assuming that his employment
had not terminated and that for such year "actual profit" will equal
"budgeted profit" (as those terms are defined in the plan).
(b) The continuation of Xxxxxxxxxx'x participation and the
participation of his dependents (to the extent they were participating
prior to his termination of employment) in the Company's health, life,
disability and other employee benefit plans, programs and arrangements
(excluding the Hannaford Bros. Co. Employees' Retirement Plan and Hannaford
Bros. Co. Savings and Investment Plan) for a period of thirty-six (36)
months after such termination as if he were still employed during such
period; provided, however, if such participation in any such plan, program
or arrangement is specifically prohibited by the terms thereof, the Company
shall provide Xxxxxxxxxx (and his dependents) with benefits substantially
similar to those which he was entitled to receive under such plan, program
or arrangement immediately prior to his termination of employment.
Additionally, at the end of any period of such coverage, Xxxxxxxxxx shall
have the right to have assigned to him, for the cash surrender value
thereof, any assignable insurance owned by the Company on the life of
Xxxxxxxxxx.
For purposes of this Paragraph 3(b), any employee benefit determined
with reference to Xxxxxxxxxx'x compensation or earnings shall be based on
his annual base salary unless otherwise provided under the terms of the
applicable employee benefit plan, program or arrangement.
Notwithstanding the foregoing provisions of this Paragraph 3(b) to the
contrary, to the extent continuation of Xxxxxxxxxx'x participation and the
participation of his dependents (to the extent they were participating
prior to his termination of employment) in an employee benefit plan,
program, or arrangement described in this Paragraph 3(b) is specifically
provided for under the terms of such plan, program or arrangement relating
to retirement from the Company, this Paragraph 3(b) shall not apply.
(c) Immediately upon such termination Xxxxxxxxxx shall be entitled to
acceleration of any payments to be made to him under the Hannaford Bros.
Co. Deferred Compensation Plan for Officers, the Hannaford Bros. Co.
Nonqualified Savings and Investment Plan or any other deferred compensation
arrangement for his benefit. Payment under any such plan or arrangement
pursuant to this Paragraph 3(c) shall be made in a lump sum within ninety
(90) days after Xxxxxxxxxx'x employment terminates.
(d) The Company shall pay Xxxxxxxxxx an amount equal to the award he
would have been entitled to receive under the Company's Annual Incentive
Plan, if his employment had not terminated, based on the base salary he had
earned as of his termination date, and assuming that "actual profit" will
equal "budgeted profit" (as those terms are defined in the plan). Such
payment shall be made within ninety (90) days after his employment
terminates.
(e) Xxxxxxxxxx shall also be entitled to such benefits and rights as
are provided upon the occurrence of a Change in Control Event under the
terms of the Company's 1988 Stock Plan, 1993 Long Term Incentive Plan, 1998
Stock Option Plan and Supplemental Executive Retirement Plan ("SERP"). FOR
PURPOSES OF CALCULATING ANY BENEFIT PAYABLE WITH RESPECT TO XXXXXXXXXX
UNDER THE SERP, HIS CASH BALANCE ACCOUNT SHALL BE INCREASED BY THE PRODUCT
OF (I) THE CONTRIBUTION CREDIT FOR HIS LAST FULL MONTH OF EMPLOYMENT OR, IF
GREATER, HIS LAST FULL MONTH OF EMPLOYMENT PRIOR TO THE CHANGE IN CONTROL
EVENT, AND (II) THIRTY-SIX (36).
4. Termination for Good Reason. For purposes of this Agreement,
termination by Xxxxxxxxxx of his employment for "Good Reason," except upon
Xxxxxxxxxx'x express written consent otherwise, shall mean:
(a) the assignment of duties to Xxxxxxxxxx which:
(i) are materially different from his duties immediately prior to
the Change in Control Event, or
(ii) result in his having significantly less authority or
responsibility than he had prior to the Change in Control Event; or
(b) Xxxxxxxxxx'x removal from, or any failure to re-elect him to, any
position he held immediately prior to the Change in Control Event with
either the Company or any majority-owned subsidiary; or
(c) a reduction of Xxxxxxxxxx'x annual base salary in effect on the
date of the Change in Control Event or as the same may be increased from
time to time thereafter; or
(d) the relocation of the Company's principal executive offices to a
place outside of the greater Portland, Maine, area, or the Company's
transferring or assigning Xxxxxxxxxx to a place of employment other than
its principal executive offices, except for required business travel to an
extent substantially consistent with his business travel obligations
immediately prior to the Change in Control Event; or
(e) the Company's failure to provide Xxxxxxxxxx with substantially the
same health, life and other employee benefit plans, programs and
arrangements (specifically including the Company's stock plans and
compensation and incentive plans, as the same may be amended in the
future), and substantially the same perquisites of employment, as provided
to him immediately prior to the Change in Control Event or as the same may
be increased thereafter; or
(f) the Company's failure to provide Xxxxxxxxxx with substantially the
same support staff as provided to him immediately prior to the Change in
Control Event; or
(g) the Company's failure to increase Xxxxxxxxxx'x salary, employee
benefits or perquisites of employment in a manner or an amount commensurate
with the increases provided to the Company's Senior Vice Presidents; or
(h) the Company's failure to obtain from any successor a satisfactory
agreement to assume and perform the terms of this Agreement.
5. TERMINATION FOR GOOD CAUSE. The Company retains the right to
terminate Xxxxxxxxxx for "Good Cause," in which event he shall not be
entitled to receive any payment or benefits pursuant to this Agreement.
"Good Cause" shall mean:
(a) Xxxxxxxxxx'x conviction, by a court of competent jurisdiction, of
a crime adversely reflecting on his honesty, trustworthiness or fitness to
carry out the responsibilities of his position with the Company in other
respects; or
(b) a willful breach by him of any material duty or obligation imposed
upon him under the terms of his employment, as those terms existed
immediately prior to any Change in Control Event, and his failure to cure
such breach within thirty (30) days after receiving notice thereof from the
Company.
6. NOTICES. Any and all notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when
deposited in the United States mails, certified or registered mail postage
prepaid and addressed as follows:
To Xxxxxxxxxx: Xxxx X. Xxxxxxxxxx
Xxxxxxxxxx Xxxxx Xxxx
Xxxx Xxxxxxxxx, Xxxxx 00000
To the Company: Hannaford Bros. Co.
P. 0. Xxx 0000
Xxxxxxxx, Xxxxx 00000
Attention: Senior Vice President-Human Resources
Either party may change by notice to the other the address to which
notices to it are to be addressed.
7. APPLICABLE LAW, TAXES, BINDING AGREEMENT, SEVERABILITY,
CONSTRUCTION. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maine, except as to any matter
which is preempted by federal law.
Notwithstanding anything to the contrary herein contained, the Company
may withhold from any amounts payable under this Agreement all federal,
state or other taxes or assessments which may be required by applicable
statute or regulation to be withheld.
This Agreement shall be binding upon and inure to the benefit of
Xxxxxxxxxx, his heirs, assigns, executors and legal representatives; and
the Company, its successors and assigns.
If any provision of this Agreement shall be held invalid or
unenforceable by a court of competent jurisdiction, the remainder of this
Agreement shall not be affected thereby.
The Outside Directors shall have the authority to construe and
interpret this Agreement on behalf of the Company, and any such
determination by the Outside Directors shall be conclusive on the Company.
8. EXECUTION OF FURTHER DOCUMENTS. In the event Xxxxxxxxxx receives
payments or benefits pursuant to the terms hereof and the Company's
independent counsel deems it necessary for the Company to receive a release
or other acknowledgment, Xxxxxxxxxx agrees to execute any such document, as
may be reasonably required as a condition of his receipt of such payment or
benefits.
9. AMENDMENT AND WAIVER. The Agreement may be amended only in
writing, by the Parties hereto, and no condition or provision of the
Agreement may be waived except in writing. Waiver by either party at any
time of the other party's breach of, or failure to comply with, any
condition or provision of this Agreement to be performed by such other
party shall not be deemed a waiver of any other provision or condition at
the same time or of any provision or condition at any prior or subsequent
time, unless specifically stated therein.
10. FUNDING. This Agreement shall not be construed to create or
require the Company to create a trust or to otherwise act to fund the
amounts payable hereunder.
11. ASSIGNMENT. Except as required by law, the right to receive
payments hereunder shall not be subject to alienation, assignment,
garnishment, attachment, execution or levy of any kind and any attempt to
cause such payments to be so subject shall not be recognized by the
Company.
12. ARBITRATION. In recognition of the mutual benefits of
arbitration, the parties hereby agree that arbitration as provided for
herein shall be the exclusive remedy for resolving any claim or dispute
arising under this Agreement, and hereby mutually waive any and all other
remedies at law or in equity for determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any related judicial
proceeding, shall be initiated and shall proceed pursuant to the
provision's of the Maine Uniform Arbitration Act (the "Act") and, to the
extent consistent with the Act, the then prevailing rules of the American
Arbitration Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be given in
writing to the Association and the other party no later than one year after
the claim arises. Any claim for which such demand is not made within one
year after the claim arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be before a single
arbitrator, and an award in such arbitration may include only damages which
the arbitrator determines to be due under express provisions of this
Agreement. The arbitrator shall have no authority to award any other
damages, including without limitation, consequential and exemplary damages.
Any award in arbitration shall be subject to enforcement and appeal
pursuant to the Act.
(c) The parties shall share equally all costs and fees charged by the
Association or the arbitrator.
13. LIMITATION ON AMOUNT TO BE PAID. If payment of any amount under
this Agreement would cause Xxxxxxxxxx to be subject to an excise tax
pursuant to Section 4999 of the Internal Revenue Code (as amended from time
to time) or the regulations thereunder, then such amount shall not be paid
to the extent necessary to avoid the imposition of such tax. The preceding
sentence shall apply only if the aggregate amount payable to Xxxxxxxxxx or
for his benefit under the Agreement, after payment of such excise tax,
would be less than the aggregate amount payable in accordance with the
preceding sentence.
14. NO ADDITIONAL EFFECT. Except as expressly provided herein,
nothing contained herein shall confer upon Xxxxxxxxxx any specific period
of employment, right to be retained in the service of the Company or other
rights, nor shall this Agreement be construed to otherwise limit the rights
of the Company to discharge or take other action with respect to
Xxxxxxxxxx.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Witness: HANNAFORD BROS. CO.
By
Its
Xxxx X. Xxxxxxxxxx
