EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made this 27th day of February,
1997, between FOOD LION, INC., a North Carolina corporation with
its principal place of business in Salisbury, North Carolina (the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., an individual residing at ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇. ▇▇▇▇"),
W I T N E S S E T H:
WHEREAS, ▇▇. ▇▇▇▇ is currently employed by the Company as
its Senior Vice President of Operations and Chief Operating
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 ▇▇. ▇▇▇▇;
WHEREAS, the Board of Directors recognizes that ▇▇. ▇▇▇▇ has
made substantial contributions to the growth and success of the
Company and desires to provide for the continuing employment of
▇▇. ▇▇▇▇ and to encourage the continued dedication and attention
of ▇▇. ▇▇▇▇ to the Company;
WHEREAS, ▇▇. ▇▇▇▇ is willing to continue to serve the
Company; and
WHEREAS, the Company and ▇▇. ▇▇▇▇ desire to enter into this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, and the
mutual agreements herein contained, the Company and ▇▇. ▇▇▇▇
hereby agree as follows:
1. Continue to Employ. The Company hereby agrees to
continue to employ ▇▇. ▇▇▇▇ as Senior Vice President of
Operations and Chief Operating Officer of the Company for the
Term of Employment as herein set forth, and ▇▇. ▇▇▇▇ hereby
agrees to continue to serve the Company as Senior Vice President
of Operations and Chief Operating Officer for such term.
2. Term of Employment. The "Term of Employment," as used
herein, will commence on the date hereof and, unless sooner
terminated as hereinafter provided, shall terminate on the
fifth (5th) anniversary of such date; provided, however, that the
Term of Employment shall automatically be extended for additional
periods of one (1) year each on the terms and conditions provided
herein unless either party shall give the other party no less
than one hundred eighty (180) days' written notice prior to the
expiration of the applicable Term of Employment.
3. Employment During the Term. During the Term of
Employment, ▇▇. ▇▇▇▇ shall devote his full professional time to
the business of the Company, shall use his best efforts to
promote the interests of the Company and shall serve as Senior
Vice President of Operations and Chief Operating Officer of the
Company and in such other senior executive capacities as the
Board of Directors of the Company shall hereafter designate from
time to time.
4. Vacation. ▇▇. ▇▇▇▇ 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 ▇▇. ▇▇▇▇'▇
services hereunder and for his covenants set forth in Sections
10, 11, and 12 below, the Company shall pay to ▇▇. ▇▇▇▇ a base
salary which shall not be less than Four Hundred Seventeen
Thousand One Hundred Twelve Dollars ($417,112) per annum;
provided, however, such amount shall be increased from time to
time by the Board of Directors of the Company to assure that the
compensation paid to ▇▇. ▇▇▇▇ under this Employment Agreement
remains competitive with amounts paid to other executive officers
in similar positions in the large supermarket chain industry and
reflects the performance of ▇▇. ▇▇▇▇ and the financial
performance of the Company. In no event shall such annual review
result in any reduction in base salary provided in this
Employment Agreement. Such compensation shall be payable in
accordance with the Company's payroll practices for executive
employees.
(b) Bonus Plans. In addition, ▇▇. ▇▇▇▇ 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 (referred to
herein as the "Bonus Plans").
(c) Deferral Arrangement.
(i) Right to Defer. ▇▇. ▇▇▇▇ may elect to
defer some or all of his bonus compensation and up to
fifty percent (50%) of his base salary payable to him
pursuant to this Employment Agreement. Any deferral of
bonus compensation shall be irrevocable and must be
requested by ▇▇. ▇▇▇▇ in writing prior to the start of
the fiscal year to which such bonus relates (except
that any deferral election for the fiscal year 1997 may
be made within thirty (30) days following the effective
date of this Employment Agreement). Any deferral of
base salary shall be irrevocable and must be requested
by ▇▇. ▇▇▇▇ in writing prior to the start of the fiscal
year to which such salary relates (except that the
deferral election for the 1997 fiscal year may be made
within thirty (30) days following the Effective Date,
but will relate only to amounts payable after the
election is received by the Company). An election for
a given fiscal year shall be deemed a continuing
election for each subsequent fiscal year, unless a
subsequent written election to defer (or not to defer)
is provided to the Company by ▇▇. ▇▇▇▇ prior to the
start of such fiscal year.
(ii) Bookkeeping Account and Grantor Trust.
Any amounts deferred by ▇▇. ▇▇▇▇ hereunder will be
credited to a bookkeeping account established on the
books and records of the Company for this purpose. In
addition, the Company will maintain in a separate,
irrevocable grantor trust established by the Company an
amount in cash equal to the amounts deferred by ▇▇.
▇▇▇▇. In connection with the deferral election, ▇▇.
▇▇▇▇ shall have the right to specify the investments in
which his bookkeeping account shall be deemed invested;
provided, however, the Company shall be under no
obligation to purchase any such investments chosen by
▇▇. ▇▇▇▇. ▇▇. ▇▇▇▇'▇ bookkeeping account shall be
credited to reflect all income, gains and losses of
such deemed investments. The parties hereto agree
that, to the extent that any investment vehicle that
▇▇. ▇▇▇▇ selects results in a loss to the bookkeeping
account, the Company will have no obligation to
compensate ▇▇. ▇▇▇▇ for such loss or to make any
compensatory adjustment to the bookkeeping account to
make up for such loss.
(iii) Distribution. The timing of the
payment of all amounts deferred by ▇▇. ▇▇▇▇ shall be
specified in his initial deferral election and may not
be subsequently changed by ▇▇. ▇▇▇▇ without the prior
written approval of the Board of Directors. The
initial deferral may specify a lump sum payment of up
to five (5) annual installment payments to be paid out
in their entirety by no later than the sixth
anniversary of the Date of Termination (as defined
below); provided, however, that, notwithstanding ▇▇.
▇▇▇▇'▇ deferral election, all amounts will be paid to
▇▇. ▇▇▇▇ within thirty (30) days following a
termination of this Employment Agreement for any reason
specified in Sections 7(c) or 7(e).
6. Benefits. ▇▇. ▇▇▇▇ 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 ▇▇. ▇▇▇▇ and/or
other executive employees of the Company in accordance with the
Company's policies. In addition, the Company shall maintain in
full force and effect on the life of ▇▇. ▇▇▇▇ a life insurance
policy, subject to a split dollar arrangement, in the face amount
of three and one-half (3.5) times ▇▇. ▇▇▇▇'▇ base salary if his
death occurs prior to his retirement (provided his retirement is
on terms consistent with the terms of the life insurance policy
and any split dollar arrangements between ▇▇. ▇▇▇▇ and the
Company relating thereto) and two (2) times ▇▇. ▇▇▇▇'▇ last base
salary if his death occurs after any such retirement. ▇▇. ▇▇▇▇
shall be the owner of such policy with the authority to designate
the beneficiary thereof.
7. Termination. Termination of ▇▇. ▇▇▇▇'▇ employment
under any of the following circumstances shall not constitute a
breach of this Employment Agreement:
(a) Death. Termination upon the death of
▇▇. ▇▇▇▇.
(b) Cause. Termination by the Company for "Cause" as
described in this Section 7(b). For purposes of this Employment
Agreement, "Cause" shall mean (i) willful failure (other than by
reason of incapacity due to physical or mental illness) to
perform his material duties hereunder and his inability or
unwillingness to correct such failure within thirty (30) days
after receipt of such notice, (ii) conviction of ▇▇. ▇▇▇▇ of a
felony or plea of no contest to a felony, or (iii) perpetration
of a material dishonest act or fraud against the Company or any
affiliate thereof. The definition of "Cause" expressly excludes
any mistake of fact or judgment made by ▇▇. ▇▇▇▇ in good faith
with respect to the Company's business.
(c) Good Reason. Termination by ▇▇. ▇▇▇▇ for "Good
Reason" as described in this Section 7(c). For purposes of this
Employment Agreement, "Good Reason" shall mean (i) a material
diminution of the professional responsibilities of ▇▇. ▇▇▇▇, (ii)
assignment of inappropriate duties to ▇▇. ▇▇▇▇, (iii) failure of
the Company to comply with compensation and benefits obligations
to ▇▇. ▇▇▇▇, (iv) transfer of ▇▇. ▇▇▇▇ more than 50 miles from
Salisbury, North Carolina, without good business reasons, as
determined by the Company's Board of Directors, (v) a purported
termination of this Employment Agreement by the Company other
than in accordance with the terms hereof, (vi) the occurrence of
a Change in Control of the Company (as defined below), or (vii)
failure of the Company to require any successor to the Company to
assume and comply with this Employment Agreement. For purposes
of this Employment Agreement, a determination in good faith by
▇▇. ▇▇▇▇ of "Good Reason" shall be conclusive.
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 by
Etablissements Delhaize Freres et Cie "Le Lion" S.A.
("Delhaize") and Delhaize "Le Lion" America, Inc.;
(B) at any time during the term of this
Employment Agreement there is a change in the
composition of the Board of Directors of the Company
resulting in a majority of the directors of the Company
who are in office on the date hereof ("Incumbent
Company Directors") no longer constituting a majority
of the directors of the Company; provided that, in
making such determination, persons who are elected to
serve as directors of the Company and who are approved
by all of the directors in office on the date of such
election (other than in connection with an actual or
threatened proxy contest) shall be treated as Incumbent
Company Directors;
(C) consummation of a complete liquidation
or dissolution of the Company or a merger,
consolidation or sale of all or substantially all of
the Company's assets (collectively, a "Business
Combination") other than a Business Combination in
which all or substantially all of the shareholders of
the Company receive fifty percent (50%) or more of the
stock of the Company resulting from the Business
Combination, at least a majority of the board of
directors of the resulting corporation were Incumbent
Company Directors and after which no person or entity
owns twenty percent (20%) or more of the stock of the
resulting corporation, who did not own such stock
immediately before the Business Combination; or
(D) occurrence of any of the events
described in Section 7(c)(B) or (C) to Delhaize or the
acquisition by any Person of more than thirty
percent (30%) of the stock of Delhaize.
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, and the term "Person" shall have the meaning
set forth in Sections 3(a)(2) and 13(d)(3) of the Exchange Act.
An election by ▇▇. ▇▇▇▇ to terminate his employment under
this Section 7(c) hereof shall not be deemed a voluntary
termination of employment by ▇▇. ▇▇▇▇ for the purpose of this
Employment Agreement or any plan, arrangement or program of the
Company.
(d) Disability. Termination by the Company or ▇▇.
▇▇▇▇ upon Disability of ▇▇. ▇▇▇▇. 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) ▇▇.
▇▇▇▇ shall not have returned to the performance of his duties
hereunder on a full-time basis during such 180-day period. For
purposes of this Employment Agreement, "Disability" shall mean
▇▇. ▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇ examined at such reasonable times by such
physicians satisfactory to ▇▇. ▇▇▇▇ as the Company may designate,
and ▇▇. ▇▇▇▇ 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 ▇▇. ▇▇▇▇ to perform his
duties hereunder, whether by reason of injury, illness (physical
or mental), or otherwise shall not result in the termination of
▇▇. ▇▇▇▇'▇ employment hereunder, and he shall be entitled to
continue to receive his base salary and other benefits as
provided herein.
(e) Without Cause. Termination by the Company without
Cause.
(f) Date and Notice of Termination. Any termination
of ▇▇. ▇▇▇▇'▇ employment by the Company or by ▇▇. ▇▇▇▇ (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
▇▇. ▇▇▇▇'▇ employment under the provision so indicated.
"Date of Termination" shall mean (i) if ▇▇. ▇▇▇▇'▇
employment is terminated by his death, the date of his death, and
(ii) if ▇▇. ▇▇▇▇'▇ 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, the Company shall
compensate ▇▇. ▇▇▇▇ as follows:
(a) Death. If ▇▇. ▇▇▇▇'▇ employment is terminated as
a result of his death, as specified in Section 7(a), the Company
shall pay ▇▇. ▇▇▇▇'▇ beneficiary the benefit called for under his
Salary Continuation Agreement with the Company. ▇▇. ▇▇▇▇'▇
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 ▇▇. ▇▇▇▇'▇ employment is
terminated by the Company or ▇▇. ▇▇▇▇ as a result of his
disability as specified in Section 7(d), then the Company shall
pay ▇▇. ▇▇▇▇ his full compensation until the Date of Termination.
Within thirty (30) days after the termination of his employment,
the Company shall pay ▇▇. ▇▇▇▇ a lump sum payment equal to fifty
percent (50%) of the present value of the future base salary
payable to ▇▇. ▇▇▇▇ during the remainder of his Term of
Employment under this Employment Agreement or for a period of
two (2) years, whichever is longer. Such lump sum amount shall
be calculated by using a discount rate equal to the applicable
Federal rate that is in effect on the date of payment as
determined under Section 1274(d) of the Internal Revenue Code of
1986 (the "Code") and the regulations thereunder, and by assuming
that ▇▇. ▇▇▇▇'▇ annual salary in effect on the Date of
Termination would continue for the remainder of the Term of
Employment, or for a period of two (2) years, whichever is
longer. This payment shall be in addition to any payments ▇▇.
▇▇▇▇ shall be entitled to receive under any applicable disability
insurance policies maintained by the Company for ▇▇. ▇▇▇▇.
(c) Cause. If ▇▇. ▇▇▇▇'▇ employment is terminated for
any reason specified in Section 7(b) hereof, the Company shall no
longer be obligated to make any payments to ▇▇. ▇▇▇▇ pursuant to
this Employment Agreement, except for the full amount of his base
salary and all compensation earned prior to the Date of
Termination and payments pursuant to plans, programs, or
arrangements, as determined under the provisions of such plans or
policies.
(d) Good Reason or Without Cause. If ▇▇. ▇▇▇▇'▇
employment is terminated by ▇▇. ▇▇▇▇ for Good Reason as specified
in Section 7(c) hereof, or if his employment is terminated by the
Company without Cause as specified in Section 7(e), the Company
shall pay ▇▇. ▇▇▇▇ the full amount of his base salary and other
compensation earned prior to the Date of Termination. The
Company shall also pay ▇▇. ▇▇▇▇, within thirty (30) days after
his termination, a lump sum payment equal to three (3) (or the
number of years left in the Term of this Employment Agreement,
whichever is greater) times his current base salary. Such lump
sum amount shall be calculated by using a discount rate equal to
the applicable Federal rate that is in effect on the date of
payment as determined under Section 1274(d) of the Code and the
regulations thereunder, and by assuming that ▇▇. ▇▇▇▇'▇ annual
salary in effect on the Date of Termination would continue for
the remainder of the Term of Employment, or for a period of
three (3) years, whichever is longer.
(e) Benefits. From the Date of Termination of ▇▇.
▇▇▇▇'▇ employment for Good Reason, as specified in Section 7(c)
hereof, or without Cause as specified in Section 7(e), the
Company shall pay ▇▇. ▇▇▇▇ the full amount of his base salary and
all compensation earned prior to the Date of Termination. The
Company shall maintain in full force and effect for the continued
benefit of ▇▇. ▇▇▇▇ and his eligible dependents for the greater
of three (3) years and the number of years (including partial
years) remaining in the Term of Employment hereunder, all
employee benefit plans and programs (such as medical, dental,
health and life insurance) in which ▇▇. ▇▇▇▇ was entitled to
participate immediately prior to the Date of Termination, if ▇▇.
▇▇▇▇'▇ continued participation is possible under the general
terms and provisions of such plans and programs. In the event
that ▇▇. ▇▇▇▇'▇ participation in any such plan or program is
barred, the Company shall arrange to provide ▇▇. ▇▇▇▇ with
benefits substantially similar to those to which ▇▇. ▇▇▇▇ would
otherwise have been entitled to receive under such plans and
programs.
9. Business Expenses. The Company agrees that during the
Term of Employment, the Company will reimburse ▇▇. ▇▇▇▇ for
actual travel and other out-of-pocket expenses reasonably
incurred by him in connection with the performance of his duties
hereunder and accounted for in accordance with the policies and
procedures currently established by the Company.
10. No Competing Employment. ▇▇. ▇▇▇▇ agrees that, during
the Term of Employment and for a period of two (2) years after
the Date of Termination ("Restricted Period"), he will not,
without the written consent of the Board of Directors, engage in
any retail or wholesale grocery business which is directly
competitive with the business of the Company or any affiliate
thereof in any geographic area in which the Company or any
affiliate operates on the Date of Termination. ▇▇. ▇▇▇▇
understands and agrees that a portion of the amounts paid to him
under Section 5(a) hereof is in consideration for his covenants
set forth in Sections 10, 11, and 12.
11. No Solicitation. ▇▇. ▇▇▇▇ agrees that, during the
Restricted Period, he will not, without the prior written consent
of the Board of Directors, directly or indirectly solicit or
recruit any employee or independent contractor of the Company for
the purpose of being employed by ▇▇. ▇▇▇▇, directly or
indirectly, or any other person or entity on behalf of which ▇▇.
▇▇▇▇ is acting as an agent, representative or employee.
Notwithstanding the above, if ▇▇. ▇▇▇▇'▇ 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. ▇▇. ▇▇▇▇ agrees that, during the Term
of Employment and thereafter, he will not, without the 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. ▇▇. ▇▇▇▇ also recognizes and acknowledges that he has a
common law obligation not to disclose trade secrets and other
proprietary information of the Company. ▇▇. ▇▇▇▇ further agrees
that, should he leave the active service of the Company, he will
not take with him or retain, without the written authorization of
the Board of Directors, any papers, files or other documents or
copies thereof or other confidential information of any kind
belonging to the Company pertaining to its business, sales,
financial condition or products. ▇▇. ▇▇▇▇ understands and agrees
that the rights and obligations set forth in this Section 12 are
perpetual and, in any case, shall extend beyond the Restricted
Period.
13. Injunctive Relief. Without limiting the remedies
available to the Company, ▇▇. ▇▇▇▇ 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 ▇▇. ▇▇▇▇ 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 ▇▇. ▇▇▇▇ to the fullest extent permitted under North
Carolina law, including, without limitation, the provisions of
Part 5 (or any successor provision) of the North Carolina
Business Corporation Act, from and against all losses, claims,
damages, liabilities, costs and expenses (including, without
limitation, attorneys' fees), which may, at any time, be suffered
by ▇▇. ▇▇▇▇ as a result of the fact that ▇▇. ▇▇▇▇ 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 ▇▇. ▇▇▇▇ in any proceeding
shall be paid promptly by the Company in advance of the final
disposition of any proceeding at the written request of ▇▇. ▇▇▇▇
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 ▇▇. ▇▇▇▇ 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 ▇▇.
▇▇▇▇ at the time specified below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by ▇▇. ▇▇▇▇
(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 ▇▇.
▇▇▇▇, 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 ▇▇. ▇▇▇▇ in
connection with a Change in Control of the Company or the
termination of ▇▇. ▇▇▇▇'▇ 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, or (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, ▇▇. ▇▇▇▇ 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, ▇▇. ▇▇▇▇
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
▇▇. ▇▇▇▇'▇ employment is terminated for reasons specified in
Sections 7(a), 7(c), 7(d) or 7(e) hereof, all of the rights
granted to ▇▇. ▇▇▇▇ 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 of Control) such rights shall
not vest if ▇▇. ▇▇▇▇'▇ employment is terminated for ▇▇. ▇▇▇▇'▇
failure to adequately perform his duties hereunder as determined
by an affirmative vote of at least seventy percent (70%) of the
Board of Directors of the Company.
17. Legal Expenses. The Company shall reimburse ▇▇. ▇▇▇▇
for all reasonable legal fees incurred in an effort to establish
entitlement to compensation and benefits under this Employment
Agreement.
18. Mitigation. The Company recognizes that ▇▇. ▇▇▇▇ has
no duty to mitigate the amounts due to him upon termination of
this Employment Agreement, and the obligations of the Company
will not be diminished in the event ▇▇. ▇▇▇▇ is employed by
another employer after the termination of his employment with the
Company.
19. Successors. This Employment Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns and upon ▇▇. ▇▇▇▇ and his legal representatives. The
Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to
expressly assume and agree to perform this Employment Agreement
in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
20. Amendments. This Employment Agreement, which contains
the entire contractual understanding between the parties, may not
be changed orally but only by a written instrument signed by the
parties hereto.
21. Governing Law. This Employment Agreement shall be
governed by and construed in accordance with the laws of the
State of North Carolina.
22. Waiver. The waiver of breach of any term or condition
of this Employment Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or
condition.
23. Severability. In the event that any provision or
portion of this Employment Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions
and portions of this Employment Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest
extent provided by law.
24. Notices. Any notices or other communications required
or permitted hereunder shall be deemed sufficiently given if sent
by registered mail, postage prepaid, as follows:
(a) If to ▇▇. ▇▇▇▇:
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) If to the Company:
Food Lion, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
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.
IN WITNESS WHEREOF, the Company has caused this Employment
Agreement to be executed by its duly authorized representative,
and ▇▇. ▇▇▇▇ has hereunto set his hand as of the date first above
written.
FOOD LION, INC.
By:▇▇▇ ▇. ▇▇▇▇▇
Attest:
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
