Exhibit 10A
EMPLOYMENT SEVERANCE AGREEMENT
AND MUTUAL RELEASE
This Employment Severance Agreement and Mutual Release
(this "Agreement") is entered into as of this 14th day of
April, 1999, by and between Food Lion, Inc. (the "Company")
and Pamela K. Kohn (the "Executive"). The Company and the
Executive hereby agree as follows:
1. Purpose of Agreement.
The parties hereto recognize that during her eight
years of employment with the Company, the Executive has
performed service to the Company in a confidential capacity.
By virtue of her responsibilities during her employment, the
Executive has acquired valuable proprietary information of a
sensitive and confidential nature pertaining to the
Company's business operations, trade secrets, strategies and
plans, which, if disclosed to individuals or entities not
employed by the Company, would materially harm the Company
and provide an unfair advantage to its competitors.
The purpose of this Agreement is to set forth the terms
of the Executive's severance from employment with the
Company, to resolve fully any and all obligations arising
out of her employment and severance from employment and to
protect the Company's legitimate interest in maintaining the
confidentiality of information pertaining to its business
plans and operations known to, or possessed by, the
Executive.
2. Resignation.
The Executive hereby resigns from employment as the
Senior Vice President of Merchandising for the Company
effective April 14, 1999 (the "Resignation Date").
Notwithstanding any provision of the Employment Agreement
between the Company and the Executive dated October 1, 1997
(the "Employment Agreement"), to the contrary, such
resignation shall not be deemed to be a breach by the
Executive of the Employment Agreement, and the Employment
Agreement shall terminate as of the Resignation Date and
shall have no further force and effect.
3. Consideration.
In consideration of the Executive's release of all
claims that may exist against the Company in connection with
her employment as more specifically set forth below in
Paragraph 4, and in consideration of the Executive's
compliance with the obligations set forth below in
Paragraphs 6, 7, 8 and 9, and provided the Executive
complies with all other terms and conditions of this
Agreement, the Company agrees that the Company will pay the
Executive $887,784.76 within 30 days following the execution
of this Agreement by the Executive. The Company also shall
pay to the Executive the full amount of her base salary and
other compensation earned prior to the Resignation Date and
will reimburse the Executive for actual travel and other out-
of-pocket expenses (which are accounted for in accordance
with the policies and procedures currently established by
the Company and which have not yet been reimbursed)
reasonably incurred by the Executive in connection with the
performance of her duties under the Employment Agreement
prior to the Resignation Date. In addition, the Company
will pay to the Executive, on the same schedule as currently
paid for the Executive, the nondiscretionary portion of the
annual incentive bonus (which nondiscretionary portion
currently is 20% of the Executive's annual base salary) for
1999, 2000 and 2001, that the Executive would have received
assuming the Executive was employed by the Company at the
end of each of such years at the annual base salary of the
Executive in effect immediately prior to the Resignation
Date, provided that annual incentive bonuses are paid to the
executives of the Company for each of such years. In the
event that the Company implements a new incentive bonus plan
that replaces the Company's current Annual Incentive Bonus
Plan for any period referenced in the immediately preceding
sentence, the Executive shall continue to receive an amount
equal to 20% of the Executive's current annual base salary
for any such remaining period. In addition, the Company
annually will pay to the Executive $10,963 (the amount that
would have been paid to the Executive as a "wellness bonus"
for 1999) for 1999, 2000 and 2001 on the same schedule as
currently paid for the Executive, provided that wellness
bonuses are paid to the executives of the Company for each
of such years.
Executive and her eligible dependents shall be entitled
until September 30, 2002, to participate in the Food Lion
Group Benefit Plan and the Executive Medical Plan (including
coverage for medical, dental, health and life insurance but
excluding disability insurance) or any similar successor
plans. If the Executive's continued participation in either
plan is barred, the Company shall arrange to provide
substantially similar benefits to which the Executive and
her eligible dependents were entitled immediately prior to
the Resignation Date for such period. Following such
period, the Executive shall be entitled to continuation of
health care under the Comprehensive Omnibus Budget
Reconciliation Act of 1986 ("COBRA").
With respect to the Company's Profit Sharing Plan and
Profit Sharing Restoration Plan, the Executive shall be
entitled to all accrued amounts to which the Executive is
eligible under such plans. In addition, following the
Resignation Date, the Executive shall receive cash payments
from the Company in the amounts that would have been
contributed to the Profit Sharing Plan and the Profit
Sharing Restoration Plan for the Executive (and on the same
schedule) as if she remained employed by the Company through
September 30, 2002, with such contributions to be calculated
in each year assuming (i) an annual salary of $285,027, (ii)
an annual wellness bonus of $10,963 and (iii) an annual
incentive bonus equal to the applicable amount (i.e., the
nondiscretionary portion of any annual incentive bonus
amount) paid under Paragraph 3(A) of this Agreement (but, in
the case of the calculation for 1999, the amount of the
annual incentive bonus that was paid for 1998 in 1999).
As provided in the stock option agreements governing
such stock options, all vested stock options of the Company
held by the Executive as of the Resignation Date shall
remain exercisable for three months less one day following
the Resignation Date. The vesting of all other stock
options that have been granted to the Executive prior to the
Resignation Date shall be accelerated to the Resignation
Date and shall remain exercisable for three months less one
day following the Resignation Date. After such period, all
unexercised stock options shall terminate and cease to be
exercisable. For purposes of clarification, Schedule A
attached hereto sets forth the stock options (and
corresponding exercise prices) that have been granted to the
Executive as of the date immediately prior to the
Resignation Date.
The Executive shall continue to be vested in all shares
of restricted stock that have vested as of the Resignation
Date. All unvested shares of restricted stock under awards
granted to the Executive prior to the Resignation Date shall
be vested as of the Resignation Date. Accordingly, the
total number of vested shares of restricted stock to be
issued to the Executive immediately following the
Resignation Date is 16,033 shares.
The Company shall continue to pay the premiums on and
shall maintain in effect the split-dollar life insurance
policy currently outstanding with respect to the Executive
(Policy No. 3669218) through the period ending on September
30, 2002. As of October 1, 2002, such policy shall be
transferred to the Executive, and thereafter the Executive
shall be responsible for all premiums under such policy, and
the Company shall waive its right to receive reimbursement
for premiums paid on such policy.
The Company may withhold from any compensation or
benefits payable under this Agreement all federal, state,
city or other taxes as may be required pursuant to any law
or governmental regulation or ruling.
Except as specifically provided herein or as otherwise
may be required by law, the Executive shall not be entitled
to receive any other payments, benefits or severance amounts
from the Company following the Resignation Date.
The Executive acknowledges that the rights and payments
provided in Paragraph 3(A):
represent good and valuable consideration and that her
release of claims in Paragraph 4 and her agreement to comply
with the obligations of Paragraphs 6, 7, 8 and 9 of this
Agreement are in return for this consideration;
shall be in lieu of any and all claims for severance pay,
additional wages, bonus, salary, accrued vacation and sick
leave pay or other compensation, or benefits, or claim of
damages she may have as of the Resignation Date other than
vested benefits described in Paragraph 3(A) and such rights
as the Executive may have to obtain continued insurance
coverage under COBRA; and
arise solely out of the terms of this Agreement and are not
part of any Company severance pay plan.
The Company acknowledges that its promises and releases
contained in this Agreement are for good and valuable
consideration.
4. Waiver and Release.
As a material inducement for the Executive and the
Company to enter into this Agreement, each of them hereby
irrevocably and unconditionally releases and forever
discharges the other as detailed below.
In exchange for the consideration described in
Paragraph 3 above, the Executive hereby releases the
Company, its parents, affiliates, subsidiaries,
shareholders, directors, officers, agents and employees from
all claims, demands and causes of action whatsoever that she
may have as a result of events occurring during, or events
related to, her employment by the Company, including but not
limited to the termination of that employment, and covenants
not to bring a lawsuit to assert such claim, demand or cause
of action. In exchange for said consideration, the
Executive further agrees to accept no benefit in any form
offered to her as a result of actions taken by any other
person or by a federal, state or local organization
concerning events occurring, or events related to, the
Executive's employment by the Company, including but not
limited to the termination of that employment.
The Executive acknowledges that the claims, demands or
causes of action she is hereby releasing include, but are
not limited to, any claims, demands or causes of action she
may have under federal laws such as, without limitation,
Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act, the Family and Medical Leave Act and the
Americans with Disabilities Act, as well as any claims,
demands or causes of action she may have under state or
local laws or ordinances.
The Executive acknowledges that she has been given a
reasonable period of time in which to consider this
Agreement, that she has been advised to consult with an
attorney concerning this Agreement and that she has been
given a reasonable period of time in which to consult an
attorney concerning this Agreement.
The Company, on behalf of its officers, directors,
employees, agents, counsel, successors, assigns and related
entities hereby releases and forever discharges the
Executive, her heirs, assigns and representatives from any
and all claims, liabilities, damages, costs and other
obligations in any manner arising out of or attributable to
her employment with the Company, and will indemnify and hold
harmless the Executive, her heirs, assigns and
representatives from such claims, except those claims
attributable to the gross negligence or willful misconduct
of the Executive.
This Agreement does not waive or release rights or
claims for occurrences after the Resignation Date. This
Agreement does not preclude the Executive or Company from
filing a lawsuit against the other for purposes of enforcing
rights conferred to each other under this Agreement.
5. Company Property.
The Executive agrees that, in connection with her
resignation from the Company, she shall not take with her,
retain, distribute or cause to be distributed, 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.
6. Confidentiality.
As described more fully in Paragraph 1(A) of this
Agreement, the Executive acknowledges that as a result of
her employment by the Company, she has acquired confidential
or proprietary information of special value to the Company.
The Executive covenants and agrees that, following the
Resignation Date, the Executive shall not, without the
written consent of the Board of Directors in writing,
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.
7. Noncompetition.
The Executive acknowledges that the Company has
legitimate business interests in assuring that the skills
and knowledge relating to the nature and character of the
Company's business obtained by the Executive during her
employment with the Company are not converted to the use of
entities in competition with the Company or who are engaged
in activities aimed at damaging the Company's public image
or are otherwise antithetical to the Company's lawful
interests. In recognition of these legitimate interests,
the Executive agrees that for a period of two years
following the Resignation Date, she shall 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 Resignation Date;
provided, however, that the foregoing shall not prohibit the
Executive from being employed by any company that has or
later acquires a subsidiary or division, or that is later
acquired by a company, that is competitive with the business
of the Company or any affiliate thereof so long as the
Executive is not employed in (or provide substantial
services to) such subsidiary or division or such acquiring
company and so long as the Executive does not otherwise
disclose confidential information relating to the business,
sales, financial condition or products of the Company to
such subsidiary or division or such acquiring company.
8. Nonsolicitation.
The Executive agrees that, for a period of two years
following the Resignation Date, she shall 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 the Executive, directly or indirectly, or any other
person or entity on behalf of which the Executive is acting
as an agent, representative or employee; provided, however,
that nothing in this Paragraph 8 shall prohibit the
Executive from responding to an unsolicited request from any
third party for an employment reference with respect to any
person who was an employee of the Company during the period
of the Executive's employment with the Company.
9. Nondisparagement.
Following the Resignation Date, the Executive shall not
disparage the Company or any of the Company's subsidiaries
or affiliates or their respective officers, directors,
employees, agents, successors or assigns, and the Company
shall not disparage the Executive or any of her
representatives or agents, or any of her heirs or assigns.
A proceeding brought by any party to enforce its rights
under this Agreement shall not be deemed to be a breach of
this Paragraph 9.
10. Enforcement.
Without limiting the remedies available to the Company,
the Executive acknowledges that a breach of the covenants
contained in Paragraphs 6, 7, 8 and 9 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 the Executive from
engaging in actvities prohibited by Paragraphs 6, 7, 8 or 9
or such other relief as may required to specifically enforce
any of the covenants in such Paragraphs.
11. Acknowledgment of Voluntary Nature of Agreement.
By signing this Agreement, the Executive and the
Company acknowledge:
That each has entered into this Agreement voluntarily and
fully understands all of its terms;
That the Executive has been advised and has had the
opportunity to consult with an attorney prior to signing
this Agreement;
That the Executive and the Company are not relying on any
statement or promise other than as contained in this
Agreement.
12. Assistance.
Upon reasonable notice, the Executive agrees to
willingly give her reasonable assistance, including her
attendance, where appropriate, to the Company's defense or
prosecution of any existing or future claims or litigation.
The Company will reimburse the Executive for all reasonable
travel expenses incurred by the Executive in complying with
this paragraph.
13. Binding Agreement.
This Agreement will become effective and enforceable
upon the Resignation Date.
This Agreement constitutes the entire agreement of the
parties with respect to the subject matter set forth herein
and there are no promises, understandings or
representations, oral or written, other than those set forth
herein.
The Executive and the Company promise that, after this
Agreement becomes final and binding, they will not pursue
any claim which has been waived under this Agreement and
will not challenge the enforceability of this Agreement by
filing or instigating any lawsuit or administrative
complaint or investigation arising out of the Employee's
employment or termination.
14. Governing Law.
This Agreement, having been executed and delivered in
the State of North Carolina, shall
be governed by the laws of the State of North Carolina.
15. Severability.
Each provision of this Agreement is intended to be
severable. If any provision, sentence, phrase or word of
this Agreement or the application thereof to any person or
circumstance shall be held invalid or unenforceable, the
remainder of this Agreement, or the application of such
provision, sentence, phrase or word to persons or
circumstances, other than those as to which it is held
invalid, shall not be affected thereby.
16. Notices.
Any notices required or permitted to be given by the
parties hereto shall be given in writing by certified mail,
return receipt requested, or by prepaid telegram, or by
nationally recognized overnight delivery service delivered
to:
Lester C. Nail
Vice President of Legal Affairs
Food Lion, Inc.
2110 Executive Drive
Post Office Box 1330
Salisbury, NC 28145-1330
and
Pamela K. Kohn
105 Aston Lane
Salisbury, NC 28147
17. Arbitration.
Except as otherwise necessary to secure the remedies
specified in Paragraphs 6, 7, 8 and 9 of this Agreement, any
dispute arising between the Company and the Executive with
respect to the performance or interpretation of this
Agreement shall be submitted to arbitration in Charlotte,
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 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.
18. Assignment.
This Agreement is binding on Employee and the Company
and their successors and assigns; provided, however, that
the rights and obligations of the Company under this
Agreement may be assigned to a successor entity which
assumes (either by operation of law or otherwise) the
Company's obligations hereunder. Any such assignment by the
Company will not release the Company unless and until all
obligations to Employee hereunder are fully discharged. No
rights or obligations of Employee hereunder may be assigned
by Employee to any other person or entity, except by will or
the laws of descent and distribution. In the event of
Employee's death prior to receipt by Employee of all amounts
payable by the Company hereunder, such amounts shall be
payable to Employee's designated beneficiaries on the same
schedule as provided for in this Agreement.
IN WITNESS WHEREOF, the parties hereto have their duly
authorized representatives to execute this Agreement as of
the date first set forth above.
\s\ Pamela K. Kohn Food Lion, Inc.
Pamela K. Kohn, Individually
By: \s\ Lester C. Nail
Name:Lester C.Nail
Title: Vice President of
Legal Affairs
SCHEDULE A
STOCK OPTIONS
No. of Options Granted Exercise Price
167 $5.75
3,500 $5.875
16,011 $7.375
24,805 $6.6875
14,714 $10.22
339 $6.875
28,528 $10.22