EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made
effective the 28th day of July, 1999 (the "Effective Date"), by
and between Fleming Companies, Inc., an Oklahoma corporation (the
"Company") and Dennis C. Lucas (the "Executive").
In consideration of their mutual obligations contained
in this Agreement, the Company hereby employs the Executive and
the Executive hereby accepts employment with the Company as of
the Effective Date upon the following terms and conditions:
1. Term of Agreement and Employment. The term of
this Agreement and of the Executive's employment (collectively,
the "Employment Period") shall be for a period of sixty (60)
months commencing on the Effective Date or for a shorter period
if the Agreement and the Executive's employment are terminated
earlier as provided in Section 9.
2. Position and Duties of Executive. During the
Employment Period, the Executive shall devote his full
professional and business-related time, skills and best efforts
to the regular duties of the position of Executive Vice President
and President-Retail or to such other appropriate position and/or
reasonable duties as may be assigned to him as a corporate
officer of the Company from time to time by the Board of
Directors (the "Board") and/or the Chairman and Chief Executive
Officer of the Company. Unless otherwise agreed to in advance in
writing by the Company, during the Employment Period, the
Executive shall not be employed by others or be engaged in self-
employment or in any professional or business-related activities
which are or may be detrimental to or in conflict or competition
with the business of the Company.
3. Annual Base Salary. During the Employment
Period, the Company shall pay the Executive a base salary of
$400,000 per each fiscal year, in installments consistent with
the Company's regular payroll practices applicable to senior
executive officers. The Company shall review such base salary
annually and may in its discretion increase such base salary.
4. Annual Incentive Bonus. In addition to the base
salary described in Section 3, the Executive will be eligible for
a target annual incentive bonus of 65% of his annual base salary,
with a potential maximum annual incentive bonus of 130% of his
annual base salary. Any annual incentive bonus for fiscal 1999
or subsequent years shall be awarded in the discretion of the
Compensation Committee using substantially the same performance
goals as are applicable to other senior executive officers.
5. Company Common Stock Options. The Company shall
grant the Executive a stock option to purchase 300,000 shares of
Company Stock pursuant to the Fleming Companies, Inc. 1999 Stock
Incentive Plan. The exercise dates and price and the other terms
and conditions of the 300,000 stock options shall be as described
in the Non-Qualified Stock Option Agreement under Fleming
Companies, Inc. 1999 Stock Incentive Plan which is being executed
contemporaneously with this Agreement.
6. Company Restricted Stock Award. The Company
shall grant the Executive an award of 20,000 shares of restricted
Company Stock pursuant to the Fleming Companies, Inc. 1990 Stock
Incentive Plan. The terms and conditions of the stock award
shall be as described in the Restricted Stock Award Agreement for
the Fleming Companies, Inc. 1990 Stock Incentive Plan which is
being executed contemporaneously with this Agreement. In
connection with the grant of the Restricted Stock, the Executive
shall make an election within thirty (30) days of the Effective
Date to include in gross income the value of the Restricted Stock
on the date of grant pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended (the "Code"). Upon notification
from the Executive that he has made such election, the Company
shall pay to the Executive an additional payment in an amount
necessary to cause the net amount of such payment that is
retained by the Executive after the calculation and deduction of
any and all federal, state and local income taxes and employment
taxes on such payment to be equal to the Executive's income taxes
attributable to the Restricted Stock and the Executive's election
under Section 83(b) of the Code in connection with the Restricted
Stock.
7. Vacation and Other Paid Leave Programs and
Welfare, Pension, Incentive and Other Benefit Plans. During the
Employment Period, the Executive shall be entitled to participate
in and be covered by all vacation and other paid and unpaid leave
programs and welfare, pension, incentive and other plans as may
be adopted and maintained from time to time by the Company as
applicable to its senior executive officers.
8. Expenses.
(a) Initial Relocation Expenses. In
connection with the Executive's initial relocation to Oklahoma
City, Oklahoma, or other corporate offices of the Company, the
Company shall provide the Executive with the relocation package
for new senior executive officers outlined in the Company's
current relocation policy. The Company will also make an
additional payment to the Executive in an amount necessary to
offset any and all federal, state and local income taxes and
employment taxes which the Executive shall be required to pay in
connection with his initial relocation to Oklahoma City,
Oklahoma. Also at the Executive's option, at any time during up to
the first two (2) years of the Employment Period, the Company shall
purchase the residence in Boise, Idaho currently owned by the
Executive at a purchase price equal to the greater of its appraised
value (as set by an appraiser designated by the Company) or the
Executive's documented invested cost in that residence.
(b) Ongoing Business Expenses. The Company
shall reimburse the Executive for all reasonable and necessary
business expenses incurred by the Executive relating to the
conduct of business of the Company, including expenses incurred
in connection with the Executive's travel to and from the
Company's corporate offices, upon presentation of an itemized
account and appropriate supporting documentation, all in
accordance with the Company's policies applicable to its senior
executive officers.
9. Termination of Agreement and Employment. This
Agreement and the Executive's employment may be terminated
earlier than sixty (60) months following the Effective Date under
the following circumstances:
(a) Death or Disability. This Agreement and
the Executive's employment shall terminate automatically upon the
Executive's death. If, because of physical or mental illness,
the Executive has been substantially unable to perform the
essential duties of his position (with or without "reasonable
accommodation," as defined under the Americans With Disabilities
Act) for a period in excess of six (6) months ("Disability"), the
Company may terminate this Agreement and the Executive's
employment for Disability.
(b) Cause. If the Executive (i) is convicted
of a felony, (ii) engages in an act of personal dishonesty which
is intended to result in personal enrichment of the Executive at
the expense of the Company, or (iii) "willfully" fails to follow
a direct, reasonable and lawful order of the Board and/or the
Chairman and Chief Executive Officer, within the reasonable scope
of the Executive's duties, and such failure, if curable, is not
cured within thirty (30) days, the Company may terminate this
Agreement and the Executive's employment for Cause. For purposes
of this Section 9(b), no act, or failure to act, by the Executive
shall be deemed "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief
that the Executive's action or omission was in the best interest
of the Company. Cause shall not exist under this Section 9(b)
unless and until the Company has delivered to Executive a copy of
a resolution duly adopted by not less than three-fourths (3/4ths)
of the Board (excluding, if applicable, the Executive) at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the
Executive was guilty of the conduct set forth above and
specifying the particulars of such conduct in detail.
(c) Without Cause. The Company may terminate
this Agreement and the Executive's employment at any time without
Cause.
(d) Good Reason. The Executive may terminate
this Agreement and his employment for "Good Reason" by providing
a Notice of Termination (as defined in Section 9(f)) to the
Company within one hundred and twenty (120) days after the
Executive has actual knowledge of the occurrence, without the
written consent of the Executive, of one of the events set forth
below. The Executive's Date of Termination shall be fifteen (15)
days after the Notice of Termination, unless the basis for Good
Reason has been cured by the Company prior to such date:
(i) the assignment of the Executive to a
position materially and adversely inconsistent with the
Executive's then current position with the Company or a material
and adverse alteration in the nature of the Executive's duties
and/or responsibilities, reporting obligations, titles or
authority;
(ii) a reduction by the Company in the
Executive's then current base salary described in Section 3;
(iii) the Company's failure to provide any
material employee benefits due to be provided to the Executive
(other than any such failure which affects all senior executive
officers); or
(iv) the failure of any successor to the
Company to assume this Agreement pursuant to Section 14(a).
The Executive's right to terminate this Agreement and
his employment for Good Reason shall not be affected by his
incapacity due to physical or mental illness. Executive's
continued employment during the one hundred and twenty (120) day
period referred to above in this paragraph (d) shall not
constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(e) Voluntary Termination. The Executive may
terminate this Agreement and his employment at any time
voluntarily (a "Voluntary Termination"). A Voluntary Termination
is any termination of employment by the Executive other than
termination due to death, Disability, with or without Cause or
for Good Reason.
(f) Notice of and Date of Termination. Any
termination of this Agreement and the Executive's employment
under Section 9 of this Agreement by the Company or the
Executive, other than termination due to death, shall be
communicated by a Notice of Termination to the other party in
accordance with Section 18. For purposes of this Agreement, a
"Notice of Termination" means a written notice which indicates
the specific termination provision in Section 9 relied upon and
sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Agreement. The
Executive's "Termination Date" shall be the date the Notice of
Termination is deemed given pursuant to Section 18, except in the
event of a termination due to the Executive's death, when the
Termination Date shall be the date of death, or in the event of a
termination by the Executive for Good Reason, when the
Termination Date shall be as provided in Section 9(d).
10. Obligations of the Company Upon Termination.
In the event this Agreement and the Executive's employment are
terminated pursuant to Section 9, the Company shall provide the
Executive with the payments and benefits set forth below. The
Executive acknowledges and agrees that the payments set forth in
this Section 10 and the other agreements and plans referenced in
this Agreement, constitute the sole and liquidated damages for a
termination of this Agreement and his employment under Section 9.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any setoff or counterclaim which the
Company may have against the Executive except that the Company
shall have the right to deduct any amounts owed by the Executive
to the Company due to the Executive's misappropriation of Company
funds or property from the payments set forth in this Section 10.
(a) Termination Because of Disability or for
Cause by the Company or Due to Death or a Voluntary Termination
by the Executive. If this Agreement and the Executive's
employment are terminated because of Disability or for Cause by
the Company or due to the death or through a Voluntary
Termination by the Executive:
(i) the Company shall pay the Executive (or
his beneficiary or legal representative, if applicable) his then
current base salary described in Section 3 and his accrued,
unused vacation pay through the Termination Date, as soon as
practicable following the Termination Date;
(ii) the Company shall reimburse the
Executive (or his beneficiary or legal representative, if
applicable) for reasonable business expenses incurred, but not
paid, prior to the Termination Date; and
(iii) the Executive (or his beneficiary or
legal representative, if applicable) shall receive any other
rights, compensation and/or benefits as may be due to the
Executive following such termination to which he is entitled in
accordance with the terms and provisions of any agreements
referenced herein or plans or programs of the Company.
(b) Termination By the Company without Cause
or by the Executive for Good Reason. If this Agreement and the
Executive's employment are terminated by the Company without
Cause or by the Executive for Good Reason:
(i) the Company shall pay the Executive (A)
his then current base salary described in Section 3 and accrued,
unused vacation pay through the Termination Date, as soon as
practicable following the Termination Date, and (B) continued
then current monthly base salary described in Section 3 for a
period of twenty-four (24) months following the Termination Date;
(ii) the Company shall maintain in full
force and effect for the continued benefit of the Executive, for
a period of twenty-four (24) months following the Termination
Date, the welfare programs in which the Executive, his spouse and
his dependents were participating immediately prior to the
Termination Date at the level in effect and upon substantially
the same terms and conditions (including without limitation
contributions required by the Executive for such benefits) as
existed immediately prior to the Termination Date; provided, that
if the Executive, his spouse or his dependents cannot continue to
participate in the Company programs providing such benefits, the
Company shall arrange to provide Executive, his spouse and his
dependents with the economic equivalent of such benefits which
they otherwise would have been entitled to receive under such
plans and programs; provided, that if the Executive becomes
reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided
plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during
such applicable period.
(iii) the Company shall reimburse the
Executive for reasonable business expenses incurred, but not
paid, prior to the Termination Date; and
(iv) the Executive shall receive any other
rights, compensation and/or benefits as may be due to the
Executive following such termination to which he is entitled in
accordance with the terms and provisions of any other agreements,
plans or programs of the Company.
11. Change of Control. Contemporaneously with this
Agreement, the parties have entered into a "Change of Control
Employment Agreement."
12. Confidential Information, Ownership of
Documents and Other Property, and Non-Competition.
(a) Confidential Information. The Executive
shall hold in a fiduciary capacity for the benefit of the Company
all trade secrets and confidential information, knowledge or data
relating to the Company and its businesses and investments and
its affiliates, which shall have been obtained by the Executive
during Executive's employment by the Company and which is not
generally available public knowledge (other than by acts by the
Executive in violation of this Agreement). Except as may be
required or appropriate in connection with his carrying out his
duties under this Agreement, the Executive shall not, without the
prior written consent of the Company or as may otherwise be
required by law or any legal process, or as is necessary in
connection with any adversarial proceeding against the Company
(in which case Executive shall use his reasonable best efforts in
cooperating with the Company in obtaining from a court of
competent jurisdiction a protective order against disclosure)
communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those
designated by the Company or on behalf of the Company in the
furtherance of its business or to perform his duties hereunder.
(b) Ownership of Documents and Other Property.
All documents (including databases, records, files, models, and
the like) and all other property relating to the Company's
business and its affiliates as to which the Executive has access
or control shall be and remain the property of the Company and
shall not be removed from the Company's premises without its
written consent, unless such removal is in the furtherance of the
Company's business or is in connection with the Executive's
carrying out his duties under this Agreement. All such documents
and other property shall be returned to the Company promptly
after the Employment Period ends, or otherwise promptly after
removal if such removal occurs following the Employment Period.
(c) Non-Competition. For twenty-four (24)
months following the termination of the Employment Period (other
than if such termination is by the Company without Cause or by
the Executive for Good Reason), the Executive will not, directly
or indirectly, in association with or as a shareholder,
principal, agent, partner, officer, director, employee or
consultant of any retail chain or any subsidiary or affiliate of
any retail chain, engage in the business of the retail sale of
food and related products within the Standard Metropolitan
Statistical Areas in which the Company or any of its subsidiaries
was conducting business or was actively soliciting business as of
the Executive's Termination Date; provided, however, this Section
12(c) shall not prohibit (i) the Executive's employment or other
relationship with any national chain engaged in the retail sale of
food and related products, regardless of location, such as Kroger,
Albertson's or Safeway or (ii) the Executive from owning less than
one percent (1%) of any such retail chain. If, at any time, the
provisions of this Section 12(c) shall be determined to be
invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this
Section 12(c) shall be considered divisible and shall become and
be immediately amended to only such area, duration and scope of
activity as shall be determined to be reasonable and enforceable
by the court or other body having jurisdiction over the matter;
and the Executive agrees that this Section 12(c) as so amended
shall be valid and binding as though any invalid or unenforceable
provision had not been included herein. The parties agree that
the area, duration and scope of activity for which the covenant
not to compete set forth in this Section 12(c) is to be effective
are reasonable.
(d) Injunctive Relief. In the event of a
breach or threatened breach of this Section 12, the Executive
agrees that the Company shall be entitled to injunctive relief in a
court of appropriate jurisdiction to address any such breach or
threatened breach pending arbitration under Section 13 of this
Agreement.
(e) Continuing Operation. The expiration or
termination of this Agreement or of Executive's employment shall
have no effect on the continuing operation of this Section 12.
13. Arbitration; Legal Fees and Expenses. The
parties agree that Executive's employment and this Agreement relate
to interstate commerce, and that any disputes, claims or
controversies between Executive and the Company which may arise out
of or relate to the Executive's employment relationship or this
Agreement shall be settled by arbitration. This agreement to
arbitrate shall survive the termination of this Agreement. Any
arbitration shall be in accordance with the Rules of the American
Arbitration Association and shall be undertaken pursuant to the
Federal Arbitration Act. Arbitration will be held in Oklahoma
City, Oklahoma unless the parties mutually agree on another
location. The decision of the arbitrator(s) will be enforceable in
any court of competent jurisdiction. The parties agree that
punitive, liquidated or indirect damages shall not be awarded by
the arbitrator(s). Nothing in this agreement to arbitrate,
however, shall preclude the Company or the Executive from obtaining
injunctive relief from a court of competent jurisdiction
prohibiting any on-going breaches by the Executive or the Company
of this Agreement including, without limitation, violations of
Section 12. If any contest or dispute shall arise between the
Company and Executive regarding any provision of this Agreement,
the Company shall reimburse Executive for all legal fees and
expenses reasonably incurred by Executive in connection with such
contest or dispute, but only if Executive is successful in respect
of one or more of Executive's material claims or defenses brought,
raised or pursued in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the
resolution of such contest or dispute to the extent the Company
receives reasonable written evidence of such fees and expenses.
14. Successors and Assignability.
(a) The Company's Successors and Assignability.
No rights or obligations of the Company under this Agreement may
be assigned or transferred except that the Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree
to perform this 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.
(b) The Executive's Successors and
Assignability. No rights or obligations of the Executive under
this Agreement may be assigned or transferred by the Executive
other than his rights to payments or benefits hereunder, which may
be transferred only by will or the laws of descent and
distribution. Upon the Executive's death, this Agreement and all
rights of the Executive hereunder shall inure to the benefit of and
be enforceable by the Executive's beneficiary or legal
representative, to the extent any such person succeeds to the
Executive's interests under this Agreement.
15. Severability. In the event that any provision
of this Agreement shall be deemed to be illegal or unenforceable
for any reason, such provision shall be deemed modified or deleted
in such a manner so as to make this Agreement as so modified legal
and enforceable to the fullest extent permitted under applicable
laws.
16. Entire Agreement; Amendment and Waiver. This
Agreement and the other agreements referenced herein constitute the
entire agreement between the parties hereto with regard to the
subject matter hereof, and there are no agreements, understandings,
specific restrictions, warranties or representations relating to
said subject matter between the parties other than those set forth
herein or herein provided for. Any provision of this Agreement may
be amended or the observance thereof may be waived only by written
consent signed by both parties. Such amendment or waiver shall be
binding upon the Company and the Executive and their successors and
assigns.
17. Counterparts. This Agreement may be executed in
one or more counterparts, each of which will take effect as an
original and all of which shall evidence one and the same
Agreement.
18. Notices. All notices required under this
Agreement shall be in writing and shall be deemed given when
delivered personally to the other party, when delivered by
facsimile transmission or when delivered by registered or certified
mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
At his last known address evidenced on
the Company's payroll records
If to the Company:
Fleming Companies, Inc.
6301 Waterford Boulevard
Oklahoma City, OK 73126-0647
Attention: General Counsel
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement to become effective as of the date first above
written.
FLEMING COMPANIES, INC.
By: SCOTT M. NORTHCUTT
Scott M. Northcutt,
Senior Vice President - Human Resources
DENNIS C. LUCAS
Dennis C. Lucas