Exhibit 10.1
FORM OF LETTER OF EMPLOYMENT
SFW ACQUISITION CORP.
February 4, 1997
[ Employee ]
Shoppers Food Warehouse Corp.
4600 Forbes Blvd
Lanham, Maryland 20706
Dear [ Employee ]:
As we stated to you a couple of weeks ago, it is our hope that the Shoppers Food
Warehouse team (Shoppers) will continue together after the closing. We
anticipate that the purchase by SFW Acquisition Corp. of the stock of Shoppers
Food Warehouse Corp. (the "Closing") will take place on or around February 6,
1997. We hope this offer will enable you to choose to continue with the rest of
the team. We are confident that you fully understand that there must be
limitations to the specifics of what we can offer as we have been severely
restricted, and continue to be restricted, from doing due diligence on matters
pertaining to the specifics of your compensation and benefits package. This
offer, therefore, unfortunately contains certain caveats that we intend to
immediately begin to clarify or firm up after Closing. As we stated to you, we
have been, and continue to be "up-front and open". The tone of any continued
relationship with you, as it is with our current Executives at all Dart Group
Companies is, in our belief, tied to such an approach.
The following offer is made to you by SFW Acquisition Corp., its successors or
assignee corporation. We will cause such successors or assignee corporation to
execute and be bound by this Agreement. This offer replaces all previous offers
made orally, or in writing by Dart Group, representatives of Dart Group, or SFW
Acquisition Corp. The following comprises our entire offer at this time.
Position: We are pleased to offer your continuation of employment at
Shoppers as [ Position ].
Salary: Your salary will be [ Bi-weekly Salary ] biweekly (if annualized
[ Current Salary ]). We have based this offer on information from
Shoppers that your current salary is [ Previous Salary ].
[ Employee ]
February 4, 1997
Page 2
Bonus: We will guarantee to pay you this year ended June 30,1997 the
same bonus you received last year. We are told by Shoppers this
amount was [ Bonus ]. The bonus will be paid within sixty (60)
days of July 1,1997. In order to receive this bonus, you must be
actively employed with Shoppers at the time of bonus payouts, or
have signed your approval and acceptance of a Severance Agreement
as outlined below. Your bonus for last year amounted to [ Bonus ]
of your salary. Within the Dart Group of Companies, we have a
strong belief that our senior management should receive
additional compensation directly tied to the performance of the
company. [ Target Bonus ]. The details of this bonus program will
be delivered to you within the first six (6) months of the
Closing. The program will contain opportunities to earn
substantially more or less, dependent upon the performance of the
company. Obviously, this program will also contain contingencies
such as your continued active employment at Shoppers at the time
of payout.
Benefits: Your base benefits will continue as they were on December 16,
1996. By reference these include life insurance (we are informed
[ Life Insurance Coverage Amount ]), health, dental and
disability insurance. Benefits will also include a 401(k) plan to
which the employee may make voluntary contributions and the
company may make discretionary contributions. Should the current
health plan with Blue Cross/Blue Shield be changed, we will (in
the new plan) waive all "pre-existing" conditions you may have at
that time. [ Additional Coverage ].
Vacation: We are informed by Shoppers that the time you accrue for rest and
relaxation amounts to four (4) weeks annually. Again, if this is
accurate based on time with the company or your original offer
letter then we will honor this agreement, otherwise it will be
whatever you are eligible for, based on Shoppers company policy
as of December 16, 1996. Vacation time may be accrued to a
maximum of twice the annual accrual, after which further accruals
will cease until your accrual bank is reduced below the twice
annual accrual. Accrued vacation not taken since July 1, 1995
will be honored within the policy as outlined.
Auto: Currently we are informed by Shoppers that you receive a car
allowance of [ Previous Car Allowance ] a month. We are unaware
of any details surrounding this benefit, however, we will raise
this allowance to [ Current Car Allowance ] a month. This amount
includes business mileage, repair and maintenance, gas, insurance
and
[ Employee ]
February 4, 1997
Page 3
license fees (i.e., there is no reimbursement for business
mileage separate from this allowance.)
Business
Expenses: We will reimburse you for business expenses reasonably incurred
by you on behalf of Shoppers. Such expenses will be expected to
follow the guidelines of the Policy on Executive Expenses. If no
such policy exists, we will establish one.
Future
Salary: We will conduct a salary analysis regarding the compensation of
the ten (10) most senior executives (including you) during the
first six (6) months following the Closing. If in fact the
analysis shows market disparity with like businesses and size of
business we will recommend to the Compensation Committee of the
Board of Directors of Shoppers Food Warehouse that market
adjustments be made at that time. In any event, the salary stated
in this letter will not be reduced as a result of this analysis.
The next salary review period for senior management will take
place in May of 1998.
Severance: We recognize the expressed concern relative to your financial
security in the event of a sale of Shoppers by Dart to another
entity. Should we end your employment within the first twelve
(12) months following the Closing, we will offer you a Severance
Agreement which will contain the equivalent of six (6) months
salary. Should we sell Shoppers to another entity within twelve
(12) months of the Closing, we will offer you a Severance
Agreement which will include the equivalent of one (1) year
salary. If termination of employment is due to such events as
illegal activity, breach of fiduciary duty, refusal to follow the
lawful and reasonable direction of the Board of Directors, etc.
or any violations of the Business Ethics Policy (attached) no
Severance Agreement will be offered. Additionally, you should
not expect a severance offer should you choose to end your
employment voluntarily. An offered Severance Agreement as
described above will not contain a non-compete provision.
Indemni-
fication: Within the first thirty (30) days of the Closing you will be
covered under a Director and Officer liability insurance policy
similar to that maintained by the Dart Group.
[ Employee ]
February 4, 1997
Page 4
Once we have an opportunity to investigate other elements relative to employment
at Shoppers we will obviously ensure that they follow consistently within the
group. Such benefits might include any discounts or professional memberships,
continuing professional development. etc.
We believe you and your fellow members of the current Shoppers team would like
to know as soon as possible if you are all going to be working together, or who
has decided to leave. We also would like to know who we will be working with.
To this end, please sign your acceptance or decline of this offer without
modification and return it to Terry Sharp at the Dart Group corporate office by
5:00 p.m., February 5, 1997.
Again, we sincerely hope that you choose to continue with the team that has done
so much to develop the successful company that Shoppers is. We respect the
pride that each of you has in the success of the company as well as your
individual and team contributions to that success. We look forward to working
with you.
Sincerely,
Mark A. Flint
Director, President and
Chief Executive Officer
ACCEPTANCE TO OFFER:
2/5/97
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Signature Date
DECLINE OF OFFER:
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Signature Date
SCHEDULE A
LETTER OF EMPLOYMENT TERMS
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Employee Jack W. Binder Roy Marks Louis Davis Isaac Gendelman
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Position Senior Vice Senior Vice Senior Vice Senior Vice
President, President, President, Store President,
Finance Grocery Operations Produce
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Bi-weekly Salary $7,038.46 $5,711.54 $5,769.23 $6,230.77
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Current Salary $183,000 $148,500 $150,000 $162,000
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Previous Salary $175,000 $141,500 $124,000 $155,000
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Bonus $50,000 $40,000 $25,000 $50,000
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Target Bonus 30% of 30% of 25% of N/A
Salary Salary Salary
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Life Insurance $100,000 $100,000 $75,000 $50,000
Coverage Amount
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Additional $2,000 per None None None
Coverage incident
Exec-U-Care
Coverage
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Previous Car $300 $400 $400 $300
Allowance
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Current Car $350 $650 $650 $650
Allowance
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