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Exhibit 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into as of
the Commencement Date (as defined below), between RALPHS GROCERY COMPANY, a
Delaware corporation, having its executive offices and a principal place of
business in the City of Compton, California (the "Employer"), and Byron
Allumbaugh (the "Employee").
RECITALS
A. It is the desire of the Employer to assure itself of
the management services of the Employee by directly engaging the Employee as
the Chief Executive Officer of the Employer.
B. The Employee desires to commit himself to serve the
Employer on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below the parties hereto agree as
follows:
ARTICLE I
POSITION AND TERM
1.1 Position. The Employer agrees to and does employ the
Employee and the Employee shall enter the employ of the Employer to perform his
duties as Chief Executive Officer or such other or additional duties as
determined by the Board of Directors of the Employer (the "Board").
1.2 Period of Contract Employment. The term "Period of
Contract Employment," as used herein, means the period beginning on the date
(the "Commencement
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Date") of consummation of the Merger (as defined in that certain Agreement and
Plan of Merger, dated as of September 14, 1994, by and among Food 4 Less Inc.,
Food 4 Less Holdings Inc., Food 4 Less Supermarkets, Inc., Ralphs Supermarkets,
Inc., the Edward J. DeBartolo Corporation, and the other stockholders of
Ralphs Supermarkets, Inc.), and ending on the earlier of the third anniversary
thereof or at the time of the Termination of Contract Employment (as defined in
Article III below).
1.3 Extension of Period of Contract Employment. The
Period of Contract Employment may be extended by a written agreement of the
parties. Notwithstanding the foregoing, neither the Employer nor the Employee
shall have any obligation to extend the Period of Contract Employment. If the
Employee remains in the employ of the Employer following the Period of Contract
Employment and any extension thereof in accordance with this Section 1.3, such
employment shall be at will unless different terms of employment are
established in writing.
1.4 Suspension of Services.
(a) Except in the case of a Termination of
Contract Employment under Article III, in the event that the Employee is
advised by the Employer in writing that his services will no longer be required
during the remainder of the Period of Contract Employment, this shall be
treated as a suspension of services and, except for the purposes set forth in
Section 2.4, and except as prohibited by applicable laws and regulations, the
Employee shall continue to be treated as an employee of the Employer for all
purposes, including eligibility for those fringe benefits provided for in
Section 2.2, and shall continue to be compensated by the Employer (subject to
the possible offset set forth in subsection (b) below) during the remainder of
the Period of Contract Employment at the rate of "Total
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Compensation" to which the Employee was entitled at time of suspension of
services. The portion of the Period of Contract Employment prior to the
suspension of service is referred to herein as the "Period of Active
Employment." For purposes of this Agreement, the term "Total Compensation"
shall mean the Base Salary set forth in Section 2.1, any increases to such Base
Salary granted by the Employer in accordance with Section 2.1 and any Bonus
Compensation earned by the Employee pursuant to Section 2.3 during the portion
of the year of suspension of services of the Employee which falls within the
Period of Active Employment.
(b) In the event of suspension of services in
accordance with subsection (a) above, the Employee shall be free to become
engaged with another business in any capacity but in such event, fifty percent
(50%) of the compensation of any kind (including deferred compensation and
compensation assigned to an entity or individual other than the Employee)
received from or earned with respect to such other business (except from
businesses or investments owned by the Employee before the date of suspension
of services for which there will be no deduction) and one hundred percent
(100%) of the compensation of any kind (including deferred compensation and
compensation assigned to an entity or individual other than the Employee)
received from or earned with respect to a "Competing Business" (as defined in
Section 4.5 below), in each case attributable to the Period of Contract
Employment, shall be subtracted from any amounts otherwise due the Employee
from the Employer. The Employee shall not take any actions to prevent
compensation received from or earned with respect to such other business from
being applied pursuant to this Section 1.4(b) to reduce amounts otherwise due
the Employee from the Employer.
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ARTICLE II
COMPENSATION
2.1 Annual Base Salary.
(a) During the Period of Contract Employment the
Employer agrees to pay the Employee a base salary for his service to the
Employer and all affiliates of the Employer in the annual amount of (i) One
Million Dollars ($1,000,000.00) during the period from the Commencement Date
until, but not including, the first anniversary of the Commencement Date; and
(ii) subject to subsection (b) below, One Million, Two Hundred Fifty Thousand
Dollars ($1,250,000.00) during the period from the first anniversary of the
Commencement Date until, but not including, the third anniversary of the
Commencement Date (the "Base Salary"); provided, however, that the agreement as
to said amount shall not preclude or in any way affect the grant by the
Employer or the receipt by the Employee of increases in the Base Salary, or of
Bonus Compensation or other forms of additional compensation (including
insurance and other employee plan benefits), such increases, contingent or
otherwise, to be determined solely in the discretion of the Board or a
committee of the Board to which such authority is delegated by the Board, and
such Bonus Compensation and additional compensation, contingent or otherwise,
to be determined in accordance with Sections 2.2 and 2.3, respectively. The
Base Salary shall be payable as current salary, in monthly installments subject
to all applicable withholding and deductions, and at the same monthly rate as
adjusted for any fraction of a month unexpired at the Termination of Contract
Employment.
(b) If the Board anticipates that an "Initial
Public Offering" (as defined below) is likely to occur prior to the second
anniversary of the Commencement Date,
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the Employee will remain as Chief Executive Officer of the Employer for one
year after the date of the Initial Public Offering and, as the Chief Executive
Officer of the Employer, the Employee shall be entitled to a Base Salary in an
annual amount of Two Million Dollars ($2,000,000) during the period from the
second anniversary of the Commencement Date until, but not including, the third
anniversary of the Commencement Date. If the Board anticipates that an Initial
Public Offering is likely to occur on or after the second anniversary of the
Commencement Date, the Employee will step down as Chief Executive Officer of
the Employer six months prior to the intended date of the Initial Public
Offering, but shall remain employed with the Employer throughout the Period of
Contract Employment, at the Base Salary provided pursuant to subsection (a)(ii)
above. For purposes of this Agreement: (i) "Initial Public Offering" shall
mean the initial Public Offering of common stock of the Employer or Food 4 Less
Holdings, Inc., a Delaware corporation, (the "Employer Securities"); and (ii)
"Public Offering" shall mean any bona fide underwritten public distribution of
Employer Securities pursuant to an effective registration statement (other than
pursuant to a registration statement on Form S-8 or otherwise relating to
equity securities issuable exclusively under any employee benefit plan of the
Employer) under the Securities Act of 1933, as amended (the "Securities Act"),
or a merger of the Employer pursuant to a registration statement on Form S-4
under the Securities Act, the results in either case in shares of Employer
Securities being listed for trading or quotation on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market.
2.2 Benefits. During the Period of Contract Employment,
the Employee shall be entitled to participate in or receive benefits under any
employee benefit plan or other arrangement including, but not limited to, any
medical, dental, retirement, disability, life
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insurance, sick leave and vacation plans or arrangements generally made
available by the Employer to its executive officers, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
or arrangements; provided, however, that such plans and arrangements are made
available at the discretion of the Employer and nothing in this Agreement
establishes any right of the Employee to the availability or continuance of any
such plan or arrangement, including pursuant to Section 1.4(a).
2.3 Bonus Compensation. In each year of employment under
this Agreement, the Employee will be eligible to receive an annual bonus in an
amount equal to his Base Salary in such year. The benchmarks for earning any
portion of such bonus shall be prescribed in the reasonable discretion of the
Board.
2.4 Expenses and Office Space. The Employer agrees that
during the Period of Active Employment the Employee shall be allowed reasonable
documented traveling expenses directly related to the Employer's business and
shall be furnished office space, assistance and accommodations within the
Employer's place of business suitable to the character of his position with the
Employer and adequate for the performance of his duties hereunder.
ARTICLE III
TERMINATION OF CONTRACT EMPLOYMENT
3.1 Automatic Termination. The Agreement and the
Employee's employment hereunder shall automatically terminate upon the first to
occur of the following circumstances (any such termination and any termination
pursuant to Section 3.2 is referred to herein as a "Termination of Contract
Employment"):
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(a) Expiration. The failure of the parties prior
to the third anniversary of the Commencement Date to extend the Period of
Contract Employment pursuant to Section 1.3 or the expiration of any extension
of the Period of Contract Employment; or
(b) Death. The Employee's death.
3.2 Permissive Termination. The Agreement and the
Employee's employment hereunder may be terminated by the Employer or the
Employee, as applicable, under the following circumstances:
(a) Disability. Upon the failure of the
Employee, during the Period of Contract Employment, to render services to the
Employer for a continuous period of six (6) months, because of the Employee's
physical or mental disability during said period, the Employer, acting through
the Board or a committee of the Board to which such authority is delegated by
the Board, may end the Employee's Period of Contract Employment. If there
should be any dispute between the parties as to the Employee's physical or
mental disability at any time, such question shall be settled by the opinion of
an impartial reputable physician agreed upon for the purpose by the parties or
their representatives, or failing agreement within ten (10) days of a written
request therefor by either party to the other, then one designated by the
then-president of the Los Angeles Medical Society. The certificate of such
physician as to the matter in dispute shall be final and binding on the
parties; or
(b) Upon Change of Control. The Employee, at the
time and in the manner provided in Section 5.1 hereof, may exercise the option
granted to the Employee pursuant to such Section 5.1; or
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(c) Resignation or Retirement. The Employee may
voluntarily resign or retire upon written notice; or
(d) Cause. The Employer may terminate the
Employee's employment based upon (i) the Employee's gross misconduct; (ii) any
felony conviction of the Employee (other than a traffic or moving violation,
such as driving under the influence, except that if the Employee incurs a
driving under the influence violation after incurring two previous driving
under the influence violations during the Period of Contract Employment, the
third such violation will be a felony conviction for purposes of this
subsection (d)(ii)); (iii) any act of fraud or dishonesty by the Employee
materially detrimental to the business or reputation of the Employer as
determined by the Board; (iv) any serious breach of Employer policy by the
Employee as determined by the Board; or (v) any other material breach of the
Agreement by the Employee.
ARTICLE IV
COVENANTS
4.1 Full-Time Employee. The Employee hereby covenants
and agrees that during the Period of Contract Employment he will faithfully and
in conformity with the directions of the Board perform the duties of his
employment hereunder, and that he shall be a full-time employee of the Employer
and that he shall devote to the performance of said duties all such time and
attention as they shall reasonably require, taking, however, from time to time
(as the Employer agrees that he may) reasonable vacations. Notwithstanding the
foregoing, the Employee shall have the right to (i) serve on the Boards of
Directors of one or more companies which the Board, in its absolute discretion,
determines is not in competition
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with the Employer or any of its affiliates and (ii) engage in charitable
activities; provided that such activities shall not detract from the
performance of his duties under this Agreement.
4.2 No Detraction From Performance. The Employee hereby
consents and agrees that during the Period of Contract Employment he will not,
without the express consent of the Board or a committee of the Board to which
such authority is delegated by the Board, become actively associated with or
engaged in any business other than that of the Employer, or a division, or
subsidiary of the Employer that would detract from the performance of his
duties to the Employer, and he will do nothing inconsistent with such duties.
4.3 Confidential Information. It is recognized by the
Employee and the Employer that the Employee's duties during the Period of
Contract Employment will entail the receipt of confidential information
concerning not only the Employer's current operations and procedures but also
its short-range and long-range plans. The Employee hereby covenants and agrees
that during the Period of Contract Employment and at any time thereafter, he
will not disclose to anyone outside of the Employer, or use in any activity or
business (other than the Employer's business), Confidential Information (as
defined below) relating to the Employer's business, in any way obtained by him
while employed by the Employer, unless authorized by the Employer in writing.
It is understood that violation of this provision would cause irreparable harm
to the Employer and that the Employer may seek to enjoin any such violation or
to take any other applicable action.
For purposes of this Agreement, the term "Confidential
Information" shall include all information of any nature and in any form which
is owned by the Employer and which is not publicly available or generally known
to persons engaged in businesses similar
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to that of the Employer, including, but not limited to, research techniques;
patents and patent applications; inventions and improvements, whether
patentable or not; development projects; computer software and related
documentation and materials; designs, practices, processes, methods, know-how
and other facts relating to the business of the Employer; practices, processes,
methods, know-how and other facts related to sales, advertising, promotions,
financial matters, customers, customer lists or customers' purchases of goods
or services from the Employer; industry contracts; and all other secrets and
information of a confidential and proprietary nature.
4.4 Conflict of Interest and Business Ethics Statement.
The Employee hereby covenants and agrees that during the Period of Contract
Employment he will not knowingly engage in any activity which would violate the
Conflict of Interest or Business Ethics Statement signed from time to time by
the Employee.
4.5 Competing Business. The Employee hereby covenants
and agrees that, during the Period of Contract Employment, the Employee will
not have any investment in a Competing Business (as defined below) other than
an equity interest of less than five percent (5%) of any company whose
securities are listed on The New York Stock Exchange, The American Stock
Exchange or NASDAQ and will not render personal services to any Competing
Business in any manner, including, without limitation, as owner, partner,
director, trustee, officer, employee, consultant or advisor thereof.
For purposes of this Agreement, "Competing Business" shall
mean any business which (i) is engaged in the retail supermarket business in
any area where the Employer or any of its subsidiaries presently does business
or, at any time during the Period
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of Contract Employment, did business; or (ii) is a supplier, directly or
indirectly, to any such retail grocery business.
If the Employee shall breach the agreement contained in this
Section 4.5, such breach may render the Employee liable to the Employer for
damages therefor and entitle the Employer to enjoin the Employee from making
such investment or from rendering such personal services. In addition, the
Employer shall have the right in such event to enjoin the Employee from
disclosing any Confidential Information concerning the Employer to any
competing business, to enjoin any competing business from receiving from the
Employee or using any such Confidential Information and/or to enjoin any
competing business from retaining or seeking to retain any other employees of
the Employer.
4.6 No Solicitation. The Employee hereby covenants and
agrees that during the Period of Contract Employment, he will not, for himself
or any third party, directly or indirectly, (i) divert or attempt to divert
from the Employer any business of any kind in which the Employer is engaged,
including, without limitation, the solicitation of its customers or
interference with any of its suppliers or customers; or (ii) employ or solicit
for employment any person employed by the Employer during the period of such
person's employment.
4.7 Remedies. The Employee and the Employer agree that
the Employer will be irreparably harmed by any violation or threatened
violation of any of the foregoing provisions of this Article 4 if such
provisions are not specifically enforced and therefore that the Employer shall
be entitled to an injunction restraining any violation of such provisions by
the Employee, or any other appropriate decree of specific performance. Such
remedies shall
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not be exclusive and shall be in addition to any other remedy to which the
Employer may be entitled under this Agreement or at law.
ARTICLE V
MISCELLANEOUS
5.1 Successors. This Agreement shall inure to the
benefit of the Employer and its successors and assigns, as applicable. If the
Employer shall merge or consolidate with or into, or transfer substantially all
of its assets, including goodwill, to another corporation or other form of
business organization, this Agreement shall bind and run to the benefit of the
successor of the Employer resulting from such merger, consolidation, or
transfer; provided, however, that if any such merger, consolidation, or
transfer shall be with, into, or to any corporation or other form of business
organization other than a subsidiary of the Employer or a corporation having
substantially the same common stockholders as the Employer, the Employee at any
time within the period ending one hundred eighty (180) days thereafter shall
have the right, at his option, on not less than thirty (30) days' written
notice to the Employer or its successors, to terminate the Period of Contract
Employment. The Employee shall not assign, pledge, or encumber his interest in
this Agreement, or any part thereof, without the prior written consent of the
Employer, and any such attempt to assign, pledge or encumber any interest in
this Agreement shall be null and void and shall have no effect whatsoever.
5.2 Leave of Absence. The Employer agrees that in the
event of war or a national emergency, the Employee will, at his request, be
granted a leave of absence for military or governmental service, and during
said period of leave of absence shall be paid
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such compensation as may be fixed by, or with the authority of, the Board. To
the extent permitted by applicable laws and regulations, during any such leave
of absence, the Employee shall, except in respect to his rights to the
compensation herein provided and his obligation to perform active duties of the
Employer be deemed, for the purposes of this Agreement, to be an employee of
the Employer.
5.3 Governing Law. This Agreement is being made and
executed in and is intended to be performed in the State of California and
shall be governed, construed, interpreted and enforced in accordance with the
substantive laws of the State of California, without regard to the conflict of
laws principles thereof.
5.4 Entire Agreement. This Agreement comprises the
entire agreement between the parties hereto relating to the subject matter
hereof and as of the Commencement Date, supersedes, cancels and annuls all
previous employment agreements between the Employer (and/or its predecessors)
and the Employee, as the same may have been amended or modified, and any right
of the Employee thereunder other than for compensation accrued thereunder as of
the date hereof, and supersedes, cancels and annuls all other prior written and
oral agreements between the Employee and the Employer or any predecessor to the
Employer. The terms of this Agreement are intended by the parties to be the
final expression of their agreement with respect to the employment of the
Employee by the Employer and may not be contradicted by evidence of any prior
or contemporaneous agreement.
5.5 Gender. Words in the masculine herein may be
interpreted as feminine or neuter, and words in the singular as plural, and
vice versa, where the sense requires.
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5.6 Disputes.
(a) Any dispute or controversy arising under, out
of, in connection with or in relation to this Agreement shall be finally
determined and settled by arbitration in Los Angeles, California, in accordance
with the rules and procedures of the American Arbitration Association, and
judgment upon the award may be entered in any court having jurisdiction
thereof.
(b) If any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief that may be granted.
5.7 Severability; Enforceability. If any provision of
this Agreement, or the application thereof to any person, place, or
circumstance, shall be held to be invalid, unenforceable, or void by the final
determination of a court of competent jurisdiction in any jurisdiction and all
appeals therefrom shall have failed or the time for such appeals shall have
expired, as to that jurisdiction and subject to this Section 5.7, such clause
or provision shall be deemed eliminated from this Agreement but the remaining
provisions shall nevertheless be given full force and effect. In the event
this Agreement or any portion hereof is more restrictive than permitted by the
law of the jurisdiction in which enforcement is sought, this Agreement or such
portion shall be limited in that jurisdiction only, and shall be enforced in
that jurisdiction as so limited to the maximum extent permitted by the law of
that jurisdiction.
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5.8 Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
5.9 Notices. Any notice, request, claim, demand,
document and other communication hereunder to any party shall be effective upon
receipt (or refusal of receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail, postage
prepaid, as follows:
(a) If to the Employer, addressed to its
principal offices to the attention of the CEO and the General Counsel.
(b) If to the Employee, to him at the address set
forth below under his signature; or at any other address as any party shall
have specified by notice in writing to the other parties.
5.10 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, but all
of which together will constitute one and the same Agreement.
5.11 Amendments; Waivers. This Agreement may not be
modified, amended, or terminated except by an instrument in writing, approved
by the Board and signed by the Employee and the Employer. By an instrument in
writing similarly executed, the Employee or the Employer may waive compliance
by the other party or parties with any provision of this Agreement that such
other party was or is obligated to comply with or perform; provided, however,
that such waiver shall not operate as a waiver of, or estoppel with respect to,
any other or subsequent failure. No failure to exercise and no delay in
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exercising any right, remedy or power hereunder shall preclude any other or
further exercise of any other right, remedy or power provided herein or by law
or in equity.
5.12 No Inconsistent Actions. The parties hereto shall
not voluntarily undertake or fail to undertake any action or course of action
inconsistent with, or to avoid or evade, the provisions or essential intent of
this Agreement. Furthermore, it is the intent of the parties hereto to act in
a fair and reasonable manner with respect to the interpretation and application
of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
RALPHS GROCERY COMPANY
By: /s/ Ronald Burkle
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/s/ Byron Allumbaugh
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Byron Allumbaugh
Title:
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Address:
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