-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MJ5l6LVOLrCtKZJUVfVw3wKz+tRJLnYqMu/5EXe3CZpCy0ZoemLx7XOVmX6B9qs7 fVWbeOuqCm/+Orwz7w/7Yw== /in/edgar/work/20000905/0000889812-00-003746/0000889812-00-003746.txt : 20000922 0000889812-00-003746.hdr.sgml : 20000922 ACCESSION NUMBER: 0000889812-00-003746 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 20000722 FILED AS OF DATE: 20000905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRAND UNION CO /DE/ CENTRAL INDEX KEY: 0000316236 STANDARD INDUSTRIAL CLASSIFICATION: [5411 ] IRS NUMBER: 221518276 STATE OF INCORPORATION: DE FISCAL YEAR END: 0403 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07824 FILM NUMBER: 716739 BUSINESS ADDRESS: STREET 1: 201 WILLOWBROOK BLVD CITY: WAYNE STATE: NJ ZIP: 07470-0966 BUSINESS PHONE: 2018906000 MAIL ADDRESS: STREET 1: 201 WILLOWBROOK BLVD CITY: WAYNE STATE: NJ ZIP: 07470 FORMER COMPANY: FORMER CONFORMED NAME: SUCCESSOR TO GRAND UNION CO/VA/ DATE OF NAME CHANGE: 19600201 10-Q 1 0001.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 / / For the quarterly period ended July 22, 2000 ------------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- ---------------- Commission File Number 0-26602 ------- THE GRAND UNION COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 22-1518276 - --------------------------------- ------------------------------------ (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 201 Willowbrook Boulevard, Wayne, New Jersey 07470-0966 - -------------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code) 973-890-6000 ----------------------------------------------------------------- Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. Yes X No -------- -------- Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No -------- -------- As of September 1, 2000, there were issued and outstanding 29,992,098 shares, par value $0.01 per share, of the Registrant's common stock. THE GRAND UNION COMPANY Form 10-Q For the 16 Weeks Ended July 22, 2000 INDEX
PART I - FINANCIAL INFORMATION (Unaudited) Item 1. Financial Statements. Page No. Consolidated Statement of Operations - 16 weeks ended July 22, 2000 and July 24, 1999 3 Consolidated Balance Sheet - July 22, 2000 and April 1, 2000 4 Consolidated Statement of Cash Flows - 16 weeks ended July 22, 2000 and July 24, 1999 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk. 10 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. 11 Item 5. Other Information. 11 Item 6. Exhibits and Reports on Form 8-K. 11 All items which are not applicable or to which the answer is negative have been omitted from this report.
-2- PART I - FINANCIAL INFORMATION Item 1. Financial Statements. THE GRAND UNION COMPANY CONSOLIDATED STATEMENT OF OPERATIONS (numbers in thousands, except per share data) (unaudited)
16 Weeks 16 Weeks Ended Ended July 22, July 24, 2000 1999 ----------------- ------------------ Sales $ 657,987 $ 687,268 Cost of sales 475,153 483,512 ----------------- ------------------ Gross profit 182,834 203,756 Operating and administrative expenses 167,070 173,781 Depreciation and amortization 11,367 16,229 Amortization of excess reorganization value 40,571 40,566 Unusual items 491 - Interest expense, net 15,024 12,801 ----------------- ------------------ (Loss) before income taxes and cumulative effect of accounting change (51,689) (39,621) Income tax provision - 1,671 ----------------- ------------------ Net (loss) before cumulative effect of accounting change (51,689) (41,292) Cumulative effect of accounting change, net - 3,525 ----------------- ------------------ Net (loss) applicable to common stock $ (51,689) $ (44,817) ================= ================== Net (loss) before cumulative effect of accounting change per common share $ (1.72) $ (1.37) Cumulative effect of accounting change per common share - (0.12) ----------------- ------------------ Basic and diluted net (loss) per common share $ (1.72) $ (1.49) ================= ================== Weighted average number of shares outstanding 29,992,098 30,000,000 ================= ==================
See accompanying notes to consolidated financial statements (unaudited). -3- THE GRAND UNION COMPANY CONSOLIDATED BALANCE SHEET (numbers in thousands, except par value) (unaudited)
July 22, April 1, 2000 2000 ----------------- ------------------ ASSETS Current assets: Cash $ 18,630 $ 19,895 Receivables, net 40,607 43,865 Inventories 127,934 145,293 Other current assets 6,540 12,907 ----------------- ------------------ Total current assets 193,711 221,960 Property, plant and equipment, net 352,252 324,719 Excess reorganization value, net 141,998 182,569 Beneficial leases, net 49,879 52,779 Other assets 11,693 11,407 ----------------- ------------------ Total assets $ 749,533 $ 793,434 ================= ================== LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current liabilities: Current portion of obligations under capital leases $ 4,748 $ 4,544 Accounts payable and accrued liabilities 159,013 195,261 ----------------- ------------------ Total current liabilities 163,761 199,805 Long-term debt 269,000 234,000 Obligations under capital leases 159,244 143,229 Adverse leases, net 61,989 69,155 Other noncurrent liabilities 150,001 150,018 ----------------- ------------------ Total liabilities 803,995 796,207 ----------------- ------------------ Commitments and contingencies Stockholders' (deficit): Common stock, $0.01 par value; 60,000,000 shares authorized, 29,992,098 shares issued and outstanding at July 22, 2000 and April 1, 2000 300 300 Preferred stock, $1.00 par value; 10,000,000 shares authorized, no shares issued and outstanding at July 22, 2000 and April 1, 2000 - - Capital in excess of par value 384,800 384,800 Accumulated deficit (439,562) (387,873) ----------------- ------------------ Total stockholders' (deficit) (54,462) (2,773) ----------------- ------------------ Total liabilities and stockholders' (deficit) $ 749,533 $ 793,434 ================= ==================
See accompanying notes to consolidated financial statements (unaudited). -4- THE GRAND UNION COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (numbers in thousands) (unaudited)
16 Weeks 16 Weeks Ended Ended July 22, July 24, 2000 1999 ----------------- ------------------ OPERATING ACTIVITIES: Net (loss) $ (51,689) $ (44,817) Adjustments to reconcile net (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 51,938 56,795 Unusual items 491 - Net deferred income tax - 1,671 Cumulative effect of accounting change, net - 3,525 Pension and other non-cash items 1,943 2,529 Non-cash interest 503 486 Gain on sale of property (6,244) - Net changes in assets and liabilities: Receivables 3,258 (4,581) Inventories 16,859 (8,721) Other current assets 6,326 (31) Other assets (1,156) (193) Accounts payable and accrued liabilities (36,729) (3,815) Other noncurrent liabilities (1,460) 609 ----------------- ------------------ Net cash provided by (used for) operating activities (15,960) 3,457 ----------------- ------------------ INVESTMENT ACTIVITIES: Capital expenditures (23,287) (14,925) Proceeds from sale of property 4,341 - Disposals of property 127 6 ----------------- ------------------ Net cash (used for) investment activities (18,819) (14,919) ----------------- ------------------ FINANCING ACTIVITIES: Proceeds from Revolving Credit Facility 131,000 - Repayment of Revolving Credit Facility (96,000) - Obligations under capital leases discharged (1,486) (2,342) ----------------- ------------------ Net cash provided by (used for) financing activities 33,514 (2,342) ----------------- ------------------ Net (decrease) in cash and temporary investments (1,265) (13,804) Cash and temporary investments at beginning of period 19,895 57,414 ----------------- ------------------ Cash and temporary investments at end of period $ 18,630 $ 43,610 ================= ================== Supplemental disclosure of cash flow information: Interest payments $ 16,517 $ 12,730 Capital lease obligations incurred 17,705 - Taxes paid 17 -
See accompanying notes to consolidated financial statements (unaudited). -5- THE GRAND UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 - Basis of Presentation The accompanying interim consolidated financial statements of The Grand Union Company (the "Company") include the accounts of the Company and its subsidiaries, all of which are wholly owned. In the opinion of management, the consolidated financial statements include all adjustments, which consist only of normal recurring items, necessary for a fair presentation of operating results for the interim periods. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K for the 52 weeks ended April 1, 2000. Operating results for the periods presented are not necessarily indicative of results for the full fiscal year. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides guidance on the recognition, presentation and disclosure of revenue in financial statements. The Company adopted SAB 101 effective April 4, 1999. Certain reclassifications have been made to prior year amounts to conform to current period presentation. NOTE 2 - Subsequent Events On August 11, 2000, the Company received a partial payment of $1.9 million from its insurance carrier in connection with an alleged embezzlement by a former corporate vice president. On August 14, 2000, the Company announced and implemented a reduction-in-force of approximately 170 positions primarily at its Wayne, New Jersey corporate headquarters and an administrative office in Clifton Park, New York. This reduction-in-force will result in estimated annualized savings between $8 million - $12 million and the Company will experience certain one-time charges in connection with the termination of employees effected by the reduction-in-force. Accordingly, a charge of approximately $2 million will be recorded as an unusual item for the twelve weeks ended October 14, 2000 (the "Fiscal 2001 Second Quarter"). On August 17, 2000, the Company announced that it will sell its leasehold interest in two stores (Glenbrook, Connecticut and the Bronx, New York) and that it has sold the Little Neck store in Queens, New York, which the company owned in fee. The total proceeds from these transactions will be approximately $9.3 million, and the net proceeds to the Company will be approximately $7.4 million. On August 17, 2000, the Company's stockholders elected Michael J. Embler, Jeffrey P. Freimark, David M. Green, Charles M. Masson, Stephen M. Peck, Gary M. Philbin and Scott M. Tepper as directors of the Company. Effective August 17, 2000 and as authorized by the Compensation Committee of the Board of Directors, the Company has entered into sale bonus agreements ("Sale Bonus Agreements") with each of its nine (9) executive officers providing for the payment of a sale bonus to each person, under specified conditions, in the event of a sale of the Company. For more information about the Sale Bonus Agreements, reference is made to Exhibits 10.10-10.18 hereto. NOTE 3 - Retention Agreements Effective July 12, 2000 and as authorized by the Compensation Committee of the Board of Directors, the Company has entered into retention agreements ("Retention Agreements") with certain of its key associates, including each of its nine (9) executive officers, providing for the payment of a retention bonus to each person under specified conditions. For more information about the Retention Agreements, reference is made to Exhibits 10.1-10.9 hereto. -6- NOTE 4 - Credit Agreement Amendment Effective June 30, 2000, the Company executed the third amendment to the Credit Agreement (the "Third Amendment"), which, among other things, adjusted certain of the financial covenants and permits the Company to retain a greater portion of the proceeds of asset sales to a specified level. The Third Amendment also provides that the financial covenants, which have an EBITDA component, will be computed and measured based upon each of the Company's 13 fiscal reporting periods, whereas before they were computed and measured quarterly. This new requirement subjects the Company to increased risk that a short-term decline in operating performance could potentially trigger an event of default under the Credit Agreement resulting in the entire loan balance becoming due and payable, subject to the lenders' discretion and proper notification. The Company believes that the revised financial covenants are achievable for each period throughout the remainder of the year, although there can be no assurance that unanticipated adverse events will not occur. The Third Amendment also requires the Company to retain an investment banker for purposes of exploring all strategic alternatives and to retain a consulting company to assist in the preparation of a business plan. The Company has retained Merrill Lynch & Co., Alvarez & Marsal, Inc. and Nightingale & Associates, LLC for these purposes. For more information concerning the Third Amendment to the Credit Facility, reference is made to Exhibit 10.7 to Grand Union's report on Form 10-K dated June 30, 2000. NOTE 5 - Restructuring Reserves The following table is a summary of the changes in reserves relating to senior management restructuring, staff reductions and store closure costs.
Recognition of Severance Store Closure Benefits Costs Total ------------------ -------------------------------------- Restructuring reserves at April 1, 2000 $ 5,529 $ 15,430 $ 20,959 Cash expenditures (1,718) (309) (2,027) ------------------ -------------------------------------- Restructuring reserves at July 22, 2000 $ 3,811 $ 15,121 $ 18,932 ================== ======================================
Severance costs consist of obligations to employees who were terminated or were notified of termination under The Grand Union Company Severance Plan For Exempt Personnel and The Grand Union Company Discretionary Severance Plan for Non-Union Associates, both of which were adopted by the Board of Directors on April 14, 1998. The restructuring reserves also include amounts to be paid under separation agreements for two former senior executives. Store closure costs relate to the cost of closing 19 stores. During the 12 weeks ended April 1, 2000 (the "Fiscal 2000 Fourth Quarter"), the Company made a decision to close twelve poor performing stores and not to renew an agreement with the Penn Traffic Company for the continued leasing of seven other stores that had operated under the Grand Union name for the previous ten years. NOTE 6 - Unusual Items The Company recorded a charge to operations in the 16 weeks ended July 22, 2000 of $491,000 in connection with legal and advisory fees associated with the Third Amendment. NOTE 7 - Income Taxes Income taxes for the interim period are based on the estimated effective tax rate expected to be applicable for the full fiscal year. The Company recorded no income tax benefit during the Fiscal 2001 First Quarter compared to a $1.7 million provision during the Fiscal 2000 First Quarter. A tax benefit that would have been recorded due to the potential use of operating loss carryforwards was fully offset by a valuation allowance during the Fiscal 2001 First Quarter. NOTE 8 - Net Loss Per Share The net loss per share is computed in accordance with SFAS No. 128, "Earnings Per Share." This statement requires that entities present, on the face of the income statement for all periods reflected, basic and diluted per share amounts. Basic earnings per share is computed using the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding for the period adjusted for dilutive potential common shares. There were 29,992,098 and 30,000,000 weighted average shares outstanding for both basic and diluted earnings per share for the 16 weeks ended July 22, 2000 and July 24, 1999, respectively. All potential common shares were excluded from the computation of the Company's diluted earnings per share because the effect would have been anti-dilutive. -7- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. - ------------------------------------------------------------------------- Results of Operations The following table sets forth certain statements of operations and other data (all dollars in millions).
16 Weeks 16 Weeks Ended Ended July 22, July 24, 2000 1999 ----------------- ------------------ Sales $ 658.0 $ 687.3 Gross profit 182.8 203.8 Operating and administrative expenses 167.1 173.8 Depreciation and amortization 11.3 16.2 Amortization of excess reorganization value 40.6 40.6 Unusual items 0.5 - Interest expense, net 15.0 12.8 (Loss) before income taxes and cumulative effect of accounting change (51.7) (39.6) Income tax provision - 1.7 Net (loss) before cumulative effect of accounting change (51.7) (41.3) Cumulative effect of accounting change, net - 3.5 Net (loss) applicable to common stock (51.7) (44.8) Sales percentage (decrease) (4.3%) (0.7%) Gross profit as a percentage of sales 27.8% 29.6% Operating and administrative expenses as a percentage of sales 25.4% 25.3%
Sales for the 16 weeks ended July 22, 2000 (the "Fiscal 2001 First Quarter") decreased $29.3 million, or 4.3%, compared to the 16 week period ended July 24, 1999 (the "Fiscal 2000 First Quarter"). Same store sales, including replacement stores, decreased 2.67% during the Fiscal 2001 First Quarter as compared to the Fiscal 2000 First Quarter. This decrease in same store sales is primarily due to intensely competitive markets. The Company continues to invest in marketing and promotional programs to drive sales as competitors continue to open new locations and remodel stores at a more aggressive rate than the Company. During the Fiscal 2001 First Quarter, the Company opened two new and three replacement stores and closed twenty-one stores. During the Fiscal 2000 First Quarter, the Company opened four replacement stores and closed two stores. Gross profit, as a percentage of sales, decreased to 27.8% for the Fiscal 2001 First Quarter from 29.6% for the Fiscal 2000 First Quarter. This is the result of decreased advertising and promotional income and the continued competitive marketplace in which the Company operates. Operating and administrative expenses, as a percentage of sales, increased to 25.4% from 25.3% for the Fiscal 2001 First Quarter as compared to the Fiscal 2000 First Quarter. The Company continues to aggressively identify and implement actions designed to reduce expenses in all areas of the business without affecting customer service. In this regard, on August 14, 2000, the Company implemented the reduction of 170 administrative positions. In addition, the Fiscal 2001 First Quarter operating and administrative expenses include a $6.2 million gain on the sale of the Company's Little Neck property. Depreciation and amortization decreased in the Fiscal 2001 First Quarter to $11.3 million compared to $16.2 million in the Fiscal 2000 First Quarter due primarily to assets which have fully depreciated and impairment losses of $16.0 million recorded during the second half of Fiscal 2000. Interest expense for the Fiscal 2001 First Quarter increased to $15.0 million from $12.8 million compared to the Fiscal 2000 First Quarter. This increase was mainly due to additional borrowings under the Credit Facility, a rise in interest rates and an increase in the spread as provided under the Third Amendment to the Credit Facility. Income taxes for the interim period are based on the estimated effective tax rate expected to be applicable for the full fiscal year. The Company recorded no income tax benefit during the Fiscal 2001 First Quarter compared to a $1.7 million provision during the Fiscal 2000 First Quarter. A tax benefit that would have been recorded due to the potential use of operating loss carryforwards was fully offset by a valuation allowance during the Fiscal 2001 First Quarter. -8- Liquidity and Capital Resources On August 17, 1998 and in connection with the consummation of the Plan of Reorganization, the Company entered into the Credit Agreement. The Credit Agreement is comprised of: (i) a $230 million Term Loan and (ii) a $70 million Revolving Credit Facility. The Term Loan and Revolving Credit Facility will mature on August 17, 2003. The proceeds of the Credit Agreement were used to refinance the obligations under the debtor-in-possession credit agreement (the "DIP Facility") and supplemental term loan claims under the credit agreement that was in existence before the Chapter 11 case. The excess is available to be used for working capital and capital expenditures. Up to $50 million of the Revolving Credit Facility is available for the issuance of letters of credit. As of July 22, 2000, the Company had net borrowings of $39 million and an aggregate of $29.9 million of letters of credit issued and outstanding under the Revolving Credit Facility. The fair value of the long-term debt is based on the quoted market prices. At July 22, 2000 and April 1, 2000, the approximate fair value of the long-term debt was $165.0 million and $198.9 million, respectively. Cash interest payments totaled approximately $16.5 million for the Fiscal 2001 First Quarter and are expected to be approximately $48 million for the fiscal year ending March 31, 2001 ("Fiscal 2001"). Capital expenditures totaled $23.3 million for the Fiscal 2001 First Quarter and are expected to be approximately $35 million for Fiscal 2001. Credit Agreement Amendment Effective June 30, 2000, the Company executed the Third Amendment to the Credit Agreement, which among other things, adjusted certain of the financial covenants and permits the Company to retain a greater portion of the proceeds of asset sales to a specified level. The Third Amendment also provides that the financial covenants, which have an EBITDA component, will be computed and measured based upon each of the Company's 13 fiscal reporting periods, whereas before they were computed and measured quarterly. This new requirement subjects the Company to increased risk that a short-term decline in operating performance could potentially trigger an event of default under the Credit Agreement resulting in the entire loan balance becoming due and payable, subject to the lenders' discretion and proper notification. The Company believes that the revised financial covenants are achievable for each period throughout the remainder of the year, although there can be no assurance that unanticipated adverse events will not occur. The Third Amendment also requires the Company to retain an investment banker for purposes of exploring all strategic alternatives and to retain a consulting firm to assist in the preparation of a business plan. The Company has retained Merrill Lynch & Co., Alvarez & Marsal, Inc. and Nightingale & Associates, LLC for these purposes. For more information concerning the Third Amendment to the Credit Facility, reference is made to Exhibit 10.7 to Grand Union's report on Form 10-K dated June 30, 2000. Future Outlook Fiscal 2000 was a transitional year for the Company. The results for the Fiscal 2001 First Quarter continue to reflect similar issues to those presented in Fiscal 2000. Management is working diligently to address the fundamental business issues required to improve operating performance. These include aggressively addressing sales, margin, expenses and asset management. The objective is to allow the Company to better serve its business strategy and drive costs out of the system. The management changes made in the Fiscal 2000 Fourth Quarter signaled this change of direction. The Company closed eleven underperforming stores in June, and one in July, eliminating the negative impact these stores had on results. Additionally, the decision was made not to renew the leases on seven additional stores based on the unfavorable economies of the lease renewal. It is possible that the Company will close additional stores in the future. The Company is focusing its merchandising, advertising and operating efforts primarily on the Grand Union banner. As such, the Hot Dot and Fresh Market store concepts that previously had separate advertising are now supported by a common Grand Union program. Additionally, the Company implemented its new "Get More" advertising and promotional program in an effort to clearly communicate value to all of its customers. The Company has invested significant capital in new stores and remodels since August 1998. These locations have been merchandised to reinforce the strengths of what Grand Union customers indicate they like most about its stores - - outstanding perishables, improved variety and specialty items throughout all departments. New features, such as expanded dairy and frozen food sections, enhanced meals-to-go for easy meal solutions and more health and natural foods are examples of the Company's continued efforts to meet the needs of today's consumer. The Company continues its efforts to convert working capital to cash. Aggressive, but realistic, programs are in place to reduce inventories and receivables. Total capital expenditures for Fiscal 2001 are expected to be approximately $35 million. The Company expects to finance such capital expenditures through cash generated from operations, selective asset sales and amounts available under the Credit Agreement. The execution of the Third Amendment to the Credit Agreement provides the Company with the potential for additional liquidity throughout Fiscal 2001. In addition, the Company is aggressively managing its cash position. -9- Based on the Third Amendment, the Company has completed the bulk of asset sales for which it will be able to retain the proceeds. Unanticipated variances to projected operating and working capital performance levels could negatively impact the Company's liquidity. The Company, with the assistance of its retained financial advisors, is nearing completion of a strategic business plan that will be delivered to the lenders under the Credit Agreement on September 1, 2000. The business plan may require the rationalization of assets and the Company's current marketing areas going forward. All available strategic alternatives are being analyzed, including asset sales, store closures and/or the sale of the entire Company. Impact of New Accounting Standards The FASB Emerging Issues Task Force (the "EITF"), issued a new accounting pronouncement EITF Issue Number 00-14, "Accounting for Certain Sales Incentives," which addresses the recognition, measurement and income statement classification for certain sales incentives offered by companies in the form of discounts, coupons or rebates. The implementation of this new accounting pronouncement may require the Company to make certain reclassifications between sales and cost of sales in the Company's Consolidated Statement of Operations. The Company will implement EITF 00-14 in the fourth quarter of the Company's current fiscal year. In accordance with such implementation, the Company will also reclassify certain prior period financial statement amounts for comparability purposes. The Company is currently reviewing this pronouncement and has not yet determined the impact on sales, cost of sales and same store sales results. However, the Company believes that the implementation of EITF 00-14 will not have an effect on the Company's reported EBITDA or net income (loss). Special Note Concerning Forward-Looking Statements Except for historical information, some matters discussed herein may be considered "forward-looking statements" within the meaning of federal securities law. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the competitive environment in which the Company operates, the ability of the Company to maintain and improve its gross sales and margins, the liquidity of the Company on a cash flow basis (including the Company's ability to comply with the financial covenants of its Credit Agreement and to fund the Company's capital expenditure program), the Company's ability to complete its capital expenditures on a timely basis, the success of operating initiatives, the viability of the Company's strategic plan, regional weather conditions, and the general economic conditions in the geographic areas in which the Company operates. For additional information about the Company and its operating and financial condition, please see the Company's most recent Annual Report on Form 10-K for the year ended April 1, 2000, as filed with the Securities and Exchange Commission on June 30, 2000. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Quantitative and Qualitative Disclosures about Market Risk represents the risk of loss that may impact the consolidated financial position, results of operations or cash flows of the Company due to adverse changes in financial rates. The Company is exposed to market risk in the area of interest rates. This exposure is directly related to its Term Loan and Revolving Credit borrowings under the Credit Agreement due to their variable interest rate pricing. There have been no material changes regarding the Company's market risk position from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Form 10-K filed with the SEC on June 30, 2000. -10- PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. - ------------------------------------------------------------- The Company's Annual Meeting of Stockholders was held on August 17, 2000. (a) Michael J. Embler, Jeffrey P. Freimark, David M. Green, Charles M. Masson, Stephen M. Peck, Gary M. Philbin and Scott M. Tepper were elected directors of the Company at the meeting. Votes cast in favor of and withheld from voting with respect to the election of each nominee for director were as follows: Director Votes For Votes Withheld -------- --------- -------------- Michael J. Embler 22,975,238 446,940 Jeffrey P. Freimark 22,975,238 446,940 David M. Green 22,975,238 446,940 Charles M. Masson 22,975,238 446,940 Stephen M. Peck 22,975,238 446,940 Gary M. Philbin 22,975,238 446,940 Scott M. Tepper 22,975,238 446,940 There were no abstentions or broker non-votes with respect to any of the directors. (b) The amendments to the Non-Employee Directors' Stock Option Plan ("NEDSOP") to increase the number of shares issuable under the NEDSOP to an aggregate of 250,000 and to increase the number of initial and annual option grants issuable under the NEDSOP to 10,000 and 5,000, respectively, were approved, with 22,149,422 votes in favor, 1,229,908 votes against, 42,798 votes abstaining and no broker non-votes. (c) The appointment of PricewaterhouseCoopers LLP as independent accountants of the Company for the fiscal year ending March 31, 2001 was ratified, with 23,330,603 votes in favor, 66,877 votes against, 24,698 votes abstaining and no broker non-votes. Reference is made to the Company's Proxy Statement dated July 7, 2000 for its 2000 Annual Meeting of Stockholders for additional information concerning the matters voted on at the meeting. Item 5. Other Information On July 26, 2000, the NASDAQ Listing Qualifications Panel advised the Company that its Common Stock no longer qualified for trading on the NASDAQ National Market and would be delisted, effective immediately. The Company's application to list its Common Stock on the NASDAQ SmallCap Market was also rejected. Effective July 27, 2000, the Company's Common Stock commenced quotation on the over-the-counter bulletin board ("OTC-BB") under the ticker symbol "GUCO". Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number 10.1 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and Gary M. Philbin. 10.2 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and Jeffrey P. Freimark. 10.3 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and Manouchehr Moslemi. 10.4 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and Glenn J. Smith. -11- 10.5 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and Timothy J. Carnahan. 10.6 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and Gary B. Duncan. 10.7 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and James Santamarina. 10.8 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and Richard D. Skelly. 10.9 Retention Bonus Agreement (effective July 12, 2000 and dated as of August 3, 2000) between Grand Union and Robert F. Smith. 10.10 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and Gary M. Philbin. 10.11 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and Jeffrey P. Freimark. 10.12 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and Manouchehr Moslemi. 10.13 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and Glenn J. Smith. 10.14 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and Timothy J. Carnahan. 10.15 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and Gary B. Duncan. 10.16 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and James Santamarina. 10.17 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and Richard D. Skelly. 10.18 Sale Bonus Agreement (effective August 17, 2000 and dated as of August 31, 2000) between Grand Union and Robert F. Smith. 27.1 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the 16 weeks ended July 22, 2000. -12- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE GRAND UNION COMPANY ----------------------- (Registrant) /s/ Jeffrey P. Freimark --------------------------------- Jeffrey P. Freimark, Executive Vice President Chief Financial and Administrative Officer and Treasurer Date: September 5, 2000 -13- EX-10.1 2 0002.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 Gary M. Philbin RE: Retention Bonus Agreement Dear Gary: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, including without limitation the employment agreement between you and the Company dated April 13, 2000 (the "Employment Agreement"), and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning set forth in your Employment Agreement. "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall have the meaning set forth in your Employment Agreement. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability (as defined in your Employment Agreement), or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 33%, 33% and 34%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under your Employment Agreement. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or 2 interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Glenn J. Smith ------------------------------------- Name: Glenn J. Smith Senior Vice President, General Counsel And Corporate Secretary Agreed to as of this 3rd day of August, 2000. /s/ Gary M. Philbin - ---------------------------------- Gary M. Philbin 3 EX-10.2 3 0003.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 Jeffrey P. Freimark RE: Retention Bonus Agreement Dear Jeffrey: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, including without limitation the employment agreement between you and the Company dated April 13, 2000 (the "Employment Agreement"), and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning set forth in your Employment Agreement. "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall have the meaning set forth in your Employment Agreement. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability (as defined in your Employment Agreement), or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 33%, 33% and 34%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under your Employment Agreement. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or 2 interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 3rd day of August, 2000. /s/ Jeffrey Freimark - ---------------------------------- Jeffrey Freimark 3 EX-10.3 4 0004.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 Manouchehr Moslemi RE: Retention Bonus Agreement Dear Manny: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, including without limitation the employment agreement between you and the Company dated April 13, 2000 (the "Employment Agreement"), and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning set forth in your Employment Agreement. "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall have the meaning set forth in your Employment Agreement. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability (as defined in your Employment Agreement), or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 33%, 33% and 34%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under your Employment Agreement. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or 2 interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ----------------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 3rd day of August, 2000. /s/ Manouchehr Moslemi - ---------------------------------- Manouchehr Moslemi 3 EX-10.4 5 0005.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 Glenn J. Smith RE: Retention Bonus Agreement Dear Glenn: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, including without limitation the employment agreement between you and the Company dated April 13, 2000 (the "Employment Agreement"), and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning set forth in your Employment Agreement. "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall have the meaning set forth in your Employment Agreement. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability (as defined in your Employment Agreement), or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 33%, 33% and 34%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under your Employment Agreement. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or 2 interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin -------------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 3rd day of August, 2000. /s/ Glenn J. Smith - ---------------------------------- Glenn J. Smith 3 EX-10.5 6 0006.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 Timothy Carnahan RE: Retention Bonus Agreement Dear Tim: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity; (B) any material reduction by the Company of your duties, authority or responsibilities (except in connection with the termination of your employment other than because of an Involuntary Termination), or: (C) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean October 1, 2000, January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 20%, 25%, 25% and 30%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under the Company's severance plan. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other 2 address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ----------------------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 3rd day of August, 2000. /s/ Timothy Carnahan - ---------------------------------- Timothy Carnahan EX-10.6 7 0007.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 Gary Duncan RE: Retention Bonus Agreement Dear Gary: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity; (B) any material reduction by the Company of your duties, authority or responsibilities (except in connection with the termination of your employment other than because of an Involuntary Termination), or: (C) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean October 1, 2000, January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 20%, 25%, 25% and 30%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under the Company's severance plan. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other 2 address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ----------------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 3rd day of August, 2000. /s/ Gary Duncan - ---------------------------------- Gary Duncan EX-10.7 8 0008.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 James Santamarina RE: Retention Bonus Agreement Dear Jim: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity; (B) any material reduction by the Company of your duties, authority or responsibilities (except in connection with the termination of your employment other than because of an Involuntary Termination), or: (C) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean October 1, 2000, January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 20%, 25%, 25% and 30%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under the Company's severance plan. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other 2 address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ----------------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 3rd day of August, 2000. /s/ James Santamarina - ---------------------------------- James Santamarina 3 EX-10.8 9 0009.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 Richard Skelly RE: Retention Bonus Agreement Dear Rick: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity; (B) any material reduction by the Company of your duties, authority or responsibilities (except in connection with the termination of your employment other than because of an Involuntary Termination), or: (C) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean October 1, 2000, January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 20%, 25%, 25% and 30%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under the Company's severance plan. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other 2 address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ----------------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 3rd day of August, 2000. /s/ Richard Skelly - ---------------------------------- Richard Skelly 3 EX-10.9 10 0010.txt RETENTION BONUS AGREEMENT Execution Copy August 3, 2000 Robert Smith RE: Retention Bonus Agreement Dear Bob: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the retention bonus (the "Retention Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Retention Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. The prior letter agreement between you and the Company concerning the Retention Bonus dated July 21, 2000 is null and void and is superceded by this Letter Agreement. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean July 12, 2000, the date on which the Compensation Committee of the Board approved the Retention Bonus. "Final Payment Date" shall mean the later of (a) July 1, 2001, if a Triggering Event does not occur prior to such date, or (b) in the event that a Triggering Event occurs prior to July 1, 2001, the latest to occur of (i) the date of a Change in Control corresponding to a Triggering Event where such Triggering Event has occurred before July 1, 2001, (ii) the date that any Triggering Event which occurs before July 1, 2001 is definitively canceled or otherwise becomes void or (iii) July 1, 2001. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity; (B) any material reduction by the Company of your duties, authority or responsibilities (except in connection with the termination of your employment other than because of an Involuntary Termination), or: (C) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Payment Dates" shall mean October 1, 2000, January 1, 2001, April 1, 2001 and the Final Payment Date. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into a binding agreement with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company as of the Effective Date; (B) the Company enters into a binding agreement providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until the Final Payment Date. 3. Retention Bonus. In consideration of, and subject to, your continued employment with the Company during the period beginning on the Effective Date and continuing through each Payment Date, the Company will pay you a Retention Bonus equal to 20%, 25%, 25% and 30%, respectively, of the annual rate of your base salary as in effect on the Effective Date. The Company will pay each Retention Bonus to you in a lump sum cash amount as soon as practicable after each Payment Date where you remain in the continued employ of the Company, but in no event shall such payment be made more than thirty days thereafter. Notwithstanding the above, if you are in the employ of the Company and there is a Change in Control following a Triggering Event during the term of this Letter Agreement, any remaining Retention Bonuses will be paid to you as soon as practicable, but in no event later than thirty days, following such Change in Control. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination prior to any of the Payment Dates, you shall be entitled to receive the Retention Bonus in accordance with the terms of Section 3, as if your employment had continued until such Payment Dates as occurs after the date of the termination of your employment. Such payment shall be in addition to any benefits you may be eligible for under the Company's severance plan. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination prior to any of the Payment Dates, you shall forfeit your right any portion of the Retention Bonus not yet earned. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other 2 address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Retention Bonus and any other payments in connection with a Change of Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the Payments constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By:/s/ Gary M. Philbin ----------------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 3rd day of August, 2000. /s/ Robert Smith - ---------------------------------- Robert Smith 3 EX-10.10 11 0011.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND GARY PHILBIN. Execution Copy August 31, 2000 Gary M. Philbin Re: Sale Bonus Agreement Dear Gary: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, including without limitation the employment agreement between you and the Company dated April 13, 2000 (the "Employment Agreement"), and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning set forth in your Employment Agreement. "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. (A) "Good Reason" shall have the meaning set forth in your Employment Agreement. "Individual Share" shall mean 25% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability as defined in your Employment Agreement, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. 3 (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 4 (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Glenn J. Smith ------------------ Name: Glenn J. Smith Senior Vice President, General Counsel and Corporate Secretary Agreed to as of this 31st day of August, 2000. /s/ Gary Philbin - ---------------- Gary Philbin 5 EX-10.11 12 0012.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND JEFFREY FREIMARK. Execution Copy August 31, 2000 Jeffrey Freimark Re: Sale Bonus Agreement Dear Jeffrey: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, including without limitation the employment agreement between you and the Company dated April 13, 2000 (the "Employment Agreement"), and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning set forth in your Employment Agreement. "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. (A) "Good Reason" shall have the meaning set forth in your Employment Agreement. "Individual Share" shall mean 30% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability as defined in your Employment Agreement, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. 3 (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 4 (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 31st day of August, 2000. /s/ Jeffrey Freimark - -------------------- Jeffrey Freimark 5 EX-10.12 13 0013.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND MANOUCHEHR MOSLEMI. Execution Copy August 31, 2000 Manouchehr Moslemi Re: Sale Bonus Agreement Dear Manny: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, including without limitation the employment agreement between you and the Company dated April 13, 2000 (the "Employment Agreement"), and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning set forth in your Employment Agreement. "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. (A) "Good Reason" shall have the meaning set forth in your Employment Agreement. "Individual Share" shall mean 5% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability as defined in your Employment Agreement, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. 3 (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 4 (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 31st day of August, 2000. /s/ Manouchehr Moslemi - ---------------------- Manouchehr Moslemi 5 EX-10.13 14 0014.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND GLENN J. SMITH. Execution Copy August 31, 2000 Glenn J. Smith Re: Sale Bonus Agreement Dear Glenn: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, including without limitation the employment agreement between you and the Company dated April 13, 2000 (the "Employment Agreement"), and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning set forth in your Employment Agreement. "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. (A) "Good Reason" shall have the meaning set forth in your Employment Agreement. "Individual Share" shall mean 15% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability as defined in your Employment Agreement, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. 3 (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 4 (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 31st day of August, 2000. /s/ Glenn Smith - --------------- Glenn Smith 5 EX-10.14 15 0015.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND TIM CARNAHAN. Execution Copy August 31, 2000 Tim Carnahan Re: Sale Bonus Agreement Dear Tim: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity, or: (B) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Individual Share" shall mean 5% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or 2 (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in 3 Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. 4 (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 31st day of August, 2000. /s/ Tim Carnahan - ---------------- Tim Carnahan 5 EX-10.15 16 0016.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND GARY DUNCAN. Execution Copy August 31, 2000 Gary Duncan Re: Sale Bonus Agreement Dear Gary: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity, or: (B) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Individual Share" shall mean 5% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or 2 (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in 3 Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. 4 (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 31st day of August, 2000. /s/ Gary Duncan - --------------- Gary Duncan 5 EX-10.16 17 0017.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND JAMES SANTAMARINA. Execution Copy August 31, 2000 James Santamarina Re: Sale Bonus Agreement Dear Jim: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity, or: (B) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Individual Share" shall mean 5% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or 2 (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in 3 Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. 4 (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 31st day of August, 2000. /s/ James Santamarina - --------------------- James Santamarina 5 EX-10.17 18 0018.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND RICHARD SKELLY. Execution Copy August 31, 2000 Richard Skelly Re: Sale Bonus Agreement Dear Rick: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity, or: (B) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Individual Share" shall mean 5% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or 2 (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in 3 Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. 4 (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------- Name: President and Chief Executive Officer Agreed to as of this 31st day of August, 2000. /s/ Richard Skelly - ------------------ Richard Skelly 5 EX-10.18 19 0019.txt SALE BONUS AGREEMENT BETWEEN GRAND UNION AND ROBERT F. SMITH. Execution Copy August 31, 2000 Robert Smith Re: Sale Bonus Agreement Dear Bob: The following sets forth the agreement between you and The Grand Union Company, a Delaware corporation (the "Company"), regarding the terms of the sale bonus (the "Sale Bonus") that you may be eligible to receive in accordance with the terms and conditions set forth below. This letter agreement (the "Letter Agreement") is in addition to, and not in substitution for, any other agreements between you and the Company, and the Sale Bonus is in addition to, and not in substitution for, any other pay or benefits to which you are eligible to earn from the Company. 1. Definitions. For purposes of this Letter Agreement, the following capitalized words that are not otherwise defined in the text of the Letter Agreement shall have the meanings set forth below: "Aggregate Consideration" shall mean an amount equal to the sum of the aggregate fair market value of any securities issued and any other non-cash consideration delivered, and any cash consideration paid to the Company or its security holders in connection with a Change in Control, plus the amount of all indebtedness for money borrowed and capitalized leases, net of excess cash, of the Company and its subsidiaries which is assumed or acquired by any Purchaser in connection with a Change in Control or retired or defeased in connection with such Change in Control. However, in the event that a Change in Control is effectuated through a bankruptcy proceeding, Aggregate Consideration shall not include capitalized leases assumed unless (i) payments to the Company's senior lenders in connection with the Change in Control equal or exceed the sum of pre-petition and post-petition amounts of indebtedness then-owing to such lenders or (ii) the Company's senior lenders agree in writing to accept a reduced amount of the then-owing debt ("Reduced Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount is subsequently paid. The fair market value of any securities issued and any other non-cash consideration delivered in connection with a Change in Control will be the value determined in good faith by the Board. "Board" shall mean the Board of Directors of the Company. "Cause" shall mean the termination of your employment based on (i) willful misconduct or gross negligence by you with regard to the Company or its business, assets or employees; (iii) the refusal by you to follow the proper direction of the Company or the Board; (iv) substantial and continuing refusal by you to attempt to perform the duties required of you in connection with your employment (other than any such failure resulting from incapacity due to physical or mental illness); (v) your being convicted of a felony or pleading nolo contendere to a felony (other than a felony involving a motor vehicle); (vi) the breach by you of any fiduciary duty owed by you to the Company; or (vii) your dishonesty, misappropriation or fraud with regard to the Company (other than good faith expense account disputes). "Change in Control" shall mean the consummation of a Triggering Event. "Effective Date" shall mean August 17, 2000, the date on which the Compensation Committee of the Board approved the Sale Bonus. The "Eligible Management Members" for the Sale Bonus are Gary Philbin, Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary Duncan, James Santamarina, Richard Skelly and Robert Smith. "Good Reason" shall mean any of the following: (A) any reduction in your base salary or target bonus opportunity, or: (B) any change in your principal work location of more than 50 miles from your principal work location as of the Effective Date. "Individual Share" shall mean 5% of the Management Share. "Involuntary Termination" shall mean (a) the termination of your employment by the Company other than for Cause, Death, Disability under the Company's Long Term Disability Plan, or retirement under the Company's Retirement Plan or (b) the resignation of your employment by you for Good Reason. "Management Share" shall mean the aggregate amount of compensation payable to Eligible Management Members in connection with the Sale Bonus. The Management Share shall be determined pursuant to the following grid: ------------------------------------------------------------ Aggregate Consideration Paid Management Share Percent ---------------------------- ------------------------ ------------------------------------------------------------ Below $240,000,000 0.00% ------------------------------------------------------------ $240,000,000 0.50% ------------------------------------------------------------ $260,000,000 0.60% ------------------------------------------------------------ $280,000,000 0.70% ------------------------------------------------------------ $300,000,000 0.90% ------------------------------------------------------------ $310,000,000 1.00% ------------------------------------------------------------ $320,000,000 1.10% ------------------------------------------------------------ $330,000,000 1.30% ------------------------------------------------------------ $340,000,000 1.50% ------------------------------------------------------------ $350,000,000 1.75% ------------------------------------------------------------ $360,000,000 or more 2.00% ------------------------------------------------------------ The Management Share shall be calculated from the first dollar of Aggregate Consideration paid. The percentage utilized to determine the Management Share shall be multiplied by the full amount of Aggregate Consideration paid. Moreover, in the event the Aggregate Consideration paid falls between two of the ranges in the above grid, the percentage to be utilized to determine the Management Share shall be interpolated on a straight line basis between the two ranges. Thus, for example, assuming the Aggregate Consideration paid is $335,000,000, the Management Share would be 1.40% times $335,000,000 or $4,690,000. "Purchaser" shall mean any person or entity that engages in a Change in Control transaction. "Sellers" shall mean the Company or, if applicable, the selling equity holders and/or selling debt holders of the Company. A "Triggering Event" shall be deemed to have occurred on the date that any of the following shall have occurred: (A) the Company enters into one or more binding agreements with one or more Purchasers to directly acquire, in exchange for cash, stock, claims, or property, fifty percent or more of the aggregate equity securities of the Company; (B) the Company enters into one or more binding agreements providing for a merger, consolidation, reorganization or other business combination upon consummation of which one or more Purchasers would own or control fifty percent or more of either (i) the aggregate voting securities of the Company, (ii) the aggregate economic interest of the outstanding equity securities of the Company or (iii) the aggregate value of the assets of the Company; (C) the Company enters into a transaction upon consummation of which one or more Purchasers would acquire in exchange for cash, stock, claims or property fifty percent or more of either (i) the aggregate equity securities of the Company, or (ii) the Company's assets; or 2 (D) the Company files a plan of reorganization or motion for relief in a case under title 11 of the United States Code for the purpose of implementing an agreement or transaction of the type described in any of the preceding clauses (A), (B) or (C); provided, however, that a Triggering Event shall not include any change of ownership resulting from a public offering of any of the securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. 2. Term. The term of this Letter Agreement (the "Term") shall commence on the Effective Date and shall continue until August 17, 2001. 3. Sale Bonus. (a) General Terms. You will become entitled to receive the Sale Bonus in the event that (i) a Triggering Event occurs during the Term, and (ii) a Change in Control contemplated by such Triggering Event occurs thereafter. The amount of the Sale Bonus shall be equal to your Individual Share multiplied by the Management Share. (b) Payment of Sale Bonus. (i) Change in Control--No Post-Closing Adjustment. In the event that the transaction resulting in a Change in Control does not include any provisions either (A) for an earn-out with respect to which a part of the Aggregate Consideration will be paid to the Sellers either in full or in part in one or more installments after the Change in Control or any similar deferral of the payment of the Aggregate Consideration or (B) that would potentially require the Sellers to reimburse any portion of the Sale Price to the Purchaser or require the Purchaser to pay to the Sellers any amount in addition to the Aggregate Consideration, as a result of a post-closing adjustment or any other reason, after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"), the Company shall pay to you the Sale Bonus within five days following the date of such Change in Control; provided, however, that in no event shall the Sale Bonus be payable to you until the full amount of the Aggregate Consideration has been paid to the Sellers. The Board, however, shall have the discretion to make pro-rata payments of the Sale Bonus to the extent that the Aggregate Consideration is paid in installments. (ii) Change in Control--Post-Closing Adjustment. In the event that the Change in Control transaction includes provisions for any Post-Closing Adjustment, the Company shall pay the Sale Bonus according to the terms of this Section 3(b)(ii). (A) In the event that the Change in Control transaction includes a Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company shall pay you a portion of the Sale Bonus within five days after the date of such Change in Control equal to your Individual Share multiplied by the Management Share multiplied by the portion of the Aggregate Consideration paid to the Sellers on or about the date of the Change in Control. Thereafter, within five days after any additional portion of the Aggregate Consideration is paid to the Sellers, the Company shall pay you the remaining portion of the Sale bonus in an amount equal to your Individual Share multiplied by the Management Share multiplied by the additional Aggregate Consideration. (B) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Sellers to reimburse any portion of the Aggregate Consideration to the Purchaser after the Change in Control, within five days after the date of such Change in Control, the Company shall pay you a portion of the Sale Bonus determined in good faith by the Board immediately prior to the consummation of the Change in Control, less an amount that shall take into account the potential adjustment to the Sales Price (the "Withheld Amount"). As soon as practicable after the Sellers know with certainty the portion, if any, of the Sale Price that the Sellers must reimburse to the Purchaser and the Sellers make such reimbursement, if any, the Company shall pay to you a prorated portion of the Withheld Amount corresponding to the portion of the maximum potential amount that Sellers may have been required to reimburse to the Purchaser less the amount actually reimbursed. (C) In the event that the Change in Control transaction is a Post-Closing Adjustment described in Section 3(b)(i)(B) that would potentially require the Purchaser to pay to the Sellers any amount in addition to the Sale Price after the Change in Control, within five days after the date of such Change in 3 Control, the Company shall pay you the Sale Bonus. Thereafter, within five days after the Purchaser knows with certainty the additional amount that such Purchaser must pay to the Sellers, if any, and the Purchaser makes such payment to the Sellers, the Company shall pay to you an additional amount determined in good faith by the Board that shall take into account the additional payment made by the Purchaser to the Sellers. (c) Determination of the Board Final. The determination of whether a Triggering Event or Change in Control has occurred, the amount of the Aggregate Consideration and the amount of any Sale Bonus shall be made in good faith by the Board (unless otherwise required by applicable law) and, absent manifest error, shall be final and binding on you, the Company and all other interested parties. (d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you shall be entitled to receive an initial Sale Bonus under this Letter Agreement which shall become payable in connection with the first Triggering Event that occurs during the Term, which results in a Change in Control. Adjustments to the initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall be payable with respect to any additional transactions or asset sales that occur during the Term that would have constituted part of the Triggering Event had they occurred prior to the Change in Control. The Sale Bonus Adjustment shall not be made for asset sales made in the ordinary course of business. The amount of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of all such transactions made during the Term, including those previously resulting in the Triggering Event. 4. Effect of Termination of Employment. (a) Involuntary Termination. In the event of your Involuntary Termination during the Term, you shall remain entitled to receive the Sale Bonus in the same manner as if your employment with the Company had continued for the duration of the Term. Thus, if following your Involuntary Termination during the term, a subsequent Triggering Event occurs during the Term, which results in a Change in Control at any time thereafter, you shall receive a your Sale Bonus at such time. (b) Other Termination. In the event that your employment terminates for any reason other than an Involuntary Termination at any time during the Term, you shall forfeit any right you may have to receive the Sale Bonus. 5. Notice. For the purpose of this Letter Agreement, notices and all other communications provided for in this Letter Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by telecopier or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Chief Executive Officer, The Grand Union Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973) 890-6012, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Letter Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding anything herein to the contrary, if the payment of the Sale Bonus and any other payments in connection with a Change in Control (together, the "Payments") constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and the amount of the Payments net the excise tax (as described in Section 4999 of the Code) payable with respect thereto is less than the amount to be paid to you if the aggregate Payments to be made to you were three times your "base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts of the Sale Bonus Payment constituting the parachute payment paid pursuant to this Agreement shall be reduced to an amount that will equal three times your base amount, less $1.00. 7. Miscellaneous. (a) No Rights to Continued Employment. Neither this Letter Agreement nor any of the rights or benefits evidenced hereby shall confer upon you any right to continuance of employment by the Company or interfere in any way with the right of the Company to terminate your employment, subject to the provisions of Section 4 above, for any reason, with or without Cause. 4 (b) Amendments, Waivers. No provision of this Letter Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Letter Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (c) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (d) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local wage withholdings. (e) Headings. The headings contained in this Letter Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Letter Agreement. (f) Governing Law. The validity, interpretation, construction and performance of this Letter Agreement shall be governed by the laws of the State of New Jersey applicable to contracts entered into and performed in such state. If this Letter Agreement sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject. Sincerely, The Grand Union Company By: /s/ Gary M. Philbin ------------------- Name: Gary M. Philbin President and Chief Executive Officer Agreed to as of this 31st day of August, 2000. /s/ Robert Smith - ---------------- Robert Smith 5 EX-27.1 20 0020.txt FINANCIAL DATA SCHEDULE
5 OTHER MAR-31-2000 JUL-22-2000 18,630 0 40,607 0 127,934 193,711 865,727 513,475 749,533 163,761 0 0 0 300 (54,462) 749,533 657,987 657,987 475,153 475,153 219,499 0 15,024 (51,689) 0 (51,689) 0 0 0 (51,689) (1.72) (1.72)
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