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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): January 5, 1998
THE GRAND UNION COMPANY
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(Exact Name of Registrant as Specified in its Charter
Delaware
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(State or Other Jurisdiction of Incorporation)
0-26602 22-1518276
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(Commission File Number) (I.R.S. Employer Identification No.)
201 Willowbrook Boulevard
Wayne, New Jersey 07470
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(Address of Principal Executive Offices) (Zip Code)
(973) 890-6000
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(Registrant's Telephone Number, Including Area Code)
Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
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NYFS03...:\18\50318\0005\1708\FRM1278L.08A
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Item 5. OTHER EVENTS.
I. On January 5, 1998, the Board of Directors of The Grand Union Company (the
"Company") elected Jack W. Partridge, Jr. to serve as the Chief Administrative
Officer of the Company. In connection with such appointment, the Company and Mr.
Partridge entered into an Employment Agreement (the "Employment Agreement"),
dated as of January 5, 1998 (the "Effective Date"). On January 15, 1998, Mr.
Partridge was elected Vice Chairman of the Board of Directors. The following
description of the Employment Agreement is qualified in its entirety by
reference to the full text of the Employment Agreement, filed as Exhibit 99.1
hereto and incorporated herein by reference.
The Employment Agreement provides, among other things, as follows:
(a) The term of Mr. Partridge's employment pursuant to the
Employment Agreement shall commence on the Effective Date and shall continue
until January 4, 2002 (the "Term").
(b) Mr. Partridge shall earn, and the Company shall pay, cash
compensation during the Term of:
(i) a one-time signing bonus of $75,000;
(ii) base salary at an annual rate of $350,000 per year,
prorated based on the actual number of weeks worked during the fiscal
years ending 1998 and 2002;
(iii) bonus compensation in an amount determined by the Company's
Compensation Committee based on the achievement of percentage and
performance targets established by the Compensation Committee, subject to
the following: (x) for the fiscal year ending March 28, 1998 and the first
half of the fiscal year ending March 27, 1999, the minimum bonus payable
for such period shall be 100% of Mr. Partridge's base salary paid for such
period; and (y) for the second half of the fiscal year ending March 27,
1999, the maximum bonus payable shall be 125% of Mr. Partridge's base
salary for the applicable period; and
(iv) payment or reimbursement of the reasonable costs of local
accommodations for Mr. Partridge and appropriate travel expenses for Mr.
Partridge between such accommodations and Wayne, New Jersey.
(c) The Company granted to Mr. Partridge options to purchase up to
450,000 shares (the "Options") of the Company's Common Stock on the terms and
subject to the conditions set forth below and in the Company's 1995 Equity
Incentive Plan, consisting of the following:
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(i) Options to purchase 175,000 shares at an exercise price
equal to $2.0625 (the closing price as reported by NASDAQ SmallCap Market
on the Effective Date), exercisable immediately;
(ii) Options to purchase 75,000 shares at an exercise price
equal to $2.0625, which shall become exercisable if and when the Company
shall have earnings before interest, tax, depreciation and amortization
expense of an aggregate of at least $147 million for any 13 continuous 4
week fiscal reporting periods commencing on the Effective Date and ending
on or before the end of the Company's fiscal year ending in 2000;
(iii) Options to purchase 100,000 shares at an exercise price
equal to $3.0625, exercisable on or after January 5, 1999; and
(iv) Options to purchase 100,000 shares at an exercise price
equal to $4.0625, exercisable on or after January 5, 2000.
(d) Mr. Partridge will be credited with seven (7) additional years
of service for purposes of the Company's Supplemental Retirement Plan for Key
Executives if he is employed by the Company on the fourth (4th) anniversary of
the Effective Date.
The Employment Agreement also contains provisions concerning other employee
benefits, rights or termination, payments and other benefits on termination
under certain circumstances, confidentiality, and non-competition, which are
customary for agreements with executives in Mr. Partridge's position.
II. Reference is made to the Press Release, dated January 27, 1998, attached
hereto as Exhibit 99.2 and incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Employment Agreement, dated as of January 5, 1998, by and
between The Grand Union Company and Jack W. Partridge, Jr.
99.2 Press Release, dated January 27, 1998.
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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 hereunto duly authorized.
THE GRAND UNION COMPANY
Dated: January 27, 1998 By: /s/ Jeffrey P. Freimark
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Name: Jeffrey P. Freimark
Title: Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit
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99.1 Employment Agreement, dated as of October 3, 1997, by and between The
Grand Union Company and Jack W. Partridge, Jr.
99.2 Press Release, dated January 27, 1998
EXHIBIT 99.1
EMPLOYMENT AGREEMENT
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AGREEMENT made as of this 5th day of January, 1998, by and
between The Grand Union Company, a Delaware corporation (the "Company"), and
Jack W. Partridge, Jr. (the "Employee").
WHEREAS, the Company desires to retain the exclusive services of
Employee and Employee desires to be employed by the Company for the term of this
Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants contained herein, the parties hereto agree as follows:
1. Duties.
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(a) The Employee shall be nominated for the position
of Vice-Chairman of the Board of Directors and shall serve as Chief
Administrative Officer of the Company or such other position as may be agreed
between the Employee and the Company, and shall perform such duties, services
and responsibilities as are consistent with such positions, including the
general management and supervision of the business and personnel of the Company
and its subsidiaries. The Employee's duties, services and responsibilities will
be performed under the overall supervision of the Chairman of the Board and
Chief Executive Officer of the Company and consistent with the policies of the
Board of Directors of the Company (the "Board of Directors").
(b) During the Employment Term (as hereinafter
defined), the Employee shall devote his full business time, attention and skill
to the performance of such duties, services and responsibilities, and will use
his best efforts to promote the interests of the Company. The Employee will not,
without the prior written approval of the Board of Directors, engage in any
other business activity which would interfere with the performance of his
duties, services and responsibilities hereunder or which is in violation of
policies established from time to time by the Company. The foregoing shall not
be construed to prohibit (i) the Employee's service as a member of the board of
directors or as an officer of any non-profit trade association or civic,
educational or charitable organization, or (ii) subject to the following proviso
and the provisions of Section 8(b), the Employee from making personal
investments of a passive nature; provided that such service or investments by
the Employee do not materially interfere with the performance by the Employee of
his duties, services and responsibilities hereunder.
(c) During the Employment Term, the Employee shall be
based at the Company's principal executive offices in Wayne, New Jersey, which
executive offices may be relocated within a 100-mile radius of the Company's
existing executive offices (such 100 mile radius of Wayne, New Jersey,
constituting the "Principal Office City"), except for reasonably required travel
in the performance of his duties, services and responsibilities hereunder.
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2. Term. The term of employment of the Employee
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hereunder shall commence as of the date hereof and shall continue in full force
and effect until the fourth anniversary of the date hereof (the "Employment
Term"), unless earlier terminated or extended as provided herein.
3. Compensation.
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(a) In exchange for Employee's execution of this
Agreement and the commencement of Employee's employment pursuant to the terms
herein, Employee shall be paid a one time signing bonus ("Signing Bonus") in the
gross amount of seventy-five thousand dollars ($75,000).
(b) In consideration of the performance by the
Employee of the Employee's obligations during the Employment Term (including any
services as an officer, director, employee, member of any committee of the
Company or any of its subsidiaries, or otherwise), the Company will, during the
Employment Term, pay the Employee a salary (the "Salary") at an annual rate of
$350,000.
(c) During the term of this Agreement, Employee shall
be eligible to receive bonus compensation at the end of each fiscal year of the
Company in an amount to be determined by the Compensation Committee (as
hereinafter defined) of the Board of Directors. The bonus compensation payable
to Employee for each fiscal year during the Employment Term shall be based on
percentage and performance targets determined by the Compensation Committee of
the Board of Directors to provide for bonus compensation of up to 100% of the
Salary for a fiscal year in which the Company achieves the designated
performance targets; provided, however, that bonus compensation paid to the
Employee in respect of each of the fiscal year ending March 28, 1998 and the
first half of the fiscal year ending March 27, 1999 shall be at least 100% of
the Salary paid to Employee for such period (the "100% Guarantee"). Such bonus
compensation, including the 100% Guarantee, shall be prorated (based on the
number of weeks worked by Employee during the fiscal year in question) for each
of the fiscal year ending March 28, 1998, the first half of the fiscal year
ending March 27, 1999, and the fiscal year ending in March 2002. The amount of
bonus compensation in any year shall be determined pursuant to the Executive
Annual Incentive Bonus Plan (the "Bonus Plan"), which was approved by the
Company's shareholders on November 20, 1997, in a manner consistent with Section
162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)"), and
the regulations promulgated thereunder and based on the achievement of
performance targets in such fiscal years, which performance targets shall be
established by the Compensation Committee of the Board of Directors pursuant to
the Bonus Plan.
(d) The Salary shall be payable in accordance with the
normal payroll practices of the Company then in effect. The Salary, and all
bonuses or other forms of compensation paid to the Employee hereunder, shall be
subject to all applicable taxes required to be withheld by the Company pursuant
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to federal, state or local law. The Employee shall be solely responsible for
income taxes imposed on the Employee by reasons of any cash or non-cash
compensation and benefits provided hereunder.
(e) Employee shall be eligible to participate in the
Company's Supplemental Retirement Plan for Key Executives (the "Plan"). Upon
Employee's retirement from the Company on or after the fourth anniversary of the
date of this Agreement, for purposes of calculation of the "target benefit"
under the Plan, Employee shall be credited with eleven (11) years of service
under the Plan if Employee retires on the fourth anniversary of the date of this
Agreement and shall also be credited with one additional year of service for
each additional year during which Employee is employed with the Company after
the fourth anniversary of the date of this Agreement. If the Employee's
employment with the Company terminates pursuant to Section 6(a)(vi) or Section
6(a)(vii)(x) of this Agreement prior to the fourth anniversary of the date of
this Agreement, for purposes of calculation of the "target benefit" under the
Plan, Employee shall be credited with a number of years of service equal to the
sum of (a) the actual number of years of employment of the Employee with the
Company and (b) seven (7) years of service. If the Employee terminates his
employment with the Company other than for Good Reason under this Agreement
prior to the fourth anniversary of the date of this Agreement, for purposes of
the "target benefit" under the Plan, Employee shall be credited with a number of
years of service equal to the actual years of employment of the Employee with
the Company.
(f) The Employee shall be entitled to participate in
any employee benefit plans (including any life insurance plan) then in effect
for similarly situated employees to the extent the Employee meets the
eligibility requirements for any such plan.
(g) The Employee shall be entitled to four weeks
vacation (in addition to the usual holidays) during each year during which the
Employee serves hereunder. Such vacation shall be taken at such time or times as
may be agreed between the Employee and the Company. Vacation not taken during
any year during the Employment Term will not be carried forward.
(h) If (i) the Employee is absent from work for more
than 180 calendar days in any twelve-month period by reason of illness or
incapacity (whether physical or otherwise) or (ii) the Company reasonably
determines that the Employee is unable to perform his duties, services and
responsibilities hereunder by reason of illness or incapacity (whether physical
or otherwise) for more than 180 calendar days in any twelve-month period during
the Employment Term ("Disability"), the Company shall not be obligated to pay
the Employee any compensation (Salary or bonus) for any period in excess of such
180 days; furthermore, any such payments during such 180-day period shall be
reduced by any amount the Employee is entitled to receive as a result of such
disability under any plan provided through the Company or under state or federal
law.
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4. Stock Option.
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(a) The Company hereby grants Employee an option
(the "Option") to purchase up to 450,000 shares of Common Stock.
(b) Except as otherwise provided in this Agreement, the
Option shall be exercisable, on a cumulative basis, at the times and prices as
follows:
(i) up to 175,000 of the total shares
subject to the Option may be purchased by Employee on or after the date hereof
at an exercise price equal to the closing price of the Common Stock on the
NASDAQ SmallCap Market on the date hereof (the "Initial Exercise Price");
(ii) up to an additional 100,000 shares of
the total shares subject to the Option may be purchased by Employee on or after
the first anniversary of the date hereof, at an exercise price equal to the
Initial Exercise Price plus one dollar ($1.00);
(iii) up to an additional 100,000 shares of
the total shares subject to the Option may be purchased by Employee on or after
the second anniversary of the date hereof, at an exercise price equal to the
Initial Exercise Price plus two dollars ($2.00); and
(iv) up to an additional 75,000 shares
subject to the Option may be purchased by Employee at an exercise price equal to
the Initial Exercise Price; provided that such shares may only be purchased if
the Company shall have had EBITDA of an aggregate of at least $147 million for
any 13 continuous 4 week fiscal reporting periods ending on or before the end of
the Company's fiscal year ending in March/April 2000; and further provided that
the Option to purchase such shares shall immediately terminate if the Company
has not satisfied such EBITDA threshold by the end of the Company's fiscal year
ending in March/April 2000.
(c) Subject to earlier termination as described above
or below, the Option shall expire on the tenth anniversary of the date hereof.
(d) If the Employee's employment with the Company
terminates pursuant to Section 6(a)(i), 6(a)(vi) or Section 6(a)(vii)(x) hereof,
the Option shall immediately become exercisable by Employee, for any and all of
such number of shares subject to the Option, at any time up to and including
thirty days after the effective date of such termination of employment after
which the Option shall terminate with respect to all shares covered thereby. If
the Employee's employment with the Company terminates pursuant to Section
6(a)(ii) or Section 6(a)(v) hereof, the portion of the Option which is then
exercisable may be exercised by Employee (or Employee's executor or
administrator or the person or persons to whom the Option is transferred by will
or the applicable laws of descent and distribution) at any time up to and
including thirty days after the effective date of such termination of employment
after which the Option shall terminate with respect to all shares covered
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thereby. If the employment of Employee with the Company shall terminate for any
reason other than as specifically provided in the immediately preceding two
sentences, including, without limitation, termination by the Company for "Cause"
or termination by the Employee for any reason other than Good Reason, the Option
shall terminate and become null and void, as of the effective date of such
termination.
(e) The Option is being granted pursuant to the 1995
Equity Incentive Plan.
5. Relocation and Relocation Expenses. Without limiting the
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Employee's responsibilities under Section 1, Employee may reside at Employee's
principal residence (Employee's Principal Residence") throughout the duration of
the Employment Term, which Employee's Principal Residence may be outside the
Principal Office City. During such time as Employee resides at Employee's
Principal Residence and such residence is not in the Principal Office City:
(i) Employee may commute between the Employee's
Principal Residence and the Principal Office City; provided, however, if within
two years of the date hereof, Employee relocates his residence to the Principal
Office City, Employee shall be eligible for the full benefits available under
the Company's Executive Relocation Program; and
(ii) the Company agrees to pay, or reimburse, Employee
for the reasonable costs of an apartment or condominium in the Principal Office
City to serve as local accommodations for Employee and for appropriate travel
expenses between the Employee's Principal Residence and the Principal Office
City, upon submission by Employee to the Chief Executive Officer (or his
designee or designees) of vouchers or expenses statements satisfactorily
evidencing such expenses. The reimbursement of expenses under this sub-paragraph
shall be taxable income to Employee and shall be subject to appropriate gross-up
procedures in order to make Employee whole for such expenses.
6. Termination.
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(a) Except as otherwise provided in this Agreement,
the employment of Employee hereunder and the Employment Term shall terminate
upon the earliest to occur of the dates specified below:
(i) the close of business on the date of
expiration of the Employment Term;
(ii) the close of business on the date of the
Employee's death;
(iii) the close of business on an early
termination date mutually agreed to in writing by the Company and the Employee;
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(iv) the close of business on the day on
which the Company shall have delivered to the Employee a written notice of the
Company's election to terminate his employment for "Cause" (as defined in
Section 6(c) hereof);
(v) the close of business on the day on
which the Company shall have delivered to the Employee a written notice of the
Company's election to terminate his employment because of Disability;
(vi) the close of business on the day
following the date on which the Board of Directors shall have adopted a
resolution terminating the employment of the Employee hereunder and such
termination is not for death, Cause or Disability; or
(vii) the close of business on the date which
is five business days after the date on which the Employee delivers to the
Company a written notice of the Employee's election to terminate his employment
hereunder (x) for "Good Reason" (as defined in Section 6(d) hereof) or (y) for
any other reason.
(b) Any purported termination by the Company or by the
Employee pursuant to Section 6(a) (iv)-(vii) hereof shall be communicated by
written "Notice of Termination" to the other party. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which indicates
the specific termination provision in this Agreement relied upon and which sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the provision so
indicated. For purposes of this Agreement, no such purported termination shall
be effective without delivery of such Notice of Termination.
(c) For purposes of this Agreement, termination of
employment for "Cause" shall mean termination based on (i) the Employee's
material breach of this Agreement, or (ii) any other conduct by the Employee
constituting valid cause for termination under the laws of the State of New
Jersey.
(d) For purposes of this Agreement, the term "Good
Reason" shall mean any material breach by the Company of this Agreement;
provided, however, that Employee first delivers written notice thereof to the
Chief Financial Officer of the Company and the Company shall have failed to cure
such breach within thirty (30) days after receipt of such written notice.
(e) In the event of termination of this Agreement, for
whatever reason, the Employee agrees to cooperate with the Company and to be
reasonably available to the Company with respect to continuing and/or future
matters arising out of the Employee's employment or any other relationship with
the Company, whether such matters are business-related, legal or otherwise. The
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Company agrees to reimburse the Employee for the Employee's reasonable travel
expenses incurred in complying with the terms of this paragraph upon delivery by
the Employee to the Company of valid receipts for such expenses. The provisions
of this paragraph shall survive termination of this Agreement.
7. Termination Payments. If the Employee's employment with
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the Company terminates for whatever reason, the Company will pay the Employee
any portion of the Salary accrued hereunder on or prior to the date of
termination but not paid. If the Employee's employment with the Company
terminates pursuant to Section 6(a)(vi) or Section 6(a)(vii)(x) hereof, the
Company will pay the Employee any portion of Employee's bonus compensation
pursuant to Section 3(c) hereof which has accrued hereunder on or prior to the
date of termination but has not been paid (the "Prorata Bonus"). The Prorata
Bonus shall be calculated by: (i) annualizing the Company's performance through
the date of termination for the fiscal year in question; (ii) determining the
bonus compensation due to the Employee pursuant to Section 3(c) hereof on the
basis of the Company's annualized results for the fiscal year in question; and
(iii) prorating the bonus compensation based on the number of weeks worked by
the Employee during the fiscal year in question. Except for purposes of this
Section 7, the Employee's bonus compensation pursuant to Section 3(c) for any
fiscal year shall not be deemed to have been accrued prior to the completion of
the fiscal year in question. If the Employee's employment with the Company
terminates pursuant to Section 6(a)(vi) or Section 6(a)(vii)(x) hereof, the
Company will continue to pay the Employee an amount equal to the Employee's
Salary (at the salary rate in effect on the date of termination of the
Employee's employment hereunder) until the fourth anniversary of the date
hereof.
The foregoing payments upon termination shall constitute the
exclusive payments due the Employee upon termination under this Agreement, but
shall have no effect on any benefits which may be due the Employee under any
plan of the Company which provides benefits after termination of employment.
8. Employee Covenants.
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(a) Unauthorized Disclosure. The Employee agrees and
understands that in the Employee's position with the Company, the Employee will
be exposed to and receive information relating to the confidential affairs of
the Company, including but not limited to technical information, business and
marketing plans, strategies, customer information, other information concerning
the Company's products, promotions, development, financing, expansion plans,
business policies and practices, and other forms of information considered by
the Company to be confidential and in the nature of trade secrets. Except to the
extent that the proper performance of the Employee's duties, services and
responsibilities hereunder may require disclosure, and except as such
information (i) was known to the Employee prior to his employment by the Company
or (ii) was or becomes generally available to the public other than as a result
of a disclosure by the Employee in violation of the provisions of this Section
8(a), the Employee agrees that during the Employment Term and thereafter the
Employee will keep such information confidential and not disclose such
information, either directly or indirectly, to any third person or entity
without the prior written consent of the Company. This confidentiality covenant
has no temporal, geographical or territorial restriction. Upon termination of
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the Employee's employment under this Agreement, the Employee will promptly
supply to the Company all property, keys, notes, memoranda, writings, lists,
files, reports, customer lists, correspondence, tapes, disks, cards, surveys,
maps, logs, machines, technical data or any other tangible product or document
which has been produced by, received by or otherwise submitted to the Employee
during or prior to the Employment Term.
(b) Non-competition. By and in consideration of the
Company's entering into this Agreement and the Salary and benefits to be
provided by the Company hereunder, and further in consideration of the
Employee's exposure to the proprietary information of the Company, the Employee
agrees that, subject to the provisions of the last two sentences of Section
1(b), the Employee will not, during the Employment Term, directly or indirectly
own, manage, operate, join, control, be employed by, or participate in the
ownership, management, operation or control of or be connected in any manner,
including but not limited to holding the positions of shareholder, director,
officer, consultant, independent contractor, employee, partner, or investor,
with any Competing Enterprise. For purposes of this paragraph, the term
"Competing Enterprise" shall mean any person, corporation, partnership or other
entity operating one or more supermarkets within a ten (10) mile radius of any
Company store if the aggregate of such Company stores (x) represent ten percent
(10%) or more of the total number of Company stores operating at the date of
termination (or other applicable date invoking the application of this
non-compete clause) or (y) account for ten percent (10%) or more of the annual
sales volume of the Company for the fiscal year immediately preceding the year
of termination (or other applicable date invoking application of this
non-compete clause). For this purpose, (1) "supermarket" means any store which
is part of a supermarket or combination store chain or is a warehouse club
selling grocery and perishable items to the public and (2) any entity operating
supermarkets includes any wholesaler to independently-owned supermarkets
operating under the same tradename. The prohibition of this clause (b) shall not
be deemed to prevent Employee from owning 1% or less of any class of equity
securities of an entity that has a class of equity securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended. Notwithstanding
anything to the contrary in this Section 8(b), the non-competition clause
contained in this Section 8(b) shall immediately terminate on the effective date
of termination of the Employee's employment with the Company unless such
termination is by the Company for Cause or is by the Employee without Good
Reason, in which case the non-competition clause contained in this Section 8(b)
shall remain in full force and effect until the fourth anniversary of the date
hereof.
(c) Non-solicitation. During the Employment Term and
for a period of two years thereafter, the Employee shall not interfere with the
Company's relationship with, or endeavor to entice away from the Company, any
person who at any time during the Employment Term was an employee or customer of
the Company or otherwise had a material business relationship with the Company.
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(d) Transactions Offered to the Corporation;
Proprietary Materials. During the term of his employment hereunder, Employee
agrees to bring to the attention of the Board of Directors or the Chief
Financial Officer, all proposals, business opportunities or investments of
whatever nature, in areas in which the Company and/or any of its subsidiary
companies is active or may be interested in becoming active, which are created
or devised by Employee or come to the attention of Employee and which might
reasonably be expected to be of interest to the Company and/or any its
subsidiary companies. Without limiting the generality of the foregoing, Employee
acknowledges and agrees that memoranda, notes, records and other documents made
or compiled by Employee or made available to Employee during the term of this
Agreement concerning the business and/or activities of the Company and/or any of
its subsidiary companies shall be the Company's property and shall be delivered
by Employee to the Chief Financial Officer upon termination of this Agreement or
at any other time at the request of the Board of Directors.
(e) Remedies. The Employee agrees that any breach of
the terms of this Section 8 would result in irreparable injury and damage to the
Company for which the Company would have no adequate remedy at law; the Employee
therefore also agrees that in the event of said breach or any threat of breach,
the Company shall be entitled to an immediate injunction and restraining order
to prevent such breach and/or threatened breach and/or continued breach by the
Employee and/or any and all persons and/or entities acting for and/or with the
Employee, without having to prove damages, in addition to any other remedies to
which the Company may be entitled at law or in equity. The terms of this
paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including but not limited
to the recovery of damages from the Employee.
The provisions of subsections (a), (b), (c), (d) and (e) of this
Section 8 shall survive any termination of this Agreement and the Employment
Term. The existence of any claim or cause of action by the Employee against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants and agreements of
this Section 8.
9. Notices. Any notice or other communication required or
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permitted hereunder shall be in writing and shall be deemed to have been given
(i) if personally delivered, when so delivered, or (ii) if mailed, three (3)
business days after having been placed in the United States mail, registered or
certified, postage prepaid, addressed to the party to whom it is directed at the
address set forth below:
If to the Company:
The Grand Union Company
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201 Willowbrook Boulevard
Wayne, New Jersey 07470
Attention: one copy to the Chief Financial Officer and
one copy to the General Counsel
If to the Employee:
Jack W. Partridge, Jr.
by registered or certified mail, postage prepaid, return receipt requested.
10. Binding Effect/Assignment. This Agreement shall inure
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to the benefit of and be binding upon the parties hereto and their respective
heirs, executors, personal representatives, estates, successors (including,
without limitation, by way of merger) and assigns. Notwithstanding the
provisions of the immediately preceding sentence, the Employee shall not assign
all or any portion of this Agreement without the prior written consent of the
Company.
11. Entire Agreement. This Agreement sets forth the entire
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understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, between them as to such
subject matter. This Agreement may not be amended, nor may any provision hereof
be modified or waived, except by an instrument in writing duly signed by the
party to be charged.
12. Severability. If any provision of this Agreement, or
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any application thereof to any circumstances, is invalid, in whole or in part,
such provision or application shall to that extent be severable and shall not
affect other provisions or applications of this Agreement.
13. Governing Law. This Agreement shall be governed by and
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construed in accordance with the internal laws of the State of New Jersey,
without reference to the principles of conflict of laws.
14. Modifications and Waivers. No provisions of this
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Agreement may be modified, altered or amended except by an instrument in writing
executed by the parties hereto. No waiver by either party hereto of any breach
by the other party hereto of any provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions at
the time or at any prior or subsequent time.
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15. Headings. The headings contained herein are solely for
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the purposes of reference, are not part of this Agreement and shall not in any
way affect the meaning or interpretation of this Agreement.
16. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by authority of its Board of Directors, and the Employee has hereunto
set his hand, as of the day and year first above written.
THE GRAND UNION COMPANY
By: /s/ J. Wayne Harris
-------------------------------------
Name: J. Wayne Harris
Title: Chairman of the Board and
Chief Executive Officer
/s/ Jack W. Partridge, Jr.
-------------------------------------
Jack W. Partridge, Jr. (Employee)
11
EXHIBIT 99.2
For further information, contact:
Jim Fingeroth/Wendi Kopsick
Kekst and Company
(212) 521-4800
FOR IMMEDIATE RELEASE
- ---------------------
GRAND UNION REPORTS THIRD QUARTER AND 40-WEEK RESULTS
-RETAINS FINANCIAL ADVISOR TO CONSIDER CAPITAL STRUCTURE-
WAYNE, NJ, JAN. 27, 1998 -- The Grand Union Company ("GUCO" - NASDAQ
SmallCap) today reported improved results for its 12-week third quarter ended
January 3. The Company also said that it has retained a financial advisor to
assist in considering alternatives for revising its capital structure to best
position the Company for long-term profitable growth.
With five fewer stores, total sales for the third quarter of fiscal
1998 declined by 0.5% from $537.2 million to $534.3 million. Comparable store
sales, however, increased 1.2% over last year and represented a significant
improvement over the 1.7% decline in comparable store sales reported for the
first half.
EBITDA (earnings before interest, taxes, depreciation and
amortization) was $26.2 million ($2.62 per share) during the third quarter,
compared to $26.0 million ($2.60 per share) during the comparable quarter of the
prior year. Third quarter EBITDA represents the second quarter of an improving
trend.
Sales for the Company's 40 week period were $1,761.2 million, a
decrease of 2% from sales of $1,797.4 million during the same period of the
prior year. Comparable store sales decreased by 0.7%. EBITDA for the 40 weeks
was $49.3 million ($4.93 per share), compared to $97.3 million ($9.73 per share)
during the same period of the prior year.
J. Wayne Harris, Chairman of the Board and Chief Executive Officer,
said, "We made substantial progress in improving sales and EBITDA performance
during the third quarter. Our results reflect a return to normal gross margins,
increased advertising/promotional allowance income, stronger promotional
programs, better store inventory levels, and good expense control."
Mr. Harris said, "The Company reduced its SG&A expenses by 142 basis
points during the quarter compared to the prior year. Reinvesting those savings
in store programs and services has made us more competitive in the
NYFS03...:\18\50318\0003\1708\RPT1278M.010
<PAGE>
marketplace. In addition, our associates have responded very positively to our
goal of re-establishing Grand Union as one of the premier regional food chains."
Grand Union said that it has retained Salomon Smith Barney as its
financial advisor to assist the Company in evaluating various financial
alternatives available to it, including a possible capital restructuring. It is
not known at this preliminary stage of the analysis what impact any capital
restructuring might have on the Company's outstanding debt and equity
securities.
Grand Union believes that none of the alternatives it may pursue
will adversely affect its ordinary business operations, or its ability to pay
operating expenses or trade obligations necessary to conduct its business.
Mr. Harris said, "While we are making progress in improving our
operating performance, the Company's highly-leveraged debt position continues
to constrain our future growth. We believe it is essential that we address the
capital structure issue."
"Grand Union has a number of powerful strengths," he said,
"including an excellent base of 222 very well-located stores, a 126-year-old
brand name that is known and respected by consumers, and a new top management
team that brings substantial supermarket industry experience to the Company.
This team has begun taking the necessary steps to achieve long-term profitable
growth. We are beginning to see the benefits of those steps, but we believe it
is imperative that we create a new capital structure that will support, and not
inhibit, the continuation of our efforts."
During the quarter, the Company announced the election of Jack W.
Partridge as Vice Chairman of the Board, Chief Administrative Officer and a
Director. Mr. Partridge was formerly a Group Vice President with The Kroger Co.,
where he had a distinguished 23-year career. His election follows the election
of Gary M. Philbin as President, Chief Merchandising Officer and a Director in
October, 1997; Mr. Harris was elected Chairman and Chief Executive Officer in
August, 1997, and Jeffrey P. Freimark was elected as Executive Vice President
and Chief Financial Officer in March, 1997.
The Company reported net losses applicable to common stock of $47.9
million ($4.79 per share) during the third quarter, compared to net losses of
$32.5 million ($3.25 per share) during the third quarter of the prior year. For
the 40 weeks, the Company reported net losses of $188.2 million ($18.82 per
share), compared to net losses of $107.2 million ($10.72 per share) during the
comparable period of the prior year. Last year's results were
2
<PAGE>
positively impacted by an income tax benefit of $6.7 million in the third
quarter and $18.1 million for the 40 weeks ended January 4, 1997; no similar tax
benefit was recorded in the current year. This year's third quarter and 40 weeks
were negatively impacted by a $3.6 million unusual item, including $3.0 million
in charges incurred for the reorganization of the Company during this fiscal
year.
Grand Union currently operates 222 retail food stores under the
Grand Union trade name in six Northeastern states.
The matters discussed herein are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. 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. For additional
information about the Company and its various risk factors, please see the
Company's most recent Form 10-K dated March 29, 1997, the Company's most recent
Form 10-Q dated October 11, 1997, and other documents as filed with the
Securities and Exchange Commission.
3
<PAGE>
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
12 WEEKS ENDED 40 WEEKS ENDED
------------------------------------------- -----------------------------------------
January 3, January 4, January 3, January 4,
1998 1997 1998 1997
------------------ ------------------ ------------------- -----------------
<S> <C> <C> <C> <C>
Sales $534,320 $537,151 $1,761,214 $1,797,386
Cost of sales (377,215) (372,816) (1,269,566) (1,248,994)
------------- ------------ -------------- ---------------
Gross profit 156,205 164,335 491,648 548,392
Operating and administrative expenses (130,044) (138,373) (442,369) (451,060)
Depreciation and amortization (16,593) (16,257) (61,369) (61,402)
Amortization of excess reorganization value (24,077) (23,678) (80,255) (78,928)
Unusual items (1) (3,665) - (3,665) -
Interest expense, net (27,654) (24,391) (85,986) (81,252)
------------- ------------ -------------- ---------------
Loss before income taxes (45,828) (38,364) (181,996) (124,250)
Income tax benefit - 6,687 - 18,108
------------ ----------- ------------- --------------
Net (loss) (45,828) (31,677) (181,996) (106,142)
Accrued dividends on preferred stock (2,096) (788) (6,226) (1,031)
------------- ------------ -------------- ---------------
Net (loss) applicable to common stock $(47,924) $(32,465) $(188,222) $(107,173)
============= ============ ============== ===============
Net (loss) per common share $(4.79) $(3.25) $(18.82) $(10.72)
============= ============ ============== ===============
</TABLE>
(1) Unusual item: Includes additional expense of $3.0 million to supplement a
reserve set at fiscal 1997 for the reorganization of the Company during fiscal
1998.
4
