Employment Agreement

Amendment to Employment Agreement

Change in Control Agreement

Severance Agreement

First Amendment to Severance Agreement 

Second Amendment to Severance Agreement 

Third Amendment to Severance Agreement 

 

EX-10.1 4 a13-2673_1ex10d1.htm EX-10.1

EXHIBIT 10.1

 

[SUPERVALU Letterhead]

 

Corporate Offices
PO Box 990
Minneapolis, MN  55440
(952) 828-4000

 

January 10, 2013

 

Sam Duncan
8612 NW 21
st Avenue

Vancouver. WA 98665

 

Dear Sam:

 

We are pleased to outline the terms of your employment in the position of President and Chief Executive Officer of SUPERVALU INC (the “Company”) beginning as of the Commencement Date (as defined below).  We look forward to benefiting from your experience, knowledge and leadership in your new role with the Company.  This letter agreement will become effective coincident with, and is contingent upon the earlier to occur of, the “Offer Closing” and the “Issuance” (each as defined in Tender Offer Agreement, by and between Symphony Investors LLC and the Company, dated as of January 10, 2013 (the “Tender Offer Agreement”)).  If the Offer Closing and the Issuance do not occur, this letter agreement will be void ab initio and of no force or effect.

 

The specific terms of your employment are as follows:

 

TERM:  This letter agreement shall have a three-year term, beginning on the earlier of (i) the “Offer Closing Date” (as defined in the Tender Offer Agreement) and (ii) the date of the Issuance (in the case of either (i) or (ii), the “Commencement Date”) and ending on the third anniversary of the Commencement Date, unless terminated earlier by either party at any time and for any reason (the “Term”).  The Term is subject to extension only by a mutual, written, signed agreement by you and the Company.

 

POSITIONS AND DUTIES:  While you are employed during the Term, you will (i) serve in the positions of President and Chief Executive Officer of the Company, (ii) have authority, duties and responsibilities that are commensurate with such positions and as are customarily exercised by a person holding such positions in an organization of a similar size and nature to the Company, including, without limitation, (A) overall responsibility for leading and supervising all of the Company’s businesses and operations, (B) responsibility for developing, refining and implementing the Company’s strategic plans, (C) hiring, supervising and firing of your direct

 



 

reports, and (D) such other duties as the Board of Directors of the Company (the “Board”) may assign to you from time to time, and (iii) report directly to the Board.  In addition, the Board will take such action as may be necessary to appoint or elect you as a member of the Board as soon as practicable following the appointment of the two Additional Directors (as defined in the Tender Offer Agreement).  Thereafter, during the Term, the Board will nominate you for re-election as a member of the Board at the expiration of your then-current term and at the expiration of each term thereafter.

 

SIGNING BONUS:  You will be paid a signing bonus of $500,000 to be paid within thirty days following the Commencement Date.  This signing bonus is subject to all applicable taxes and withholdings.

 

SALARY:  You will earn a base salary while you are employed by the Company during the Term at an annualized rate of $1,500,000 (subject to applicable taxes and withholdings) (“Base Salary”), which will be paid in substantially equal installments in accordance with the Company’s payroll policies.

 

CASH BONUS:  You will have the opportunity to earn a bonus for each fiscal year of the Company that you are employed by the Company during the Term, with a minimum of zero, a target of 100% of your Base Salary and a maximum of 200% of your Base Salary, to be paid not later than 2-1/2 months following the end of such fiscal year (subject to your continued employment through such payment date).  The bonus shall be based on the attainment of performance goals proposed by the Company’s management to, and subject to the final approval of, the Leadership Development and Compensation Committee of the Board (the “Compensation Committee”) and shall be pro-rated on a linear basis for levels attained between the minimum, target and maximum.

 

INITIAL EQUITY GRANT:  On the Commencement Date, the Company will grant you stock options to acquire 1,500,000 shares of Company common stock (the “Initial Stock Options”) pursuant to the terms and conditions of the Company’s 2012 Stock Plan (the “2012 Plan”) with an exercise price equal to the closing price of a share of Company common stock on the New York Stock Exchange on the grant date.  The Initial Stock Options shall have the same terms and conditions as stock options generally granted during the Company’s fiscal year ending February 22, 2014 (“FY 2014”) to other executives of the Company under the 2012 Plan; providedthat, the Initial Stock Options shall vest in three equal annual installments on each anniversary of the grant date, with accelerated vesting of the Initial Stock Options upon the achievement of a per share price of Company common stock (such price, and the duration for which it must be maintained, to be established by the Compensation Committee and reflected in the Initial Stock Options grant agreement), in each case subject to continued employment through the applicable vesting date.

 

ANNUAL EQUITY GRANTS:  As soon as practicable following the Commencement Date, the Company shall grant you an annual equity award for FY 2014 in the form of stock options and/or performance shares, with the grant date fair value, allocation between stock options and performance shares, performance metrics and other terms and conditions to be determined by the

 

2



 

Board or the Compensation Committee (as constituted following the Commencement Date).  For any fiscal years of the Company following FY 2014, the Company will grant you annual equity awards in the form of stock options and/or performance shares at the same time as annual equity awards are granted to similarly situated executives of the Company if you remain employed with the Company on such grant date, with the grant date fair value, allocation between stock options and performance shares, performance metrics and other terms and conditions to be determined by the Board or the Compensation Committee.

 

Equity Awards Holding Period.  You acknowledge and agree that you are (i) subject to the Company’s Executive Stock Ownership and Retention Program, as in effect from time to time, and (ii) required to hold all shares of Company common stock that you receive either (A) upon the exercise of stock options or (B) the vesting of any equity awards other than stock options, in each case for a one-year period following the exercise date or vesting date (the “Holding Period Requirement”), as applicable; providedhowever, that the Holding Period Requirement will not apply to any shares of Company common stock that you elect to dispose of in order to pay the exercise price of stock options or satisfy income and employment tax liabilities with respect to such exercise or vesting (to the extent permitted by the terms of the 2012 Plan or the applicable award agreements).

 

BENEFITS:  In addition to your compensation described in the preceding paragraphs, you will be able to participate in the Company’s comprehensive benefits programs.  These programs are summarized in a document that you will receive from the Company.  You will also be entitled to reasonable personal use of the Company’s aircraft as approved by the Compensation Committee, provided that you will be responsible for all taxes incurred by you in connection with any such use.

 

REIMBURSEMENT OF EXPENSES:  The Company will pay or reimburse you for all reasonable travel and other business related expenses incurred by you in performing your duties as President and Chief Executive Officer in accordance with the Company’s policies and procedures as in effect from time to time; providedhowever that the Company will not reimburse you for living expenses incurred by you in Minnesota or elsewhere.

 

PAID TIME OFF:  The Company has a Paid Time Off (PTO) policy that provides a bank of paid time for needs such as vacation, personal illness, family needs, etc.  You will be eligible for 27 days of PTO annually, which will be prorated during your first year of employment based on the Commencement Date.

 

EXECUTIVE DEFERRED COMPENSATION PLAN:  You will be eligible to participate in the Company’s Executive Nonqualified Deferred Compensation Plan which provides pretax deferrals of your base salary, as well as tax deferred growth and credited interest.  Enrollment in this plan occurs in December of each year.

 

NO OTHER ARRANGEMENTS:  You represent and warrant that as of the date hereof, except as previously disclosed to the Company in writing, you (i) are not party to any agreements or compensatory arrangements with Cerberus Capital Management, L.P., Albertson’s, LLC or any

 

3



 

of their respective affiliates (each, a “Buyer Entity” and, collectively, the “Buyer Entities”), and (ii) do not have any investments in or with any of the Buyer Entities.  Furthermore, you acknowledge and agree that, from the date hereof and through the Commencement Date and at any time while you are employed by the Company, you will not enter into or become a party to any agreements or compensatory arrangements with a Buyer Entity and you will not make any investments in or with a Buyer Entity,  in each such situation without the prior consent of the Board.

 

MISCELLANEOUS:  Your employment with the Company will be “at will.”  “At-will” means that either you or the Company are free to terminate the employment relationship at any time, for any reason. This letter agreement does not change the nature of your “at-will” employment and does not guarantee employment for any specific period of time.  Your status as an “at-will” employee cannot be modified except by written agreement signed by the Chair of the Compensation Committee.  Your employment is conditional upon your successful completion of the required drug screen and/or background check and your failure to successfully complete the foregoing shall result in this letter agreement being void ab initio and of no force or effect.  The Company maintains an Executive & Officer Severance Pay Plan and should your employment be terminated (other than under circumstances entitling you to severance benefits under your COC Agreement) your eligibility for severance will be determined under the terms of that plan, as in effect at the time of such termination of employment.  In addition, you will be provided with a COC Agreement, with terms consistent with COC Agreements of other senior executives of the Company, that will become effective on the Commencement Date.  In the event that you become entitled to severance payments or benefits under the Executive & Officer Severance Pay Plan or the COC Agreement, as applicable, such payments and benefits will be your sole and exclusive severance payments and benefits and you will not be entitled to any other severance payments or benefits from the Company, including, without limitation, continued base salary or bonus entitlements pursuant to this letter agreement.  For the avoidance of doubt, the transactions contemplated by the Tender Offer Agreement and any related transaction shall not constitute a Change of Control for the purposes of your COC Agreement.

 

NON-COMPETE, NON-SOLICITATION, CONFIDENTIALITY AND MANDATORY ARBITRATION:  By accepting this offer, you agree to the Confidentiality, Non-Compete, and Non-Solicitation provisions contained in the “Terms and Conditions of Employment” attached as Exhibit A, and that are incorporated herein by reference.  You also agree that any and all employment disputes occurring during or after your employment with the Company are subject to mandatory arbitration as set forth in the “Terms and Conditions of Employment”.

 

LEGAL FEES:  Upon presentation of appropriate documentation, the Company will pay or reimburse you for your reasonable counsel fees incurred in connection with the negotiation and documentation of this letter agreement up to a maximum of $50,000 in the aggregate.

 

ENTIRE AGREEMENT:  This letter agreement is intended to be the entire agreement between the Company and you with respect to the matters described herein.  No waiver or modification shall be valid unless made in writing, signed by both you and the Chair of the Compensation Committee.

 

4



 

SECTION 409A.  The Company and you intend that the payments and benefits provided for in this letter agreement either be exempt from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations thereunder, or be provided in a manner that complies with Section 409A of the Code, and any ambiguity herein shall be interpreted so as to be consistent with the intent of this paragraph.  Notwithstanding anything contained herein to the contrary, all payments and benefits paid on account of your termination of employment shall be paid or provided only at the time of a termination of your employment that constitutes a “separation from service” from the Company within the meaning of Section 409A of the Code and the regulations and guidance promulgated thereunder (determined after applying the presumptions set forth in Treas. Reg. Section 1.409A-1(h)(1)).  Further, if at the time of your termination of employment with the Company, you are a “specified employee” as defined in Section 409A of the Code as determined by the Company in accordance with Section 409A of the Code, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax or interest on account of Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in payments or benefits ultimately paid or provided to you) until the date that is at least six (6) months following your termination of employment with the Company (or the earliest date permitted under Section 409A of the Code), whereupon the Company will pay you a lump-sum amount equal to the cumulative amounts that would have otherwise been previously paid to you under this letter agreement during the period in which such payments or benefits were deferred.  For purposes of the limitations on non-qualified deferred compensation under Section 409A of the Code, each payment of compensation under this letter agreement shall be treated as a separate payment of compensation for purposes of applying the exclusion under Section 409A of the Code for certain short-term deferral amounts.  In no event may you, directly or indirectly, designate the calendar year of any payment under this letter agreement.

 

Notwithstanding anything to the contrary in this letter agreement, in-kind benefits and reimbursements provided under this letter agreement during any calendar year shall not affect in-kind benefits or reimbursements to be provided in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and are not subject to liquidation or exchange for another benefit.  Notwithstanding anything to the contrary in this letter agreement, reimbursement requests must be timely submitted by you and, if timely submitted, reimbursement payments shall be promptly made to you following such submission, but in no event later than December 31st of the calendar year following the calendar year in which the expense was incurred.  In no event shall you be entitled to any reimbursement payments after December 31st of the calendar year following the calendar year in which the expense was incurred.  This paragraph shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to you.

 

Additionally, in the event that following the date hereof the Company or you reasonably determines that any compensation or benefits payable under this letter agreement may be subject to Section 409A of the Code, the Company and you shall work together to adopt such amendments to this letter agreement or adopt other policies or procedures (including

 

5



 

amendments, policies and procedures with retroactive effect), or take any other commercially reasonable actions necessary or appropriate to (x) exempt the compensation and benefits payable under this letter agreement from Section 409A of the Code and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this letter agreement or (y) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided that neither the Company nor any of its employees or representatives shall have any liability to you with respect to tax penalties, accelerated taxation or interest on account of Section 409A of the Code.

 

CONTROLLING LAW:  This letter agreement shall in all respects be interpreted, enforced and governed by the laws of the State of Minnesota.

 

SEVERABILITY:  You agree that the terms of this letter agreement are severable, and if any provision of this letter agreement is found to be void and unenforceable by a court, that judgment will not affect, impair or invalidate the remainder of this letter agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

6



 

If the foregoing accurately expresses our mutual understanding, please execute the enclosed copy of this letter in the space provided below, and return to the undersigned.

 

Sincerely,

 

/s/ Susan E. Engel

 

Susan E. Engel, Chair, Leadership Development

 

and Compensation Committee

 

 

 

 

 

AGREED AND ACCEPTED:

 

 

 

/s/ Sam Duncan

 

SAM DUNCAN

 

 



 

EXHIBIT “A”

 

TERMS AND CONDITIONS OF EMPLOYMENT

 

The following are confidentiality, noncompete, nonsolicitation and mandatory arbitration agreements referenced in the attached offer letter.  By accepting this offer of employment, you agree to these terms and conditions.  As they concern important legal rights, you are urged to read carefully, and consult counsel, if necessary, to ensure you understand these provisions.

 

As used below, “You” refers to the individual to whom this offer of employment is being extended.  “Company” refers to SUPERVALU INC., and all of its subsidiaries, affiliates, and related companies.

 

You affirm, agree and understand that the offer letter, as attached, includes the following provisions, and that by accepting the Company’s offer of employment, You agree to abide by, and be bound by, the following:

 

1.                                      Confidentiality.  You acknowledge that, in the course of your employment with the Company, You will have access to Confidential Information that was obtained or developed by the Company at great expense and that is zealously guarded from unauthorized disclosure.  Your access to and possession of this Information will be due solely to your employment with the Company.  You agree You will not, at any time during or following termination of employment for any reason, disclose, use, or otherwise make available to any third party, any Confidential Information relating to the Company’s business, products, services, customers, vendors, or suppliers; trade secrets, data, specifications, techniques; long and short term plans, existing and prospective client, vendor, supplier, and employee lists, contacts, and information; financial, personnel, and information system information and applications; and any other information concerning the business of the Company which is not disclosed to the general public or known in the industry, except with the express written consent of the Company.  All Confidential Information, including all copies, notes regarding, and replications of such Confidential Information will remain the sole property of the Company, as applicable, and must be returned to the Company immediately upon your termination from the Company.

 

2.                                      Non-Solicitation of Customers, Vendors, or Suppliers.  You specifically acknowledge that the Confidential Information described above includes confidential data pertaining to existing and prospective customers, vendors, and suppliers of the Company; that such data is a valuable and unique asset of the business of the Company, and that the success or failure of their businesses depends upon their ability to establish and maintain close and continuing personal contacts and working relationships with such existing and prospective customers, vendors, and suppliers and to develop proposals which are specific to such existing and prospective customers, vendors and suppliers.  Therefore, You agree that for twelve (12) months following the date of your termination from the Company, You will not (except on behalf of the Company, or with the Company’s express written consent) solicit, approach, contact or attempt to solicit, approach, or

 

A-1



 

contact, either directly or indirectly, on your own behalf or on behalf of any other person or entity, any existing or prospective customers, vendors, or suppliers of the Company with whom You had contact or about whom You gained Confidential Information during Your employment with the Company for the purpose of obtaining business or engaging in any commercial relationship that would be competitive with the “Business of the Company” (as defined below) or cause such customer, supplier, or vendor to materially change or terminate its business or commercial relationship with the Company.  This provision is in addition to, and not in lieu of, similar provisions in any other agreement(s) between You and the Company.

 

3.                                      Non-Solicitation of Employees.  You specifically acknowledge that the Confidential Information described above also includes confidential data pertaining to Employees and agents of the Company, and You further agree that for twelve (12) months following your termination of employment, You will not, directly or indirectly, on your own behalf or on behalf of any other person or entity, solicit, contact, approach, encourage, induce or attempt to solicit, contact, approach, encourage, or induce any of the employees or agents of the Company to terminate their employment or agency with the Company.

 

4.                                      Non-Competition.  You covenant and agree that for twelve (12) months following your termination of employment, You will not, in any geographic market in which You worked on behalf of the Company, or for which You had any sales, marketing, operational, logistical, or other management or oversight responsibility, engage in or carry on, directly or indirectly, as an owner, employee, agent, associate, consultant, partner, or in any other capacity, a business competitive with the Business of the Company.

 

a.                                      The “Business of the Company” shall mean any business or activity involved in grocery or general merchandise retailing and supply chain logistics, including but not limited to grocery distribution, business-to-business portal, retail support services, and third-party logistics, of the type provided by the Company, or presented in concept to You by the Company at any time during your employment with the Company.

 

b.                                      To “engage or carry on” shall mean to have ownership in such business (excluding ownership of up to 1% of the outstanding shares of a publicly-traded company) or to consult, work in, direct, or have responsibility for any area of such business, including but not limited to operations, logistics, sales, marketing, finance, recruiting, sourcing, purchasing, information technology, or customer service.

 

5.                                      Mandatory Arbitration.  You covenant and agree that any controversy or claim arising out of or relating to your employment relationship with the Company or the termination of that relationship must be submitted for final and binding resolution by a private and impartial arbitration, under the Employment Dispute Resolution rules of the American Arbitration Association.  This includes, but is not limited to, any claim that could be asserted in court or before an administrative agency or claims for which You have an alleged cause of action, including without limitation claims for breach of any contract or

 

A-2



 

covenant (express or implied); tort claims; claims for discrimination, harassment or retaliation under local, state or federal statutes; claims for wrongful discharge; claims for violations of the Family and Medical Leave Act or any other local, state, federal or other governmental law, statute, regulation, and whether based on statute or common law.  This includes claims against the Company, any of its affiliated or subsidiary entities, or its individual officers, directors, or employees.

 

This does not include the following claims:

 

a.                                      Claims for workers compensation or unemployment benefits;

 

b.                                      Claims under the National Labor Relations Act, as amended;

 

c.                                       Claims based on current or future employee benefit and/or welfare plans that contain a dispute resolution procedure therein; or

 

d.                                      Claims by the Company for injunctive or other equitable relief based on your alleged breach of covenants under this Exhibit A.

 

The burden of proof at arbitration shall be on the party seeking relief.  Each party shall bear its own costs and attorneys fees.  In reaching a decision, the arbitrator shall apply the governing substantive law applicable to the claims, causes of action and defenses asserted by the parties.  The arbitrator shall have the power to award all remedies that could be awarded by a court or administrative agency in accordance with the governing and applicable substantive law.

 

However, you agree that in the event that your employment with the Company is terminated for Cause (as defined above), that such termination will be determined by the Company in its sole discretion in a manner consistent with the terms of the Company’s Executive & Officer Severance Pay Plan and such decision will be final and binding as approved by the Company’s Board of Directors.

 

You also agree that the arbitration procedure described herein does not alter your status as an “at-will” employee, meaning both you and the Company have the right to terminate employment at any time and for any reason.

 

6.                                      Governing Law.  You agree that the internal law, and not the law of conflicts, of the State of Minnesota, shall govern all questions concerning the validity, construction and effect of this Agreement.

 

A-3


 

 

 

 

 

 

 

EX-10.1 2 skdletter1.htm

EXHIBIT 10.1

 

[SUPERVALU Letterhead]

Corporate Offices
PO Box 990
Minneapolis, MN  55440
(952) 828-4000

February 3, 2013

Sam Duncan
8612 NW 21st Avenue
Vancouver, WA  98665

Dear Sam:

This letter amends the letter agreement that you entered into with SUPERVALU INC (the “Company”), dated as of January 10, 2013 (the “Letter Agreement”). 

The Letter Agreement shall be amended as follows:

1.      The last two sentences of the first paragraph of the Letter Agreement are hereby deleted in their entirety and replaced by the following:

“This letter agreement will become effective on February 4, 2013 (the “Commencement Date”).” 

2.      The first sentence of the section with the heading “Term” is hereby deleted in its entirety and replaced by the following:

“This letter agreement shall have a three-year term, beginning on the Commencement Date and ending on the third anniversary of the Commencement Date, unless terminated earlier by either party at any time and for any reason (the “Term”).” 

3.      The first sentence of the section with the heading “Positions and Duties” is hereby amended to add the following proviso at the end thereof:

“; provided that, your duties shall not include supervising and being responsible for the consummation of the transactions described in (x) the Stock Purchase Agreement by and among AB Acquisition LLC, the Company and New Albertson’s, Inc., dated as of January 10, 2013 and (y) the Tender Offer Agreement by and between Symphony Investors, LLC, the Company and Cerberus Capital Management, L.P., dated as of January 10, 2013.”

 


 

Sam Duncan
February 3, 2013
Page 2

4.      The second to last sentence of the section with the heading “Positions and Duties” is hereby deleted in its entirety and replaced by the following:

“In addition, the Board will take such action as may be necessary to appoint or elect you as a member of the Board as soon as practicable following the appointment of the two Additional Directors (as defined in the Tender Offer Agreement, by and between Symphony Investors LLC and the Company, dated as of January 10, 2013 (the “Tender Offer Agreement”)).”   

 

  1. The two sentences in the section with the heading “Annual Equity Grants” are hereby deleted in their entirety and replaced by the following:

 

“For each fiscal year that you are employed during the Term, the Company will grant you annual equity awards in the form of stock options and/or performance shares at the same time as annual equity awards are granted to similarly situated executives of the Company if you remain employed with the Company on such grant date, with the grant date fair value, allocation between stock options and performance shares, performance metrics and other terms and conditions to be determined by the Board or the Compensation Committee (as constituted following the Commencement Date).”

 

6.      This letter shall in all respects be interpreted, enforced and governed by the laws of the State of Minnesota.

7.      Except as expressly amended hereby, the Letter Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects by the parties to the Letter Agreement.

 

[Remainder of Page Intentionally Left Blank

 

 


 

 

If the foregoing accurately expresses our mutual understanding, please execute the enclosed copy of this letter in the space provided below, and return to the undersigned.

 

Sincerely,

 

 /s/ Susan E. Engel                                                    
Susan E. Engel, Chair, Leadership Development
and Compensation Committee

 

AGREED AND ACCEPTED:

 

 /s/ Sam Duncan                                                         
SAM DUNCAN

 

 


 

 

 

EX-10.1 2 a13-24926_1ex10d1.htm EX-10.1

Exhibit 10.1

 

CHANGE OF CONTROL SEVERANCE AGREEMENT

 

This Agreement (“Agreement”) is dated as of Effective Date, by and between SUPERVALU INC., a Delaware corporation (the “Company”), and Executive Name (the “Executive”).

 

WHEREAS, the Company considers the continued services of key executives of the Company to be in the best interests of the Company and its stockholders; and

 

WHEREAS, the Company desires to assure and has determined that it is appropriate and in the best interests of the Company to reinforce and encourage the continued attention and dedication of key executives of the Company to their duties of employment without personal distraction or conflict of interest in circumstances arising from the possibility or occurrence of a Change of Control of the Company; and

 

WHEREAS, the Company has decided to enter into a continuity agreement with this key executive of the Company; and

 

WHEREAS, for the purpose of this Agreement, Executive is considered to be a key executive of the Company and has been designated by the Company as an executive to be offered such a continuity compensation agreement with the Company; and

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Executive agree as follows:

 

1.                                      General Principles.  This Agreement is effective on the first date that it has been signed by both the Company and Executive.  Words and phrases used with initial capital letters shall have the meaning assigned to them in Section 16 and in other Sections of this Agreement unless, in the context in which used, it would be unreasonable to do so.  The captions given to Sections of this Agreement are solely for convenience of reference and shall not be considered in construing this Agreement.

 

2.                                      Employment Following Change of Control.

 

(a)                                 Employment Continued.  If a Change of Control occurs, Executive’s employment shall be continued hereunder for the Employment Period, subject to Executive’s Separation from Service as described hereinafter.  Any existing employment agreement between Executive and the Company shall continue to be effective following the Change of Control, but severance amounts under this Agreement shall be reduced by severance amounts payable under any such employment agreement, with any such amounts reduced in a manner consistent with Section 12(a).

 

(b)                                 Terms of Continued Employment.  During the Employment Period, the following shall apply:

 

(i)                                     If Executive’s employment has not terminated, during the Employment Period Executive shall have no less than the same titles as that Executive had on the date immediately prior to the Change of Control.  Executive’s duties and responsibilities shall not be materially and adversely diminished during the Employment Period (to the extent Executive’s employment has not terminated) in comparison to the duties and responsibilities that Executive had on the date immediately prior to the Change of Control unless mutually agreed otherwise, other than as a result of a general reduction of the number or scope of personnel for which

 



 

Executive is responsible for supervising which reduction occurs in connection with a restructuring or recapitalization of the Company or the division of the Company in which Executive works.  In addition, and for the avoidance of doubt, any diminution of duties or responsibilities that occurs solely as a result of the fact that the Company ceases to be a public company or that the size of the Company has been reduced as a result of the Change of Control, shall not be considered a breach of this clause (i) by the Company.

 

(ii)                                  If Executive’s employment has not terminated, during the Employment Period, Executive shall receive an annual base salary which is not less than the base salary in effect on the date immediately prior to the Change of Control, and the Company shall review the salary annually with a view to increasing it; provided any such increase shall be in the sole discretion of the Company’s Board of Directors (the “Board”).

 

(iii)                               If Executive’s employment has not terminated, for the year of the Change of Control and for each year thereafter during which Executive is employed during the Employment Period, Executive shall be paid an annual bonus which shall be no less than Executive’s Target Bonus in effect on the date immediately prior to the Change of Control.

 

(iv)                              If Executive’s employment has not terminated, Executive shall be provided with a program of long-term incentive compensation during the Employment Period that is not materially and adversely diminished from the program of long-term incentive compensation as it existed for Executive on the date immediately prior to the Change of Control (for purposes of this clause (iv), a reduction of fifteen percent (15%) or more of the annualized target dollar amount of Executive’s long-term incentive compensation as it existed for Executive on the COC Date based on Executive’s most recent awards of long-term incentive compensation in the three years prior to the date immediately prior to the COC Date (or, if Executive has been granted long-term incentive opportunities for less than three years, based on all of the years of long-term incentive opportunities provided to Executive) shall be considered to be material and adverse).

 

(v)                                 If Executive’s employment has not terminated, during the Employment Period Executive shall be provided with retirement benefits, welfare benefits and perquisites that are no less favorable in the aggregate than the retirement benefits, welfare benefits and perquisites provided to Executive on the date immediately prior to the Change of Control or, if more favorable to Executive, at a level that is substantially comparable to the level of such retirement benefits, welfare benefits and perquisites made available to other similarly situated executive officers of the Company after the Change of Control.

 

(vi)                              If Executive’s employment has not terminated, during the Employment Period Executive’s place of employment following a Change of Control shall be no farther than forty-five (45) miles from Executive’s place of employment on the date immediately prior to the Change of Control.

 

3.                                      Payment upon Separation from Service Incident to a Change of Control.

 

(a)                                 Payment Triggers.  Executive shall be entitled to the severance benefits provided in Section 4 if, and only if, Executive has a Separation from Service and that Separation from Service occurs either:

 

(i)                                     prior to a Change of Control, as a result of an Anticipatory Separation, or

 

(ii)                                  within two (2) years following a Change of Control:

 

2



 

(1)                                 by the Company without Cause, or

 

(2)                                 by Executive for Good Reason.

 

(b)                                 Excluded Separations.  Without limiting the generality of the foregoing, if Executive has a Separation from Service prior to a Change of Control for any reason other than an Anticipatory Separation, this Agreement (excluding the covenants in Section 11) shall terminate and have no effect and Executive shall receive only such severance payments, if any, as are provided in any other existing agreement between Executive and the Company.  If Executive has a Separation from Service after a Change of Control other than by the Company without Cause or by Executive for Good Reason, this Agreement (excluding the covenants in Section 11) shall terminate and have no effect and Executive shall receive only such severance payments, if any, as are provided in any other existing agreement between Executive and the Company.

 

(c)                                  Death or Disability.  Notwithstanding the foregoing, Executive shall not be entitled to severance benefits under this Agreement if Executive’s Separation from Service is on account of Executive’s death or Disability.  Executive’s death or Disability subsequent to a Separation from Service which would otherwise give rise to severance benefits under this Agreement will not disqualify Executive’s estate or Executive from receiving the severance benefits.

 

(d)                                 Notice of Termination by Company.  Any purported Separation from Service of Executive by the Company (whether for Cause or without Cause) shall be communicated by a Notice of Termination to Executive.  No purported Separation from Service of Executive by the Company shall be effective without a Notice of Termination having been given.

 

(e)                                  Good Reason Notice by Executive.  Any purported Separation from Service by Executive for Good Reason shall be communicated by a Notice of Termination to the Company.  An Executive’s Separation from Service will not be for Good Reason unless (i) Executive gives the Company written notice of the event or circumstance which Executive claims is the basis for Good Reason (the “Good Reason Event”) within ninety (90) days of the Good Reason Event first occurring, (ii) the Company is given thirty (30) days from its receipt of such notice within which to cure or resolve the event or circumstance so noticed (the “Cure Period”) and (iii) the actual termination of employment occurs within six (6) months of the initial existence of the Good Reason Event;providedhowever, that notwithstanding anything to the contrary set forth herein, in the event that the Company decides not to cure or resolve the Good Reason Event in accordance with clause (ii) above, the Company may require Executive to actually terminate employment for Good Reason during the Cure Period.  For the avoidance of doubt, if the Good Reason Event is cured or resolved during the Cure Period, Executive’s Separation from Service will not be for Good Reason.

 

4.                                      Compensation Upon Separation from Service Incident to a Change of Control.  If, pursuant to Section 3, Executive has a Separation from Service that qualifies Executive for benefits under this Section 4, and subject to Executive’s timely execution and non-rescission of a Release of Claims, within seventy-five (75) days following such Separation from Service, as further described in Section 12(c) below, Executive shall be entitled to the following payments and benefits.

 

(a)                                 Lump Sum Severance.  Within seventy-five (75) days following such Separation of Service (or at such later time as may be provided under Section 12(a)), the Company shall pay or cause to be paid to Executive a lump sum cash amount equal to [              (1)] times the sum of (i)

 


(1)  For the chief executive officer — “three (3).”  For other executive officers — “two (2).”

 

3



 

Executive’s annual Base Salary and (ii) Executive’s Target Bonus.  If the seventy-five (75)-day period following a Separation from Service begins in one calendar year and ends in a second calendar year (a “Crossover 75-Day Period”) and if there are any payments due Executive that are:  (i) non-qualified deferred compensation subject to section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) conditioned on Executive signing and not revoking the Release, and (iii) otherwise due to be paid during the portion of the Crossover 75-Day Period that falls within the first year, then such payments will be delayed and paid in a lump sum during the portion of the Crossover 75-Day Period that falls within the second year.

 

(b)                                 Other Remuneration.

 

(i)                                     Salary and PTO Pay.  In addition, at the time of the payment under Section 4(a), Executive shall be entitled to an additional lump sum cash payment equal to the sum of (A) Executive’s earned but unpaid salary through the date of Separation from Service, and (B) an amount, if any, of accrued PTO pay, in each case, in full satisfaction of Executive’s rights thereto.  In addition, Executive shall be entitled to payment of annual bonus plan and long-term incentive plan amounts, if any, due but not yet paid as of the Separation from Service with respect to years or cycles that were completed before the Separation from Service.

 

(ii)                                  Interrupted Annual Bonus.  In addition, Executive shall receive a pro-rated payment pursuant to the terms of an annual bonus program as would have been earned based on actual performance for the annual bonus cycle that includes the Separation from Service; provided that Executive was a participant in the applicable annual bonus plan as of the date that Executive’s employment terminates.  This pro-rated annual bonus will be determined on the basis of actual performance through the date that performance is determined for similarly situated employees of the Company who do not separate from service during the applicable performance period, as determined at the sole discretion of the Board or a committee designated by the Board, with the actual payment to be pro-rated based on the portion of the performance period that Executive was employed by the Company.  Except to the extent Executive has elected to defer payment of such amount pursuant to a deferred compensation plan, the pro-rated amount shall be paid at the same time other bonuses are paid under the annual bonus plan.  In all events, however, this payment under the annual bonus plan shall be paid not later than the later of (A) March 15 following the end of the calendar year in which the Separation from Service occurs or (B) May 15 following the end of the Company’s fiscal year in which the Separation from Service occurs.

 

(c)                                  No Effect on Other Agreements.  Except as expressly provided in this Agreement, nothing in this Agreement shall be interpreted or relied upon as a basis to amend, modify, accelerate or defer, or otherwise change any contributions to or payments that may be due from any other plan or arrangement that are deferred compensation subject to section 409A of the Code.

 

(d)                                 Continued Welfare Benefits.

 

(i)                                     In General.  Executive shall be entitled to continued medical, dental and life insurance coverage for Executive and Executive’s eligible dependents on the same basis as in effect prior to the Change of Control or Executive’s Separation from Service, whichever is deemed to provide for more substantial benefits, until the earlier of (A) the eighteen (18)-month anniversary of the date of Executive’s Separation from Service or (B) the commencement of comparable coverage with a subsequent employer or under a plan of Executive’s spouse’s employer.

 

4



 

(ii)                                  Impossibility.  If the Company determines that it is not able to provide the coverage required above under the general terms and provisions of the Company’s welfare benefit plans consistent with the underwriting, regulatory and tax treatment intended for those plans, then the Company shall reimburse Executive for the cost of obtaining substantially similar benefits (the “Benefit Payment”) and shall pay Executive an additional amount, such that after payment of all applicable federal, state and local income and payroll taxes imposed upon Executive as a result of the Benefit Payment, Executive retains an amount equal to the amount of the Benefit Payment.

 

(e)                                  Outplacement.  If so requested by Executive, outplacement services shall be provided by a professional outplacement provider mutually acceptable to Executive and the Company at a cost to the Company of not more than Twenty-Five Thousand Dollars ($25,000).  Such services may be provided by direct payment to the outplacement provider (and not by reimbursement to Executive).  However, services shall be paid or reimbursed only if the services are provided during the period beginning with the Separation from Service and ending on the December 31 of the second calendar year following the calendar year in which the Separation from Service occurred.

 

(f)                                   Indemnification; Liability Insurance.  The Company shall maintain, for a period not less than six (6) years following Executive’s Separation from Service, indemnification policies and liability insurance coverage for Executive’s benefit comparable to those indemnification policies and liability insurance coverage provided by the Company for Executive’s benefit prior to the Change of Control.

 

(g)                                  Withholding.  Payments and benefits provided pursuant to this Section 4 or any other provision of this Agreement shall be subject to any applicable income, payroll and other taxes required to be withheld.

 

5.                                      Contingent Limitation of Payments.

 

(a)                                 Reduction Alternative.  Anything in this Agreement to the contrary notwithstanding, if it is determined (as hereafter provided) that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including, without limitation any stock option, stock appreciation right, restricted stock unit, restricted stock award or similar right or award, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by section 4999 of the Code (or any successor provision thereto) by reason of being “contingent on a change in ownership or control” of the Company, within the meaning of section 280G of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest and penalties, are hereafter collectively referred to as the “Excise Tax”), then if a reduction in the amount of payments under Section 4(a) sufficient to avoid the excise tax would result in an increase in the total amount of all Payments that would be retained by Executive, net of all applicable taxes, then and only then, the payments due under Section 4(a) shall be reduced to the amount that, when considered with all Payments taken into account under section 280G of the Code is One Dollar ($1.00) less than the smallest sum that would subject Executive to the excise tax.

 

(b)                                 Determinations.  If at any time Executive disagrees with any part of the Company’s determinations as to the application of Section 5(a), the disputed matter shall be referred to the nationally recognized firm of certified public accountants (the “Accounting Firm”) used by the Company prior to the Change of Control (or, if such Accounting Firm declines to serve, the Accounting

 

5



 

Firm shall be a nationally recognized firm of certified public accountants selected by Executive).  The Accounting Firm shall be directed by the Company or Executive to submit its determination and detailed supporting calculations to both the Company and Executive within fifteen (15) calendar days after the Separation from Service, if applicable, and any other such time or times as may be requested by the Company or Executive.  In connection with making determinations under this Section 5, the Accounting Firm shall take into account the value of any reasonable compensation for services to be rendered by Executive before or after the Change of Control, including any restrictive covenants that may apply to Executive and the Company shall cooperate in the valuation of any such services, including any restrictive covenants, including, without limitation, the restrictive covenants set forth in Section 11.

 

(c)                                  Process.  The Company and Executive shall each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determination contemplated by Section 5(b).

 

(d)                                 Fees and Expenses.  The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by this Section 5 shall be borne by the Company.  If such fees and expenses are initially advanced by Executive, the Company shall reimburse Executive the full amount of such fees and expenses on the fifth (5th) business day after receipt from Executive of a statement therefore and reasonable evidence of Executive’s payment thereof.

 

6.                                      Obligations Absolute; No Mitigation; No Effect On Other Rights.

 

(a)                                 Absolute.  The obligations of the Company to make the payment to Executive, and to make the arrangements provided for herein, are absolute and unconditional and may not be reduced by any circumstances, including without limitation any set off, counterclaim (including, without limitation, pursuant to Section 11), recoupment, defense or other right which the Company may have against Executive or any third party at any time.

 

(b)                                 No Mitigation.  Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to Executive in any subsequent employment.

 

(c)                                  Other Agreements.  The provisions of this Agreement, and any payment provided for herein, shall not supersede or in any way limit the rights, benefits, duties or obligations which Executive may now or in the future have under any benefit, incentive or other plan or arrangement of the Company or any other agreement with the Company, including, but not limited to, any restrictive covenants including non-competition agreements.

 

7.                                      Not an Employment Agreement.  Subject to the terms of this or any other agreement or arrangement between the Company and Executive that may then be in effect, nothing herein shall prevent the Company from terminating Executive’s employment.

 

8.                                      Successors; Binding Agreement; Assignment.

 

(a)                                 Company’s Successors.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business of the Company, by agreement to expressly, absolutely and unconditionally assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required

 

6



 

to perform it if no such succession had taken place; providedhowever, that no such express agreement shall be required in the event that such successor would assume this Agreement by operation of law.  Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a material breach of this Agreement and shall entitle Executive to terminate Executive’s employment with the Company or such successor for Good Reason immediately prior to or within ninety (90) days after such succession.  The Company shall have the right to assign all rights and obligations under this Agreement to an affiliate of the Company to which Executive provides substantially all of his or her services.  As used in this Agreement, “Company” shall mean (i) the Company as hereinbefore defined, (ii) any successor to all or substantially all of the Company’s business or assets which executes and delivers an agreement provided for in this Section 8(a) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, including any parent or subsidiary of such a successor and (iii) any affiliate of the Company that the Company assigns all rights and obligations under this Agreement to in accordance with this Section 8(a).

 

(b)                                 Executive’s Successors.  This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If Executive should die while any amount would be payable to Executive hereunder if Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive’s estate or designated beneficiary.  Neither this Agreement nor any right arising hereunder may be assigned or pledged by Executive.

 

9.                                      Notice.  For purpose of this Agreement, notices and all other communications provided for in this Agreement or contemplated hereby shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States certified or registered mail, return receipt requested, postage prepaid, and addressed, in the case of the Company, to the Company at:

 

P.O. Box 990

Minneapolis, MN 55440

Attention:  Corporate Secretary

 

And, in the case of Executive, to Executive at the most current address shown on Executive’s employment records.  Either party may designate a different address or designate delivery by electronic mail by giving notice of change of address or electronic address in the manner provided above, except that notices of change of address or electronic address shall be effective only upon receipt.

 

10.                               Expenses.  Subject to Executive prevailing on at least one material claim, in addition to all other amounts payable to Executive under this Agreement, the Company shall pay or reimburse Executive for legal fees (including, without limitation, any and all court costs and attorneys’ fees and expenses) incurred by Executive in connection with or as a result of any claim, action or proceeding brought by the Company or Executive with respect to or arising out of this Agreement.

 

11.                               Employee Covenants.  In consideration of this Agreement, and in recognition of the fact that, as a result of Executive’s employment with the Company or any of its affiliates, Executive has had or will have access to and gain knowledge of highly confidential or proprietary information or trade secrets pertaining to the Company or its affiliates, as well as the customers, suppliers, joint ventures, licensors, licensees, distributors or other persons and entities with whom the Company or any of its affiliates does business (“Confidential Information”), which the Company or its affiliates have expended time, resources and money to obtain or develop and which have significant value to the Company and its affiliates, Executive agrees for the benefit of the Company and its affiliates, and as a material condition to Executive’s receipt of benefits described in this Agreement, as follows.

 

7



 

(a)                                 Non-Disclosure of Confidential Information.  Executive acknowledges that Executive will receive access or have received access to Confidential Information about the Company or its affiliates, that this information was obtained or developed by the Company or its affiliates at great expense and is zealously guarded by the Company and its affiliates from unauthorized disclosure and that Executive’s possession of this special knowledge is due solely to Executive’s employment with the Company or one or more of its affiliates.  In recognition of the foregoing, Executive will not at any time during employment or following termination of employment for any reason, disclose, use or otherwise make available to any third party any Confidential Information relating to the Company’s or any affiliate’s business, products, services, customers, vendors or suppliers; trade secrets, data, specifications, developments, inventions and research activity; marketing and sales strategies, information and techniques; long- and short-term plans; existing and prospective client, vendor, supplier and employee lists, contacts and information; financial, personnel and information system information and applications; and any other information concerning the business of the Company or its affiliates which is not disclosed to the general public or known in the industry, except for disclosure necessary in the course of Executive’s duties or with the express written consent of the Company.  All Confidential Information, including all copies, notes regarding, and replications of such Confidential Information will remain the sole property of the Company or its affiliate, as applicable, and must be returned to the Company or such affiliate immediately upon termination of Executive’s employment.

 

(b)                                 Return of Property.  Upon termination of employment with the Company or any of its affiliates, or at any other time at the request of the Company, Executive shall deliver to a designated Company representative all records, documents, hardware, software and all other property of the Company or its affiliates and all copies of such property in Executive’s possession.  Executive acknowledges and agrees that all such materials are the sole property of the Company or its affiliates and that Executive will certify in writing to the Company at the time of delivery, whether upon termination or otherwise, that Executive has complied with this obligation.

 

(c)                                  Non-Solicitation of Existing or Prospective Customers, Vendors and Suppliers.  Executive specifically acknowledges that the Confidential Information described in Section 11(a) includes confidential data pertaining to existing and prospective customers, vendors and suppliers of the Company or its affiliates; that such data is a valuable and unique asset of the business of the Company or its affiliates; and that the success or failure of their businesses depends upon their ability to establish and maintain close and continuing personal contacts and working relationships with such existing and prospective customers, vendors, and suppliers and to develop proposals which are specific to such existing and prospective customers, vendors, and suppliers.  Therefore, during Executive’s employment with the Company or any of its affiliates and for the twelve (12) months following termination of employment for any reason, Executive agrees that Executive will not, except on behalf of the Company or its affiliates, or with the Company’s express written consent, solicit, approach, contact or attempt to solicit, approach or contact, either directly or indirectly, on Executive’s own behalf or on behalf of any other person or entity, any existing or prospective customers, vendors or suppliers of the Company or its affiliates with whom Executive had contact or about whom Executive gained Confidential Information during Executive’s employment with the Company or its affiliates for the purpose of obtaining business or engaging in any commercial relationship that would be competitive with the “Business of the Company” (as defined below in Section 11(e)(i)) or cause such customer, supplier, or vendor to materially change or terminate its business or commercial relationship with the Company or its affiliates.

 

(d)                                 Non-Solicitation of Employees.  Executive specifically acknowledges that the Confidential Information described in this Section 11 also includes confidential data pertaining to employees and agents of the Company or its affiliates, and Executive further agrees that during Executive’s employment with the Company or its affiliates and for the twelve (12) months following termination of employment for any reason, Executive will not, directly or indirectly, on Executive’s own

 

8



 

behalf or on behalf of any other person or entity, solicit, contact, approach, encourage, induce or attempt to solicit, contact, approach, encourage or induce any of the employees or agents of the Company or its affiliates to terminate their employment or agency with the Company or any of its affiliates.

 

(e)                                  Non-Competition.  Executive covenants and agrees that during Executive’s employment with the Company or any of its affiliates and for the twelve (12) months following termination of employment for any reason, Executive will not, in any geographic market in which Executive worked on behalf of the Company or any of its affiliates, or for which Executive had any sales, marketing, operational, logistical or other management or oversight responsibility, engage in or carry on, directly or indirectly, as an owner, employee, agent, associate, consultant, partner or in any other capacity, a business competitive with the Business of the Company.

 

(i)                                     The “Business of the Company” shall mean any business or activity engaged in by the Company or its affiliates related to grocery, hard discount retailing, pharmacy retailing or general merchandise retailing and supply chain logistics (including, but not limited to, grocery distribution, business-to-business portal, retail support services and third-party logistics), or presented in concept to Executive by the Company or its affiliates, or in which Executive becomes involved, at any time during Executive’s employment with the Company or any of its affiliates.

 

(ii)                                  To “engage in or carry on” shall mean to have ownership in such business (excluding ownership of up to 1% of the outstanding shares of a publicly-traded company) or to consult, work in, direct or have responsibility for any area of such business, including, but not limited to, operations, logistics, sales, marketing, finance, recruiting, sourcing, purchasing, information technology or customer service.

 

(f)                                   No Disparaging Statements.  Executive agrees they will not make, cause to be made, issue, release, authorize or confirm any comments or statements concerning the Company, either in writing, electronically, orally, or otherwise that (a) are disparaging or defamatory or portray the Company in a negative light, (b) in any way impair the reputation, goodwill, or legitimate business interest of the Company; or (c) disparage the employees, agents, officers, directors, pricing, products, policies, or services of the Company.  This will apply, without limitation, to any (i) member of the general public; (ii) social media websites including but not limited to Facebook, LinkedIn Twitter, My Space, Google Plus, YouTube, etc.; (iii) current, former or prospective employees and agents of the Company; (iv) current or future customers, licensees, vendors or referral sources; or (v) members of the press or other media.  Notwithstanding the above, nothing herein shall preclude Executive from testifying under oath under power of a subpoena.

 

(g)                                  Remedies for Breach of These Covenants.  Any breach of the covenants in this Section 11 likely will cause irreparable harm to the Company or its affiliates for which money damages could not reasonably or adequately compensate the Company or its affiliates.  Accordingly, the Company or any of its affiliates shall be entitled to all forms of injunctive relief (whether temporary, emergency, preliminary, prospective or permanent) to enforce such covenants, in addition to damages and other available remedies, and Executive consents to the issuance of such an injunction without the necessity of the Company or any such affiliate posting a bond or, if a court requires a bond to be posted, with a bond of no greater than Five Hundred Dollars ($500) in principal amount.  In the event that injunctive relief or damages are awarded to the Company or any of its affiliates for any breach by Executive of this Section 11, Executive further agrees that the Company or such affiliate shall be entitled to recover its costs and attorneys’ fees necessary to obtain such recovery.  In addition, Executive agrees that upon Executive’s breach of any covenant in this Section 11, all unexercised options issued under any stock option plans of

 

9



 

the Company will immediately terminate and the Company shall have the right to exercise any and all of the rights described above.

 

(h)                                 Enforceability of These Covenants.  It is further agreed and understood by Executive and the Company that if any part, term or provision of these terms and conditions should be held to be unenforceable, invalid or illegal under any applicable law or rule, the offending term or provision shall be applied to the fullest extent enforceable, valid or lawful under such law or rule or, if that is not possible, the offending term or provision shall be struck and the remaining provisions of these Terms and Conditions shall not be affected or impaired in any way.

 

12.                               Miscellaneous.  No provision of this Agreement may be amended, altered, modified, waived or discharged unless such amendment, alteration, modification, waiver or discharge is agreed to in writing signed by Executive and such officer of the Company as shall be specifically designated by the Leadership Development and Compensation Committee of the Board or by the Board.

 

(a)                                 Section 409A.  The ongoing obligations under this Agreement are intended to comply with the requirements of section 409A of the Code or an exemption or exclusion therefrom and shall in all respects be administered in accordance with section 409A of the Code.  To the extent that any payments or benefits to be provided to Executive under this Agreement would be considered deferred compensation within the meaning of section 409A of the Code and Executive is, as of Separation from Service, a “specified employee” as defined in regulations issued under section 409A of the Code, then any such payments that would otherwise be due and payable during the first six (6) months following and on account of a Separation from Service shall instead be paid to Executive upon the earlier of (i) six (6) months and one (1) day after the date of Executive’s Separation from Service or (ii) any other date permitted under section 409A(a)(2) of the Code and section 409A(a)(3) of the Code.  To the extent that any payments or benefits to be provided to Executive under this Agreement would be considered deferred compensation under section 409A of the Code, the provisions of this Agreement pertaining thereto shall be construed and administered to comply with section 409A.  Any payments that qualify for the “short-term deferral” exception under Treasury Regulations Section 1.409A-1(b)(4), the “separation pay” exception under Treasury Regulations Section 1.409A-1(b)(9)(iii) or any other exception under section 409A of the Code shall be paid under the applicable exceptions to the greatest extent possible.  Each payment under this Agreement shall be treated as a separate payment for purposes of section 409A of the Code.  All reimbursements and in-kind benefits that constitute deferred compensation within the meaning of section 409A of the Code provided under this Agreement shall be made or provided in accordance with the requirements of section 409A of the Code, including, without limitation, that (i) in no event shall reimbursements by the Company under this Agreement be made later than the end of the calendar year next following the calendar year in which the applicable fees and expenses were incurred; provided, that Executive shall have submitted an invoice for such fees and expenses at least ten (10) days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred; (ii) the amount of in-kind benefits that the Company is obligated to pay or provide in any given calendar year shall not affect the in-kind benefits that the Company is obligated to pay or provide in any other calendar year; (iii) Executive’s right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit; and (iv) in no event shall the Company’s obligations to make such reimbursements or to provide such in-kind benefits apply later than Executive’s remaining lifetime (or if longer, through the twentieth (20th) anniversary of the date first written above).  Neither the Company nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to Executive or any other person for any taxes, penalties, interest or like amounts that may be imposed on Executive or other person on account of any amounts paid or payable under this Agreement or on account of any failure to comply with section 409A of the Code.

 

10



 

(b)                                 No Waivers.  No waiver by either party, at any time, of any breach by the other party of, or of compliance by the other party with, any condition or provision of this Agreement to be performed or complied with by such other party shall be deemed a waiver of any similar or dissimilar provision or condition of this Agreement or any other breach of or failure to comply with the same condition or provision at the same time or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to its conflict of laws rules.  Any action brought by Executive or the Company shall be brought and maintained in a court of competent jurisdiction in the State of Minnesota (in the case of injunctive relief) or in an arbitration forum in Minneapolis, Minnesota in accordance with the American Arbitration Association’s arbitration rules and procedures.

 

(c)                                  Release of Claims Required.

 

(i)                                     Notwithstanding any other provision of this Agreement, no benefits shall be paid pursuant to Section 4(a) if Executive:

 

(1)                                 fails to execute and deliver to the Company a release of claims (the “Release of Claims”) in the form and manner prescribed by the Company, within the time set forth in the Release of Claims, or

 

(2)                                 revokes or rescinds such Release of Claims and Agreement during the revocation or rescission period set forth in such Release of Claims.

 

(ii)                                  The Release of Claims will include Executive’s agreements related to confidentiality, non-competition, non-solicitation, non-disparagement and arbitration.

 

(iii)                               It is the responsibility of the Company to timely deliver to Executive the Company’s form of Release of Claims, such that Executive is afforded such period as may be required by applicable statute or regulation to consider whether to sign the Release of Claims and whether to revoke or rescind such Release of Claims.

 

13.                               Severability.  If any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.  To the extent permitted by applicable law, each party hereto waives any provision of law which renders any provision of this Agreement invalid, illegal or unenforceable in any respect.

 

14.                               Counterparts.  This Agreement may be executed in two (2) or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.

 

15.                               Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements, commitments or understandings with respect to the matters provided for herein (except that any other non-disclosure, non-competition or non-solicitation agreements or provisions the parties hereto have entered into shall continue to be in effect).

 

16.                               Definitions.  The following terms, and terms derived from the following terms, shall have the following meanings when used in this Agreement with initial capital letters unless, in the context, it would be unreasonable to do so.

 

11



 

(a)                                 Anticipatory Separation shall mean a Separation from Service that occurs before a Change of Control:

 

(i)                                     if either:

 

(1)                                 the Separation from Service follows any event or condition described in clauses (i) through (iv) of the Good Reason definition, or

 

(2)                                 it is a Separation from Service without Cause, and

 

(ii)                                  Executive reasonably demonstrates:

 

(1)                                 the events leading up to the Separation from Service was at the request of a third party who has indicated an intention or has taken steps reasonably calculated to effect a Change of Control, or

 

(2)                                 otherwise arose in connection with or in anticipation of a Change of Control.

 

(b)                                 Base Salary shall mean the base salary in effect on the date immediately prior to the Change of Control.

 

(c)                                  Cause shall mean:

 

(i)                                     the continued failure of Executive to perform Executive’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to Executive by the Board or an officer of the Company which specifically identifies the manner in which the Board or the officer believes that Executive has not substantially performed Executive’s duties and after Executive has had six (6) months to improve performance to the Company’s expectations;

 

(ii)                                  the conviction of, or plea of guilty or nolo contendere to, a felony or the willful engaging by Executive in conduct which is materially and demonstrably injurious to the Company;

 

(iii)                               Executive’s commission of an act or acts of personal dishonesty intended to result in substantial personal enrichment of Executive at the expense of the Company; or

 

(iv)                              Executive’s failure to comply with Company policies relating to Code of Business Conduct, Equal Employment Opportunities and Harassment or Workplace Violence;

 

providedhowever, that in no event shall Cause exist by virtue of any action taken by Executive (A) in compliance with express written directions of the Board [, the Company’s Chief Executive Officer or the officer to whom Executive reports(2)] or (B) in reliance upon the express written consent of the Company’s counsel.

 

In each case above, for a Separation from Service to be for Cause:  (A) Executive must be provided with a Notice of Termination (as described in Section 3(d)) within six (6) months after the Board has actual knowledge of the act or omission constituting Cause; (B) Executive must be provided

 


(2)  Bracketed material included for executive officers other than the chief executive officer.

 

12



 

with an opportunity to be heard by the Board no earlier than thirty (30) days following the Notice of Termination (during which notice period Executive has failed to cure or resolve the behavior in question); and (C) there must be a good faith determination of Cause by at least 2/3rds of the non-employee outside directors of the Company.

 

Whether a Separation from Service is for Cause as provided above will be determined by the Company in its sole discretion based on all the facts and circumstances.

 

(d)                                 Change of Control shall be deemed to have occurred upon any of the following events:

 

(i)                                     the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (A) the then outstanding shares of common stock of the Company, or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, or (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or

 

(ii)                                  the consummation of any merger or other business combination of the Company, sale or lease of all or substantially all of the Company’s assets or combination of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own at least sixty percent (60%) of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination, (B) the purchaser or lessee of the Company’s assets, or (C) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions; or

 

(iii)                               within any 24-month period, the persons who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of a successor to the Company. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least three-fourths of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change of Control or engage in a proxy or other control contest).

 

(e)                                  COC Date shall mean the date on which a Change of Control occurs.  However, if Executive has a Separation from Service prior to a Change of Control by reason of an Anticipatory Separation, the COC Date for Executive shall be the date immediately preceding the occurrence of that Anticipatory Separation.

 

(f)                                   Disability shall have the same meaning as in the Company’s long-term disability plan.

 

13



 

(g)                                  Employment Period shall mean the period commencing on the COC Date and ending on the second anniversary of the COC Date.

 

(h)                                 Good Reason shall mean any one or more of the following events occurring during the two-year period following the COC Date:

 

(i)                                     Executive’s annual base salary is reduced below the amount in effect on the date immediately prior to the COC Date;

 

(ii)                                  Executive’s actual annual bonus is less than the Target Bonus as it existed on the date immediately prior to the COC Date;

 

(iii)                               Executive’s title is reduced from the title that Executive had on the date immediately prior to the COC Date, or Executive’s duties and responsibilities are materially and adversely diminished in comparison to the duties and responsibilities that Executive had on the date immediately prior to the COC Date other than in a general reduction of the number or scope of personnel for which Executive is responsible for supervising which reduction occurs in connection with a restructuring or recapitalization of the Company or the division of the Company in which Executive works;

 

(iv)                              the program of long-term incentive compensation is materially and adversely diminished in comparison to the program of long-term incentive compensation as it existed for Executive on the date immediately prior to the COC Date (for purposes of this clause (iv), a reduction of fifteen percent (15%) or more of the annualized target dollar amount of Executive’s long-term incentive compensation as it existed for Executive on the date immediately prior to the COC Date based on Executive’s most recent awards of long-term incentive compensation in the three years prior to the COC Date (or, if Executive has been granted long-term incentive opportunities for less than three years, based on all of the years of long-term incentive opportunities provided to Executive) shall be considered to be material and adverse);

 

(v)                                 Executive is required to be based at a place of employment that is more than forty-five (45) miles from Executive’s place of employment on the date immediately prior to the COC Date;

 

(vi)                              failure by the Company to provide for the assumption of this Agreement by any successor entity; or

 

(vii)                           a material breach by the Company of the terms of this Agreement;

 

provided, however, that any diminution of duties or responsibilities that occurs solely as a result of the fact that the Company ceases to be a public company or that the size of the Company has been reduced as a result of the Change of Control shall not, in and of itself, constitute Good Reason.

 

(i)                                     Notice of Termination shall mean a written notice which shall indicate the specific provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Executive’s Separation from Service under the provisions so indicated.

 

(j)                                    Separation from Service shall mean a severance of Executive’s employment for reasons other than death under circumstances that would qualify as a separation from service as that term is used and defined under section 409A of the Code.

 

14



 

(i)                                     Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Company and Executive both reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36)- month period (or the full period of services to the Company if Executive has been providing services to the Company less than thirty-six (36) months).

 

(ii)                                  A transfer from employment with the Company to employment with an affiliate of the Company shall not constitute a Separation from Service.

 

(iii)                               A Separation from Service shall not be deemed to occur while Executive is on military leave, sick leave or other bona fide leave of absence if the period does not exceed six (6) months or, if longer, so long as Executive retains a right to reemployment with the Company or an affiliate under an applicable statute or by contract.  For this purpose, a leave isbona fide only if, and so long as, there is a reasonable expectation that Executive will return to perform services for the Company or an affiliate.

 

(iv)                              Notwithstanding the foregoing, a twenty nine (29) month period of absence will be substituted for such six (6) month period if the leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of no less than six (6) months and that causes Executive to be unable to perform the duties of his or her position of employment.

 

(k)                                 Separation from Service Date shall mean the date on which a Separation from Service occurs.

 

(l)                                     Target Bonus shall mean the target amount of bonus expressed as a percentage of annual base salary established under the annual bonus plan for Executive for the year in which the Separation from Service occurs.  When the context requires, it shall also mean the target amount of bonus established for any earlier or later year.

 

17.                               Dispute Resolution.

 

(a)                                 ERISA §503 Procedure.  Executive and the Company agree that any controversy, claim or dispute arising out of or relating to this Agreement (including, but not necessarily being limited to, the manner of giving the Notice of Termination, the reasons or cause for Executive’s Separation from Service or the amount of compensation due to Executive subsequent to Executive’s Separation from Service), excluding, however, claims by the Company relating to Executive’s breach of any of the employee covenants set forth in Section 11 above, shall be subject to a claims adjudication process analogous to the ERISA §503 process set forth in the SUPERVALU INC. Executive & Officer Severance Pay Plan.  Notwithstanding the foregoing, in any litigation or arbitration regarding such matter, deference shall not be afforded to any determination that is made in whole or in part under that process subsequent to a COC Date.

 

(b)                                 Agreement to Arbitrate.  The parties intend to resolve disputes under this Agreement in an efficient, streamlined matter.  Consequently, any such claims not resolved after exhausting that process, as well as any claims by the Company relating to Executive’s breach of any of the employee covenants set forth in Section 11 above, shall be resolved by binding arbitration before a

 

15



 

neutral arbitrator in Minneapolis, Minnesota under rules set forth in the Federal Arbitration Act and in accordance with the rules and procedures of the American Arbitration Association.  Any issues of arbitrability must be decided by the arbitrator, not a court.  Any claim regarding this Agreement can only be arbitrated on an individual, not a class or collective basis.  Executive and the Company agree that claims regarding this Agreement may be brought in an appropriate administrative forum, but at the point at which Executive or the Company seeks a judicial forum to resolve the matter, the agreement for binding arbitration becomes effective, and Executive and the Company hereby knowingly and voluntarily waive any right to have any such dispute tried and adjudicated by a judge or jury.  During any period in which an Executive’s claim for any benefit under this Agreement is pending (whether under Section 17(a) or Section 17(b)), Executive shall continue to receive Executive’s salary (including any bonus) and benefits as if Executive’s employment with the Company had continued through the date of the arbitrator’s determination, and any such payments or benefits shall not be offset against any severance, either under this Agreement or otherwise, to which Executive may be entitled.  The agreement to arbitrate shall continue in full force and effect despite the expiration or termination of Executive’s employment relationship with the Company or any of its affiliates

 

(c)                                  Judicial Enforcement.  Notwithstanding the foregoing, the Company may seek to enforce the employee covenants set forth in Section 11 above, in any court of competent jurisdiction, as described in subsection (e) below.

 

(d)                                 Arbitration Process.  Executive and the Company agree that any award rendered by the arbitrator shall be final and binding and that judgment upon the final award may be entered in any court having jurisdiction thereof.  The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable, including any remedy or relief that would have been available to Executive, the Company or any of its affiliates had the matter been heard in court.  All expenses of the arbitration, including the required travel and other expenses of the arbitrator and any witnesses, and the costs relating to any proof produced at the direction of the arbitrator, shall be borne equally by Executive and the Company unless otherwise mutually agreed or unless the arbitrator directs otherwise in the award.  The arbitrator’s compensation shall be borne equally by Executive and the Company unless otherwise mutually agreed or unless the law provides otherwise.

 

(e)                                  Injunction and Finality.  Executive agrees that any breach of the covenants contained in Section 11 would irreparably injure the Company.    Executive and the Company agree that the Company is entitled to seek an injunction temporarily or preliminarily restraining a violation of this Agreement without having to first file an arbitration action.    In addition, the Company and Executive agree that for purposes of a court issuing temporary or preliminary injunctive relief, the Company and Executive specifically agree that any violation of this Agreement would result in an irreparable injury, and therefore waive any argument that such a violation would not result in an irreparable injury.  .The Company and Executive further specifically agree that this Agreement is valid, enforceable and designed to protect the Company’s legitimate business interests, and therefore waive any argument that this Agreement is invalid, unenforceable, or not designed to protect the Company’s legitimate business interests.  Any temporary or preliminary order issued shall be without prejudice to any final decision reached by an arbitrator pursuant to this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

16



 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

Witnesses:

 

SUPERVALU INC.

(To be completed by Home Office)

 

 

 

 

 

 

 

 

 

 

Name:

Michele Murphy

 

 

Title:

Executive Vice President – Human Resources and Communications

 

 

 

 

 

 

 

 

 

 

 

Executive Name

 


 

 

 

 

 

 

 

 

 

 

 

EX-10.1 2 c52970exv10w1.htm EX-10.1

Exhibit 10.1

SUPERVALU INC.
EXECUTIVE & OFFICER SEVERANCE PAY PLAN

SUPERVALU INC., a Delaware corporation, hereby establishes a severance pay plan for those employees of SUPERVALU and its subsidiaries (the “Company”) in Pay Bands 0, 1 and 2, or Vice Presidents in Pay Band 3 who have been elected by the Board of Directors as a corporate officer, pursuant to this Plan document (the “Plan”). If and to the extent that any employees covered by this Plan are also covered under the plan set forth in the document entitled “SUPERVALU INC. Severance Pay Plan for Nonunion Associates” and dated June 2, 2008, as amended from time to time, this Plan shall entirely replace and supersede such coverage effective May 2, 2009.

1. Purpose. The Plan provides severance benefits to certain employees of the Company whose employment is involuntarily terminated without Cause, as that term is defined herein.

2. Effective Date. This Plan document is effective for any termination of employment of which a participant (as defined in paragraph 3) is notified on or after May 2, 2009.

3. Participation. Unless excluded under paragraph 4, an employee of the Company becomes a participant in the Plan if:

 

(a)

 

at the time of termination, the employee is in Pay Bands 0, 1, 2 or is a Vice President in Pay Band 3 who has been elected by the Board of Directors as a corporate officer; and

 

 

(b)

 

the employee is involuntarily terminated without Cause, on or after the effective date of this Plan, as that term is defined herein.

For purposes of subparagraph (b), Cause means:

     (i) the continued failure to substantially perform employee’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written notice has been provided identifying the manner in which the employee has not substantially performed employee’s duties, and after employee has had six months to improve performance to Company’s expectations;

     (ii) the conviction of, or plea of guilty or nolo contendere to, a felony or the employee’s engagement in conduct which, in the Company’s opinion, is materially and demonstrably injurious to the Company;

     (iii) the commission of an act or acts of personal dishonesty intended to result in substantial personal enrichment of the employee at the expense of the Company; provided, however, that in no event shall Cause exist by virtue of any action taken by the employee in compliance with express written directions of the Board, the Company’s Chief Executive Officer, or the officer to whom the employee reports, or in reliance upon the express written consent of the Company’s counsel; or

 


 

     (iv) employee’s failure to comply with Company policies relating to Code of Business Conduct, Equal Employment Opportunities and Harassment, or Workplace Violence.

With respect to the Chief Executive Officer only, for a termination of employment to be for Cause, the employee must be provided with a notice of termination within six (6) months after the Company has actual knowledge of the act or omission constituting Cause, the employee must be provided with an opportunity to be heard by the Board no earlier than 30 days following the notice of termination; and there must be a good faith determination of Cause by at least 2/3rds of the non-employee outside directors of the Company.

Whether the termination meets the criteria for Cause outlined above will be determined by the Company in its sole discretion based on all the facts and circumstances. The Company’s decision will be final and binding.

A participant will continue in the Plan until the earliest of: (i) the date the participant has been paid all the severance payments due under the Plan, (ii) the date the participant accepts continuing employment with the Company in a classification other than a classification of employees covered by this Plan, (iii) the date the participant’s employment is terminated under conditions that do not qualify for benefits under this Plan, or (iv) the date of the participant’s death.

4. Exclusions. Even if an employee satisfies the requirements in paragraph 3, the employee will not become a participant or receive benefits in this Plan if:

 

(a)

 

employee is employed by SUPERVALU India;

 

 

(b)

 

employee is terminated due to disability or death;

 

 

(c)

 

employee has not been actively at work at any time during the six months immediately preceding the termination date;

 

 

(d)

 

employee accepts any position with the Company or a subsidiary thereof;

 

 

(e)

 

employee is offered a position by the Company or a subsidiary thereof, and such position does not requires relocation and offers total annual cash compensation equal to or greater than employee’s current total annual cash compensation, even if employee does not accept such offer;

 

 

(f)

 

employee is employed in a business unit that is sold or otherwise transferred to another employer and, prior to the closing of that transaction, employee (i) accepts any position with the other employer or (ii) is offered a position that does not require relocation and with total annual cash compensation that is not less than the employee’s current total annual cash compensation, even if employee does not accept such offer;

-2-


 

 

(g)

 

employee does not continue working through the date designated by the Company as the employee’s termination date or any earlier date that is designated by the Company as the employee’s release from duty date;

 

 

(h)

 

employee fails to return Company property on or before the employee’s last day of work;

 

 

(i)

 

employee is eligible for a severance payment on account of the employee’s termination of employment under an individual Change of Control Severance Agreement;

 

 

(j)

 

employee fails to execute a Release of Claims and Agreement in the form and manner prescribed by the Company within the time set forth in the Release of Claims and Agreement or revokes or rescinds such Release of Claims and Agreement during the revocation or rescission period set forth in such Release of Claims and Agreement. The Agreement will include the participant’s agreements related to confidentiality, noncompetition, nonsolicitation, nondisparagement, and arbitration; or

 

 

(k)

 

employee has signed an individual Change of Control Severance Agreement before April 25, 2009 and has not agreed to changes consistent with the template Change of Control Severance Agreement approved by the Compensation Committee of the Board of Directors at its meeting on April 25, 2009, intended to replace and supersede any previous individual Change of Control Severance Agreements.

5. Severance Pay Benefit. The amount of severance pay is determined under this paragraph 5.

 

(a)

 

Amount. The amount of severance pay depends on the participant’s classification as follows:

 

 

 

 

 

Tier I

 

Chief Executive Officer and/or Employee in Pay Band 0

 

(1) 2 times annual base salary at time of termination

 

 

 

 

Plus

 

 

 

 

(2) an amount calculated as follows: take the average of the performance results (expressed as a percentage) used to determine employee’s bonus amounts under the Company’s annual bonus plan for the preceding three years (or all bonus amounts, if employee has been employed fewer than three years). Multiply that percentage by employee’s current target bonus amount under such annual bonus plan. Multiply the result of this subparagraph by two.

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(3) pro-rated payments for each long term incentive plan cycle that is not completed as of the employee’s termination date (but only to the extent that the awards for the long-term incentive plan have not already vested). The Company shall determine, with respect to each such long term incentive plan cycle, in its discretion, the amount of the payment (prior to pro-ration) after assessing progress

-3-


 

 

 

 

 

 

 

 

 

 

against long term incentive plan objectives to the termination date. By way of example, if a termination occurred at the end of the 17th week of the fiscal year beginning in 2012 and ending in 2013 (i.e., approximately June 2012) and assuming that each three year performance cycle consists of 157 weeks:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø   In March/April 2013 the Company would, in its discretion, assess performance to June 2012 against LTIP objectives for the three year cycle ended February 2013, determine the resulting LTIP bonus based on that assessment and pay a pro rated 121/157th of that amount for that completed three year cycle.

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø   Also, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2014, determine the resulting LTIP bonus based on that assessment and pay a pro rated 69/157th of that amount for the now 2/3rd completed three year cycle.

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø   Finally, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2015, determine the resulting LTIP bonus based on that assessment and pay a pro rated 17/157th of that amount for the now 1/3rd completed three year cycle.

 

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(4) a pro-rated bonus under the Company’s annual bonus plan (based on weeks of service in relevant bonus year) calculated on the same basis as all others in the annual bonus plan.

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(5) Reimbursement for cost of COBRA coverage for medical and/or dental insurance (if participant has been enrolled in such prior to termination, and if participant timely makes a COBRA election) until the earlier of: a) 18 months following termination; or b) participant is eligible to obtain medical and/or dental coverage through other sources. (Reimbursed amounts will be taxable to the participant).

 

 

 

 

 

Tier II

 

Executive Vice Presidents and/or Employee in Pay Band 1

 

(1) 1.5 times annual base salary at the time of termination

 

 

 

 

Plus

 

 

 

 

(2) an amount based on the following calculation: take the average of the performance results (expressed as a percentage) used to determine employee’s bonus amounts under the Company’s annual bonus plan for the preceding three years (or all bonus amounts, if employee has been employed fewer than three years). Multiply that percentage by employee’s current target bonus amount under such annual bonus plan. Multiply the result of this subparagraph by 1.5.

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(3) pro-rated payments for each long term incentive plan cycle that is not completed as of the employee’s termination date (but only to

-4-


 

 

 

 

 

 

 

 

 

 

the extent that the awards for the long-term incentive plan have not already vested). The Company shall determine, with respect to each such long term incentive plan cycle, in its discretion, the amount of the payment (prior to pro-ration) after assessing progress against long term incentive plan objectives to the termination date. By way of example, if a termination occurred at the end of the 17th week of the fiscal year beginning in 2012 and ending in 2013 (i.e., approximately June 2012) and assuming that each three year performance cycle consists of 157 weeks:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø    In March/April 2013 the Company would, in its discretion, assess performance to June 2012 against LTIP objectives for the three year cycle ended February 2013, determine the resulting LTIP bonus based on that assessment and pay a pro rated 121/157th of that amount for that completed three year cycle.

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø    Also, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2014, determine the resulting LTIP bonus based on that assessment and pay a pro rated 69/157th of that amount for the now 2/3rd completed three year cycle.

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø    Finally, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2015, determine the resulting LTIP bonus based on that assessment and pay a pro rated 17/157th of that amount for the now 1/3rd completed three year cycle.

 

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(4) a pro-rated bonus under the Company’s annual bonus plan (based on weeks of service in relevant bonus year) calculated on the same basis as all others in the annual bonus plan

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(5) Reimbursement for cost of COBRA coverage for medical and/or dental insurance (if participant has been enrolled in such prior to termination, and if participant timely makes a COBRA election) until the earlier of: a) 18 months following termination; or b) participant is eligible to obtain medical and/or dental coverage through other sources. (Reimbursed amounts will be taxable to the participant).

 

 

 

 

 

Tier III

 

Employees in Pay Band 2 or Vice Presidents in Pay Band 3 who have been elected by the Board of Directors as an officer.

 

(1)1 times annual base salary at time of termination

 

 

 

Plus

 

 

 

(2) an amount based on the following calculation: take the average of the performance results (expressed as a percentage) used to determine employee’s bonus amounts under the Company’s annual bonus plan for the preceding three years (or all bonus amounts, if employee has been employed fewer than three years). Multiply that percentage by employee’s current target bonus amount under such annual bonus plan. Multiply the result of this subparagraph by one.

-5-


 

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(3) pro-rated payments for each long term incentive plan cycle that is not completed as of the employee’s termination date (but only to the extent that the awards for the long-term incentive plan have not already vested). The Company shall determine, with respect to each such long term incentive plan cycle, in its discretion, the amount of the payment (prior to pro-ration) after assessing progress against long term incentive plan objectives to the termination date. By way of example, if a termination occurred at the end of the 17th week of the fiscal year beginning in 2012 and ending in 2013 (i.e., approximately June 2012) and assuming that each three year performance cycle consists of 157 weeks:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø    In March/April 2013 the Company would, in its discretion, assess performance to June 2012 against LTIP objectives for the three year cycle ended February 2013, determine the resulting LTIP bonus based on that assessment and pay a pro rated 121/157th of that amount for that completed three year cycle.

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø    Also, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2014, determine the resulting LTIP bonus based on that assessment and pay a pro rated 69/157th of that amount for the now 2/3rd completed three year cycle.

 

 

 

 

 

 

 

 

 

 

 

 

 

Ø    Finally, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2015, determine the resulting LTIP bonus based on that assessment and pay a pro rated 17/157th of that amount for the now 1/3rd completed three year cycle.

 

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(4) a pro-rated bonus under the Company’s annual bonus plan (based on weeks of service in relevant bonus year) calculated on the same basis as all others in the annual bonus plan

 

 

 

 

 

 

 

 

 

Plus

 

 

 

 

(5) Reimbursement for cost of COBRA coverage for medical and/or dental insurance (if participant has been enrolled in such prior to termination, and if participant timely makes a COBRA election) until the earlier of: a) 12 months following termination; or b) participant is eligible to obtain medical and/or dental coverage through other sources. (Reimbursed amounts will be taxable to the participant).

 

 

(b) Time and Form of Payment All severance pay, except the pro-rated amounts under the Company’s annual bonus and long-term incentive

-6-


 

 

 

 

plans, will be paid in a single lump sum as soon as practicable after the tenth day following the last day of the revocation period specified in the Release of Claims and Agreement, subject to paragraph 9(e) below. Notwithstanding anything to the contrary herein, the last day of the revocation period will not be later than March 1 of the year following the calendar year in which the termination date or, if earlier, the release from duty date, occurs.

 

 

 

 

The pro-rated annual bonus will be paid at the same time other bonuses are paid under the annual bonus plan. The pro-rated long term incentive plan bonus will be paid as soon as practicable after the end of the fiscal year in which the termination date, or if earlier, the release from duty date occurs. In no event, however, will payments under the annual bonus plan, long term incentive plan, or any other amounts payable under this plan, except for reimbursement for the cost of COBRA coverage, be paid after May 15 following the end of the Company’s fiscal year in which the termination date or, if earlier, the release from duty date occurs.

 

 

 

 

Required taxes will be withheld from payments under this Plan, and appropriate tax documents will be issued reflecting amounts received pursuant to this plan. Severance pay is not eligible for contributions to the 401(k) plan, flexible spending account plan or any deferred compensation plan.

 

 

(c)

 

WARN Benefits. Where the requirements of the Worker Adjustment and Retraining Notification Act (“WARN”) or other similar state or local requirements apply, participants will receive the legally required notice of termination dates. These participants will remain on active employment status as required by law through that notice period. Where the Company determines that the services of such participant are not required through the full notice period, the participant may be released from duty (see paragraph (d) below) but will continue to receive regular pay and benefits on the same basis as if they had reported to work and will also receive all severance pay under this Plan for which they are eligible.

 

 

(d)

 

Release from Duty Date. In some circumstances, the Company may determine in its sole discretion that the employee is not needed at work through the stated termination date. A participant will be eligible to receive severance pay under this Plan if the participant stops coming to work after receiving written notification from the Company of such an early release date.

 

 

(e)

 

Repayment of Severance Pay. If within 6 months of an individual’s termination date, the Company wishes to rehire, in any capacity, an individual who has received severance benefits pursuant to this Plan, the rehired employee is required to repay to the Company a portion of the severance benefits received, calculated as follows: convert the amount of

-7-


 

 

 

 

base salary in item (1) in Tier I, II, and III charts above into weeks of base salary (e.g., 52 weeks for a Tier III participant) and subtract from it the number of full weeks that elapsed between the participant’s termination date (or release from duty date, if earlier) and rehire date. Multiply that number of weeks by the weekly equivalent of the total base salary and bonus amounts in items (1) and (2) in the Tier I, II, and III charts, above. (The weekly equivalent is obtained by adding together the amounts paid under Items (1) and (2) and then dividing by 104 for Tier I, 78 for Tier II, and 52 for Tier III). The result is the gross repayment amount. The individual must repay that amount, reduced by applicable taxes, to the Company prior to the date employment recommences or the employment offer will be withdrawn.

6.

 

Related Benefits and Benefit Plans.

 

 

(a)

 

Outplacement Assistance. At participant’s request, outplacement services shall be provided by a professional outplacement provider mutually acceptable to the Executive and the Company at a cost to the Company of not more than Twenty-Five Thousand Dollars ($25,000). Such services may be provided by direct payment to the outplacement provider and not by reimbursement to employee. Services shall be paid only if the services are provided during the period beginning with the later of the termination date or last day worked and ending on the December 31 of the second calendar year following the calendar year in which the termination occurred. However, outplacement services may begin after the date Employee is notified of termination with advance written approval of the Company.

 

 

(b)

 

Other Benefit Plans. Benefits in other benefit plans provided by the Company will be determined in accordance with the plan documents for those benefit plans. Severance pay is not eligible for deferral into 401(k) plans sponsored by the Company and will not be counted as pay in the SUPERVALU Inc. Retirement Plan. Severance pay is not eligible for contribution to any Section 125 “cafeteria” plans or any deferred compensation plans. This Plan does not affect the payment of unused vacation or the terms of any stock option plan or agreements.

7. Amendment and Termination of Plan. SUPERVALU INC., by action of its Board of Directors, reserves the right to amend or terminate this Plan without notice, in any respect, in whole or in part, for any reason, at any time and from time to time, prospectively or retroactively or both, as to persons who are participants and as to persons who may become participants and as to benefits being received and as to benefits that may be received in the future in whole or in part. However, changes to the Plan which clarify its terms or that are not material changes to eligibility requirements or the amount of the benefit may be adopted and approved in writing by the Executive Vice President, Human Resources and Communications.

-8-


 

8.

 

Claims Procedure.

 

(a)

 

Initial Claim and Decision. If a participant (referred to as “claimant” for remainder of Section 8) believes that he is not receiving a benefit he is entitled to receive under the Plan, the claimant may file a claim with the Director of Employee Relations. The claim must be in writing, must include the facts and arguments the claimant wants to be considered, and must be filed within one year of the date the claimant knew (or should have known) the facts behind the claim. The Director of Employee Relations has 90 days after receiving the claim to make a decision and notify the claimant if the claim is denied in whole or in part. The notice of denial will state the reasons for the denial, the Plan provisions on which the denial is based, a description of additional material (if any) needed from the claimant and why, the procedure for requesting a review of the denial, and the participant’s right to file a civil action under section 502(a) of ERISA if the claim is denied upon review.

 

 

(b)

 

Request for Review and Decision. If the claimant disagrees with the denial of the claim, the claimant may file a request for a review of that decision. The request must be in writing to the Corporate Executive Vice President of Human Resources (hereinafter “EVPHR”), must state the reason for disagreement with the denial of the claim, and must be filed within 60 days after the denial notice was received. The claimant should submit all documents and written arguments s/he wants considered at the review, and the claimant may, upon request and free of charge, receive copies of documents and information relevant to the claim. The EVPHR has 60 days after receiving the request to make a decision and notify the claimant if the denial is upheld. If the EVPHR decides that the claim was correctly denied, the notice will state the reasons for the denial, the Plan provisions on which the denial is based, the claimant’s right to receive, upon request and free of charge, reasonable access to and copies of the relevant documents and information used in the claims process, and the claimant’s right to file a civil action under section 502(a) of ERISA.

 

 

(c)

 

Extensions of Time Periods. If the claimant is notified what special circumstances require an extension and what date the claim is expected to be decided, the 90-day period for deciding an initial claim may be extended for up to 90 additional days and the 60-day period for making a decision following a request for a review may be extended for up to 60 additional days. If an extension of the 60-day period is necessary because the claimant needs to submit additional information, the claimant will be given 60 days to provide that information. The time it takes the claimant to provide that information will not count against the 60 days the EVPHR has to make a decision.

 

 

(d)

 

In General. The EVPHR will make all final decisions on claims. The EVPHR has the discretion, authority, and responsibility to decide all factual and legal questions under the Plan, to interpret and construe the Plan and any ambiguous or unclear terms, and to determine whether a

-9-


 

 

 

 

claimant is eligible for benefits and the amount of benefits, if any, a claimant is entitled to receive. The EVPHR has the right to delegate his or her authority to make decisions and all such decisions are conclusive and binding on all parties. A claimant may, at his own expense, have an attorney or representative act on his behalf, but the Company has the right to require a written authorization from the claimant.

 

 

(e)

 

Substitution. For purposes of Section 8 (b) through (d) above, if the claimant is the EVPHR, then “General Counsel” shall be substituted wherever “Corporate Vice President of Human Resources” or “EVPHR” currently appears. In the absence of an individual designated as “General Counsel,” the Executive Vice President who oversees legal services shall be substituted wherever “Corporate Executive Vice President of Human Resources” or “EVPHR” currently appears.

 

 

(f)

 

Deadline to File a Legal Action. No legal action to recover Plan benefits or to enforce or clarify rights under the Plan under section 502 or section 510 of ERISA or under any other provision of law, whether or not statutory, may be brought by any claimant on any matter pertaining to this Plan unless the legal action is commenced in the proper forum and before the earlier of : (a) thirty (30) months after the claimant know or reasonably should have know of the principal facts on which the claim is based, or (b) six (6) months after the claimant has exhausted the claim and review procedure.

 

 

(g)

 

Choice of Forum. All controversies, disputes, claims, or causes of actions arising under or related to the Plan must be brought in the United States District Court for the District of Minnesota.

9.

 

Miscellaneous Provisions.

 

 

(a)

 

No Assignment. No participant will have any transmissible interest in any benefit under the Plan nor shall any participant have any power to anticipate, alienate, dispose of, pledge or encumber the same, nor shall the Company recognize any assignment thereof, either in whole or in part, nor shall any benefit be subject to attachment, garnishment, execution following the judgment or other legal process.

 

 

(b)

 

Correction of Error. The Company has the right to correct any errors that may occur in the administration of the Plan, including reducing or eliminating benefits to the participant under the Plan.

 

 

(c)

 

Governing Law. To the extent not preempted by the laws of the United States, the laws of the State of Minnesota shall apply with respect to the Plan.

 

 

(d)

 

Severability. If a provision of the Plan shall be held to be illegal, invalid or unenforceable, the illegal, invalid or unenforceable provision shall not

-10-


 

 

 

 

affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provisions had not been included.

 

 

(e)

 

409A Limitation. Notwithstanding any provision to the contrary, the Plan shall either provide for payments that are exempt from Code section 409A or such payments shall be made in compliance with Code section 409A. To the extent that any payments or benefits to be provided to the participant under this Plan would be considered deferred compensation under Code Section 409A and the participant, as of the date of participant’s termination of employment, is a “specified employee” as defined in regulations issued under Code Section 409A of the Code, then any such payments that would otherwise be due and payable during the first six (6) months following and on account of a termination of employment shall instead be paid to the participant upon the earlier of (i) six months and one day after the date of the participant’s termination of employment or (ii) any other date permitted under section 409A(a)(2) and section 409A(a)(3). To the extent that any payments or benefits to be provided to the participant under this Plan would be considered deferred compensation under Code section 409A, the provisions of this Plan pertaining thereto shall be construed and administered to comply with section 409A. Neither the Company nor any of its officers, directors, agent or affiliates shall be obligated, directly or indirectly, to any participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the participant or other person on account of any amounts paid or payable under this Plan or on account of any failure to comply with section 409A.

Effective: May 2, 2009
Amended: August 7, 2009

-11-

 

 

 

 

 

 

 

 

EX-10.138 2 d285265dex10138.htm AMENDMENT NO. 1 TO EXECUTIVE AND OFFICER SEVERANCE PAY PLAN

Exhibit 10.138

FIRST AMENDMENT TO THE

SUPERVALU INC.

EXECUTIVE & OFFICER SEVERANCE PAY PLAN

SUPERVALU INC., a Delaware corporation, has heretofore established and maintains the plan entitled SUPERVALU INC. Executive and Officer Severance Pay Plan as amended from time to time (“Plan”). Pursuant to Section 7 of the Plan document, the Plan is hereby amended as follows in “First Amendment to the SUPERVALU INC. Executive and Officer Severance Pay Plan”:

1. SEVERANCE PAY BENEFIT-AMOUNT. Section 5(a) of the Plan is amended to read as follows:

 

 

(a)

Amount. The amount of severance pay depends on the participant’s classification as follows:

 

Tier I

  

Chief Executive Officer and/or

Employee in Pay Band 0

  

(1) 2 times annual base salary at time of termination

  

  

Plus

  

  

(2) an amount calculated as follows: take the average of the performance results (expressed as a percentage) used to determine employee’s bonus amounts under the Company’s annual bonus plan for the preceding three years (or all bonus amounts, if employee has been employed fewer than three years). Multiply that percentage by employee’s current target bonus amount under such annual bonus plan. Multiply the result of this subparagraph by two.

  

  

Plus

  

  

(3) pro-rated payments for each long term incentive plan cycle (other than Multi-Year Performance Awards) that is not completed as of the employee’s termination date (but only to the extent that the awards for the long-term incentive plan have not already vested). The Company shall determine, with respect to each such long term incentive plan cycle, in its discretion, the amount of the payment (prior to pro-ration) after assessing progress against long term incentive plan objectives to the termination date. By way of example, if a termination occurred at the end of the 17th week of the fiscal year beginning in 2012 and ending in 2013 (i.e., approximately June 2012) and assuming that each three year performance cycle consists of 157 weeks:

  

  

•    In March/April 2013 the Company would, in its discretion, assess performance to June 2012 against LTIP objectives for the three year cycle ended February 2013, determine the resulting LTIP bonus based on that assessment and pay a pro rated 121/157th of that amount for that completed three year cycle.

  

  

•    Also, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2014, determine the resulting LTIP bonus based on that assessment and pay a pro rated 69/157th of that amount for the now 2/3rd completed three year cycle.

 

1


  

  

•    Finally, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2015, determine the resulting LTIP bonus based on that assessment and pay a pro rated 17/157th of that amount for the now 1/3rd completed three year cycle.

  

  

•      If the applicable incentive plan is a Multi-Year Performance Awards (“MYPA”), the Committee would, in its discretion, determine the bonus that would have been payable under the MYPA (prior to proration) after assessing progress against MYPA objectives based on the performance at the end of the multi-year performance cycle, and pay a pro rated MYPA bonus based on the number of full weeks that the employee worked during the performance cycle. By way of example only, if the Committee were to determine at the end of the performance cycle that a bonus of $500,000 would have been payable to an employee eligible for a bonus under MYPA based on the MYPA performance criteria for the full performance cycle, but the employee was employed by the Company for only fifty full weeks of the 157 week performance cycle, the employee would receive a bonus of (50/157) times $500,000 or $159,235.67.

  

  

Plus

  

  

(4) a pro-rated bonus under the Company’s annual bonus plan (based on weeks of service in relevant bonus year) calculated on the same basis as all others in the annual bonus plan, except that to the extent the annual bonus is otherwise payable in the form of restricted stock, the Committee may, in its discretion, elect to pay cash in lieu of issuing restricted stock or to accelerate vesting of the restricted stock after termination of employment under such terms as the Committee may decide.

  

  

Plus

  

  

(5) Reimbursement for cost of COBRA coverage for medical and/or dental insurance (if participant has been enrolled in such prior to termination, and if participant timely makes a COBRA election) until the earlier of: a) 18 months following termination; or b) participant is eligible to obtain medical and/or dental coverage through other sources. (Reimbursed amounts will be taxable to the participant).

Tier II

  

Executive Vice Presidents and/or Employee in Pay Band 1

  

(1) 1.5 times annual base salary at the time of termination

  

  

Plus

  

  

(2) an amount based on the following calculation: take the average of the performance results (expressed as a percentage) used to determine employee’s bonus amounts under the Company’s annual bonus plan for the preceding three years (or all bonus amounts, if employee has been employed fewer than three years). Multiply that percentage by employee’s current target bonus amount under such annual bonus plan. Multiply the result of this subparagraph by 1.5.

 

2


  

  

Plus

  

  

(3) pro-rated payments for each long term incentive plan cycle (other than Multi-Year Performance Awards) that is not completed as of the employee’s termination date (but only to the extent that the awards for the long-term incentive plan have not already vested). The Company shall determine, with respect to each such long term incentive plan cycle, in its discretion, the amount of the payment (prior to pro-ration) after assessing progress against long term incentive plan objectives to the termination date. By way of example, if a termination occurred at the end of the 17th week of the fiscal year beginning in 2012 and ending in 2013 (i.e., approximately June 2012) and assuming that each three year performance cycle consists of 157 weeks:

  

  

•    In March/April 2013 the Company would, in its discretion, assess performance to June 2012 against LTIP objectives for the three year cycle ended February 2013, determine the resulting LTIP bonus based on that assessment and pay a pro rated 121/157th of that amount for that completed three year cycle.

  

  

•    Also, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2014, determine the resulting LTIP bonus based on that assessment and pay a pro rated 69/157th of that amount for the now 2/3rd completed three year cycle.

  

  

•    Finally, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2015, determine the resulting LTIP bonus based on that assessment and pay a pro rated 17/157th of that amount for the now 1/3rd completed three year cycle.

  

  

•    If the applicable incentive plan is a Multi-Year Performance Awards (“MYPA”), the Committee would, in its discretion, determine the bonus that would have been payable under the MYPA (prior to proration) after assessing progress against MYPA objectives based on the performance at the end of the multi-year performance cycle, and pay a pro rated MYPA bonus based on the number of full weeks that the employee worked during the performance cycle. By way of example only, if the Committee were to determine at the end of the performance cycle that a bonus of $300,000 would have been payable to an employee eligible for MYPA based on the MYPA performance criteria for the full performance cycle, but the employee was employed with the Company for only fifty full weeks of the 157 week performance cycle, the employee would receive a bonus of (50/157) times $300,000 or $95,541.40.

 

3


  

  

Plus

  

  

(4) a pro-rated bonus under the Company’s annual bonus plan (based on weeks of service in relevant bonus year) calculated on the same basis as all others in the annual bonus plan except that to the extent the annual bonus is otherwise payable in the form of restricted stock, the Committee may, in its discretion, elect to pay cash in lieu of issuing restricted stock or to accelerate vesting of the restricted stock after termination of employment under such terms as the Committee may decide.

  

  

Plus

  

  

(5) Reimbursement for cost of COBRA coverage for medical and/or dental insurance (if participant has been enrolled in such prior to termination, and if participant timely makes a COBRA election) until the earlier of: a) 18 months following termination; or b) participant is eligible to obtain medical and/or dental coverage through other sources. (Reimbursed amounts will be taxable to the participant).

Tier III

  

Employees in Pay Band 2 or Vice Presidents in Pay Band 3 who have been elected by the Board of Directors as an officer.

  

(1)1 times annual base salary at time of termination

 

Plus

(2) an amount based on the following calculation: take the

average of the performance results (expressed as a percentage)

  

  

used to determine employee’s bonus amounts under the Company’s annual bonus plan for the preceding three years (or all bonus amounts, if employee has been employed fewer than three years). Multiply that percentage by employee’s current target bonus amount under such annual bonus plan. Multiply the result of this subparagraph by one.

  

  

Plus

  

  

(3) pro-rated payments for each long term incentive plan cycle (other than Multi-Year Performance Awards) that is not completed as of the employee’s termination date (but only to the extent that the awards for the long-term incentive plan have not already vested). The Company shall determine, with respect to each such long term incentive plan cycle, in its discretion, the amount of the payment (prior to pro-ration) after assessing progress against long term incentive plan objectives to the termination date. By way of example, if a termination occurred at the end of the 17th week of the fiscal year beginning in 2012 and ending in 2013 (i.e., approximately June 2012) and assuming that each three year performance cycle consists of 157 weeks:

  

  

•    In March/April 2013 the Company would, in its discretion, assess performance to June 2012 against LTIP objectives for the three year cycle ended February 2013, determine the resulting LTIP bonus based on that assessment and pay a pro rated 121/157th of that amount for that completed three year cycle.

 

4


  

  

•    Also, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2014, determine the resulting LTIP bonus based on that assessment and pay a pro rated 69/157th of that amount for the now 2/3rd completed three year cycle.

  

  

•    Finally, in March/April 2013 the Company would, in its discretion, assess performance to June 2012 against objectives for the three year cycle that will end February 2015, determine the resulting LTIP bonus based on that assessment and pay a pro rated 17/157th of that amount for the now 1/3rd completed three year cycle.

  

  

If the applicable incentive plan is a Multi-Year Performance Awards (“MYPA”), the Committee would, in its discretion, determine the bonus that would have been payable under the MYPA (prior to proration) after assessing progress against MYPA objectives based on the performance at the end of the multi-year performance cycle, and pay a pro rated MYPA bonus based on the number of full weeks that the employee worked during the performance cycle. By way of example only, if the Committee were to determine at the end of the performance cycle that a bonus of $100,000 would have been payable to an employee eligible for MYPA based on the MYPA performance criteria for the full performance cycle, but the employee was employed with the Company for only fifty full weeks of the 157 week performance cycle, the employee would receive a bonus of (50/157) times $100,000 or $31,847.13.

  

  

Plus

  

  

(4) a pro-rated bonus under the Company’s annual bonus plan (based on weeks of service in relevant bonus year) calculated on the same basis as all others in the annual bonus plan except that to the extent the annual bonus is otherwise payable in the form of restricted stock, the Committee may, in its discretion, elect to pay cash in lieu of issuing restricted stock or to accelerate vesting of the restricted stock after termination of employment under such terms as the Committee may decide.

  

  

Plus

  

  

(5) Reimbursement for cost of COBRA coverage for medical and/or dental insurance (if participant has been enrolled in such prior to termination, and if participant timely makes a COBRA election) until the earlier of: a) 12 months following termination; or b) participant is eligible to obtain medical and/or dental coverage through other sources. (Reimbursed amounts will be taxable to the participant).

2. SEVERANCE PAY BENEFIT-TIME AND FORM OF PAYMENT. Section 5(b) of the Plan is amended to read as follows:

5(b) Time and Form of Payment. All severance pay, except the pro rated amounts under the Company’s annual bonus, long-term incentive plans and MYPA plans, will be paid in a single lump sum as soon as practicable after

 

5


the tenth day following the last day of the revocation period specified in the Release of Claims and Agreement, subject to paragraph 9(e) below. Except as otherwise stated herein, bonuses payable under the annual bonus, long term incentive plans and MYPA will be paid in the same form of payment as otherwise payable under the specific plan or program, however, the Committee may, in its discretion, elect to pay out a stock or restricted stock component of an award in cash at the time that awards are otherwise paid to persons who have terminated and signed Releases prior to that date. In no case will payment of severance pay (other than the pro rated amounts under the Company’s annual bonus, long-term incentive plans and MYPA plans) be made later than the later of (i) two and one half months following the end of the fiscal year in which the termination date or, if earlier, the release from duty date, occurs or (ii) March 15 of the calendar year next following the calendar year in which the termination date or, if earlier, the release from duty date, occurs.

The pro-rated annual bonus will be paid at the same time other bonuses are paid under the annual bonus plan except that payments in lieu of restricted stock will take place at a time decided by the Committee but no later than March 15 of the calendar year next following the end of the fiscal year to which the annual bonus relates and any acceleration of restricted stock determined by the Committee will take place on the schedule as determined by the Committee. The pro-rated long term incentive plan bonus will be paid as soon as practicable after the end of the fiscal year in which the termination date, or if earlier, the release from duty date occurs. Payments under a MYPA award will take place no later than March 15 of the calendar year next following the end of the last fiscal year of the performance cycle year to which the MYPA award relates. In no event, however, will payments under the annual bonus plan, long term incentive plan, or any other amounts payable under this plan, except for reimbursement for the cost of COBRA coverage, be paid later than the applicable short term deferral period under Internal Revenue Code Section 409A. Required taxes will be withheld from payments under this Plan, and appropriate tax documents will be issued reflecting amounts received pursuant to this plan. Severance pay is not eligible for contributions to the 401(k) plan, flexible spending account plan or any deferred compensation plan.

3. EFFECTIVE DATES: This first amendment is effective as to persons who are not “covered employees” within the meaning of Internal Revenue Code Section 162(m) as of January 9, 2012. For participants who are “covered employees” within the meaning of Code Section 162(m), the amendment is effective only as to bonuses, long term incentive plans and multi-year performance awards that are adopted for periods beginning after January 9, 2012.

4. SAVINGS CLAUSE. Save and except as hereinabove expressly amended, the Plan document shall continue in full force and effect.

 

6

 

 

 

 

 

 

 

 

 

EX-10.2 5 a13-2673_1ex10d2.htm EX-10.2

EXHIBIT 10.2

 

SECOND AMENDMENT TO THE

SUPERVALU INC.

EXECUTIVE AND OFFICER SEVERANCE PAY PLAN

 

SUPERVALU INC., a Delaware corporation, has heretofore established and maintains the plan entitled SUPERVALU INC. Executive and Officer Severance Pay Plan as amended from time to time (“Plan”).  Pursuant to Section 7 of the Plan document, the Plan is hereby amended as follows in “Second Amendment to the SUPERVALU INC. Executive and Officer Severance Pay Plan”:

 

1.              EXCLUSIONS.  Section 4(f) of the Plan is amended to read as follows:

 

4(f)  employee is employed in a business unit in which a sale or other transfer of the business unit, a portion of the business unit, or specific assets of the business unit to another employer occurs and, (i) upon or within one hundred twenty days (120) days following the closing of that transaction, (A) employee accepts any position with the other employer or (B) is offered a position that does not require relocation and with total annual cash compensation that is not less than the employee’s current total annual cash compensation, even if employee does not accept such offer; provided that, employee remains employed by the Company through the occurrence of either (A) or (B) or (ii) the employment of employees employed by such business unit is continued immediately following the closing of that transaction by operation of law.  For purposes of this subparagraph 4(f), “business unit” shall mean any subunit of the Company as defined at the discretion of the Company (e.g., subsidiary, district, region, or cost center may be “business units” under this subparagraph);

 

2.              CLAIMS PROCEDURE. Section 8(a) of the Plan is amended to read as follows:

 

8(a) Initial Claim and Decision. If a participant (referred to as claimant for remainder of Section 8) believes that she or he is not receiving a benefit she or he is entitled to receive under the Plan, the claimant may file a claim with the Senior Vice President of Corporate Human Resources.  The claim must be in writing, must include the facts and arguments the claimant wants considered, and must be filed within one year of the date the claimant knew (or should have known) the facts behind the claim.  The Senior Vice President of Corporate Human Resources has 90 days after receiving the claim to make a decision and notify the claimant if the claim is denied in whole or in part.  The notice of denial will state the reasons for denial, the Plan provisions on which the denial is based, a description of additional material (if any) needed from the claimant and why, the procedure for requesting a review of the denial, and the participant’s right to file a civil action under section 502(a) of ERISA if the claim is denied upon review.

 

3.              EFFECTIVE DATES: This Second Amendment is effective as to all participants under this plan as of January 3, 2013.

 



 

4.              SAVINGS CLAUSE.  Save and except as hereinabove expressly amended, the Plan document shall continue in full force and effect.

 


 

 

 

 

 

 

 

 

 

 

EX-10.3 6 a13-2673_1ex10d3.htm EX-10.3

EXHIBIT 10.3

 

THIRD AMENDMENT TO THE

SUPERVALU INC.

EXECUTIVE AND OFFICER SEVERANCE PAY PLAN

 

SUPERVALU INC., a Delaware corporation, has heretofore established and maintains the plan entitled SUPERVALU INC. Executive and Officer Severance Pay Plan as amended from time to time (“Plan”).  Pursuant to Section 7 of the Plan document, the Plan is hereby amended as follows in “Third Amendment to the SUPERVALU INC. Executive and Officer Severance Pay Plan”:

 

1.                                      AMENDMENT AND TERMINATION.  Section 7 of the Plan is amended to read as follows:

 

7.                                      Amendment and Termination of Plan.  SUPERVALU INC., by action of its Board of Directors, reserves the right to amend or terminate this Plan without notice (subject to the proviso in this sentence), in any respect, in whole or in part, for any reason, at any time and from time to time, prospectively or retroactively or both, as to persons who are participants and as to persons who may become participants and as to benefits being received and as to benefits that may be received in the future in whole or in part; provided, however, that, if the Company enters into a definitive agreement with an entity code named Charlie or one of its affiliates prior to April 1, 2013 providing for the sale or other transfer of a business unit, a portion of the business unit, or specific assets of the business unit or subsidiary(ies) (a “Charlie Transaction”), then during the six-month period following the closing of the Charlie Transaction, this Plan may not be amended or terminated (other than to increase benefits). Notwithstanding the foregoing, changes to the Plan which are administrative or clarify its terms but that are not changes to eligibility requirements or reduction in the amount of benefits available under this Plan may be adopted and approved in writing, either before or after the Charlie Transaction, by either the Board of Directors or the Executive Vice President, Human Resources.

 

2.                                      EFFECTIVE DATE: This Third Amendment is effective as to all participants under this plan as of January 9, 2013.

 

3.                                      SAVINGS CLAUSE.  Save and except as hereinabove expressly amended, the Plan document shall continue in full force and effect.