Exhibit 10.43
ALBERTSON'S, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
FOR CHIEF OPERATING OFFICER AND EXECUTIVE VICE PRESIDENTS
THIS CHANGE OF CONTROL SEVERANCE AGREEMENT (this "Agreement"), dated as of
November 1, 2002, is made and entered by and between Albertsons, Inc., a
Delaware corporation (the "Company"), and _________________ (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a key employee of the Company or one or more of
its Subsidiaries (as defined below) and has made and is expected to continue to
make major contributions to the short- and long-term profitability, growth and
financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most publicly held
companies, the possibility of a Change in Control (as defined below) exists and
that such possibility, and the uncertainty it may create among management, may
result in the distraction or departure of management personnel, to the detriment
of the Company and its stockholders;
WHEREAS, the Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum severance
benefits for certain of its senior executives, including the Executive,
applicable in the event of a Change in Control; and
WHEREAS, the Company wishes to ensure that its senior executives are not
unduly distracted by the circumstances attendant to the possibility of a Change
in Control and to encourage the continued attention and dedication of such
executives, including the Executive, to their assigned duties with the Company;
and
WHEREAS, the Company desires to provide additional inducement for the
Executive to continue to remain in the employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "Base Pay" means the Executive's annual base salary rate as in
effect from time to time.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means that, prior to any termination pursuant to Section
3(b), the Executive shall have:
(i) been convicted of a criminal violation involving, in each
case, fraud, embezzlement or theft in connection with his duties or in the
course of his employment with the Company or any Subsidiary;
(ii) committed intentional wrongful damage to property of the
Company or any Subsidiary;
(iii) committed intentional wrongful disclosure of secret
processes or confidential information of the Company or any Subsidiary; or
(iv) committed intentional wrongful engagement in any Competitive
Activity; and any such act shall have been demonstrably and materially
harmful to the Company. For purposes of this Agreement, no act or failure
to act on the part of the Executive shall be deemed "intentional" if it was
due primarily to an error in judgment or negligence, but shall be deemed
"intentional" only if done or omitted to be done by the Executive not in
good faith and without reasonable belief that the Executive's action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three quarters of the Board then in office at a meeting of
the Board called and held for such purpose, after reasonable notice to the
Executive and an opportunity for the Executive, together with the
Executive's counsel (if the Executive chooses to have counsel present at
such meeting), to be heard before the Board, finding that, in the good
faith opinion of the Board, the Executive had committed an act constituting
"Cause" as herein defined and specifying the particulars thereof in detail.
Nothing herein will limit the right of the Executive or his beneficiaries
to contest the validity or propriety of any such determination.
(d) "Change in Control" means the occurrence during the Term of any of
the following events:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Company; provided, however, that:
(1) for purposes of this Section 1(d)(i), the following
acquisitions shall not constitute a Change in Control: (A) any
acquisition of Voting Stock of the Company directly from the Company
that is approved by a majority of the Incumbent Directors, (B) any
acquisition of Voting Stock of the Company by the Company or any
Subsidiary, (C) any acquisition of Voting Stock of the Company by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any Subsidiary, and (D) any acquisition of Voting Stock of
the Company by any Person pursuant to a Business Combination that
complies with clauses (A), (B) and (C) of Section 1(d)(iii) below;
(2) if any Person acquires beneficial ownership of 20% or more of
combined voting power of the then-outstanding Voting Stock of the
Company as a result of a transaction described in clause (1)(A) of
Section 1(d)(i) and such Person thereafter becomes the beneficial owner
of any additional shares of Voting Stock of the Company representing 1%
or more of the then-outstanding Voting Stock of the Company, other than
in an acquisition directly from the Company that is approved by a
majority of the Incumbent Directors or other than as a result of a
stock dividend, stock split or similar transaction effected by the
Company in which all holders of Voting Stock are treated equally, such
subsequent acquisition shall be treated as a Change in Control;
(3) a Change in Control will not be deemed to have occurred if a
Person acquires beneficial ownership of 20% or more of the Voting Stock
of the Company as a result of a reduction in the number of shares of
Voting Stock of the Company outstanding unless and until such Person
thereafter becomes the beneficial owner of any additional shares of
Voting Stock of the Company representing 1% or more of the
then-outstanding Voting Stock of the Company, other than as a result of
a stock dividend, stock split or similar transaction effected by the
Company in which all holders of Voting Stock are treated equally; and
(4) if at least a majority of the Incumbent Directors determine in
good faith that a Person has acquired beneficial ownership of 20% or
more of the Voting Stock of the Company inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares so
that such Person beneficially owns less than 20% of the Voting Stock of
the Company, then no Change in Control shall have occurred as a result
of such Person's acquisition; or
(ii) a majority of the Directors are not Incumbent Directors; or
(iii) the consummation of a reorganization, merger or
consolidation, or sale or other disposition of all or substantially all of
the assets of the Company or the acquisition of assets of another
corporation, or other transaction (each, a "Business Combination"), unless,
in each case, immediately following such Business Combination (A) all or
substantially all of the individuals and entities who were the beneficial
owners of Voting Stock of the Company immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of the
combined voting power of the then outstanding shares of Voting Stock of the
entity resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly
or through one or more subsidiaries), (B) no Person (other than the
Company, such entity resulting from such Business Combination, or any
employee benefit plan (or related trust) sponsored or maintained by the
Company, any Subsidiary or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of the
combined voting power of the then outstanding shares of Voting Stock of the
entity resulting from such Business Combination, and (C) at least a
majority of the members of the Board of Directors of the entity resulting
from such Business Combination were Incumbent Directors at the time of the
execution of the initial agreement or of the action of the Board providing
for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section
1(d)(iii).
(e) "Competitive Activity" means the Executive's having an investment
constituting more than $100,000 in or providing personal services to any
business enterprise (without the prior written consent of the Company), if such
enterprise:
(i) at the time of determination, is substantially similar to the
whole or a substantial part of the business conducted by the Company or any
of its divisions or affiliates;
(ii) at the time of determination, is operating a store or stores
which, during its or their fiscal year preceding the determination, had
aggregate net sales in excess of $10,000,000, if such store or any of such
stores is or are located in a city or within a radius of 25 miles from the
outer limits of a city where the Company, or any of divisions or
affiliates, is operating a store or stores which, during its or their
fiscal year preceding the determination, had aggregate net sales in excess
of $10,000,000; and
(iii) had aggregate net sales at all its locations, and sales by
its divisions and affiliates, during its fiscal year preceding that in
which the Executive made an investment therein, or first rendered personal
services thereto, in excess of $500,000,000.
(f) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement income and
Welfare Benefit policies, plans, programs or arrangements in which Executive is
entitled to participate, including without limitation any stock option,
performance share, performance unit, stock purchase, stock appreciation,
savings, pension, supplemental executive retirement, or other retirement income
or Welfare Benefit, deferred compensation, incentive compensation, group or
other life, health, medical/hospital or other insurance (whether funded by
actual insurance or self-insured by the Company or a Subsidiary), disability,
salary continuation, expense reimbursement and other employee benefit policies,
plans, programs or arrangements that may now exist or any equivalent successor
policies, plans, programs or arrangements that may be adopted hereafter by the
Company or a Subsidiary, providing perquisites, benefits and service credit for
benefits at least as great in the aggregate as are payable thereunder
immediately prior to a Change in Control.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Good Reason" means the occurrence of one or more of the following
events (regardless of whether any other reason, other than Cause, for such
termination exists or has occurred, including without limitation other
employment):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially equivalent or
better office or position, of or with the Company and/or a Subsidiary (or
any successor thereto by operation of law of or otherwise), as the case may
be, which the Executive held immediately prior to a Change in Control, or
the removal of the Executive as a Director of the Company and/or a
Subsidiary (or any successor thereto) if the Executive shall have been a
Director of the Company and/or a Subsidiary immediately prior to the Change
in Control;
(ii) Failure of the Company to remedy any of the following within
10 calendar days after receipt by the Company of written notice thereof
from the Executive: (A) A significant adverse change in the nature or scope
of the authorities, powers, functions, responsibilities or duties attached
to the position with the Company and any Subsidiary which the Executive
held immediately prior to the Change in Control, (B) a reduction in the
Executive's Base Pay received from the Company or any Subsidiary, (C) a
reduction in the Executive's Incentive Pay as compared with the Incentive
Pay most recently paid prior to the Change in Control, or (D) the
termination or denial of the Executive's rights to Employee Benefits or a
reduction in the scope or value thereof;
(iii) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or the transfer of all or substantially all
of its business and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization, transfer or otherwise)
to which all or substantially all of its business and/or assets have been
transferred (by operation of law or otherwise) assumed all duties and
obligations of the Company under this Agreement pursuant to Section 11(a);
(iv) The Company requires the Executive to have his principal
location of work changed to any location that is in excess of 50 miles from
the location thereof immediately prior to the Change in Control, or
requires the Executive to travel away from his office in the course of
discharging his responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any calendar quarter
when annualized for purposes of comparison to any prior year) than was
required of Executive in any of the three full years immediately prior to
the Change in Control without, in either case, his prior written consent;
or
(v) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any successor
thereto which is not remedied by the Company within 10 calendar days after
receipt by the Company of written notice from the Executive of such breach.
(i) "Incentive Pay" means an annual bonus, incentive or other payment
of compensation, in addition to Base Pay, made or to be made in regard to
services rendered in any year or other period pursuant to any bonus, incentive,
profit-sharing, performance, discretionary pay or similar agreement, policy,
plan, program or arrangement (whether or not funded) of the Company or a
Subsidiary, or any successor thereto. "Incentive Pay" does not include any stock
option, stock appreciation, stock purchase, restricted stock or similar plan,
program, arrangement or grant, whether or not provided under an arrangement
described in the preceding sentence.
(j) "Incumbent Directors" means the individuals who, as of the date
hereof, are Directors of the Company and any individual becoming a Director
subsequent to the date hereof whose election, nomination for election by the
Company's shareholders, or appointment, was approved by a vote of at least
two-thirds of the then Incumbent Directors (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as
a nominee for director, without objection to such nomination); provided,
however, that an individual shall not be an Incumbent Director if such
individual's election or appointment to the Board occurs as a result of an
actual or threatened election contest (as described in Rule 14a-12(c) of the
Exchange Act) with respect to the election or removal of Directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.
(k) "Retirement Plans" means the benefit plans of the Company that are
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code") and any supplemental executive retirement benefit
plan or any other plan that is a successor thereto if the Executive was a
participant in such Retirement Plan on the date of the Change in Control.
(l) "Severance Period" means the period of time commencing on the date
of the first occurrence of a Change in Control and continuing until the earlier
of (i) the second anniversary of the occurrence of the Change in Control, or
(ii) the Executive's death; provided, however, that commencing on each
anniversary of the Change in Control, the Severance Period will automatically be
extended for an additional year unless, not later than 90 calendar days prior to
such anniversary date, either the Company or the Executive shall have given
written notice to the other that the Severance Period is not to be so extended.
(m) "Subsidiary" means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting Stock.
(n) "Term" means the period commencing as of the date hereof and
expiring on the close of business on December 31, 2005; provided, however, that
(i) commencing on January 1, 2004 and each January 1 thereafter, the term of
this Agreement will automatically be extended for an additional year unless, not
later than September 30 of the immediately preceding year, the Company or the
Executive shall have given notice that it or the Executive, as the case may be,
does not wish to have the Term extended; (ii) if a Change in Control occurs
during the Term, the Term shall expire and this Agreement will terminate on the
last day of the Severance Period; and (iii) subject to Section 3(c), if, prior
to a Change in Control, the Executive ceases for any reason to be an employee of
the Company or any Subsidiary (including termination arising in connection with
the Company ceasing to beneficially own 50% or more of the Voting Stock of a
Subsidiary), or ceases to be an employee at a level previously designated for
the benefits set forth in Annex A hereto, thereupon without further action the
Term shall be deemed to have expired and this Agreement will immediately
terminate and be of no further effect. For purposes of this Section 1(n), the
Executive shall not be deemed to have ceased to be an employee of the Company
and any Subsidiary by reason of the transfer of Executive's employment between
the Company and any Subsidiary, or among any Subsidiaries.
(o) "Termination Date" means the date on which the Executive's
employment is terminated (the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive if the
termination is pursuant to Section 3(b)).
(p) "Voting Stock" means securities entitled to vote generally in the
election of directors.
(q) "Welfare Benefits" means Employee Benefits that are provided under
any "welfare plan" (within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) of the Company.
2. Operation of Agreement. This Agreement will be effective and binding
immediately upon its execution, but, anything in this Agreement to the contrary
notwithstanding, except as provided in Section 3(c), this Agreement will not be
operative unless and until a Change in Control occurs. Upon the occurrence of a
Change in Control at any time during the Term, without further action, this
Agreement will become immediately operative.
3. Termination Following a Change in Control. (a) In the event of the
occurrence of a Change in Control, the Executive's employment may be terminated
by the Company or a Subsidiary during the Severance Period and the Executive
will be entitled to the benefits provided by Section 4 unless such termination
is the result of the occurrence of one or more of the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits pursuant to,
the long-term disability plan in effect for, or applicable to, Executive
immediately prior to the Change in Control; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is terminated by the
Company or any Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii) or
3(a)(iii), the Executive will be entitled to the benefits provided by Section 4.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary during
the Severance Period for Good Reason with the right to severance compensation as
provided in Section 4.
(c) Anything in this Agreement to the contrary notwithstanding, if a
Change in Control occurs and not more than twelve months prior to the date on
which the Change in Control occurs, the Executive's employment with the Company
ceases at the previously designated level or is terminated by the Company (or
the Executive terminates his employment for Good Reason), such cessation or
termination of employment will be deemed to be a cessation or termination of
employment after a Change in Control for purposes of this Agreement if the
Executive has reasonably demonstrated that such cessation or termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control, or (ii) otherwise arose in
connection with or in anticipation of a Change in Control.
(d) A termination by the Company pursuant to Section 3(a) or by the
Executive pursuant to Section 3(b) will not affect any rights that the Executive
may have pursuant to any agreement, policy, plan, program or arrangement of the
Company or Subsidiary providing Employee Benefits, which rights shall be
governed by the terms thereof, except for any rights to severance compensation
to which Executive may be entitled upon termination of employment under any
severance or employment agreement between the Company and the Executive which
rights, to the extent not greater than those provided by this Agreement, shall,
during the Severance Period, be superseded by this Agreement.
4. Severance Compensation. (a) If, following the occurrence of a Change in
Control, the Company or Subsidiary terminates the Executive's employment during
the Severance Period other than pursuant to Section 3(a)(i), 3(a)(ii) or
3(a)(iii), or if the Executive terminates his employment pursuant to Section
3(b), provided that the Executive executes a release substantially in the form
rendered by senior executives of the Company prior to the Change in Control. The
Company will pay to the Executive the amounts described in Annex A within five
business days after the Termination Date and will continue to provide to the
Executive the benefits described on Annex A for the periods described therein.
(b) Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment or provide any benefit required to be
made or provided hereunder on a timely basis, the Company will pay interest on
the amount or value thereof at an annualized rate of interest equal to the
"prime rate" as set forth from time to time during the relevant period in The
Wall Street Journal "Money Rates" column, plus 2%. Such interest will be payable
as it accrues on demand. Any change in such prime rate will be effective on and
as of the date of such change.
(c) Unless otherwise expressly provided by the applicable annual
incentive compensation plan or program, after the occurrence of a Change in
Control, the Company will pay in cash to the Executive a lump sum amount equal
to the value of the Executive's annual bonus for the performance period that
includes the date on which the Change in Control occurred, disregarding any
applicable vesting requirements; provided that such amount will be equal to the
product of the target award percentage under the applicable annual incentive
plan or program in effect immediately prior to the Change in Control or, if the
applicable Incentive Pay plan or program does not specify such percentage, the
target percentage that would be applicable immediately prior to the Change in
Control based upon the Executive's salary grade, job classification and title,
in either event, multiplied by Base Pay, but prorated to base payment only on
the portion of the Executive's service that had elapsed during the applicable
performance period through the Change in Control. Such payment will be made
within five business days after the Change in Control.
5. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding, but subject to Paragraph 7 of Annex
B, in the event that this Agreement becomes operative and it is determined (as
hereafter provided) that any payment (other than the Gross-Up payments provided
for in this Section 5 and Annex B) or distribution by the Company or any of its
affiliates to or for the benefit of the 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, performance
share, performance unit, stock appreciation right or similar right, 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 by reason of being considered "contingent on a change
in ownership or control" of the Company, within the meaning of Section 280G of
the Code or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the "Excise
Tax"), then the Executive will be entitled to receive an additional payment or
payments (collectively, a "Gross-Up Payment"); provided, however, that no
Gross-up Payment will be made with respect to the Excise Tax, if any,
attributable to (i) any incentive stock option, as defined by Section 422 of the
Code ("ISO") granted prior to the execution of this Agreement, or (ii) any stock
appreciation or similar right, whether or not limited, granted in tandem with
any ISO described in clause (i). The Gross-Up Payment will be in an amount such
that, after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment. For purposes of
determining the amount of the Gross-Up Payment, the Executive will be considered
to pay (x) federal income taxes at the highest rate in effect in the year in
which the Gross-Up Payment will be made and (y) state and local income taxes at
the highest rate in effect in the state or locality in which the Gross-Up
Payment would be subject to state or local tax, net of the maximum reduction in
federal income tax that could be obtained from deduction of such state and local
taxes.
(b) The obligations set forth in Section 5(a) will be subject to the
procedural provisions described in Annex B.
6. No Mitigation Obligation. The Company hereby acknowledges that it will
be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the
non-competition covenant contained in Section 8 will further limit the
employment opportunities for the Executive. Accordingly, the payment of the
severance compensation by the Company to the Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be reasonable,
and the Executive will not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
will any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise, except as expressly provided in the last
sentence of Paragraph 2 of Annex A.
7. Legal Fees and Expenses. It is the intent of the Company that the
Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action in regard thereto, whether by or against the Company or any Director,
officer, stockholder or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client relationship
between the Company and such counsel, the Company irrevocably consents to the
Executive's entering into an attorney-client relationship with such counsel, and
in that connection the Company and the Executive agree that a confidential
relationship will exist between the Executive and such counsel. Without respect
to whether the Executive prevails, in whole or in part, in connection with any
of the foregoing, the Company will pay and be solely financially responsible for
any and all attorneys' and related fees and expenses incurred by the Executive
in connection with any of the foregoing; provided that, in regard to such
matters, the Executive has not acted in bad faith or with no colorable claim of
success. Such payments will be made within five business days after delivery of
the Executive's written requests for payment, accompanied by such evidence of
fees and expenses incurred as the Company may reasonably require.
8. Competitive Activity; Confidentiality; Nonsolicitation;
Nondisparagement.
(a) During the Term and for a period ending one year following the
Termination Date, if the Executive has received or is receiving benefits under
Section 4, and, if applicable, Section 5, the Executive will not, without the
prior written consent of the Company, which consent will not be unreasonably
withheld, engage in any Competitive Activity.
(b) During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 8(b)) to the extent necessary for Executive to carry out his obligations
to the Company. The Executive hereby covenants and agrees that he will not,
without the prior written consent of the Company, during the Term or thereafter
disclose to any person not employed by the Company, or use in connection with
engaging in competition with the Company, any confidential or proprietary
information of the Company. For purposes of this Agreement, the term
"confidential or proprietary information" will include all information of any
nature and in any form that is owned by the Company and that is not publicly
available (other than by Executive's breach of this Section 8(b)) or generally
known to persons engaged in businesses similar or related to those of the
Company. Confidential or proprietary information will include, without
limitation, the Company's financial matters, customers, employees, industry
contracts, strategic business plans, product development (or other proprietary
product data), marketing plans, and all other secrets and all other information
of a confidential or proprietary nature. For purposes of the preceding two
sentences, the term "Company" will also include any Subsidiary (collectively,
the "Restricted Group"). The foregoing obligations imposed by this Section 8(b)
will not apply (i) during the Term, in the course of the business of and for the
benefit of the Company, (ii) if such confidential or proprietary information has
become, through no fault of the Executive, generally known to the public or
(iii) if the Executive is required by law to make disclosure (after giving the
Company notice and an opportunity to contest such requirement).
(c) The Executive hereby covenants and agrees that during the Term and
for one year thereafter Executive will not, without the prior written consent of
the Company, on behalf of Executive or on behalf of any person, firm or company,
directly or indirectly, attempt to influence, persuade or induce, or assist any
other person in so persuading or inducing, any employee of the Restricted Group
to give up, or to not commence, employment or a business relationship with the
Restricted Group.
(d) The Executive hereby covenants and agrees that the Executive will
not make, publish or cause to be made or published any public or private
statement disparaging the Company or its present or former officers, directors
or employees.
(e) Executive and the Company agree that the covenants contained in
this Section 8 are reasonable under the circumstances, and further agree that if
in the opinion of any court of competent jurisdiction any such covenant is not
reasonable in any respect, such court will have the right, power and authority
to excise or modify any provision or provisions of such covenants as to the
court will appear not reasonable and to enforce the remainder of the covenants
as so amended. Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his obligations under this Section
8 would be inadequate and that damages flowing from such a breach may not
readily be susceptible to being measured in monetary terms. Accordingly,
Executive acknowledges, consents and agrees that, in addition to any other
rights or remedies that the Company may have at law, in equity or under this
Agreement, upon adequate proof of his violation of any such provision of this
Agreement, the Company will be entitled to immediate injunctive relief and may
obtain a temporary order restraining any threatened or further breach, without
the necessity of proof of actual damage.
9. Employment Rights. Nothing expressed or implied in this Agreement will
create any right or duty on the part of the Company or the Executive to have the
Executive remain in the employment of the Company or any Subsidiary prior to or
following any Change in Control.
10. Withholding of Taxes. The Company may withhold from any amounts payable
under this Agreement all federal, state, city or other taxes as the Company is
required to withhold pursuant to any applicable law, regulation or ruling.
11. Successors and Binding Agreement. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor shall thereafter be deemed the "Company" for the purposes of this
Agreement), but will not otherwise be assignable, transferable or delegable by
the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto will, without the consent of the other, assign, transfer or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in
Sections 11(a) and 11(b). Without limiting the generality or effect of the
foregoing, the Executive's right to receive payments hereunder will not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by Executive's will or by the
laws of descent and distribution and, in the event of any attempted assignment
or transfer contrary to this Section 11(c), the Company will have no liability
to pay any amount so attempted to be assigned, transferred or delegated.
12. Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as FedEx, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive office and to the Executive at his principal
residence, or to such other address as any party may have furnished to the other
in writing and in accordance herewith, except that notices of changes of address
shall be effective only upon receipt.
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State.
14. Validity. If any provision of this Agreement or the application of any
provision hereof to any person or circumstance is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such
provision to any other person or circumstance will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal will be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid or legal.
15. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party that are not set forth expressly in this
Agreement. References to Sections are to Sections of this Agreement. References
to Paragraphs are to Paragraphs of an Annex to this Agreement. Any reference in
this Agreement to a provision of a statute, rule or regulation will also include
any successor provision thereto.
16. Survival. Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under Sections 3(c), 4,
5, 7 and 8 will survive any termination or expiration of this Agreement or the
termination of the Executive's employment following a Change in Control for any
reason whatsoever.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
ALBERTSONS, INC.
By: _____________________________________
[Name and Title]
_____________________________________
[Executive]
Annex A
Severance Compensation
(1) A lump sum payment in an amount equal to three times the sum of (A)
Base Pay (at the highest rate in effect for any period within three years prior
to the Termination Date), plus (B) Incentive Pay (in an amount equal to the
product of the target award percentage under the applicable Incentive Pay plan
or program in effect immediately prior to the Change in Control or, if the
applicable Incentive Pay plan or program does not specify such percentage, the
target percentage that would be applicable immediately prior to the Change in
Control based upon the Executive's salary grade, job classification and title,
in either event, multiplied by Base Pay).
(2) For a period of 36 months following the Termination Date (the
"Continuation Period"), the Company will arrange to provide the Executive with
Welfare Benefits substantially similar to those that the Executive was receiving
or entitled to receive immediately prior to the Termination Date (or, if
greater, immediately prior to the reduction, termination, or denial described in
Section 1(h)(ii)). If and to the extent that any benefit described in this
Paragraph 2 is not or cannot be paid or provided under any policy, plan, program
or arrangement of the Company or any Subsidiary, as the case may be, then the
Company will itself pay or provide for the payment to the Executive, his
dependents and beneficiaries, of such Employee Benefits along with, in the case
of any benefit described in this Paragraph 2 which is subject to tax because it
is not or cannot be paid or provided under any such policy, plan, program or
arrangement of the Company or any Subsidiary, an additional amount such that
after payment by the Executive, or his dependents or beneficiaries, as the case
may be, of all taxes so imposed, the recipient retains an amount equal to such
taxes. Notwithstanding the foregoing, or any other provision of the Agreement,
for purposes of determining the period of continuation coverage to which the
Executive or any of his dependents is entitled pursuant to Section 4980B of the
Code under the Company's medical, dental and other group health plans, or
successor plans, the Executive's "qualifying event" will be the termination of
the Continuation Period and the Executive will be considered to have remained
actively employed on a full-time basis through that date. Further, for purposes
of the immediately preceding sentence and for any other purpose, including,
without limitation, the calculation of service or age to determine the
Executive's eligibility for benefits under any retiree medical benefits or life
insurance plan or policy, the Executive shall be considered to have remained
actively employed on a full-time basis through the termination of the
Continuation Period. Without otherwise limiting the purposes or effect of
Section 5 or this Paragraph 2, Employee Benefits otherwise receivable by the
Executive pursuant to this Paragraph 2 will be reduced to the extent comparable
welfare benefits are actually received by the Executive from another employer
during the Continuation Period following the Executive's Termination Date, and
any such benefits actually received by the Executive will be reported by the
Executive to the Company.
(3) Outplacement services by a firm selected by the Executive, at the
expense of the Company in an amount up to $50,000.
(4) Reimbursement for relocation expenses on a basis consistent with the
Company's practices for senior executives, in an amount up to $100,000; provided
such executive was relocated at the request of the Company (including but not
limited to as a result of initial hire) within five years of his or her
Termination Date.
Annex B
Excise Tax Gross-Up Procedural Provisions
(1) Subject to the provisions of Paragraph 5, all determinations required
to be made under Section 5 and Annex B, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to the Executive and the
amount of such Gross-Up Payment, if any, will be made by a nationally recognized
accounting firm or benefits consulting firm (the "National Firm") selected by
the Executive in his sole discretion. The Executive will direct the National
Firm to submit its determination and detailed supporting calculations to both
the Company and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by the
Company or the Executive. If the National Firm determines that any Excise Tax is
payable by the Executive, the Company will pay the required Gross-Up Payment to
the Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the National Firm
determines that no Excise Tax is payable by the Executive with respect to any
material benefit or amount (or portion thereof), it will, at the same time as it
makes such determination, furnish the Company and the Executive with an opinion
that the Executive has substantial authority not to report any Excise Tax on his
federal, state or local income or other tax return with respect to such benefit
or amount. As a result of the uncertainty in the application of Section 4999 of
the Code and the possibility of similar uncertainty regarding applicable state
or local tax law at the time of any determination by the National Firm
hereunder, it is possible that Gross-Up Payments that will not have been made by
the Company should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts or fails to pursue its remedies pursuant to Paragraph 5 and the
Executive thereafter is required to make a payment of any Excise Tax, the
Executive will direct the National Firm to determine the amount of the
Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment will be promptly paid by the Company to, or for
the benefit of, the Executive within five business days after receipt of such
determination and calculations.
(2) The Company and the Executive will each provide the National Firm
access to and copies of any books, records and documents in the possession of
the Company or the Executive, as the case may be, reasonably requested by the
National Firm, and otherwise cooperate with the National Firm in connection with
the preparation and issuance of the determinations and calculations contemplated
by Paragraph 1. Any determination by the National Firm as to the amount of the
Gross-Up Payment will be binding upon the Company and the Executive.
(3) The federal, state and local income or other tax returns filed by the
Executive will be prepared and filed on a consistent basis with the
determination of the National Firm with respect to the Excise Tax payable by the
Executive. The Executive will report and make proper payment of the amount of
any Excise Tax, and at the request of the Company, provide to the Company true
and correct copies (with any amendments) of his federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the National Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive will within five business days pay to the Company the amount of such
reduction.
(4) The fees and expenses of the National Firm for its services in
connection with the determinations and calculations contemplated by Paragraph 1
will be borne by the Company. If such fees and expenses are initially paid by
the Executive, the Company will reimburse the Executive the full amount of such
fees and expenses within five business days after receipt from the Executive of
a statement therefor and reasonable evidence of his payment thereof.
(5) The Executive will notify the Company in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such
notification will be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive will further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Executive). The Executive will not pay such claim prior to the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company or, if earlier, the date that any payment of amount
with respect to such claim is due. If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive will:
(A) provide the Company with any written records or documents in his
possession relating to such claim reasonably requested by the Company;
(B) take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including without
limitation accepting legal representation with respect to such claim by an
attorney competent in respect of the subject matter and reasonably selected by
the Company;
(C) cooperate with the Company in good faith in order effectively to
contest such claim; and
(D) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income or other tax, including interest
and penalties with respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limiting the foregoing provisions of
this Paragraph 5, the Company will control all proceedings taken in connection
with the contest of any claim contemplated by this Paragraph 5 and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company determines; provided, however, that if the
Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company will advance the amount of such payment to the Executive on an
interest-free basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(6) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Paragraph 5, the Executive receives any refund with respect
to such claim, the Executive will (subject to the Company's complying with the
requirements of Paragraph 5) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Paragraph 5, a determination is made that
the Executive is not entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such
denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance will be forgiven and will not be required to be
repaid and the amount of any such advance will offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid by the Company to the
Executive pursuant to Section 5 and this Annex B.
(7) Notwithstanding any provision of this Agreement to the contrary, but
giving effect to any redetermination of the amount of Gross-Up payments
otherwise required by this Annex B, if (A) but for this sentence, the Company
would be obligated to make a Gross-Up Payment to the Executive, (B) the
aggregate "present value" of the "parachute payments" to be paid or provided to
the Executive under this Agreement or otherwise does not exceed 1.15 multiplied
by three times the Executive's "base amount," and (C) but for this sentence, the
net after-tax benefit to the Executive of the Gross-Up Payment would not exceed
$50,000 (taking into account income taxes, employment taxes and any Excise Tax),
then the payments and benefits to be paid or provided under this Agreement will
be reduced (or repaid to the Company, if previously paid or provided) to the
minimum extent necessary so that no portion of any payment or benefit to the
Executive, as so reduced or repaid, constitutes an "excess parachute payment."
For purposes of this Paragraph 7, the terms "excess parachute payment," "present
value," "parachute payment," and "base amount" will have the meanings assigned
to them by Section 280G of the Code. The determination of whether any reduction
in or repayment of such payments or benefits to be provided under this Agreement
is required pursuant to this Paragraph 7 will be made at the expense of the
Company, if requested by the Executive or the Company, by the National Firm.
Appropriate adjustments will be made to amounts previously paid to Executive, or
to amounts not paid pursuant to this Paragraph 7, as the case may be, to reflect
properly a subsequent determination that the Executive owes more or less Excise
Tax than the amount previously determined to be due. In the event that any
payment or benefit intended to be provided under this Agreement or otherwise is
required to be reduced or repaid pursuant to this Paragraph 7, the Executive
will be entitled to designate the payments and/or benefits to be so reduced or
repaid in order to give effect to this Paragraph 7. The Company will provide the
Executive with all information reasonably requested by the Executive to permit
the Executive to make such designation. In the event that the Executive fails to
make such designation within 10 business days prior to the Termination Date or
other due date, the Company may effect such reduction or repayment in any manner
it deems appropriate.
