EXHIBIT 10.12
CHANGE OF CONTROL SEVERANCE AGREEMENT
[TIERS I, II & III]
This Agreement ("Agreement") is dated as of ________, 199_, by and between
SUPERVALU INC., a Delaware corporation (the "Company"), and ________________
(the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") 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 Board desires to assure, and has determined that it is
appropriate and in the best interests of the Company and its stockholders 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 Board has authorized the Company to enter into continuity
agreements with those key executives of the Company who are designated by the
Executive Personnel and Compensation Committee of the Board of Directors
("Committee"), such agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and has been
designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
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 the
Executive agree as follows:
1. Term of Agreement. On the date on which a Change of Control occurs (the
"Effective Date"), this Agreement shall become effective. If Executive ceases to
be employed by reason of an Anticipatory Termination (as defined in Section
3(c)) prior to the Effective Date, then Executive shall receive the severance
benefits provided herein and the Effective Date of this Agreement shall be
deemed to be the date immediately preceding the occurrence of an Anticipatory
Termination. If Executive ceases to be employed for any reason other than an
Anticipatory Termination prior to a Change of Control, this Agreement shall
terminate and have no effect and Executive shall receive such severance payments
as are provided in any existing agreement between the Executive and the Company.
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If a Change of Control occurs, the Executive's employment shall be continued
hereunder for the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a Change of
Control occurs, subject to the termination of Executive's employment as
described hereinafter. Any existing employment agreement between the Executive
and the Company shall continue to be effective following the Change of Control,
but severance amounts under this Agreement shall be reduced by amounts payable
under any such employment agreement.
For purposes of this Agreement, a "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 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 20% 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 the Company's assets or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company and any trustee
or fiduciary of any Company employee benefit plan immediately prior to the
Transaction own at least 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); or
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(iv) such other event or transaction as the Board shall determine
constitutes a Change of Control.
2. Employment following Change of Control. Executive shall have at least
the same titles and responsibilities as those in effect immediately prior to the
Change of Control. Executive shall receive an annual base salary which is not
less than the highest base salary in effect for Executive at any time in the 12
months preceding 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 Board. Once increased, base salary cannot be
decreased. For the year of the Change of Control, the Executive shall be paid an
annual bonus which shall be no less than the higher of (i) the bonus which the
Executive would have received under the Company's bonus plans as they were prior
the Change of Control (based upon actual performance in the year up to the
Change of Control), (ii) the highest of the annual bonuses paid or payable in
respect of the three years prior to the Change of Control, or (iii) the
Executive's target bonus immediately prior to the Change of Control. Thereafter,
the Executive shall be paid an annual bonus which shall be no less than the
higher of (i) the bonus which the Executive would have received under the
Company's bonus plans as they were prior the Change of Control (based upon
actual performance in the year up to the Change of Control), (ii) the average of
the annual bonuses paid or payable in respect of the three years prior to the
Change of Control, or (iii) the Executive's target bonus immediately prior to
the Change of Control (the highest of (i), (ii) and (iii) being the "Bonus"). In
addition, the Executive shall be provided with incentive compensation, pension,
general insurance, vacation, fringe benefits, perquisites (including an
automobile allowance, if any), the use of an office and support staff that are
commensurate with the benefits, vacation, expense reimbursement, fringe
benefits, perquisites, office and support staff provided to Executive
immediately prior to the Change of Control or, if more favorable to Executive,
at the level made available to other similarly situated executive officers of
the Company after the Change of Control. In addition, the Executive's place of
employment following a Change of Control shall be no further than 35 miles from
the Executive's place of employment prior to the Change of Control.
3. Termination Following Change of Control.
(a) The Executive shall be entitled to the severance benefits provided in
Section 4 hereof in the event Executive's employment is terminated (A) within
two years following a Change of Control (i) by the Company without Cause, or
(ii) by Executive for Good Reason, or (B) prior to a Change of Control, as a
result of an Anticipatory Termination.
Notwithstanding the foregoing, Executive shall not be entitled to severance
benefits in the event of a termination of employment on account of death,
Disability or Retirement,
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but excluding any such termination which is coincident with or subsequent to a
termination which would otherwise give rise to severance benefits. For purposes
of this Agreement:
(i) "Disability" shall have the same meaning as in the Company's
long-term disability plan.
(ii) "Retirement" shall mean a termination of employment by Executive
pursuant to late, normal or early retirement under a pension plan sponsored
by the Company, as defined in such plan.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially 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;
(ii) (A) the conviction of, or plea of guilty or nolo contendere to, a
felony or (B) the willful engaging by Executive in gross misconduct which
is materially and demonstrably injurious to the Company; or
(iii) Executive's commission of an act or acts of personal dishonesty
intended to result in substantial personal enrichment of the Executive at
the expense of the Company;
provided, however, that in no event shall Cause exist by virtue of any action
taken by the Executive (A) in compliance with express written directions of the
Board, [the Company's Chief Executive Officer or the officer to whom the
Executive reports,](1) or (B) in reliance upon the express written consent of
the Company's counsel. In each case above, for a termination of employment to be
for Cause: (a) the Executive must be provided with a Notice of Termination (as
described in Section 3(d)) within six (6) months after the Company has actual
knowledge of the act or omission constituting Cause; (b) the Executive must be
provided with an opportunity to be heard by the Board no earlier than 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
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(1) Not to be included in CEO's Agreement, and, for those Executives reporting
directly to the CEO, "the officer to whom the Executive reports" shall not
be included.
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must be a good faith determination of Cause by at least 2/3rds of the
non-employee outside directors of the Company.
(c) Good Reason and Anticipatory Termination. For purposes of this
Agreement, "Good Reason" shall mean:
(i) Executive's annual salary is reduced below the higher of (A) the
amount in effect on the Effective Date, or (B) the highest amount in effect
at any time thereafter;
(ii) Executive's annual bonus is reduced below the Bonus;
(iii) Executive's duties and responsibilities or the program of
incentive compensation (including, without limitation, long term incentive
plans), vacation, fringe benefits, perquisites, retirement and general
insurance benefits offered to Executive are materially and adversely
diminished in comparison to the duties and responsibilities or the program
of such benefits enjoyed by Executive on the Effective Date;
(iv) Executive is required to be based at a location more than 35
miles from the location where Executive was based and performed services on
the Effective Date or Executive's business travel obligations are
significantly increased over those in effect immediately prior to the
Effective Date; [or]
(v) failure to provide for the assumption of this Agreement by any
successor entity; [or
(vi) Executive's termination of employment for any reason during the
seventh month following the Change of Control;](2)
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
shall not, in and of itself, constitute Good Reason.
Any event or condition described in clauses (i) through (iv) or a termination
without Cause, either of which occurs prior to a Change of Control but which
Executive reasonably demonstrates (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change of Control (a "Third Party"), or (B) otherwise arose in connection with,
or in anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement, notwithstanding that it occurred prior to a Change
of Control ("Anticipatory Termination").
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(2) For CEO only.
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Executive shall give the Company written notice of any event which Executive
claims is the basis for Good Reason [(other than a termination pursuant to
Section 3(c)(vi))], within 6 months of such event, and the Company shall have 30
days from its receipt of such notice within which to cure or resolve the
behavior in question before Executive can terminate for Good Reason.
(d) Notice of Termination. Any purported termination of the Executive's
employment with the Company [(other than a termination pursuant to Section
3(c)(vi))] shall be communicated by a Notice of Termination to the Executive, if
such termination is by the Company, or to the Company, if such termination is by
the Executive. For purposes of this Agreement, "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated. For purposes of this Agreement, no
purported termination of Executive's employment with the Company shall be
effective without such a Notice of Termination having been given.
(e) Dispute Resolution. Disputes arising from the operation of this
Agreement, including, but not necessarily being limited to, the manner of giving
the Notice of Termination, the reasons or cause for the Executive's termination
or the amount of severance compensation due to the Executive subsequent to the
Executive's termination, shall be resolved by arbitration; provided, however,
that disputes arising under Section 11 of this Agreement shall not be resolved
under this Section 3(e). In the event that any dispute which shall be resolved
by arbitration, is not able to be resolved by mutual agreement of the parties
within sixty calendar (60) days of the giving of such notice, the Executive and
the Company hereby agree to promptly submit such a dispute to binding
arbitration in Minnesota in accordance with Delaware law and the rules and
procedures of the American Arbitration Association. During any period in which a
dispute is pending, the 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 arbiters' 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.
4. Compensation Upon Termination After a Change of Control.
If within two (2) years after the Effective Date, the Executive's
employment by the Company shall be terminated in accordance with Section 3(a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance. As soon as practicable after the Termination, but in any
event no later than 10 business days following such Termination, the Company
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shall pay or cause to be paid to the Executive, a lump sum cash amount equal to
[three (3) times][two (2) times](3) the sum of (i) the Executive's annual base
salary on the Effective Date (the "Base Salary"), (ii) the Bonus, and (iii) the
value of the perquisites (e.g., car allowance, club dues, etc., including any
ordinary tax gross-ups for perquisites) provided to Executive in respect of the
year prior to the Change of Control. In addition, at the time of the above
payment, the Executive shall be entitled to an additional lump sum cash payment
equal to the sum of (A) Executive's annual salary through the date of
termination, (B) a pro rata portion of the Bonus (calculated through the date of
termination), and (C) an amount, if any, equal to compensation previously
deferred (excluding any qualified plan deferral) and any accrued vacation pay,
in each case, in full satisfaction of Executive's rights thereto
(b) Welfare Benefits. The Executive shall be entitled to continued medical,
dental and life insurance coverage for the Executive and the Executive's
eligible dependents on the same basis as in effect prior to the Change of
Control or the Executive's Termination of employment, whichever is deemed to
provide for more substantial benefits, until the earlier of (A) [thirty-six
(36)][twenty-four (24)][twelve (12)](4) months (the "Separation Period") after
the Executive's Termination or (B) the commencement of comparable coverage with
a subsequent employer; provided, however, that such continued coverage shall not
count against any continued coverage required by law; provided, further, that if
the Company is not able to provide the coverage required above under the general
terms and provisions of the Company's 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, the Executive retains an amount
equal to the amount of the Benefit Payment.
(c) Pension Benefits. The Executive shall also receive additional service
credit (including, benefit accrual and vesting credit) for the Separation Period
under any Company pension plan in which Executive participates; provided,
however, that in the case of a qualified pension plan, the Executive shall be
paid (within 30 days after Executive's last day of employment) a cash lump sum
equal to the present value of the additional benefits Executive would have
accrued if Executive had been credited for all purposes with the additional
years of service under such plan. In addition, the Executive shall receive an
additional payment (the "401(k) Payment") equal to the
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(3) Three times for Tier I (CEO & EVPs); Two times for Tier II (SVPs); one time
for Tier III (remaining participants).
(4) Thirty-six months for Tier I; twenty-four months for Tier II; twelve months
for Tier III.
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product of (i) [three (3)] [two (2)][one (1)](5), (ii) 0.0225, and (iii) the sum
of the Base Salary and the Bonus.
(d) Outplacement. If so requested by the Executive, outplacement services
shall be provided by a professional outplacement provider at a cost to the
Company of not more than 10% of the Executive's Base Salary.
(e) Indemnification; Liability Insurance. The Company shall maintain, for a
period not less than 6 years following Executive's termination of employment,
comparable indemnification policies and liability insurance coverage for
Executive's benefit to those indemnification policies and liability insurance
coverage provided by the Company for Executive's benefit prior to the Change of
Control.
(f) Withholding. Payments and benefits provided pursuant to this Section 4
or any other provision of this Agreement shall be subject to any applicable
payroll and other taxes required to be withheld.
5. Certain Additional Payments by the Company:
(a) 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 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, 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 (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 the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") 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 Payments.
(b) Subject to the provisions of Section 5(f) hereof, all determinations
required to be made under this Section 5, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment
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(5) Three for Tier I; two for Tier II; and one for Tier III.
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is required and the amount of such Gross-Up Payment, shall be made by 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 Firm shall be a nationally
recognized firm of certified public accountants selected by the Executive). The
Accounting Firm shall be directed by the Company or the Executive to submit its
determination and detailed supporting calculations to both the Company and the
Executive within 15 calendar days after the Termination Date, if applicable, and
any other such time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by
the Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations. If the Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall, at the same time as it makes such determination,
furnish the Executive with an opinion that Executive has substantial authority
not to report any Excise Tax on Executive's federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting 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 Section
5(f) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting 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 shall 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.
(c) The Company and the Executive shall each provide the Accounting 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
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determination contemplated by Section
5(b) hereof.
(d) The federal, state and local income or other tax returns filed by the
Executive and the Company (or any filing made by a consolidated tax group which
includes the Company) shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall 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 Executive's federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as
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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 Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive shall within five business
days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Sections
5(b) and (d) hereof shall be borne by the Company. If such fees and expenses are
initially advanced by the Executive, the Company shall 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
Executive's payment thereof.
(f) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall 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 shall 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 shall not pay such claim prior to the earlier of (a) the expiration of
the 30-calendar-day period following the date on which Executive gives such
notice to the Company and (b) 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 shall:
(i) provide the Company with any written records or documents in
Executive's possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request 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;
(iii) cooperate with the Company in good faith in order effectively to
contest such claim; and
(iv) permit the Company to participate in any proceedings relating to
such claim;
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provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income 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
Section 5(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5(f) 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 Executive's
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 shall determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and xxx for a
refund, the Company shall advance the amount of such payment to the Executive on
an interest-free basis and shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income 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
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall 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.
(g) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5(f) hereof, the Executive receives any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 5(f) hereof) 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 Section 5(f) hereof, 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 shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid pursuant to this
Section 5.
6. Obligations Absolute; No Mitigation; No Effect On Other Rights.
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(a) The obligations of the Company to make the payment to the 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, recoupment, defense or other right which the Company may
have against the Executive or any third party at any time.
(b) The 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 the Executive in any subsequent employment.
(c) The provision of this Agreement, and any payment provided for herein,
shall not supersede or in any way limit the rights, benefits, duties or
obligations which the 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.
7. Not an Employment Agreement. Subject to the terms of this or any other
agreement or arrangement between the Company and the Executive that may then be
in effect, nothing herein shall prevent the Company from terminating the
Executive's employment.
8. Successors; Binding Agreement, Assignment.
(a) 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 to perform it if no
such succession had taken place. 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 the Executive to terminate the Executive's
employment with the Company or such successor for Good Reason immediately prior
to or at any time after such succession. As used in this Agreement, "Company"
shall mean (i) the Company as hereinbefore defined, and (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.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would be payable to the Executive hereunder if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's estate or designated
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beneficiary. Neither this Agreement nor any right arising hereunder may be
assigned or pledged by the 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 United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
X.X. Xxx 000
Xxxxxxxxxxx, XX 00000
Attention: Corporate Secretary
and in the case of the Executive, to the Executive at the most current address
shown on the Executive's employment records. Either party may designate a
different address by giving notice of change of address in the manner provided
above, except that notices of change of address shall be effective only upon
receipt.
10. Expenses. In addition to all other amounts payable to the Executive
under this Agreement, the Company shall pay or reimburse the Executive for legal
fees (including without limitation, any and all court costs and attorneys' fees
and expenses), incurred by the Executive in connection with or as a result of
any claim, action or proceeding brought by the Company or the Executive with
respect to or arising out of this Agreement or any provision hereof; unless, (i)
in the case of an action brought by the Executive, it is determined by an
arbitrator or by a court of competent jurisdiction that such action was
frivolous and was not brought in good faith, or (ii) in the case of a claim
arising under section 11 hereof, the Company prevails on the merits of such
claim.
11. Nondisclosure of Confidential Information; Non-Competition.
(a) Executive shall not, without the prior written consent of the Company,
use, divulge, disclose or make accessible to any other person, firm,
partnership, corporation or other entity any Confidential Information pertaining
to the business of the Company or any of its affiliates, except (i) while
employed by the Company, in the business of and for the benefit of the Company,
or (ii) when required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information. For purposes of this Section 11(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans and other non-public,
proprietary and confidential information of the
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Company or its affiliates (the "Restricted Group") or customers, that, in any
case, is not otherwise available to the public (other than by Executive's breach
of the terms hereof).
(b) During the period of Executive's employment hereunder and for one (1)
year thereafter, Executive agrees that, without the prior written consent of the
Company, (A) Executive will not, directly or indirectly, either as principal,
manager, agent, consultant, officer, stockholder, partner, investor, lender or
employee or in any other capacity, carry on, be engaged in or have any financial
interest in, any business which is in competition with the business of the
Restricted Group and (B) Executive shall not, on Executive's own behalf or on
behalf of any person, firm or company, directly or indirectly, solicit or offer
employment to any person who has been employed by the Restricted Group at any
time during the 12 months immediately preceding such solicitation.
(c) For purposes of this Section 11, a business shall be deemed to be in
competition with the Restricted Group if it or any of its material affiliates is
in the business of selling food (fresh, packaged and/or frozen), retail or
wholesale, within the continental United States. Nothing in this Section 11
shall be construed so as to preclude Executive from investing in any publicly or
privately held company, provided Executive's beneficial ownership of any class
of such company's securities does not exceed 1% of the outstanding securities of
such class. Executive shall retain the right to seek the written approval of the
Company's [successor] Chief Executive Officer waiving the requirements of
Section 11(b) with respect to any particular activity in which Executive seeks
to engage.
(d) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 11 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in addition to pursuing any other remedies it may have in
law or in equity, cease making any payments otherwise required by this Agreement
and obtain an injunction against Executive from any court having jurisdiction
over the matter restraining any further violation of this Agreement by
Executive; provided, however, that the Company may not cease making any payments
required by this Agreement until a court or arbitrator(s) having jurisdiction
over the matter has made a final non-appealable determination on the merits of
such action in the Company's favor.
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 the Executive and
15
such officer of the Company as shall be specifically designated by the Committee
or by the Board. 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 the Executive or the Company shall be brought and maintained
in a court of competent jurisdiction in the State of Minnesota.
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 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 understanding
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), including the
Change of Control Severance Agreement, dated as of _________, 19__, between the
Company and the Executive.
16. Grantor Trust. Immediately prior to a Change of Control, the Company
shall contribute to a grantor trust an amount equal to 125% of the payments
Executive would receive from the Company, pursuant to Section 4 hereof, if
Executive were terminated without Cause by the Company or if Executive were to
terminate Executive's employment for Good Reason, in either case, immediately
following the Change of Control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SUPERVALU INC.
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Witnesses:
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Name:
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Title:
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Executive
