Exhibit 10.9.1
The Vons Companies, Inc.
Amended and Restated
Severance Plan for Senior Management and Key Employees
This Amended and Restated Severance Plan (the "Plan") shall
become effective with respect to any particular Designated Employee
(as defined below) as of the later of July 15, 1996 and the date a
Senior Management and Key Employee Severance Agreement, incorporating
all or any portion of the terms hereof, is executed between such
Designated Employee and The Vons Companies, Inc. (the "Company").
1. Purpose
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The principal purposes of the Plan are to (i) provide
an incentive to the Designated Employees to remain in the employ
of the Company, notwithstanding any uncertainty and job insecurity
which may be created by an actual or prospective Change in Control,
(ii) encourage the Designated Employees' full attention and
dedication to the Company currently and in the event of any
actual or prospective Change in Control, and (iii) provide an
incentive for the Designated Employees to be objective concerning
any potential Change in Control and to fully support any Change
in Control transaction approved by the Board of Directors.
2. Definitions
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Terms not otherwise defined in the Plan shall have the
meanings set forth in this Section 2.
(a) Compensation. "Compensation" shall mean the sum of
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(x) the highest of the Designated Employee's annual base salary
(i) at the time the Notice of Termination provided for in
Section 3(c) of the Plan is given or (ii) for any of the three
most recent fiscal years completed prior to the Change in Control
as a result of which the Designated Employee is entitled to
receive benefits hereunder, (y) the average annual cash
"short-term incentive compensation bonus," as defined below,
for the Designated Employee, whether pursuant to a then existing
plan of the Company or otherwise, with respect to any of the
three most recent fiscal years preceding the year in which the
Date of Termination occurs for which a "short-term incentive
compensation bonus" was paid or for which the amount of
"short-term incentive compensation bonus," if any, was
finally determined and (z) the average annual amount allocated
to the Designated Employee under the Company's Profit Sharing
Plan for such prior three years. For purposes of this Plan, a
"short-term incentive compensation bonus" shall mean a lump
sum cash amount, whether contingent or fixed, determined on
an annual basis as an incentive to Designated Employees and
based on the Designated Employee's merit or value and/or on
the performance of such Designated Employee, of the Company
or its outstanding securities, and/or of the operating unit
of which such Designated Employee is a part, but shall not
include (by way of example, and not limitation): (i) one-time
payments in the nature of "sign-on" bonuses made to induce a
Designated Employee to accept initial employment with the
Company; (ii) amounts paid to reimburse the Designated
Employee for actual or deemed out-of-pocket expenses, such
as tax preparation, estate planning, financial advisory,
career counseling, health care, education or relocation
expenses; (iii) amounts paid to the Designated Employee upon
the exercise and cancellation of a stock appreciation right
previously granted; (iv) amounts paid to the Designated
Employee in the nature of a retention bonus designed to
encourage the Employee to remain in the employ of the Company
through a specified date or through the occurrence of a
specified event; (v) any severance or termination payments
or damages paid to the Employee; (vi) any amounts received
by the Designated Employee with respect to a health,
welfare or retirement benefit plan, program or arrangement
of the Company, or payments made to the Employee in
lieu of contributions made to such plan, program or
arrangement; or (vii) any amounts paid to the Designated
Employee pursuant to the Company's Long-Term Incentive Plan
originally approved by the Board of Directors on
February 19, 1992, or any successor thereto.
(b) Cause. For purposes of the Plan and any agreements
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entered into pursuant to the Plan only, "Cause" shall mean:
(i) the commission of acts constituting a crime of moral
turpitude (other than driving under the influence of alcohol),
(ii) conduct which is malicious or known or intended to be
contrary to the best interest of the Company and which causes
material harm to the Company, or (iii) habitual neglect of duty
if the Designated Employee shall have been given five (5) business
days' written notice by the Company of such habitual neglect
and such habitual neglect shall not have been cured prior
to the expiration of such five (5) business day period;
provided, however, that a Designated Employee shall have been
advised of such determination in writing at the time of his
or her termination, with a reasonable specification in such
writing of the facts constituting Cause.
(c) Change in Control. A "Change in Control" of the
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Company shall be deemed to have occurred if there shall be
consummated (w) any acquisition by another person of voting
stock of the Company if such person shall thereafter be the
beneficial owner of 50% or more of such outstanding voting
stock; (x) any merger or consolidation of the Company with or
into any other person, as the result of which the holders
of the Company's voting stock immediately prior to the
transaction shall, on the basis of such holdings prior
to such transaction, hold less than 50% of the total
outstanding voting stock of the surviving corporation
immediately upon completion of the transaction; (y) any sale
or exchange of all or substantially all of the property and
assets of the Company; or (z) any change in a majority of
the board of directors of the Company occurring within a
period of two years or less, such that a majority of the
board of directors is comprised of individuals who are not
"Continuing Directors." For purposes of the foregoing, a
Continuing Director shall be a director (i) who was in office
at the commencement of such period of two years or (ii) who
was elected subsequent to the commencement of such period
with the approval of not less than a majority of those
directors referred to in clause (i) who are then in office.
Any director meeting the qualifications of clause (ii) of
the previous sentence shall, with respect to further
determinations after the date of such director's initial
election, be deemed to be a director meeting the
qualifications of clause (i) of the previous sentence. As
used herein the term "person" shall have the meaning of such
term under Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934 (the "Act"); and the term "beneficial owner"
shall have the meaning set forth in Rule 13d-3 under the
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Act. Notwithstanding the foregoing, a Change of Control shall
not be deemed to have occurred under clauses (w), (x) or (y)
if the acquirer, purchaser or 50% owner is an employee benefit
plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company.
(d) Designated Employees. "Designated Employees" shall
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refer to those employees of the Company and its subsidiaries
who are parties to agreements with the Company, substantially
in the form of Exhibit A attached hereto (with such changes as
may be approved by the Board of Directors or the Compensation
Committee or other duly authorized committee thereof),
incorporating terms and provisions of this Plan. Each such
agreement shall indicate whether the particular Designated
Employee is in Group A, Group B, or Group C for the purposes
hereof.
(e) Good Reason. A Designated Employee's termination of
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employment with the Company shall be deemed for "Good Reason"
if it occurs within six months of any of the following
without the Designated Employee's express written consent:
(i) Any change in the nature, or diminution in
the status, of the Designated Employee's duties or
position from those in effect immediately prior to the
Change in Control (other than one that is immaterial);
(ii) A reduction by the Company in the
Designated Employee's annual base salary as in effect
on the date of a Change in Control of the Company or
as in effect thereafter if such compensation has been
increased and such increase was approved prior to the
Change of Control;
(iii) A reduction by the Company in the overall
value of benefits provided to the Designated Employee,
as in effect on the date of a Change in Control of the
Company or as in effect thereafter if such benefits
have been increased and such increase was approved prior
to the Change of Control. As used herein, "benefits"
shall include all profit sharing, retirement, pension,
health, medical, dental, disability, insurance,
automobile, and similar benefits;
(iv) A failure to continue in effect any stock
option or other equity-based or non-equity based
incentive compensation plan in effect immediately prior
to the Change in Control, or a reduction in the
Designated Employee's relative participation in any
such plan, unless the Designated Employee is afforded
the opportunity to participate in an alternative
incentive compensation plan of reasonably equivalent value;
(v) A failure to provide the Designated Employee
the same number of paid vacation days per year available
to him or her prior to the Change in Control, or any
material reduction or the elimination of any material
benefit or perquisite enjoyed by the Designated
Employee immediately prior to the Change in Control;
(vi) Relocation of the Designated Employee's
principal place of employment to any place more than 35
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miles from the office theretofore regularly occupied
by the Designated Employee, except for required travel
by the Designated Employee on the Company's business;
(vii) Any breach by the Company of any provision
of the Plan or of any agreement entered into pursuant to
the Plan; or
(viii) Any failure by the Company to obtain
the assumption of the Plan or any agreement entered
into pursuant to the Plan by any successor or assign
of the Company;
provided that for purposes of clauses (ii) through (v) above,
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"Good Reason" shall not exist if the aggregate value of all
salary, benefits, incentive compensation arrangements,
perquisites and other compensation is reasonably equivalent
to the aggregate value of salary, benefits, incentive
compensation arrangements, perquisites and other compensation
as in effect immediately prior to the Change in Control, or as
in effect thereafter if the aggregate value of such items
has been increased and such increase was approved prior to the
Change in Control.
3. Termination Following Change in Control
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(a) Termination of Employment. If a Change in Control
-------------------------
of the Company shall have occurred while the Designated
Employee is still an employee of the Company, the Designated
Employee shall be entitled to the compensation provided in
Section 4 upon the subsequent termination, within two years
of such Change in Control, of the Designated Employee's
employment with the Company unless such termination is as a
result of: (i) the Designated Employee's death; (ii) the
Designated Employee's Disability (as defined in Section 3(b)
below); (iii) the Designated Employee's mandatory retirement
in accordance with law and the Company's retirement policies
as they may exist prior to the Change in Control; (iv) the
Designated Employee's termination by the Company for Cause;
or (v) the Designated Employee's decision to terminate his
employment with the Company other than for Good Reason. In
addition to the circumstances described above, if a change in
Control of the Company shall have occurred while the Designated
Employee is still an employee of the Company, such Designated
Employee shall be entitled to the compensation provided in
Section 4 in the event of his voluntary termination of
employment with the Company during the 60-day period commencing
upon the first anniversary of the Change of Control.
(b) Disability. If, as a result of the Designated
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Employee's incapacity due to physical or mental illness,
the Designated Employee shall have been absent from his duties
with the Company on a full-time basis for six months and, within
30 days after written Notice of Termination thereafter given
by the Company, the Designated Employee shall not have returned
to the full-time performance of the Designated Employee's
duties, the Company may terminate the Designated Employee's
employment for "Disability".
(c) Notice of Termination. Any purported termination
---------------------
of the Designated Employee's employment by the Company or
the Designated Employee hereunder shall be communicated by a
Notice of Termination to the other party in accordance with the
terms of the agreement entered into pursuant to the Plan.
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For purposes of the Plan and any agreement entered into
pursuant hereto, a "Notice of Termination" shall mean a
written notice which shall indicate those specific termination
provisions in the Plan applicable to the termination and
which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for application
of the provisions so indicated.
(d) Date of Termination. "Date of Termination" shall
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mean (i) if the Designated Employee is terminated by the
Company for Disability, 30 days after Notice of Termination is
given to the Designated Employee (provided that the Designated
Employee shall not have returned to the performance of the
Designated Employee's duties on a full-time basis during such
30-day period) or (ii) if the Designated Employee's
employment is terminated by the Company for any other reason
or by the Designated Employee, the date on which a Notice
of Termination is given.
4. Severance Compensation upon Termination of Employment
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If the Designated Employee's employment with the
Company shall be terminated as provided in Section 3(a) of
the Plan, then the Company shall:
(i) Pay to the Designated Employee as severance
pay in a lump sum, in cash, on or before the twentieth
business day following the Date of Termination, an
amount equal to the multiple specified on Exhibit B
times the Designated Employee's Compensation;
(ii) Provide the Designated Employee, for
three years (or such shorter period as the Designated
Employee may elect) with disability, health, life and
accidental death and dismemberment benefits substantially
similar to those benefits which the Designated Employee is
receiving immediately prior to the Change of Control or,
if greater, immediately prior to the Notice of Termination.
Benefits otherwise receivable by the Designated Employee
pursuant to this Section 4(ii) shall be reduced to the
extent comparable benefits are actually received by the
Designated Employee during such period as the result of
his or her employment with another person.
(iii) Take all such action as may be
necessary or appropriate to provide the Designated
Employee the benefit of additional credit for that number
of years of service specified on Exhibit B for all
purposes under the Company's retirement plans (both
qualified and supplemental, but excluding the Company's
Profit Sharing Plan), in existence on the date of
this Plan; provided, that the Company may, at its
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election, provide in lieu of such credit under any
qualified plan a nonqualified benefit comparable
to the benefit that would have been resulted if
such credit had been given under such qualified plan.
(iv) Provide the Designated Employee with
appropriate outplacement counselling at a cost not
to exceed $25,000 or, if so elected by the
Designated Employee, $25,000 in a cash lump sum
payment.
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(v) If the Designated Employee is in Group C,
provide the Designated Employee with financial
counselling at a cost not to exceed $10,000.
5. "Parachute Payment" Provisions
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(a) Definitions. For purposes of this Section 5,
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the following terms shall have the following meanings:
(i) "Code" shall mean the Internal Revenue Code of 1986, as
amended; (ii) a "Payment" shall mean any payment or
distribution in the nature of compensation to or for the
benefit of a Designated Employee, whether paid or payable
pursuant to this Plan or otherwise; (iii) "Plan Payment"
shall mean a Payment paid or payable pursuant to this
Plan (disregarding this Section 5); (iv) "Net After Tax
Receipt" shall mean the Present Value of a Payment net of
all taxes imposed on a Designated Employee with respect
thereto under Sections 1 and 4999 of the Code, determined
by applying the highest marginal rate under Section 1 of
the Code which applied to the Designated Employee's
taxable income for the immediately preceding taxable year;
(v) "Present Value" shall mean such value determined in
accordance with Section 280G(d)(4) of the Code; (vi)
"Reduced Amount" shall mean the greatest aggregate amount
of Plan Payments which (A) is less than the sum of all Plan
Payments and (B) results in aggregate Net After Tax Receipts
which are equal to or greater than the Net After Tax Receipts
which would result if the Designated Employee were paid the
sum of all Plan Payments; (vii) "Accounting Firm" shall mean
KPMG Peat Marwick LLP or such other certified public accounting
firm as may be designated by a Designated Employee; and
(viii) "Excise Tax" means the excise tax imposed by Section
4999 of the Code and any interest or penalties with respect to
such excise tax.
(b) Certain Reductions in Payments for Designated
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Employees in Groups A and B. (i) Anything in this Plan
---------------------------
to the contrary notwithstanding, before any Plan Payments are
made by a Designated Employee in Group A or Group B, the
Accounting Firm shall determine whether receipt of all Payments
would subject a Designated Employee in Group A or Group B to
the Excise Tax, and if so, the Accounting Firm shall also
determine whether some amount of Plan Payments would meet
the definition of a "Reduced Amount." If the Accounting
Firm determines that there is a Reduced Amount, the aggregate
Plan Payments to such Designated Employee shall be reduced
to such Reduced Amount.
(ii) If the Accounting Firm determines
that the aggregate Plan Payments should be reduced to
the Reduced Amount, the Company shall promptly give
the Designated Employee notice to that effect and a
copy of the detailed calculation thereof, and the
Designated Employee may then elect, in his or her
sole discretion, which and how much of the Plan
Payments shall be eliminated or reduced (as long as
after such election the present value of the aggregate
Plan Payments equals the Reduced Amount), and shall
advise the Company in writing of his or her election
within ten days of his or her receipt of notice. If no
such election is made by the Designated Employee within
such ten-day period, the Company may elect which of such
Plan Payments shall be eliminated or reduced (as long as
after such election the present value of the aggregate
Plan Payments equals the Reduced Amount) and shall notify
the Designated Employee promptly of such election. As
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promptly as practicable following such determination, the
Company shall pay to or distribute for the benefit of the
Designated Employee such Plan Payments as are then due
to the Designated Employee under this Plan and shall promptly
pay to or distribute for the benefit of the Designated Employee
in the future such Plan Payments as become due to the
Designated Employee under this Plan.
(iii) While it is the intention of the Company to
reduce the amounts payable or distributable to the Designated
Employees in Group A and Group B only if the aggregate Net
After Tax Receipts to such a Designated Employee would
thereby be increased, as a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by Accounting Firm hereunder, it is
possible that amounts will have been paid or distributed by
the Company to or for the benefit of such a Designated
Employee pursuant to this Plan which should not have been so
paid or distributed ("Overpayment") or that additional amounts
which will have not been paid or distributed by the Company to
or for the benefit of such a Designated Employee pursuant to
this Plan could have been so paid or distributed
("Underpayment"), in each case, consistent with the calculation
of the Reduced Amount hereunder. In the event that Accounting
Firm, based upon the assertion of a deficiency by the Internal
Revenue Service against either the Company or the Designated
Employee which Accounting Firm believes has a high probability
of success, determines that an Overpayment has been made,
any such Overpayment paid or distributed by the Company to or
for the benefit of a Designated Employee shall be treated
for all purposes as a loan to the Designated Employee which
the Designated Employee shall repay to the Company together
with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code; provided, however, that no
such loan shall be deemed to have been made and no amount
shall be payable by a Designated Employee to the Company if
and to the extent such deemed loan and payment would not either
reduce the amount on which the Designated Employee is subject
to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that
Accounting Firm, based upon controlling precedent or
substantial authority, determines that an Underpayment
has occurred, any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Designated
Employee together with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code.
(c) Certain Additional Payments by the Company to
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Designated Employees in Group C. (i) Anything in this Plan
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to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any Payment to or
for the benefit of any Designated Employee in Group C would
be subject to the Excise Tax, then the Designated Employee
shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment
by the Designated Employee of all taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the
Designated Employee retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section
5(c), if it shall be determined that the Designated Employee
is entitled to a Gross-Up Payment, but that the Designated
Employee, after taking into account the Payments and the
Gross-Up Payment, would not receive a net after-tax benefit
of at least $50,000 (taking into account both income taxes
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and any Excise Tax) as compared to the net after-tax proceeds
to the Designated Employee resulting from an elimination of
the Gross-Up Payment and a reduction of the Payments, in
the aggregate, to an amount (the "Reduced Amount") such
that the receipt of Payments would not give rise to any Excise
Tax, then no Gross-Up Payment shall be made to the Designated
Employee and the Payments, in the aggregate, shall be reduced
to the Reduced Amount.
(ii) Subject to the provisions of Section
5(c)(iii), all determinations required to be made under this
Section 5(c), including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such
determination, shall be made by the Accounting Firm,
which shall provide detailed supporting calculations both
to the Company and the Designated Employee within ten days
of the receipt of notice from the Designated Employee that
there has been a Payment, or such earlier time as is requested
by the Company. Any Gross-Up Payment, as determined pursuant
to this Section 5(c), shall be paid by the Company
to the Designated Employee within five days of the receipt
of the Accounting Firm's determination. As a result
of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to
Section 5(c)(iii) and the Designated Employee thereafter
is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Designated
Employee.
(iii) A Designated Employee in Class C 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 the Gross-Up Payment. Such
notification shall be given as soon as practicable but no
later than ten business days after the Designated Employee
is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which
such claim is requested to be paid. The Designated Employee
shall not pay such claim prior to the expiration of the
30-day period following the date on which he or she gives
such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Designated
Employee in writing prior to the expiration of such period
that it desires to contest such claim, the Designated
Employee shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim,
(B) 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 reasonably selected
by the Company,
(C) cooperate with the Company in good faith
in order effectively to contest such claim, and
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(D) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Designated Employee harmless, on an
after-tax basis, for 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 limitation on the foregoing provisions of this
Section 5(c)(iii), the Company shall control all proceedings
taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority
in respect of such claim and may, at its sole option, either
direct the Designated Employee to pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner,
and the Designated Employee 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 Designated Employee to pay
such claim and xxx for a refund, the Company shall advance
the amount of such payment to the Designated Employee, on
an interest-free basis and shall indemnify and hold the
Designated Employee 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
or with respect to any imputed income with respect to such
advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the
taxable year of the Designated Employee with respect to
which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the
Designated Employee 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.
(iv) If, after the receipt by the Designated
Employee of an amount advanced by the Company pursuant
to Section 5(c)(iii), the Designated Employee becomes
entitled to receive any refund with respect to such
claim, the Designated Employee shall (subject to the
Company's complying with the requirements of Section
5(c)(iii)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by
the Designated Employee of an amount advanced by the Company
pursuant to Section (c)(iii), a determination is made that
the Designated Employee shall not be entitled to any refund
with respect to such claim and the Company does not notify
the Designated Employee in writing of its intent to contest
such denial of refund prior to the expiration of 30 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.
(d) All fees and expenses of the Accounting Firm shall
be paid for by the Company. All determinations made by the
Accounting Firm under this Section 5 shall be binding upon
the Company and the Designated Employees
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6. Dispute Resolution
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(a) Any disputes or controversies relating to the
validity of the Plan or the Company's authorization or
adoption thereof or the Company's due authorization of any
agreement entered into between the parties pursuant to the
Plan and any and all other disputes or controversies arising
out of or relating to the Plan or any agreement entered into
between the parties pursuant to the Plan, including any
disputes relating to the enforceability of either or the
interpretation of either, shall be governed by the laws of
the State of Michigan, without giving effect to its conflict
of laws provisions.
(b) Subject to paragraph (c) below, any and all
such disputes shall be submitted to binding arbitration
before one arbitrator of the American Arbitration Association
conducted in Los Angeles County in accordance with the rules
of such association. Subject to paragraph (d) below, all fees
and expenses of any arbitration, including the fees and expenses
of the arbitrator but not including fees and expenses incurred
by the Company or the Designated Employee for counsel or
otherwise, shall be borne by the Company; provided that in the
event the arbitrator determines that the Company is the
prevailing party in the arbitration, then such fees and
expenses shall be borne by the Designated Employee. The award
of the arbitrator shall be final and binding upon the parties,
shall not be subject to review or appeal and shall be enforceable
in any court of proper jurisdiction. All reasonable costs
of enforcement of an award by the prevailing party, including
fees and expenses of counsel, are to be borne by the other party.
(c) At the election of the Designated Employee,
by written notice to the Company prior to the selection of
an arbitrator pursuant to the preceding paragraph, any
dispute or controversy may be submitted for decision in
accordance with the following procedure: One of the following
attorneys shall be selected, by lot: Xxxxx Xxxxxx, Xxxxxx
Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxx, Xxx Xxxxxx,
C. Xxxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxx. In the event the
person so selected shall be unable or unwilling to serve,
by reason of conflicts of interest or otherwise, then a
second such person shall be selected by the same procedure,
and if necessary the procedure shall be repeated. The
person so selected (the "Attorney") shall be employed
jointly by the Company and the Designated Employee, to
decide the dispute or controversy fairly and impartially,
in accordance with the Plan and the applicable agreement
pursuant to the Plan, and in accordance with applicable
law. The Attorney shall establish such procedure as
he deems appropriate under the circumstances, having in
mind the nature of the dispute or controversy and the amount
in dispute, with a view to reaching a decision as
speedily and inexpensively as possible, consistent with
the interests of the parties. Each of the Company and
the Designated Employee shall cooperate in making available
to the Attorney all such information, documents and
personnel as the Attorney may request for the purpose of
reaching a decision hereunder. The Attorney may obtain
assistance in rendering his or her decision hereunder
from other attorneys employed in the same law firm, a law
firm qualified to practice in the State of Michigan
and/or an independent accounting firm which the Attorney
may retain for the purpose. The decision of the Attorney
shall be set forth in writing, shall be final and binding
upon the parties, shall not be subject to review or appeal
and shall be enforceable in any court of proper jurisdiction.
Subject to paragraph (d) below, all fees and expenses of
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any proceeding before the Attorney, including the fees and
expenses of the Attorney, shall be borne by the Company;
provided that in the event the Attorney determines that the
Company is the prevailing party in the proceeding, then such
fees and expenses shall be borne by the Designated Employee.
The Attorney shall have no liability to the Company or to
the Designated Employee for any action or omission to
act hereunder, unless such action or omission to act shall
be shown to have been not in good faith or to have amounted
to willful misconduct or gross negligence. All reasonable
costs of enforcement of an award by the prevailing party
shall be borne by the other party.
(d) The Company, consistent with the authority
therefor granted in Article VIII of the Company's bylaws,
and as authorized by Sections 561 et seq. of the
-- ---
Michigan Business Corporation Act, will indemnify and
reimburse the Designated Employee for actual and reasonable
expenses, including the fees and expenses of the
Designated Employee's counsel, incurred in any action,
suit or proceeding to enforce the Designated Employee's
rights pursuant to the Plan or any agreement entered into
pursuant to the Plan that results in an award or judgment in
favor of the Designated Employee, provided that, as to all
matters that are the subject of any such action, suit or
proceeding, the Designated Employee has acted in good faith
and in a manner he or she reasonably believed to be in or
not opposed to the best interest of the Company. Reasonable
legal fees and other costs incurred by the Designated
Employee in any action, suit or proceeding shall be paid by
the Company in advance of the final disposition of such action,
suit or proceeding, if (i) the Designated Employee elects in
the first instance to utilize the dispute resolution
procedures set forth in paragraph (c), above, (ii) the
Designated Employee furnishes the Company a written
affirmation of his or her good faith belief that he or
she has acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the
best interests of the Company, and (iii) the designated
employee furnishes the Company a written undertaking,
executed personally or on his or her behalf, to repay the
advance if it is ultimately determined that he or she did
not meet the foregoing standard of conduct or if it is
ultimately determined that such Designated Employee is not
entitled to be indemnified by the Company as provided in
this subparagraph (d), which shall be an unlimited general
obligation of the Designated Employee.
7. Mitigation of Damages; Effect of Plan
-------------------------------------
(a) The Designated Employee shall not be required
to mitigate damages or the amount of any payment provided
for under the Plan by seeking other employment or otherwise,
nor shall the amount of any payment provided for under the
Plan be reduced by any compensation earned by the Designated
Employee as a result of employment by another employer or
by retirement benefits after the Date of Termination, or
otherwise except as expressly provided herein.
(b) The provisions of the Plan, and any payment
provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish the Designated
Employee's existing rights, or rights which would accrue
solely as a result of the passage of time, under any
Benefit Plan, employment agreement or other contract,
plan or arrangement.
- 11 -
8. Term; Amendments; No Effect on Employment Prior to
--------------------------------------------------
Change in Control
-----------------
(a) The Plan, as amended and restated hereby, shall
have an initial term of two years, which shall be
automatically extended by one year beginning on the first
anniversary of the date of adoption of the Plan and on each
anniversary thereafter. The Plan with respect to all
Designated Employees or any particular Designated Employee
may be terminated or amended by the Board of Directors of the
Company or by its Compensation Committee or any other duly
authorized committee thereof; provided that a termination
or any amendment that reduces the benefits to the Designated
Employee provided hereunder or otherwise adversely affects the
rights of the Designated Employee, without the Designated
Employee's prior written consent: (i) may only be approved
after the completion of the initial two year term and prior to
a Change of Control, and (ii) may not be effected prior to
the provision of 24 months' advance notice thereof to the
Designated Employee. Termination or amendment of the Plan
shall not affect any obligation of the Company under the Plan
which has accrued and is unpaid as of the effective date of
the termination or amendment.
(b) Nothing in the Plan or any agreement entered into
pursuant to the Plan shall confer upon the Designated Employee
any right to continue in the employ of the Company prior to
(or, subject to the terms of the Plan, following) a Change in
Control of the Company or shall interfere with or restrict in
any way the rights of the Company, which are hereby expressly
reserved, to discharge the Designated Employee at any time prior
to (or, subject to the terms of the Plan, following) the date
of a Change in Control of the Company for any reason whatsoever,
with or without cause. The Designated Employee and the
Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Designated Employee
and the Company, the employment of the Designated Employee
by the Company is "at will," and if, prior to a Change of
Control, the Designated Employee's employment with the
Company terminates for any reason or for no reason, then the
Designated Employee shall have no further rights under this
Plan.
(c) The Company may withhold from any amounts payable
under this Plan such Federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law or
regulation.
(d) The Designated Employee's or the Company's failure
to insist upon strict compliance with any provision hereof
or the failure to assert any right the Designated Employee
or the Company may have hereunder, including, without
limitation, the right of the Designated Employee to
terminate employment for Good Reason, as defined herein,
shall not be deemed to be a waiver of such provision or right
or any other provision or right under this Plan.
9. Effect of Other Agreements
--------------------------
Notwithstanding anything to the contrary provided in the
Plan, (i) any amounts payable to a Designated Employee pursuant
to Section 4(i) of the Plan shall be reduced by any amounts
actually paid to such Designated Employee following a termination
- 12 -
of employment under any contract between the Designated Employee
and the Company that provides for the payment of compensation or
severance benefits following a termination of employment (an
"Existing Severance Agreement") and (ii) any benefits that
may be provided to a Designated Employee for three years
following a termination of employment pursuant to Section 4(ii)
of the Plan shall be reduced to the extent that substantially
identical benefits are actually received by the Designated
Employee during such three year period under an Existing
Severance Agreement.
- 13 -
EXHIBIT A
THE VONS COMPANIES, INC.
SENIOR MANAGEMENT AND KEY EMPLOYEE
SEVERANCE AGREEMENT
This SENIOR MANAGEMENT AND KEY EMPLOYEE SEVERANCE AGREEMENT
(this "Agreement"), dated as of , 199__ is made and
--------- --
entered into by and between The Vons Companies, Inc., a Michigan
corporation (the "Company"), and
------------- -----------
(the "Executive").
R E C I T A L S
- - - - - - - -
This Agreement is being entered into in accordance with
the Amended and Restated Severance Plan attached hereto as Annex 1
(the "Plan") in order to set forth the specific severance compensation
which the Company agrees that it will pay to the Executive if the
Executive's employment with the Company terminates under certain
circumstances described in the Plan.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the continued
service of the Executive as an employee and officer of the Company,
the mutual covenants and agreements contained in this Agreement,
and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Agreement to Provide Plan Benefits. The Plan is
----------------------------------
hereby incorporated into this Agreement in full and made a part
hereof as though set forth in full in this Agreement. The Executive
is hereby designated a member of Group under the Plan and shall
--
be entitled to all of the rights and benefits applicable to Group
--
employees of the Company under the Plan. The Company agrees to be
bound by the Plan and to provide to the Executive all of the benefits
provided to employees of the Company who are members of Group under
--
the Plan subject to the terms and conditions of the Plan. Terms
not otherwise defined in this Agreement shall have the meanings set
forth in the Plan.
2. Heirs and Successors.
--------------------
(a) Successors of the Company. The Company will
-------------------------
require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company,
expressly, absolutely and unconditionally to 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 or assignment had taken place. Failure of the Company
to obtain such agreement prior to the effectiveness of any such
succession transaction shall be a breach of this Agreement and
shall entitle the Executive to terminate his or her employment
with the Company within six months thereafter for Good Reason and
to receive the benefits provided under the Plan in the event of
termination for Good Reason following a Change in Control. As used
in this Agreement, "Company" shall mean the Company as defined
above and any successor or assign to its business and/or assets
as aforesaid which executes and delivers the agreement provided
for in this Section 2 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.
(b) Heirs of the Executive. This Agreement shall inure
----------------------
to the benefit of and be enforceable by the Executive's personal
and legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If the Executive should
die after the conditions to payment of benefits set forth in Section 3
of the Plan have been met and any amounts are still payable to
him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement
to the Executive's beneficiary, successor, devisee, legatee or
other designee or, if there be no such designee, to the Executive's
estate. Until a contrary designation is made to the Company,
the Executive hereby designates as his beneficiary under this
Agreement the person whose name appears below his signature on
page 3 of this Agreement.
3. Notice. For purposes of this Agreement, notices and
------
all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt requested,
postage prepaid, as follows: if to the Company - The Vons Companies,
Inc., 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention:
General Counsel and Secretary; and if to the Executive at the
address specified at the end of this Agreement. Notice may also
be given at such other address as either party may have furnished
to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
4. Miscellaneous. No provisions of this Agreement
-------------
or the Plan may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed
by the Executive and the Company, except as provided in Section 8(a)
of the Plan. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. 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 set forth expressly in this agreement,
5. Validity. The invalidity or unenforceability of
--------
any provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
6. 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 instrument.
7. Gender. In this Agreement (unless the context
------
requires otherwise), use of any masculine term shall include
the feminine.
- 2 -
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE VONS COMPANIES, INC., EXECUTIVE:
a Michigan corporation
By:
--------------------------------- -----------------------------
Name: (Signature)
Title:
-----------------------------
(Name)
-----------------------------
-----------------------------
(Address for Notice)
-----------------------------
(Designated Beneficiary)
-----------------------------
-----------------------------
(Address of Beneficiary)
- 3 -
EXHIBIT B
GROUP
-----
A B C
- - -
Multiple of 1 1.5 2.5
compensation
under Sections 3
and 4(i)
Additional years 1 1.5 2.5
credit under
Section 4(iii)
Possible reduction yes yes no
under Section 5(b)
Possible additional no no yes
payments under Section 5(c)
