EXECUTION VERSION

Exhibit 10.1
 
SUPERVALU INC.
 
 

 
P.O. Box 990
Minneapolis, MN 55440
952 828 4623

February 2, 2016
Mark Gross

Dear Mark:
We are pleased to set forth in this letter agreement (the “Letter Agreement”)
the terms of your employment in the position of President and Chief Executive
Officer of SUPERVALU INC. (“Supervalu” or the “Employer”), beginning on a date
mutually agreed by Supervalu and you, but in no event earlier than February 5,
2016 or later than February 12, 2016 (the “Start Date”). In that position, you
shall have primary responsibility for the business of Supervalu, and report to
the Board of Directors of Supervalu (the “Board”). If you commence employment on
the Start Date, you will be appointed to the Board no later than March 1, 2016,
subject to your continued employment through the date of such appointment.
The specific terms of your employment are as follows:
EFFECTIVE DATE: This Letter Agreement shall become effective upon execution by
both you and Supervalu (the “Effective Date”).
ADDITIONAL CONDITIONS OF OFFER: You agree as a condition of your employment with
Supervalu to fully comply with the terms of any agreement(s) you may have with
any prior employer or any other third party, including, without limitation, any
such terms pertaining to the nondisclosure of confidential information. To this
end, we call your attention to the paragraph below entitled “Certain
Representations and Covenants.”
POSITIONS AND DUTIES: While you are employed with Supervalu, you shall have
authority, duties and responsibilities that are commensurate with your position
as set forth in the initial paragraph of this Letter Agreement and as are
customarily exercised by a person holding such position, including, without
limitation, (a) overall responsibility for leading and supervising the
businesses and operations of Supervalu, (b) responsibility for developing,
refining and implementing the strategic plans of Supervalu, (c) hiring,
supervising and firing of your direct reports, and (d) such other duties as the
Board may assign to you from time to time (consistent with your title and
position) and, in each case, subject to the ultimate authority and direction of
the Board. Your primary place of employment will be in the Minneapolis,
Minnesota metropolitan area, at the executive offices of Supervalu, and you
shall relocate your primary residence to the Minneapolis metropolitan region as
soon as reasonably practicable following the Start Date, but in no event later
than July 1, 2016. Supervalu will reimburse you for reasonable costs you incur
for temporary housing for up to eight weeks following the Start Date in
accordance with Supervalu’s Relocation Policy – Tier 1 (as described below).
During your employment with Supervalu, you shall not be permitted to participate
or invest in or manage any

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for-profit business activity or venture not arising in connection with the
performance of your duties pursuant to this Letter Agreement; provided, however,
that it shall not be a violation of this Letter Agreement for you to (i) with
the prior written approval of the Board, serve on the boards of directors of
for-profit companies, (ii) serve on civic or charitable boards or committees,
deliver lectures, fulfill speaking engagements, or teach at educational
institutions and manage personal investments and (iii) manage, use, allocate or
invest any personal or family assets or investments, so long as, in the case of
activities described in the preceding clauses (i), (ii) and (iii), such
activities do not significantly interfere with the performance of your
responsibilities in accordance with this Letter Agreement or otherwise create a
conflict of interest or breach of Supervalu company policies or this Letter
Agreement.
BASE SALARY: You will be paid a base salary while you are employed by the
Employer at an annualized rate of $1,000,000 (subject to applicable taxes and
withholdings) (the “Base Salary”), which will be paid in substantially equal
installments in accordance with the Employer’s usual and customary payroll
policies.
ANNUAL BONUS: You will have the opportunity to earn a bonus for each fiscal year
of the Employer that you are employed by the Employer commencing with the fiscal
year ending in 2017 (the “Annual Bonus”), with a minimum of zero, a target of
100% of your Base Salary (the “Target Bonus”), and a maximum bonus of 200% of
your Base Salary, to be paid not later than two and one-half months following
the end of such fiscal year (subject to your continued employment through the
applicable performance period). The Annual Bonus shall be based on the
attainment of performance goals proposed by Supervalu’s management, and subject
to the final approval of, the Leadership Development and Compensation Committee
of the Board (the “LDCC”) and the independent members of the Board, as
applicable.
SIGNING BONUS: As soon as administratively practicable following the Start Date
(and in no event more than 15 business days after the Start Date), Supervalu
will make a cash payment to you of $300,000 (the “Signing Bonus”). If, however,
you are terminated by the Employer for Cause (as defined in the Supervalu
Executive & Officer Severance Pay Plan (the “Supervalu Severance Plan”) as in
effect on the Effective Date) or you resign for any reason other than “Good
Reason” (as defined below under the paragraph labeled “Severance”) prior to the
first anniversary of the Start Date, then you will repay to the Employer the
Signing Bonus within ten business days following your termination or resignation
of employment.
INDUCEMENT LTI AWARD(S): Subject to your continued employment through the grant
dates described below in this paragraph, you will be granted a Supervalu
long-term incentive award having an aggregate grant date value of $6.0 million,
computed as described below (the “Inducement LTI Award”). The Inducement LTI
Award represents your annual long-term incentive awards in respect of the fiscal
years of Supervalu ending in 2017 and 2018. It will be comprised of 50%
performance shares and 50% stock options. The first 50% of the Inducement LTI
Award (the “Inducement Options”) will be apportioned entirely in stock options
and will be granted to you on your Start Date (or, if there is not an open
window period in effect on such date, the first date thereafter on which an open
window is in effect). The number of shares subject to the Inducement Options
shall be such that the grant value of the Inducement Options is $3 million,
calculated consistently with the Black-Scholes assumptions set forth in the
Supervalu Form 10-K filed on April 28, 2015, but using the prevailing risk-free
interest rate and the closing price of a share of Supervalu common stock on the
New York Stock Exchange on the

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Start Date. The Inducement Options shall have a per-share exercise price equal
to the closing price of a share of Supervalu common stock on the New York Stock
Exchange on the grant date, and will vest ratably on each of the first three
anniversaries of the Start Date, subject to your continued employment. The other
50% of the Inducement LTI Award (the “Inducement Performance Shares”) will be
apportioned entirely in performance shares, will have a grant date value of $3
million, and will be granted at the same time that long-term incentive awards in
respect of Supervalu’s fiscal year ending in 2017 are granted to senior
management generally under the policies and practices of Supervalu, which is
currently anticipated to be in April 2016. The Inducement Performance Shares
will have a three-year performance period (fiscal years ending 2017–2019), and
will vest at the end of that period based on the attainment of the performance
goals and your continued employment, and will have other terms and conditions
that are no less favorable to you than the terms and conditions of performance
shares granted to senior management at the same time (including with respect to
the treatment of such performance shares in connection with the spinoff of the
Save-A-Lot business, if any). Notwithstanding the above, if you are terminated
by Supervalu without “cause” (as defined in the Supervalu Severance Plan as in
effect on the Effective Date) or you resign with Good Reason, then (i) if any
Inducement Options are then unvested, you will immediately vest in a pro rata
portion of the Inducement Options scheduled to vest on the anniversary of the
Start Date next following such termination, based on the portion of the year
ending on such anniversary of the Start Date elapsed through such termination,
and (ii) if the performance period for the Inducement Performance Shares has not
ended, then a pro rata portion of the Inducement Performance Shares will remain
outstanding and available to vest as if your termination had not occurred, based
on the portion of the three-year performance period elapsed through such
termination and the actual level of attainment of the performance goals over the
entire three-year performance period. Other than as provided herein, the terms
and conditions of the Inducement LTI Award will be consistent with those
applicable to other senior executives and the terms and conditions of the
Inducement Option will be consistent with the form of the stock option agreement
attached hereto as Exhibit B.
SPECIAL AND ANNUAL LTI AWARDS: In respect of the fiscal year of Supervalu ending
in 2018, provided that you remain employed with Supervalu through the grant
date, you will receive a special, one-time long-term incentive award from
Supervalu in the form of stock options with a grant date value (based on
valuation method used by Supervalu for financial reporting purposes) of $500,000
(the “2018 Option Grant”). The grant date for the 2018 Option Grant will not be
later than May 15, 2017 (or if Supervalu is in a so-called “blackout” period on
May 15, 2017, then on the first date on which Supervalu is no longer subject to
any blackout restrictions). The vesting and other terms with respect to the 2018
Option Grant will be consistent with the terms and conditions applicable to the
Inducement Option but in no event less favorable then the terms and conditions
applicable to other senior executives of Supervalu who receive grants of stock
options at such time. In respect of each fiscal year of Supervalu ending in 2019
and later, provided that you remain employed with Supervalu through the grant
date, you will receive an annual long-term incentive award from Supervalu with
an aggregate grant date value of $3.0 million. The allocation between award
types, calculation methodology of the number of shares and/or options, and terms
and conditions of the annual awards described in the preceding sentence will be
no less favorable than the terms and conditions of long-term incentive awards
granted to senior management at the same time.

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BENEFITS: In addition to your compensation described in the preceding
paragraphs, you will be entitled to participate in Supervalu’s benefits programs
including, without limitation, all programs available to senior executives of
Supervalu, subject to the eligibility requirements thereof. These programs as in
effect on the Start Date are summarized in a document that you have received
from Supervalu. In addition, Supervalu shall enter into an aircraft time share
agreement with you upon or promptly following the Start Date, which will provide
you with reasonable personal use of Supervalu corporate aircraft for calendar
year 2016 and each subsequent calendar year in which you remain employed, in
each case, as approved by the Board and subject to (i) your reimbursement to
Supervalu of the entire incremental or variable cost to Supervalu of such
aircraft use, as allowable (to be determined under such time share agreement),
(ii) any business use of such aircraft taking precedence over any personal use
by you, and (iii) Supervalu continuing to own its own corporate aircraft.
REIMBURSEMENT OF EXPENSES: Supervalu will pay or reimburse you for all
reasonable travel and other business related expenses incurred by you in
performing your duties for Supervalu in accordance with Supervalu’s policies and
procedures as in effect from time to time. You will be entitled to relocation
benefits in accordance with Supervalu’s Relocation Policy – Tier 1, a copy of
which you have received from Supervalu.
PAID TIME OFF: Supervalu has a Paid Time Off (PTO) policy that provides paid
time off for needs such as vacation, personal illness, family needs, etc. You
will be eligible for 27 days of PTO annually, which will be prorated during your
first calendar year of employment based on the Start Date.
SEVERANCE: You will participate in the Supervalu Severance Plan at a “Tier I”
level; provided, however, that (a) termination by you for Good Reason (as
defined below) will be deemed to be a termination by Supervalu without Cause for
purposes of the Supervalu Severance Plan and (b) in no event shall your
severance benefits be less favorable than the severance benefits in effect under
the Supervalu Severance Plan on the Effective Date and as modified herein (i.e.,
you will be entitled to such benefits upon the terms and subject to the
conditions set forth in the Supervalu Severance Plan as of the Effective Date
and as modified herein even if the Supervalu Severance Plan is thereafter
eliminated or modified to include less favorable benefits). For purposes of this
Letter Agreement, you will have the right to terminate your employment for “Good
Reason” if you are removed from the position of Chief Executive Officer, or
there occurs a material reduction in your duties, responsibilities, Base Salary
or Target Bonus. For this purpose, a reduction in the size of Supervalu,
including, without limitation, on account of the anticipated separation or
disposition of the Save-A-Lot business by spinoff or otherwise, shall not
constitute a material reduction in your duties or responsibilities. You may only
terminate your employment for Good Reason if you first deliver to Supervalu by a
written notice within 30 days of the occurrence of such event and Supervalu
fails to cure such event within 30 days following the receipt of your written
notice; provided that no resignation will be for Good Reason unless you actually
resign from employment effective as of a date within 75 days after the end of
Supervalu’s 30-day cure period.
CERTAIN REPRESENTATIONS AND COVENANTS: You represent and warrant as of the
Effective Date that your entry into this Letter Agreement and your performance
of your obligations hereunder as of the Start Date and thereafter will not
result in any breach, violation, or contravention of any law of governmental
entity applicable to you or violate any contractual,

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common law or statutory obligations to any parties, and you are not a party to
any agreement or arrangement containing or otherwise subject to a noncompetition
provision or other restriction with respect to, in each case, (a) the nature of
any services that you are entitled or obligated to perform or conduct for
Supervalu or any of its affiliates under this Letter Agreement, or (b) the
disclosure or use of any confidential information that directly or indirectly
relates to the nature of the business of Supervalu or any of its affiliates, or
the services that you are entitled or obligated to perform under this Letter
Agreement (except, in the case of clause (b), any such confidentiality agreement
that relates to information that you will not need to use in your performance of
your obligations hereunder, which you agree not to use or disclose). In
addition, you represent and warrant that (i) you are a lawful permanent resident
of the United States, (ii) you are authorized to work in the United States, and
(iii) you will not require employer sponsorship in order to maintain such status
and work authorization. You agree to complete Form I-9 in accordance with
Supervalu procedures upon commencement of employment and to maintain such status
and work authorization throughout your employment with Supervalu. You agree
that, no later than the Start Date, (A) you and Surry Investment Advisors LLC
and any related business shall have ceased providing consulting or other
services to any business, entity or person whose business activities overlap or
are in any way competitive with those of Supervalu and its affiliates, provided
that continued financial management and operation of Gross family investments
through Surry Investment Advisors LLC shall not constitute a breach of this
agreement to the extent that such activities do not (1) violate Supervalu
policies (including but not limited to the Supervalu Conflicts of Interest
Policy) and (2) do not materially interfere with the performance of your duties
under this Letter Agreement, (B) you shall have resigned or otherwise been
removed from the Official Committee of Unsecured Creditors in the Haggen
Holdings LLC bankruptcy, and (C) you shall be in compliance with the Supervalu
Conflicts of Interest Policy, a copy of which you have received from Supervalu,
including without limitation having terminated and fulfilled any obligations
under the agreement dated March 17, 2014 previously supplied to Supervalu . You
represent that you have supplied Supervalu or its advisors of copies of any
written agreements pursuant to which you are or have been subject to restrictive
covenants or other obligations of any sort that could continue to apply on and
following the Start Date, other than such agreements (x) that could not affect
your performance of your duties hereunder or (y) that Supervalu has requested
for review but that you have not provided to Supervalu or its advisors based on
your good faith determination that providing such agreements would result in
your violation of confidentiality covenants contained therein (it being
understood that you have orally disclosed to Supervalu the essential substance
of any such restrictive covenants or obligations contained in the agreements you
have not provided). You acknowledge and agree that any breach of the foregoing
representations, covenants or obligations shall constitute a basis to terminate
you for “cause” (or such similar term) for purposes of this Letter Agreement and
all equity awards granted to you by Supervalu and all Supervalu severance
arrangements for which you may otherwise be eligible (including, without
limitation, the Supervalu Severance Plan), resulting in, without limitation, a
forfeiture of all unvested Supervalu equity awards held by you at the time of
such termination, and your ineligibility for severance payments or benefits of
any kind under the Supervalu Severance Plan or any other severance plan, policy,
agreement, or arrangement of Supervalu. Supervalu represents and warrants that
it has the power and authority to execute and deliver this Letter Agreement and
to perform its obligations hereunder.

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MISCELLANEOUS: Your employment with Supervalu will be “at-will.” “At-will” means
that either you or Supervalu are free to terminate the employment relationship
at any time, for any reason. This Letter Agreement does not change the nature of
your “at-will” employment and does not guarantee employment for any specific
period of time. You will be provided with a Supervalu Tier II Change of Control
Severance Agreement (the “Supervalu COC Agreement”), with terms consistent with
other Supervalu Tier II COC Agreements of other senior executives of Supervalu,
which will become effective on the Start Date. In the event that you become
entitled to severance payments or benefits under this Letter Agreement, the
Supervalu Severance Plan or the Supervalu COC Agreement, such payments and
benefits will be your sole and exclusive severance payments and benefits and you
will not be entitled to any other severance payments or benefits from Supervalu.
Supervalu and you shall enter into Supervalu’s standard form of indemnification
agreement for executive officers. You shall be provided with director’s and
officer’s liability insurance coverage to the same extent as other Supervalu
executive officers and as provided in such policies for Supervalu executive
officers serving as directors. Such coverage shall continue after your service
with Supervalu ceases while you have continuing liability with regard to your
actions or inactions on behalf of Supervalu on the same basis as coverage for
other former Supervalu officers and directors.
NONCOMPETITION, NONSOLICITATION, CONFIDENTIALITY, AND MANDATORY ARBITRATION: By
accepting this offer, you agree, effective as of the Effective Date, to the
confidentiality, noncompetition, and nonsolicitation provisions contained in the
“Terms and Conditions of Employment” attached as Exhibit A, and that are
incorporated herein by reference. You also agree that any and all employment
disputes occurring during or after your employment with Supervalu are subject to
mandatory arbitration as set forth in the “Terms and Conditions of Employment.”
In addition, you acknowledge and agree that this Letter Agreement and the
discussions and correspondences that led to this Letter Agreement shall
constitute “Confidential Information” for purposes of the Confidentiality
Agreement, executed in November 2015, by and between Supervalu and you (unless
such information is already publicly available through no fault of your own).
LEGAL FEES: Upon presentation of appropriate documentation, Supervalu will pay
or reimburse you for your reasonable counsel fees and expenses incurred in
connection with the negotiation and documentation of this Letter Agreement (at
such counsel’s standard hourly rates and expense charges), up to a maximum of
$50,000 in the aggregate.
ENTIRE AGREEMENT: This Letter Agreement is intended to be the entire agreement
between Supervalu and you with respect to the matters described herein. No
waiver or modification hereof shall be valid unless made in writing, signed by
both you and Supervalu.
SECTION 409A. Supervalu and you intend that the payments and benefits provided
for in this Letter Agreement either be exempt from the application of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
the rules and regulations thereunder, or be provided in a manner that does not
result in tax penalties to you under Section 409A of the Code, and any ambiguity
herein shall be interpreted so as to be consistent with the intent of this
paragraph. Notwithstanding anything contained herein to the contrary, all
payments and benefits paid on account of your termination of employment that
constitute nonqualified deferred compensation within the meaning of Section 409A
of the Code shall be paid or provided only at the time of a termination of your
employment that constitutes a “separation from service” from

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Supervalu within the meaning of Section 409A of the Code and the regulations and
guidance promulgated thereunder (determined after applying the presumptions set
forth in Treas. Reg. Section 1.409A-1(h)(1)). Further, if at the time of your
termination of employment with Supervalu you are a “specified employee” as
defined in Section 409A of the Code as determined by Supervalu in accordance
with Section 409A of the Code, and Supervalu determines that the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a result
of such termination of employment is necessary to prevent any accelerated or
additional tax or interest on account of Section 409A of the Code, then
Supervalu will defer the commencement of the payment of any such payments or
benefits hereunder (without any reduction in payments or benefits ultimately
paid or provided to you) until the date that is six months following the date of
your termination of employment with Supervalu (or, if earlier, the date of your
death), whereupon Supervalu will pay you a lump sum amount equal to the
cumulative amounts that would have otherwise been previously paid to you under
this Letter Agreement during the period in which such payments or benefits were
deferred. For purposes of the limitations on nonqualified deferred compensation
under Section 409A of the Code, each payment of compensation under this Letter
Agreement shall be treated as a separate payment of compensation for purposes of
applying the exclusion under Section 409A of the Code for certain short-term
deferral amounts and otherwise. In no event may you, directly or indirectly,
designate the calendar year of any payment under this Letter Agreement.
Notwithstanding anything to the contrary in this Letter Agreement, in-kind
benefits and reimbursements provided under this Letter Agreement during any
calendar year shall not affect in-kind benefits or reimbursements to be provided
in any other calendar year, other than an arrangement providing for the
reimbursement of medical expenses referred to in Section 105(b) of the Code, and
are not subject to liquidation or exchange for another benefit. Notwithstanding
anything to the contrary in this Letter Agreement, reimbursement requests must
be timely submitted by you and, if timely submitted, reimbursement payments
shall be promptly made to you following such submission, but in no event later
than December 31st of the calendar year following the calendar year in which the
expense was incurred. In no event shall you be entitled to any reimbursement
payments after December 31st of the calendar year following the calendar year in
which the expense was incurred. This paragraph shall only apply to in-kind
benefits and reimbursements that would result in taxable compensation income to
you.
CONTROLLING LAW: This Letter Agreement shall in all respects be interpreted,
enforced and governed by the laws of the State of Minnesota without regard to
its conflicts of laws principles.
SEVERABILITY: You agree that the terms of this Letter Agreement (including,
without limitation, Exhibit A hereto) are severable, and if any provision of
this Letter Agreement (including, without limitation, Exhibit A hereto) is found
to be void and unenforceable by a court, that judgment will not affect, impair
or invalidate the remainder of this Letter Agreement.
COUNTERPARTS: This Letter Agreement may be executed in separate counterparts
(including by facsimile or other electronic means), each of which shall deemed
to be an original but all of which taken together shall constitute one and the
same instrument.

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

By:

 
/s/ Gerald Storch
 
Name: Gerald Storch
 
Title: Non-Executive Chairman of the Board
 
 
 
 
Date:
February 2, 2016

 
/s/ Matthew E. Rubel
 
Name: Matthew E. Rubel
 
Title: Chair, Leadership Development and
 
 
Compensation Committee
 
 
 
 
Date:
February 2, 2016

AGREED AND ACCEPTED:
 
/s/ Mark Gross
 
Name: Mark Gross
 
 
 
 
Date:
February 2, 2016

[Signature Page to Offer Letter]

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EXHIBIT A
TERMS AND CONDITIONS OF EMPLOYMENT
The following are confidentiality, noncompetition, nonsolicitation and mandatory
arbitration agreements referenced in the attached offer letter. By accepting
this offer of employment, you agree to these terms and conditions. As they
concern important legal rights, you are urged to read carefully, and consult
counsel, if necessary, to ensure you understand these provisions.
As used below, “You” refers to the individual to whom this offer of employment
is being extended. The “Employer” in this Exhibit A refers to SUPERVALU INC. and
all of its subsidiaries, affiliates, and related companies.
You affirm, agree and understand that the offer letter, as attached (the “Letter
Agreement”), includes the following provisions, and that by accepting the
Employer’s offer of employment, You agree to abide by, and be bound by, the
following:
1.
Confidentiality. You acknowledge that, in the course of your employment with the
Employer, You will have access to confidential information that was obtained or
developed by the Employer at great expense and that is zealously guarded from
unauthorized disclosure. Your access to and possession of this information will
be due solely to your employment with the Employer. You agree that You will not,
at any time during or following termination of employment for any reason,
disclose, use, or otherwise make available to any third party, any confidential
information relating to the Employer’s business, products, services, customers,
vendors, or suppliers; trade secrets, data, specifications, techniques; long-
and short-term plans, existing and prospective client, vendor, supplier, and
employee lists, contacts, and information; financial, personnel, and information
system information and applications; and any other information concerning the
business of the Employer that is not disclosed to the general public or known in
the industry, except with the express written consent of the Employer. All
confidential information, including all copies, notes regarding, and
replications of such confidential information will remain the sole property of
the Employer, as applicable, and must be returned to the Employer immediately
upon your termination from the Employer.

2.
Nonsolicitation of Customers, Vendors, and Suppliers. You specifically
acknowledge that the confidential information described above includes
confidential data pertaining to existing and prospective customers, vendors, and
suppliers of the Employer, that such data is a valuable and unique asset of the
business of the Employer, and that the success or failure of their businesses
depends upon their ability to establish and maintain close and continuing
personal contacts and working relationships with such existing and prospective
customers, vendors, and suppliers and to develop proposals which are specific to
such existing and prospective customers, vendors and suppliers. Therefore, You
agree that for 12 months following the date of your termination from the
Employer, You will not (except on behalf of the Employer, or with the Employer’s
express written consent) solicit, approach, contact or attempt to solicit,
approach, or contact, either directly or indirectly, on your own behalf or on
behalf of any other person or entity, any existing or prospective customers,
vendors, or suppliers of the Employer with whom You had contact or about whom
You gained confidential information during your employment with the Employer for
the purpose of obtaining business or engaging in any commercial

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relationship that would be competitive with the Business of the Employer (as
defined below) or cause such customer, supplier, or vendor to materially change
or terminate its business or commercial relationship with the Employer. This
provision is in addition to, and not in lieu of, similar provisions in any other
agreement(s) between You and the Employer.
3.
Nonsolicitation of Employees. You specifically acknowledge that the confidential
information described above also includes confidential data pertaining to
employees and agents of the Employer, and You further agree that for 12 months
following your termination of employment, You will not, directly or indirectly,
on your own behalf or on behalf of any other person or entity, solicit, contact,
approach, encourage, induce or attempt to solicit, contact, approach, encourage,
or induce any of the employees or agents of the Employer to terminate their
employment or agency with the Employer.

4.
Noncompetition. You covenant and agree that for 12 months following your
termination of employment, You will not, in any geographic market in which You
worked or had direct or indirect responsibilities on behalf of the Employer, and
for any business line or lines for or other functions for which You had direct
or indirect responsibility for any sales, marketing, operational, logistical, or
other management or oversight responsibility, engage in or carry on, directly or
indirectly, as an owner, employee, agent, associate, consultant, partner, or in
any other capacity, a business competitive with the Business of the Employer.

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

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

5.
Remedies. You and the Employer each acknowledges and agrees that the Employer
will suffer irreparable harm from a breach by You of any of the covenants or
agreements contained in Section 1, 2, 3, or 4 of this Exhibit A. You further
acknowledge that the restrictive covenants set forth in Section 4 of this
Exhibit A are of a special, unique, and extraordinary character, the loss of
which cannot be adequately compensated by monetary damages. You agree that the
terms and provisions of Sections 1, 2, 3, and 4 of this Exhibit A are fair and
reasonable and are reasonably required for the protection of the Employer in
whose favor such restrictions operate. You acknowledge that, but for your
agreements to be bound by the restrictive covenants set forth in this Exhibit A,
the Employer would not have entered into the Letter Agreement. In the event of
an alleged or threatened breach by You of any of the provisions of Section 1, 2,
3, or 4 of this

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Exhibit A, the Employer or its successors or assigns may, in addition to all
other rights and remedies existing in its or their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
equitable relief in order to enforce or prevent any violations of the provisions
hereof.
6.
Mandatory Arbitration. You covenant and agree that any controversy or claim
arising out of or relating to your employment relationship with the Employer or
the termination of that relationship must be submitted for final and binding
resolution by a private and impartial arbitration, under the Employment Dispute
Resolution rules of the American Arbitration Association. This includes, but is
not limited to, any claim that could be asserted in court or before an
administrative agency or claims for which You have an alleged cause of action,
including without limitation claims for breach of any contract or covenant
(express or implied); tort claims; claims for discrimination, harassment or
retaliation under local, state or federal statutes; claims for wrongful
discharge; claims for violations of the Family and Medical Leave Act or any
other local, state, federal or other governmental law, statute, regulation, and
whether based on statute or common law. This includes claims against the
Employer, any of its affiliated or subsidiary entities, or its individual
officers, directors, or employees.

This does not include the following claims:
a.
claims for workers compensation or unemployment benefits;

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

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

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

The burden of proof at arbitration shall be on the party seeking relief. Each
party shall bear its own costs and attorneys’ fees. In reaching a decision, the
arbitrator shall apply the governing substantive law applicable to the claims,
causes of action and defenses asserted by the parties. The arbitrator shall have
the power to award all remedies (including attorneys’ fees) that could be
awarded by a court or administrative agency in accordance with the governing and
applicable substantive law.
You also agree that the arbitration procedure described herein does not alter
your status as an “at-will” employee, meaning both you and the Employer have the
right to terminate employment at any time and for any reason.
7.
Governing Law. You agree that the internal law, and not the law of conflicts, of
the State of Minnesota, shall govern all questions concerning the validity,
construction and effect of this Exhibit A. The exclusive venue for any
arbitration or court proceeding relating to this Agreement shall be a state
court or arbitration forum, as required above, within the state of Minnesota
unless the parties mutually agree to a different venue. You consent to personal
jurisdiction in Minnesota.

A-3

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EXHIBIT B
FORM OF INDUCEMENT OPTION AGREEMENT
SUPERVALU INC.
2012 STOCK PLAN

STOCK OPTION AGREEMENT

This agreement is made and entered into as of the grant date indicated below
(the “Grant Date”), by and between SUPERVALU INC. (the “Company”) and the
individual whose name appears below (“Optionee”).
 
The Company has established the 2012 Stock Plan (the “Plan”), under which
directors and key employees of the Company and its Affiliates may be granted
Options to purchase shares of the Company’s common stock. Optionee has been
selected by the Company to receive an Option subject to the provisions of this
agreement. Capitalized terms that are used in this agreement, that are not
defined, shall have the meanings ascribed to them in the Plan.

In consideration of the foregoing, the Company and Optionee hereby agree as
follows:

1.
Option Grant. The Company hereby grants to Optionee, subject to Optionee’s
acceptance hereof, the right and option to purchase the number of Shares
indicated below at the exercise price per Share indicated below (the “Exercise
Price”), effective as of the Grant Date. The Option has been designated as a
Non-Qualified Stock Option (“NQ”) for tax purposes, the consequences of which
are set forth in the prospectus that describes the Plan.

2.
Acceptance of Option and Stock Option Terms and Conditions. The Option is
subject to and governed by the Stock Option Terms and Conditions (“Terms and
Conditions”) attached hereto, which is incorporated herein and made a part
hereof, and the terms and provisions of the Plan. To accept the Option, this
agreement must be delivered and accepted through an electronic medium in
accordance with procedures established by the Company or Optionee must sign and
return a copy of this agreement to the Company within sixty (60) days after the
Grant Date. By so doing, Optionee acknowledges receipt of the accompanying Terms
and Conditions and the Plan, and represents that Optionee has read and
understands the same and agrees to be bound by the accompanying Terms and
Conditions and the terms and provisions of the Plan. In the event that any
provision of this agreement or the accompanying Terms and Conditions is
inconsistent with the terms and provisions of the Plan, the terms and provisions
of the Plan shall govern. Any question of administration or interpretation
arising under this agreement or the accompanying Terms and Conditions shall be
determined by the Committee administering the Plan, and such determination shall
be final, conclusive and binding upon all parties in interest.

3.
Vesting, Exercise Rights and Expiration. Except as otherwise provided in the
accompanying Terms and Conditions: (i) the Option shall vest according the
schedule below, (ii) the vested portion of the Option may be exercised in whole
or part, and (iii) the Option will expire on the expiration date indicated below
(the “Expiration Date”).

Option Number:    %%OPTION_NUMBER%-%
Grant Date:        %%OPTION_DATE,’Month DD, YYYY’%-%
Number of Shares:    %%TOTAL_SHARES_GRANTED,’999,999,999’%-%
Exercise Price:        %%OPTION_PRICE,’$999,999,999.99’%-%
Expiration Date:    %%EXPIRE_DATE_PERIOD1,’Month DD, YYYY’%-%
Vesting Schedule:    34%, 33% and 33% on each anniversary of the Grant Date

--------------------------------------------------------------------------------

By:
 
 
 
 
Michele A. Murphy
 
FIRST_NAME_MIDDLE_NAME_LAST_NAME
 
Executive Vice President
 
EMPLOYEE_IDENTIFIER
 
Human Resources & Corporate Communications
 
 

--------------------------------------------------------------------------------

SUPERVALU INC.
2012 STOCK PLAN

STOCK OPTION TERMS AND CONDITIONS
(FOR EMPLOYEES)

These Stock Option Terms and Conditions (“Terms and Conditions”) apply to the
Option granted to you under the Plan, pursuant to the Stock Option Agreement
(the “Agreement”) to which this document is attached. Capitalized terms that are
used in this document, but are not defined, shall have the meanings ascribed to
them in the Plan or the attached Agreement. See Section 21 for a list of defined
terms.

1.
Vesting and Exercisability. The Option shall vest on the date or dates and in
the amount or amounts set forth in the attached Agreement, or at such earlier
time or times as may be provided in Sections 6 or 8 below.

The vested portion of the Option may be exercised at any time, or from time to
time, during the term of the Option to purchase Shares. If in any year the full
amount of Shares that may be purchased pursuant to the vested portion of the
Option is not purchased, the remaining amount of such Shares shall be available
for purchase during the remainder of the term of the Option. The term of the
Option shall be for a period of ten (10) years from the Grant Date, terminating
at the close of business on the Expiration Date, or such shorter period as is
provided for herein.

2. Manner of Exercise. Except as provided in Section 6 or 8 below, you cannot
exercise the Option unless at the time of exercise you are an employee of the
Company or an Affiliate. Prior to your death or Disability (as set forth in
Section 8 below), only you may exercise the Option. You may exercise the Option
as follows:

a)
By delivering a “Notice of Exercise of Stock Option” to the Company at its
principal office, attention: Vice President, Compensation, stating the number of
Shares being purchased and accompanied by payment of the full purchase price for
such Shares (determined by multiplying the Exercise Price by the number of
Shares to be purchased). Note: In the event the Option is exercised by any
person other than you pursuant to any of the provisions of Section 7 below, the
Notice must be accompanied by appropriate proof of such person’s right to
exercise the Option; or

b)
By entering an order to exercise the Option using E*TRADE’s website.

3. Method of Payment. The full purchase price for the Shares to be purchased
upon exercise of the Option must be paid as follows:
a)
By delivering directly to the Company, cash or its equivalent (personal check,
bank draft or money order) payable to the Company;

b)
By delivering indirectly to the Company, cash or its equivalent payable to the
Company through E*TRADE under a broker-assisted sale and remittance program
approved by the Company;

c)
By delivering directly to the Company Shares having a Fair Market Value as of
the exercise date equal to the purchase price (commonly known as a “Stock
Swap”);

d)
By delivering directly to the Company the full purchase price in a combination
of cash and Shares; or

e)
By the Company delivering to you a number of Shares having an aggregate Fair
Market Value (determined as of the date of exercise) equal to the excess, if
positive, of the Fair Market Value (on the date of exercise) of the Shares as to
which the Option is being exercised, over the aggregate exercise price for such
Shares under the Option (commonly known as a “net exercise”).

If you pay all or a portion of the purchase price by means of a Stock Swap, you
shall represent and warrant in writing that you are the owner of the Shares so
delivered, free and clear of all liens, encumbrances, security interests and
restrictions. To the extent that you possess Shares in certificated form, you
shall duly endorse in blank all certificates delivered to the Company.

4. Delivery of Shares. You shall not have any of the rights of a stockholder
with respect to any Shares subject to the Option until such Shares are purchased
by you upon exercise of the Option. Such Shares shall then be issued and
delivered to you by the Company as follows:
a)
In the form of a stock certificate registered in your name or your name and the
name of another adult person (twenty-one (21) years of age or older) as joint
tenants, and mailed to your address;

--------------------------------------------------------------------------------

b)
In “book entry” form, that is, registered with the Company’s stock transfer
agent, in your name or your name and the name of another adult person
(twenty-one (21) years of age or older) as joint tenants, with a notice of
issuance provided to you; or

c)
sent by electronic delivery to your brokerage account.

The Company will not deliver any fractional Share but will pay, in lieu thereof,
the Fair Market Value of such fractional Share. Delivery of Shares upon exercise
of this Option is subject to the satisfaction of applicable withholding tax
obligations and to Section 17 below.

5. Withholding Taxes. You are responsible for the payment of any federal, state,
local or other taxes that are required to be withheld by the Company upon
exercise of the Option and you must promptly remit such taxes to the Company.
You may elect to remit these taxes by:
a)
Delivering directly to the Company, cash or its equivalent payable to the
Company;

b)
Delivering indirectly to the Company, cash or its equivalent payable to the
Company through E*TRADE’s website;

c)
Having the Company withhold a portion of the Shares to be issued upon exercise
of the Option having a Fair Market Value as of the exercise date equal to the
amount of taxes required to be withheld upon such exercise; or

d)
Delivering directly to the Company, Shares, other than the Shares issuable upon
exercise of the Option, having a Fair Market Value as of the exercise date equal
to the amount of taxes required to be withheld upon such exercise. You shall
represent and warrant in writing that you are the owner of the Shares so
delivered, free and clear of all liens, encumbrances, security interests and
restrictions. To the extent that you possess Shares in certificated form, you
shall duly endorse in blank all certificates delivered to the Company.

The Company shall be under no obligation to withhold taxes in excess of your
minimum required tax withholding rate if you elect to satisfy your obligation to
pay withholding taxes by either of the means specified in clauses 5(c) and 5(d)
above.
6.    Change of Control.
a)
If, within two (2) years after a Change of Control, you experience an
involuntary termination of employment initiated by the Company for reasons other
than Cause, or a termination of employment for Good Reason, the unvested portion
of the Option shall immediately vest and the Option shall become immediately
exercisable in full and remain exercisable for one (1) year beginning on the
date of your termination of employment. If the Option is replaced pursuant to
subsection (d) below, the protections and rights granted under this subsection
(a) shall transfer and apply to such replacement option.

b)
If, in the event of a Change of Control described in clause (ii) of Section
21(b) below, and to the extent the Option is not assumed by a successor
corporation (or affiliate thereto) or other successor entity or person, or
replaced with an award or grant that, solely in the discretionary judgment of
the Committee preserves the existing intrinsic value of the Option at the time
of the Change of Control, then the Option shall become fully vested and
exercisable for such period of time prior to the effective time of the Change of
Control as is deemed fair and equitable by the Committee to provide you with the
opportunity to participate as a stockholder in the Change of Control
transaction, and shall terminate at the effective time of the Change of Control.
The Company will provide written notice of of the period of accelerated vesting
and exercisability to you, and the exercise of this Option pursuant to such
accelerated vesting and exercisability shall be conditioned upon the
consummation of the Change of Control and shall be effective only immediately
before such consummation.

c)
In the discretion of the Committee and notwithstanding subsection (b) above or
any other provision, the Option (whether or not exercisable) may be cancelled at
the time of the Change of Control in exchange for cash, property or a
combination thereof that is determined by the Committee to be at least equal to
the excess (if any) of the value of the consideration that would be received in
such Change of Control by a holder of the number of Shares remaining subject to
the Option (or the Fair Market Value of such number of Shares immediately prior
to the Change of Control if the holders of Company common stock will not receive
consideration in such Change of Control), over the aggregate Exercise Price
under the Option for that number of Shares. For purposes of clarification, if
application of the formula in the preceding sentence does not result in a
positive number, then this Option is subject to cancellation without
consideration. Furthermore, the Committee is under no obligation to treat
Options and/or holders of Options uniformly and has the discretionary authority
to treat Options and/or holders of Options

--------------------------------------------------------------------------------

disparately.
d)
If in the event of a Change of Control and to the extent that this Option is
assumed by any successor corporation, affiliate thereof, person or other entity,
or is replaced with awards that, solely in the discretionary judgment of the
Committee preserve the existing intrinsic value of this Option at the time of
the Change of Control and provide for vesting and settlement terms that are at
least as favorable to you as the vesting and payout terms applicable to this
Option, then the assumed Option or such substitute therefore shall remain
outstanding and be governed by its respective terms.

7. Transferability. The Option shall not be transferable other than by will or
the laws of descent and distribution. More particularly, the Option may not be
assigned, transferred, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of the Option contrary to these provisions, or the levy of an
execution, attachment or similar process upon the Option, shall be void.

8. Effect of Termination of Employment. Subject to Section 6(a) above, following
the termination of your employment with the Company and its Affiliates for any
of the reasons set forth below, your right to exercise the Option, as well as
that of your beneficiary or beneficiaries, shall be as follows:

a)
Voluntary. If you voluntarily terminate your employment, you may exercise the
portion of the Option that was vested and exercisable as of the date of
termination of your employment at any time until the earlier of (i) ninety (90)
days after such termination of employment, or (ii) the Expiration Date.

b)
Involuntary. If your employment is terminated involuntarily for any reason other
than death, Disability or Cause, you may exercise the portion of the Option that
was vested and exercisable as of the date of termination of your employment at
any time until the earlier of (i) one (1) year after such termination of
employment, or (ii) the Expiration Date.

c)
Retirement. Notwithstanding paragraphs (a) and (b) above, if your employment
terminates on or after reaching age 60 for any reason other than death or
Disability, your termination shall be considered a “retirement” and the
following provisions will apply:

(i)
If at the time of your retirement you have completed at least fifteen (15) years
of service with the Company or an Affiliate, you may exercise the portion of the
Option that was vested and exercisable as of the date of your retirement at any
time until the earlier of (i) five (5) years after the date of your retirement,
or (ii) the Expiration Date.

(ii)
If at the time of your retirement you have completed fewer than fifteen (15)
years of service with the Company or an Affiliate, you may exercise the portion
of the Option that was vested and exercisable as of the date of your retirement
at any time until the earlier of (i) one (1) year after your retirement, or (ii)
the Expiration Date.

 
d)
Death.

(i)
Prior to Age 60. If your employment terminates as a result of your death prior
to reaching age 60, the unvested portion of the Option shall immediately vest
and become exercisable in full. Thereafter, the Option may be exercised by your
beneficiary(ies), or a legatee(s) under your last will, or your personal
representative(s) or the distributee(s) of your estate, to the full extent of
the Shares covered by the Option that were not previously purchased, until the
earlier of (i) one (1) year after the date of your death, or (ii) the Expiration
Date.

(ii)
On or After Age 60. If your employment terminates as a result of your death on
or after you have reached age 60, the unvested portion of your Option shall
immediately vest and become exercisable in full. Thereafter, the Option may be
exercised by your beneficiary(ies), or a legatee(s) under your last will, or
your personal representative(s) or the distributee(s) of your estate, to the
full extent of the Shares covered by the Option that were not previously
purchased, until the earlier of (i) five (5) years after the date of your death,
or (ii) the Expiration Date.

e)
Disability.

--------------------------------------------------------------------------------

(i)
Prior to Age 60. If your employment terminates prior to reaching age 60 as a
result of your Disability, the unvested portion of the Option shall immediately
vest and become exercisable in full. Thereafter, the Option may be exercised by
you or by your personal representative(s), to the full extent of the Shares
covered by the Option that were not previously purchased, until the earlier of
(i) one (1) year after your employment terminates due to such Disability, or
(ii) the Expiration Date.

(ii)
On or After Age 60. If your employment terminates on or after reaching age 60 as
a result of your Disability, the unvested portion of the Option shall
immediately vest and become exercisable in full. Thereafter, the Option may be
exercised by you or by your personal representative(s), to the full extent of
the Shares covered by the Option that were not previously purchased, until the
earlier of (i) five (5) years after your employment terminates due to such
Disability, or (ii) the Expiration Date.

You shall be considered subject to a “Disability” if you suffer from a medically
determinable physical or mental impairment that renders you incapable of
performing any substantial gainful employment, and is evidenced by a
certification to such effect by a doctor of medicine approved by the Company. In
lieu of such certification, the Company shall accept, as proof of permanent
disability, your eligibility for long-term disability payments under the
applicable Long-Term Disability Plan of the Company.

f)
Cause. If your employment is terminated for Cause, or if you are determined to
have engaged in conduct during a post-termination exercise period that would
constitute Cause or be in violation of Section 10, any unexercised or unvested
portion of this Option shall be immediately forfeited without consideration.

g)
Change in Duties/Leave of Absence. The Option shall not be affected by any
change of your duties or position or by a temporary leave of absence approved by
the Company, so long as you continue to be an employee of the Company or of an
Affiliate.

h)
Offer Letter. Notwithstanding the foregoing provisions of this Section 9, any
more favorable vesting provisions with respect to your termination of employment
set forth in that certain letter agreement, dated as of [•], 2016 (the “Offer
Letter”), by and between the Company and you, shall apply to the Option as
though set forth herein. In addition, your resignation for Good Reason will be
treated as an involuntary termination for purposes of this Section 8.

9. Repurchase Rights. If your employment with the Company and its Affiliates is
terminated for Cause, or if you breach any of the covenants contained in Section
10 below, the Company shall have the right and option to repurchase from you any
Shares purchased by you upon any exercise of this Option that occurred within
six (6) months prior to the date on which your employment with the Company and
its Affiliates ended, or at any time thereafter, and you agree to sell such
Shares to the Company.

The Company may exercise its repurchase rights by depositing in the United
States mail a written notice addressed to you at the latest mailing address for
you on the records of the Company within thirty (30) days following the
termination of your employment for the repurchase of Shares purchased prior to
such termination, and within thirty (30) days after the Company’s discovery of
any breach of the covenants contained in Section 10. Within thirty (30) days
after the mailing of such notice, you shall deliver to the Company the number of
Shares the Company has elected to repurchase and the Company shall pay to you in
cash, as the repurchase price for such Shares upon their delivery, an amount
which shall be equal to the purchase price paid by you for the Shares. If you
have disposed of the Shares, then in lieu of delivering an equivalent number of
Shares to the Company, you must pay to the Company the difference between the
amount realized by you from the disposition of the Shares (or the Fair Market
Value of the Shares on the disposition date if greater) and the amount you
originally paid for the Shares, exclusive of any taxes due and payable or
commissions or fees arising from such disposition.

If the Company exercises its repurchase option prior to the actual issuance and
delivery to you of any Shares pursuant to the exercise of the Option, no Shares
need be issued or delivered. In lieu thereof, the Company shall return to you
the purchase price you tendered upon the exercise of the Option to the extent
that it was actually received from you by the Company.

10. Employee Covenants. In consideration of benefits described elsewhere in
these Terms and Conditions and the attached Agreement, and in recognition of the
fact that, as a result of your employment with the Company or any of its
Affiliates, you have had or will have access to and gain knowledge of highly
confidential or proprietary information

--------------------------------------------------------------------------------

or trade secrets pertaining to the Company or its Affiliates, as well as the
customers, suppliers, joint ventures, licensors, licensees, distributors or
other persons and entities with whom the Company or any of its Affiliates does
business (“Confidential Information”), which the Company or its Affiliates have
expended time, resources and money to obtain or develop and which have
significant value to the Company and its Affiliates, you agree for the benefit
of the Company and its Affiliates, and as a material condition to your receipt
of benefits described elsewhere in these Terms and Conditions and the attached
Agreement, as follows:

a)
Non-Disclosure of Confidential Information. You acknowledge that you will
receive access or have received access to Confidential Information about the
Company or its Affiliates, that this information was obtained or developed by
the Company or its Affiliates at great expense and is zealously guarded by the
Company and its Affiliates from unauthorized disclosure, and that your
possession of this special knowledge is due solely to your employment with the
Company or one (1) or more of its Affiliates. In recognition of the foregoing,
you will not at any time during employment or following termination of
employment for any reason, disclose, use or otherwise make available to any
third party, any Confidential Information relating to the Company’s or any
Affiliate’s business, products, services, customers, vendors, or suppliers;
trade secrets, data, specifications, developments, inventions and research
activity; marketing and sales strategies, information and techniques; long and
short term plans; existing and prospective client, vendor, supplier and employee
lists, contacts and information; financial, personnel and information system
information and applications; and any other information concerning the business
of the Company or its Affiliates which is not disclosed to the general public or
known in the industry, except for disclosure necessary in the course of your
duties or with the express written consent of the Company. All Confidential
Information, including all copies, notes regarding and replications of such
Confidential Information will remain the sole property of the Company or its
Affiliate, as applicable, and must be returned to the Company or such Affiliate
immediately upon termination of your employment.

b)
Return of Property. Upon termination of employment with the Company or any of
its Affiliates, or at any other time at the request of the Company, you shall
deliver to a designated Company representative all records, documents, hardware,
software and all other property of the Company or its Affiliates and all copies
of such property in your possession. You acknowledge and agree that all such
materials are the sole property of the Company or its Affiliates and that you
will certify in writing to the Company at the time of delivery, whether upon
termination or otherwise, that you have complied with this obligation.

c)
Non-Solicitation of Existing or Prospective Customers, Vendors and Suppliers.
You specifically acknowledge that the Confidential Information described in
Section 10(a) includes confidential data pertaining to existing and prospective
customers, vendors and suppliers of the Company or its Affiliates; that such
data is a valuable and unique asset of the business of the Company or its
Affiliates; and that the success or failure of their businesses depends upon
their ability to establish and maintain close and continuing personal contacts
and working relationships with such existing and prospective customers, vendors
and suppliers and to develop proposals which are specific to such existing and
prospective customers, vendors and suppliers. Therefore, during your employment
with the Company or any of its Affiliates and for the twelve (12) months
following termination of employment for any reason, you agree that you will not,
except on behalf of the Company or its Affiliates, or with the Company’s express
written consent, solicit, approach, contact or attempt to solicit, approach or
contact, either directly or indirectly, on your own behalf or on behalf of any
other person or entity, any existing or prospective customers, vendors or
suppliers of the Company or its Affiliates with whom you had contact or about
whom you gained Confidential Information during your employment with the Company
or its Affiliates for the purpose of obtaining business or engaging in any
commercial relationship that would be competitive with the “Business of the
Company” (as defined below in Section 10(e)(i)) or cause such customer, supplier
or vendor to materially change or terminate its business or commercial
relationship with the Company or its Affiliates.

d)
Non-Solicitation of Employees. You specifically acknowledge that the
Confidential Information described in Section 10(a) also includes confidential
data pertaining to employees and agents of the Company or its Affiliates, and
you further agree that during your employment with the Company or its Affiliates
and for the twelve (12) months following termination of employment for any
reason, you will not, directly or indirectly, on your own behalf or on behalf of
any other person or entity, solicit, contact, approach, encourage, induce or
attempt to solicit, contact, approach, encourage or induce any of the employees
or agents of the Company or its Affiliates to terminate their employment or
agency with the Company or any of its Affiliates.

e)
Non-Competition. You covenant and agree that during your employment with the
Company or any of its Affiliates and for the twelve (12) months following
termination of employment for any reason, you will not, in any geographic market
in which you worked on behalf of the Company or any of its Affiliates, or for
which you had any sales, marketing, operational, logistical or other management
or oversight responsibility, engage

--------------------------------------------------------------------------------

in or carry on, directly or indirectly, as an owner, employee, agent, associate,
consultant, partner or in any other capacity, a business competitive with the
Business of the Company.
i)
The “Business of the Company” shall mean any business or activity involved in
grocery or general merchandise retailing and supply chain logistics, including
but not limited to grocery distribution, business-to-business portal, retail
support services and third-party logistics, of the type provided by the Company
or its Affiliates, or presented in concept to you by the Company or its
Affiliates at any time during your employment with the Company or any of its
Affiliates.

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

f)
No Disparaging Statements. You agree that you will not make any disparaging
statements about the Company, its Affiliates, directors, officers, agents,
employees, products, pricing policies or services.

g)
Remedies for Breach of These Covenants. Any breach of the covenants in this
Section 10 likely will cause irreparable harm to the Company or its Affiliates
for which money damages could not reasonably or adequately compensate the
Company or its Affiliates. Accordingly, the Company or any of its Affiliates
shall be entitled to all forms of injunctive relief (whether temporary,
emergency, preliminary, prospective or permanent) to enforce such covenants, in
addition to damages and other available remedies, and you consent to the
issuance of such an injunction without the necessity of the Company or any such
Affiliate posting a bond or, if a court requires a bond to be posted, with a
bond of no greater than $500 in principal amount. In the event that injunctive
relief or damages are awarded to the Company or any of its Affiliates for any
breach by you of this Section 10, you further agree that the Company or such
Affiliate shall be entitled to recover its costs and attorneys’ fees necessary
to obtain such recovery. In addition, you agree that upon your breach of any
covenant in this Section 10, the Option, and any other unexercised options
issued under the Plan or any other stock option plans of the Company will
immediately terminate and the Company shall have the right to exercise any and
all of the rights described above including the provisions articulated in
Section 9.

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

11. Arbitration. You and the Company agree that any controversy, claim or
dispute arising out of or relating to the attached Agreement or the breach of
any of these Terms and Conditions, or arising out of or relating to your
employment relationship with the Company or any of its Affiliates, or the
termination of such relationship, shall be resolved by final and binding
arbitration under the Employment Arbitration Rules and Mediation Procedures of
the American Arbitration Association, or other neutral arbitrator and rules as
mutually agreed to by you and the Company, except for claims by the Company
relating to your alleged breach of any of the employee covenants set forth in
Section 10 above. This agreement to arbitrate specifically includes, but is not
limited to, discrimination claims under Title VII of the Civil Rights Act of
1964 and under state and local laws prohibiting employment discrimination.
Nothing in this Section 11 shall preclude the Company from pursuing a court
action to obtain a temporary restraining order or a preliminary injunction
relating to the alleged breach of any of the covenants set forth in Section 10.
The agreement to arbitrate shall continue in full force and effect despite the
expiration or termination of your Option or your employment relationship with
the Company or any of its Affiliates. You and the Company agree that any award
rendered by the arbitrator must be in writing and include the findings of fact
and conclusions of law upon which it is based, shall be final and binding and
that judgment upon the final award may be entered in any court having
jurisdiction thereof. The arbitrator may grant any remedy or relief that the
arbitrator deems just and equitable, including any remedy or relief that would
have been available to you or the Company or any of its Affiliates had the
matter been heard in court. All expenses of arbitration, including the required
travel and other expenses of the arbitrator and any witnesses, and the costs
relating to any proof produced at the direction of the arbitrator, shall be
borne equally by you and the Company unless otherwise mutually agreed or unless
the arbitrator directs otherwise in the award. The arbitrator’s compensation
shall be borne equally by you and the Company unless otherwise mutually agreed
or the law provides otherwise.

12. Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Shares
or other securities of the Company, issuance of

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warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares covered by
the Option such that an adjustment is necessary in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under these Terms and Conditions and the attached Agreement, then the Committee
administering the Plan shall, in such manner as it may deem equitable, adjust
any or all of the number and type of Shares (or other securities or other
property) covered by the Option and the Exercise Price of the Option.

13. Severability. In the event that any portion of these Terms and Conditions
shall be held to be invalid, the same shall not affect in any respect whatsoever
the validity and enforceability of the remainder of these Terms and Conditions.

14. Interpretations. These Terms and Conditions and the attached Agreement are
subject in all respects to the Plan. A copy of the Plan is available upon your
request. In the event that any provision of these Terms and Conditions or the
attached Agreement is inconsistent with the terms of the Plan, the terms and
provisions of the Plan shall govern. Any question of administration or
interpretation arising under these Terms and Conditions or the attached
Agreement shall be determined by the Committee administering the Plan, and such
determination shall be final, conclusive and binding upon all parties in
interest.

15. No Right to Employment. Nothing in these Terms and Conditions or the
attached Agreement or the Plan shall be construed as giving you the right to be
retained as an employee of the Company. In addition, the Company may at any time
dismiss you from employment, free from any liability or any claim under these
Terms and Conditions or the attached Agreement, unless otherwise expressly
provided in these Terms and Conditions or the attached Agreement.

16. Reservation of Shares. The Company shall at all times during the term of the
Option reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of these Terms and Conditions and the attached
Agreement.

17. Securities Matters. The Company shall not be required to deliver any Shares
until the requirements of any federal or state securities or other laws, rules
or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.

18. Headings. Headings are given to the sections and subsections of these Terms
and Conditions and the attached Agreement solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or relevant to
the construction or interpretation of these Terms and Conditions or the attached
Agreement or any provision hereof or thereof.

19. Governing Law. The internal law, and not the law of conflicts, of the State
of Delaware will govern all questions concerning the validity, construction and
effect of these Terms and Conditions and the attached Agreement.

20. Notices. For purpose of the Agreement and these Terms and Conditions,
notices and all other communications provided for in the Agreement, these Terms
and Conditions or contemplated by either 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:
P.O. Box 990
Minneapolis, MN 55440
Attention: Corporate Secretary

and in the case of you, to you at the most current address shown on your
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.
a)
Notice of Termination by Company. Any purported termination of employment of you
by the Company (whether for Cause or without Cause) shall be communicated by a
Notice of Termination to you. No purported termination of employment of you by
the Company shall be effective without a Notice of Termination having been
given.

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b)
Good Reason Notice by You. Any purported termination of employment by you for
Good Reason shall be communicated by a Notice of Termination to the Company or
successor. Your termination of employment will not be for Good Reason unless (i)
you give the Company written notice of the event or circumstance which you claim
is the basis for Good Reason within ninety (90) days of such event or
circumstance first occurring, and (ii) the Company is given thirty (30) days
from its receipt of such notice within which to cure or resolve the event or
circumstance so noticed. If the circumstance is cured or resolved within said
thirty (30) days, your termination of employment will not be for Good Reason.

21. Definitions. The following terms, and terms derived from the following
terms, shall have the following meanings when used in these Terms and Conditions
or the attached Agreement with initial capital letters unless, in the context,
it would be unreasonable to do so.
a)
Cause shall have the meaning set forth in the Offer Letter.

b)
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 Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than fifty percent (50%) 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;

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

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

c)
Change of Control Date shall mean the date on which a Change of Control occurs.

d)
Good Reason shall (x) prior to the Change of Control Date, have the meaning set
forth in the Offer Letter, and (y) on or following the Change of Control Date,
mean any one (1) or more of the following events occurring during the two-year
period following the Change of Control Date:

i)
your annual base salary is reduced below the amount in effect on the Change of
Control Date;

ii)
your Target Bonus is reduced below the Target Bonus as it existed on the Change
of Control Date;

iii)
your title is reduced from the title that you had on the Change of Control Date,
or your duties and responsibilities are materially and adversely diminished in
comparison to the duties and responsibilities that you had on the Change of
Control Date other than in a general reduction of the number or scope of
personnel for which you are responsible for supervising which reduction occurs
in connection with a restructuring or recapitalization of the Company or the
division of the Company in which you work;

iv)
the program of long term incentive compensation is materially and adversely
diminished in comparison to the program of long term incentive compensation as
it existed for you on the Change of Control Date (for purposes of this clause
(iv), a reduction of fifteen percent (15%) or more of the

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target dollar amount of your long term incentive compensation as it existed for
you on the Change of Control Date based on your most recent award of long term
incentive compensation prior to the Change of Control Date shall be considered
to be material and adverse); or

v)
you are required to be based at a location more than forty-five (45) miles from
the location where you were based and performed services on the Change of
Control Date;

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

e)
Notice of Termination shall mean a written notice which shall indicate the
specific provision in these Terms and Conditions relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
your termination of employment under the provisions so indicated.

f)
Target Bonus shall mean the target amount of bonus established under the annual
bonus plan for you for the year in which the termination of employment occurs.
When the context requires, it shall also mean the target amount of bonus
established for any earlier or later year.

Original Approval