Exhibit 10.1

 

CHANGE OF CONTROL SEVERANCE AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.                                      Employment Following Change of Control.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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(1)                                 by the Company without Cause, or

 

(2)                                 by Executive for Good Reason.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 Other Remuneration.

 

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

 

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

 

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

 

(d)                                 Continued Welfare Benefits.

 

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

 

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

 

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

 

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

 

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

 

5.                                      Contingent Limitation of Payments.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8.                                      Successors; Binding Agreement;
Assignment.

 

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

 

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

 

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

 

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

 

P.O. Box 990

Minneapolis, MN 55440

Attention:  Corporate Secretary

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  Release of Claims Required.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     if either:

 

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

 

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

 

(ii)                                  Executive reasonably demonstrates:

 

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

 

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

 

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

 

(c)                                  Cause shall mean:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

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

 

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

 

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

 

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

 

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

 

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

 

17.                               Dispute Resolution.

 

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

 

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

 

15

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

 

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

 

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

 

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

 

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

 

 

Witnesses:

 

SUPERVALU INC.

(To be completed by Home Office)

 

 

 

 

 

 

 

 

 

 

Name:

Michele Murphy

 

 

Title:

Executive Vice President – Human Resources and Communications

 

 

 

 

 

 

 

 

 

 

 

Executive Name

 

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