Exhibit 10.1

ROUNDY’S, INC.

SEVERANCE PAY PLAN

1. Purpose of the Plan. Roundy’s, Inc. (“Roundy’s”) has adopted this Roundy’s,
Inc. Severance Pay Plan (the “Plan”) to provide severance benefits for eligible
employees of Roundy’s and its subsidiaries (the “Company”) whose employment is
involuntarily terminated under the circumstances described herein.

2. Eligible Employees. Subject to the conditions and exceptions set out below,
Company employees eligible to participate in the Plan (each a “Participant”) are
those individuals who have been designated, from time to time, as participants
by the Board of Directors of Roundy’s (the “Board”), by the compensation
committee (or its equivalent) of the Board (“Compensation Committee”) or by the
President of Roundy’s. Such Participants shall be classified as either
(a) Class A Participants or (b) Class B Participants. The Participants may be
changed (by the addition of other employees, a change of classification and/or
the deletion of employees previously named) at any time by the written direction
of the Board, the Compensation Committee or the President of Roundy’s; provided
that any employee who is a Participant as of the date of a Change of Control
shall remain so listed for a period of not less than two (2) years following
such Change of Control.

3. Conditions for Payment of Severance Benefits. Subject to the exceptions set
out in Section 4 below and subject to Section 11(b) below, a Participant will be
entitled to receive Severance Benefits (as defined below) under this Plan if the
following conditions are met:

(a) The Participant’s employment is terminated either

(i) by the Company, without Good Cause, or

(ii) voluntarily by the Participant but only for Good Reason (as defined below);

and

(b) in the case of a Class B Participant, such termination of employment occurs
within the twenty-four (24) month period following a Change in Control; and

(c) the Participant remains in good standing in his or her position with the
Company through the last day of his or her employment; and

(d) the Participant enters into an agreement or agreements with the Company, on
such terms as the Company may reasonably determine to be appropriate (but which
terms shall not vary substantively, in any material respect, among the several
Participants in the Plan) under which the Participant shall release the Company
and its shareholders and its and their officers, directors, employees and
principals from any and all claims the Participant may have against them, and
such release is effective and no longer subject to revocation within sixty
(60) days following the Participant’s termination of employment; and

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(e) the Participant complies in all respects with the terms of such
Participant’s Employee Confidentiality and Non-Competition Agreement, or any
other applicable agreement between Company and the Participant with respect to
post-termination obligations respecting confidentiality, the return of Company
property, the treatment of Company intellectual property, non-competition,
non-solicitation of customers or employees or other similar matters.

4. Exceptions. Notwithstanding the foregoing, a Participant shall not be
eligible to receive Severance Benefits under any of the following circumstances:

(i) If the Participant’s employment is terminated by the Participant,
voluntarily and without Good Reason; or

(ii) If the Participant’s employment is terminated as a result of his or her
death or Incapacity (as defined below); or

(iii) If the Participant’s employment is terminated for Good Cause (as defined
below).

5. Severance Benefits. The “Severance Benefits” payable to a Participant under
this Plan consist of only the following:

(a) Salary Continuation and Bonus Payment.

(i) In the case of a Class A Participant only, if such termination does not
occur within the twenty-four (24) month period following a Change in Control,
Roundy’s shall pay the Participant a total amount equal to the product of
(A) one (1.0) and (B) the sum of the Participant’s annual base salary and target
bonus (as each is in effect when the Participant’s employment is terminated),
paid pro-rata on a monthly basis over a period of one (1) year following such
termination; provided that to the extent that the payment of any such amount
constitutes “nonqualified deferred compensation” for purposes of Code
Section 409A (as defined herein), any such payment scheduled to occur during the
first sixty (60) days following the date of termination shall not be paid until
the first regularly scheduled payment date of the Company following the sixtieth
(60th) day following the date of termination and shall include payment of any
amount that was otherwise scheduled to be paid prior thereto;

(ii) If such termination occurs within the twenty-four (24) month period
following a Change in Control, Roundy’s shall pay the following:

(1) If the Participant is a Class A Participant, the Participant shall receive a
total amount equal to the product of (A) one and one-half (1.5) and (B) the sum
of the Participant’s annual base salary and target bonus (as each is in effect
when the Participant’s employment is terminated), paid in a lump-sum on the
first regularly scheduled payment date of the Company following the date that
the agreement referred to in Section 3(d) is effective and no longer subject to
revocation; provided that

 

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to the extent that the payment of any such amount constitutes “nonqualified
deferred compensation” for purposes of Code Section 409A, any such payment
scheduled to occur during the first sixty (60) days following the date of
termination shall not be paid until the first regularly scheduled payment date
of the Company following the sixtieth (60th) day following the date of
termination and shall include payment of any amount that was otherwise scheduled
to be paid prior thereto; or

(2) If the Participant is a Class B Participant, the Participant shall receive a
total amount equal to the product of (A) one (1.0) and (B) the Participant’s
annual base salary as is in effect when the Participant’s employment is
terminated, paid in a lump-sum on the first regularly scheduled payment date of
the Company following the date that the agreement referred to in Section 3(d) is
effective and no longer subject to revocation; provided that to the extent that
the payment of any such amount constitutes “nonqualified deferred compensation”
for purposes of Code Section 409A, any such payment scheduled to occur during
the first sixty (60) days following the date of termination shall not be paid
until the first regularly scheduled payment date of the Company following the
sixtieth (60th) day following the date of termination and shall include payment
of any amount that was otherwise scheduled to be paid prior thereto.

(iii) Roundy’s shall pay the Participant a prorated portion (based upon the
portion of the applicable performance period during which the Participant was
employed) of any bonus that may be earned in the performance period that
includes the date of termination, subject to the satisfaction of any applicable
performance goals related thereto.

(b) Health Insurance. Subject to (A) the Participant’s timely election of
continuation coverage under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended (“COBRA”), (B) the Participant’s continued copayment of
premiums at the same level and cost to the Participant as if the Participant
were an employee of the Company (excluding, for purposes of calculating cost, an
employee’s ability to pay premiums with pre-tax dollars), continued
participation in the Company’s group health plan (to the extent permitted under
applicable law and the terms of such plan) which covers the Participant (and the
Participant’s eligible dependents) for a period of one (1) year following the
termination of the Participant’s employment, at the Company’s expense, provided
that the Participant is eligible and remains eligible for COBRA coverage.

(c) A Participant’s Severance Benefits may be changed (but in no event shall it
be greater than the amount described in this Plan) at any time after the
Participant becomes a Participant in the Plan, by the written direction of the
Board, the Compensation Committee or the President of Roundy’s; provided that
for a period of two (2) years following a Change of Control, no change shall be
made in the Severance Benefits of any Participant who was a Participant as of
the date of such Change of Control.

 

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6. Definitions.

(a) Change of Control. A “Change of Control” means (i) any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934), other than the Company, any trustee or other fiduciary holding
securities under any employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of Common Stock (as defined in the Incentive
Plan), shall become the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934), directly or indirectly of more than
20% of the outstanding capital stock of the Company, (ii) consummation by the
Company of a complete liquidation, or sale or disposition by the Company, of all
or substantially all of it assets (determined on a consolidated basis),
(iii) during any period of twelve months, individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a “person” who has entered into an agreement with the Company to
effect a transaction described in clauses (i), (ii) or (iv) of this Section or a
director whose initial assumption of office occurs as a result of either an
actual or threatened election contest or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board) whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the twelve-month period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority of the Board, or (iv) consummation
of any consolidation or merger involving the Company in which the Company is not
the continuing or surviving entity or pursuant to which the capital stock of the
Company is converted into cash, securities or other property, other than a
merger or consolidation of the Company in which the beneficial owners of the
capital stock of the Company outstanding immediately prior to the consolidation
or merger hold, directly or indirectly, at least a majority of the capital stock
of the surviving entity immediately after such consolidation or merger;
provided, however, that notwithstanding anything to the contrary contained
herein, a Change of Control shall be deemed not to have occurred (A) in the
event that the Company has completed an initial public offering of its
securities pursuant to the Securities Act, or (B) unless such event also
constitutes a change in the ownership or effective control of the Company, or in
the ownership of a substantial portion of the assets of the Company, in each
case as determined pursuant to Code Section 409A(a)(2)(A)(v).

(b) Good Cause. “Good Cause” means any one or more of the following, in each
case as determined in good faith by the Board or the Compensation Committee:
(i) the commission by the Participant of a felony or crime involving moral
turpitude or the commission of any other act or omission involving dishonesty or
fraud with respect to the Company or any its customers or suppliers;
(ii) conduct on the part of the Participant that brings the Company into public
disgrace or disrepute in any material respect; (iii) the Participant’s gross
negligence or willful misconduct in the performance of his or her duties and
responsibilities to the Company; (iv) the failure of the Participant to carry
out the duties and responsibilities of his or her office or position, or to
follow a specific and lawful directive of the Board or an officer of the Company
to whom the undersigned

 

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reports (provided such directive is consistent with the Participant’s office or
position); (v) the Participant’s willful disclosure of material confidential
information or trade secrets of the Company to or for the benefit of a
competitor of the Company, to the extent such information was not available
publicly; or (vi) any intentional misrepresentation by the Participant to the
Board or to an officer of the Company to whom the Participant reports. For
purposes of the preceding definition, no act, failure to act, or omission on the
part of the Participant will be deemed to have been “willful” or “intentional”
if done or omitted to be done in good faith and in the reasonable belief that it
was in or not opposed to the best interests of the Company. Any such act or
omission or failure to act based upon the advice of counsel for the Company will
be conclusively deemed to have been done or omitted to be done in good faith and
in the best interests of the Company.

(c) Good Reason. “Good Reason” means any of the following (in each case,
effected by the Company, without the Participant’s voluntary concurrence),
occurring within six (6) months prior to the Participant’s resignation, unless
such events are fully corrected in all material respects by the Company within
thirty (30) days following written notification by the Participant to the
Company of the occurrence of one of the reasons set forth below: (i) any
material diminution in the total value of the Participant’s base salary; (ii) if
Participant’s principal place of work is, without his or her consent, relocated
such that it is at least 50 miles farther from his or her residence than was his
or her former principal place of work; or (iii) a substantial diminution of or
adverse change in Participant’s authorities, functions, duties or level of
responsibility in the Company, to the point that the Participant’s job functions
and level of responsibility in the Company (or in its successor, or in the
business unit that comprises substantially the business of the Company as it
existed preceding the Change of Control) are not reasonably commensurate with
the level of responsibility or the functions associated with the Participant’s
position with the Company immediately preceding the Change of Control. The
Participant shall provide the Company with a written notice detailing the
specific circumstances alleged to constitute Good Reason within ninety (90) days
after the first occurrence of such circumstances. Otherwise, any claim of such
circumstances as “Good Reason” shall be deemed irrevocably waived by the
Participant.

(d) Incapacity. “Incapacity” means the disability of the Participant caused by
any physical or mental injury, illness or incapacity as a result of which the
Participant is unable effectively to perform the essential functions of the
Participant’s duties as determined by the Board or the Compensation Committee in
good faith, for a period of ninety (90) consecutive days or a period of 120 days
during any 180-day period.

7. Integration with Other Severance Agreements or Arrangements. It is intended
that the benefits under this Plan not be duplicative of any other severance or
similar benefits to which a Participant may be entitled under any other
agreement, contract or arrangement he or she may have with the Company.
Accordingly, if any Participant who becomes otherwise entitled to Severance
Benefits hereunder is also entitled to any other severance, salary continuation,
insurance or similar benefits or compensation following the Participant’s
termination of employment under any other contract, agreement, plan or
arrangement between that Participant and the Company (“Other Plans”), the
benefits otherwise payable under this Plan shall be replaced by the amount of
any similar benefit that is paid or payable under the Other Plans.

 

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8. No Contract of Employment. Nothing herein contained shall be construed or
interpreted to impose on the Company any obligation to continue the employment
of any Participant, or confer on any Participant any rights to any such
continued employment.

9. Source of Benefits. Benefits under this Plan will be paid from the general
assets of Roundy’s. No assets or funds with respect to any such benefits will be
segregated by Roundy’s in any fund, account or trust. A Participant shall have
no greater claim against the assets of Roundy’s than as a general unsecured
creditor.

10. Administration. This Plan will be administered by the Compensation
Committee. The Compensation Committee shall make the rules and regulations
necessary to administer this Plan. The Compensation Committee shall have the
discretionary authority and responsibility to determine eligibility for benefits
(including without limitation determinations as to the existence or
non-existence of “Good Cause” or “Good Reason”) and the amount of such benefits,
and to construe the terms of the Plan. The determinations and constructions of
the Compensation Committee will be final, binding and conclusive as to all
parties, unless found by a court of competent jurisdiction to be arbitrary and
capricious.

11. Amendment or Termination of the Plan; No Multiple Changes of Control.

(a) Roundy’s reserves the right prior to a Change of Control, whether in an
individual case or more generally, to amend or terminate this Plan, and/or to
alter, reduce or eliminate any pay practice, policy or benefit, in whole or in
part, with or without advance notice; provided, however, that no such amendment
or termination shall adversely affect the benefits payable with respect to any
Participant whose employment has terminated prior to the adoption of such
amendment or termination. Upon a Change of Control, the Company, or the
successor to the Company, may not amend or terminate this Plan in any manner for
a period of one (1) year.

(b) It is intended that this Plan shall provide Severance Benefits in respect of
only one Change of Control, and therefore after the occurrence of the first
Change of Control to occur after the adoption of this Plan, no subsequent Change
of Control shall be deemed to satisfy the requirement of Section 5(a)(ii).

12. Taxes.

(a) The Company will withhold, or cause to have withheld, all applicable income
and payroll taxes, wage assignments, garnishments and the like from any benefit
paid under this Plan to the extent required by law.

(b) The intent of the parties is that payments and benefits under this Agreement
comply with Internal Revenue Code Section 409A and the regulations and guidance
promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to
the maximum extent permitted, this Agreement shall be interpreted to be in
compliance therewith. In no event whatsoever shall the Company be liable for any
additional tax, interest or penalty that may be imposed on the Participant by
Code Section 409A or damages for failing to comply with Code Section 409A.

 

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(c) A termination of employment shall not be deemed to have occurred for
purposes of any provision of this Agreement providing for the payment of any
amounts or benefits upon or following a termination of employment unless such
termination is also a “separation from service” within the meaning of Code
Section 409A and, for purposes of any such provision of this Agreement,
references to a “termination,” “termination of employment” or like terms shall
mean “separation from service.”

(d) Notwithstanding anything to the contrary in this Agreement, if the
Participant is deemed on the date of termination to be a “specified employee”
within the meaning of that term under Code Section 409A(a)(2)(B), then with
regard to any payment or the provision of any benefit that is considered
deferred compensation under Code Section 409A payable on account of a
“separation from service,” such payment or benefit shall not be made or provided
until the date which is the earlier of (A) the expiration of the six (6)-month
period measured from the date of such “separation from service” of the
Participant, and (B) the date of the Participant’s death, to the extent required
under Code Section 409A. Upon the expiration of the foregoing delay period, all
payments and benefits delayed pursuant to the previous sentence (whether they
would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid or reimbursed to the Participant in a lump
sum, and any remaining payments and benefits due under this Agreement shall be
paid or provided in accordance with the normal payment dates specified for them
herein.

(e) To the extent that reimbursements or other in-kind benefits under this
Agreement constitute “nonqualified deferred compensation” for purposes of Code
Section 409A, (A) all expenses or other reimbursements hereunder shall be made
on or prior to the last day of the taxable year following the taxable year in
which such expenses were incurred by the Participant, (B) any right to such
reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit, and (C) no such reimbursement, expenses eligible
for reimbursement, or in-kind benefits provided in any taxable year shall in any
way affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year.

(f) For purposes of Code Section 409A, the Participant’s right to receive any
installment payments pursuant to this Agreement shall be treated as a right to
receive a series of separate and distinct payments. Whenever a payment under
this Agreement specifies a payment period with reference to a number of days,
the actual date of payment within the specified period shall be within the sole
discretion of the Company. Notwithstanding any other provision of this Agreement
to the contrary, in no event shall any payment under this Agreement that
constitutes “nonqualified deferred compensation” for purposes of Code
Section 409A be subject to offset by any other amount unless otherwise permitted
by Code Section 409A.

(g) Notwithstanding any provision of the Plan to the contrary, if any payments
or benefits a Participant would receive from the Company under the Plan or
otherwise in connection with a change in control (the “Total Payments”)
(a) constitute “parachute payments” within the meaning of Section 280G of the
Code, and (b) but for this Section 11(g), would be subject to the excise tax
imposed by Section 4999 of the Code, then such Participant will be entitled to
receive either (i) the full amount of the Total Payments or

 

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(ii) a portion of the Total Payments having a value equal to $1 less than three
(3) times such Participant’s “base amount” (as such term is defined in
Section 280G(b)(3)(A) of the Code), whichever of (i) and (ii), after taking into
account applicable federal, state, and local income taxes and the excise tax
imposed by Section 4999 of the Code, results in the receipt by such employee on
an after-tax basis, of the greatest portion of the Total Payments. Any
determination required under this Section 11(g) shall be made in writing by the
Company’s independent certified public accountants appointed prior to any change
in ownership (as defined under Section 280G(b)(2) of the Code) or tax counsel
selected by such accountants (the “Accountants”), whose determination shall be
conclusive and binding for all purposes upon the applicable Participant. For
purposes of making the calculations required by this Section 11(g), the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good-faith interpretations
concerning the application of Sections 280G and 4999 of the Code. If there is a
reduction pursuant to this Section 11(g), the payment reduction shall be
implemented by determining the Parachute Payment Ratio (as defined below) for
each payment and then reducing the payments in order beginning with the payments
with the highest Parachute Payment Ratio. For payments with the same Parachute
Payment Ratio, such payments shall be reduced based on the time of payment of
such payments, with amounts having later payment dates being reduced first. For
payments with the same Parachute Payment Ratio and the same time of payment,
such payments shall be reduced on a pro rata basis (but not below zero) prior to
reducing payments with a lower Parachute Payment Ratio. For purposes hereof, the
term “Parachute Payment Ratio” shall mean a fraction, the numerator of which is
the present value as of the date of the change of control for purposes of
Section 280G of the Code of the portion of such payments that constitutes a
“parachute payment” under Section 280G(b)(2), and the denominator of which is
the intrinsic value of such payments.

13. Effect on Retirement Plans. Any amounts payable to a Participant under this
Plan shall not be deemed salary or other compensation to the Participant for the
purpose of computing benefits to which he or she may be entitled under any
profit sharing plan, pension plan, or other arrangement of the Company for the
benefit of its employees.

14. Miscellaneous Provisions.

(a) Assignment. The right of a Participant or any other person to the payment of
the Severance Benefits under this Agreement shall not be assigned, transferred,
pledged or encumbered, voluntarily or by operation of law.

(b) Death of Participant. In the event a Participant who is entitled to
Severance Benefits hereunder dies after the termination of his or her employment
and before the amounts payable under Section 5(a) of this Plan have been paid,
such amounts shall continue to be paid to the Participant’s estate. Upon such
death, the health insurance benefits payable under Section 5(b) shall be
continued (for the remainder of the period described therein) for the benefit of
the deceased Participant’s spouse and/or family members, if any, who were
covered by the deceased Participant’s insurance immediately prior to his or her
death.

 

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(c) References. If Roundy’s or any of its subsidiaries merges or consolidates
with or into any other corporation or entity (whether or not Roundy’s or its
subsidiary is the surviving entity in such transaction), or transfers all or
substantially all of its business or assets to another corporation or other form
of business or other entity, all references herein to Roundy’s (or to the
Company, as the case may be) shall be deemed references to the corporation or
other entity surviving such merger or consolidation or to which such assets or
business are transferred (as well as to Roundy’s or to the Company, if Roundy’s
or its subsidiary remains in existence).

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