Document:

SWY-3.22.14-Ex10.1 Retention Bonus Plan

SAFEWAY INC.
RETENTION BONUS PLAN

Effective as of March 6, 2014 

     1. Introduction and Purpose.

This Safeway Inc. Retention Bonus Plan (this “Plan”) has been adopted in connection with the transaction contemplated under that certain Agreement and Plan of Merger (the “Merger Agreement”) dated as of March 6, 2014 by and among Safeway Inc. (the “Company”), AB Acquisition LLC, a Delaware limited liability company (“Ultimate Parent”), Albertson’s Holdings LLC, a Delaware limited liability company and a wholly-owned subsidiary of Ultimate Parent (“Parent”), Albertson’s LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent, and Saturn Acquisition Merger Sub, a Delaware corporation and a wholly-owned subsidiary of Parent, pursuant to which, among other matters and on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the “Transaction”), with the Company continuing as the surviving corporation. Both the Company and Parent believe that the value of the Company will be enhanced by the continued employment of certain of the Company’s key employees through the consummation of the Merger (the “Closing”), and the Company has established this Plan to create an incentive for such employees to continue their employment with the Company, through the grant of retention bonuses. 

    2. Retention Bonuses.
    
(a) The key employees and other service providers of the Company eligible to participate in the Plan (collectively, the “Participants”) are set forth on Exhibit A hereto. Each Participant shall be eligible for a retention bonus (a “Retention Bonus”) equal to the percentage of such Participant’s Base Salary, as set forth opposite such Participant’s name on Exhibit A, on each Retention Date subject to such Participant’s continued employment or service relationship with the Company through such Retention Date.

(b) Each Retention Bonus earned pursuant to Section 2(a) above shall be paid as a cash lump sum as soon as practicable after the applicable Retention Date (and in no event later than 30 days after the applicable Retention Date) and shall be subject to reduction for all applicable income and employment withholding taxes and other regular payroll deductions.
 
(c) If a Participant’s employment or service relationship with the Company terminates prior to a Retention Date, other than in the case of any Involuntary Termination, such Participant shall immediately forfeit any right to receive the applicable Retention Bonus under this Plan and shall have no further rights with respect thereto.  Notwithstanding Section 2(a), if a Participant’s employment with the Company is terminated in any Involuntary Termination prior to a Retention Date, such Participant shall be entitled to the Retention Bonus(es) on the same basis as if such Participant had remained employed through each Retention Date; provided, that such Retention Bonus(es) shall be paid to such Participant as a cash lump sum as soon as practicable after the 

date of such Involuntary Termination (and in no event later than 30 days after the date of such Involuntary Termination).

     3. Definitions.

(a) Base Salary. For purposes hereof, “Base Salary” means the annual base salary in effect immediately prior to the effective date of the Plan.

(b) Involuntary Termination. For purposes hereof, “Involuntary Termination” with respect to a Participant means (i) termination of such Participant’s employment without Cause or (ii) such Participant’s voluntary termination for Good Reason.

(c) Cause. For purposes hereof, “Cause” shall have the meaning ascribed to such term in any written employment agreement between or among Participant and the Company and/or any of its subsidiaries and, if no such written employment agreement shall be in force or effect, shall mean (a) conviction of, or the entry of a plea of guilty or no contest to, a felony or any other crime that causes the Company public disgrace or disrepute, or adversely affects the Company’s operations, financial performance, or relationship with its customers; (b) misappropriation of funds or other property of the Company or its affiliates; (c) refusal to perform the lawful and reasonable directives of Participant’s supervisor, the Company’s Chief Executive Officer or the Board; (d) Participant’s failure to perform the duties of his or her employment with the Company or any of its subsidiaries which continues for a period of fourteen (14) days (other than by reason of illness or injury); or (e) material breach of any agreement with or duty owed to the Company or any of its affiliates.  However, none of the foregoing events or conditions will constitute Cause unless the Company provides Participant with written notice of the event or condition and thirty (30) days to cure such event or condition (if curable) and the event or condition is not cured within such 30-day period.

(d) Good Reason. For purposes hereof, “Good Reason” shall have the meaning ascribed to such term in any written employment agreement between or among Participant and the Company and/or any of its subsidiaries and, if no such written employment agreement shall be in force or effect, shall mean the occurrence of any of the following, without Participant’s prior consent: (a) a material, adverse change in Participant’s responsibilities, authority or duties (including as a result of the assignment of duties materially inconsistent with Participant’s position); (b) a material reduction in Participant’s base salary; (c) a material transfer of Participant’s principal place of employment to a location more than fifty (50) miles away from Participant’s principal place of employment immediately prior to the Transaction; or (d) the Company’s material breach of this Agreement.  However, none of the foregoing events or conditions will constitute Good Reason unless: (x) Participant provides the Company with written objection to the event or condition within ninety (90) days following the occurrence thereof; (y) the Company does not reverse or otherwise cure the event or condition within thirty (30) days of receiving that written objection; and (z) Participant resigns his or her employment within thirty (30) days following the expiration of that cure period.

(e) Retention Date. For purposes hereof, the “First Retention Date” shall be March 6, 2015 and the “Second Retention Date” shall be March 6, 2016. The First Retention Date, together with the Second Retention Date shall be referred to as the “Retention Dates.”

     4. Section 280G.

Notwithstanding any provision of this Plan to the contrary, if any payments or benefits a Participant would receive from the Company under this Plan or otherwise in connection with the Transaction (the “Total Payments”) (a) constitute “parachute payments” within the meaning of Section 280G of the Code and (b) but for this Section 4, 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 (ii) a portion of the Total Payments having a value equal to one dollar ($1) less than three (3) times such individual’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 Participant on an after-tax basis, of the greatest portion of the Total Payments. Any determination required under this Section 4 shall be made in writing by the independent public accountant of the Company immediately prior to the Retention Date (the “Accountants”), whose determination shall be conclusive and binding for all purposes upon the Company and the applicable Participant. For purposes of making the calculations required by this Section 4, 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 4 of the Total Payments to be delivered to the applicable Participant, such reduction shall first be applied to any cash amounts to be delivered to the applicable Participant under this Plan and thereafter to any other severance benefits or payments otherwise owing to such applicable Participant. 

     5. Section 409A.  

To the extent applicable, this Plan shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the adoption of this Plan. Notwithstanding any provision of this Plan to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to a Participant under Section 409A of the Code and related Department of Treasury guidance, to the extent permitted under Section 409A of the Code, the Company may, to the extent permitted under Section 409A of the Code (a) cooperate in good faith to adopt such amendments to this Plan and appropriate policies and procedures, including amendments and policies with retroactive effect, that they determine necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Plan or preserve the economic benefits of this Plan and/or (b) take such other actions as mutually determined necessary or appropriate to exempt the amounts payable hereunder from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes under such section. To the extent 

applicable, each of the exceptions to Code Section 409A’s prohibition on acceleration of payments of Deferred Compensation provided under Treasury Regulation 1.409A-3(j)(4) shall be permitted under this Plan.

     6. Plan Administration.

(a) This Plan shall be administered by the Board of Directors of the Company (the “Board”) or a duly authorized committee thereof (the “Plan Administrator”). Subject to the express provisions of this Plan, the Plan Administrator shall have sole authority to interpret this Plan (including any vague or ambiguous provisions) and to make all other determinations deemed necessary or advisable for the administration of this Plan. Decisions of the Plan Administrator shall be made by a majority of its members attending a meeting at which a quorum is present (which meeting may be held telephonically), or by written action in accordance with applicable law. All determinations and interpretations of the Plan Administrator shall be final, binding, and conclusive as to all persons. 

(b) Neither the Plan Administrator nor any employee, officer, agent, or director of the Company shall be personally liable by reason of any action taken with respect to this Plan for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each employee, officer, agent, or director of the Company, including the Plan Administrator, to whom any duty or power relating to the administration or interpretation of this Plan may be allocated or delegated, against any reasonable cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Plan Administrator) arising out of any act or omission to act in connection with this Plan unless arising out of such person’s own fraud, bad faith, or gross negligence. 

(c) The Plan Administrator may delegate any and all of its powers and responsibilities hereunder to other persons and such persons shall have the full authority to exercise the duties so delegated. 

(d) The Plan Administrator shall maintain such accounts and records regarding the fiscal and other transactions of this Plan and such other data as may be required to carry out its functions under this Plan and to comply with all applicable laws. 

     7. Right to Amend or Terminate Plan.

The Company reserves the right to amend, in whole or in part, any or all of the provisions of this Plan by action of the Plan Administrator at any time prior to either Retention Date for any reason, provided that in no event shall any amendment adversely impact a Participant’s rights hereunder without the express written consent of such affected Participant. Notwithstanding anything herein to the contrary, this Plan shall be effective as of the date it is approved by the Board and shall terminate upon the payment of all amounts payable hereunder.  

     8. No Guarantee of Employment. 

This Plan is not a guarantee of continued employment for any employee of the Company, including any employee potentially eligible for benefits hereunder. An employee’s employment remains terminable at any time with or without cause by either the employee or the Company.
 
     9. Applicable Law.

This Plan and all action taken under it shall be governed as to validity, construction, interpretation, and administration by the laws of the State of Delaware (without regard to the choice of law principles thereof) and any applicable U.S. federal law. 

     10.  Successors.

For purposes of this Plan, the Company shall include any and all successors and assignees, whether direct or indirect, by purchase, merger, consolidation, or otherwise, to all or substantially all of the business or assets of the Company, and such successors and assignees shall perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. In such event, the term “Company,” as used in this Plan, shall mean the Company, as herein before defined and any successor, parent corporation or assignee to the business or assets which by reason hereof becomes bound by the terms and provisions of this Plan. 

     11. General Provisions.

(a) Nothing contained herein shall give an employee any right to any employee benefit upon termination of employment with the Company, except as specifically provided herein. 

(b) No person having a benefit under this Plan may assign, transfer, or in any other way alienate any benefit hereunder, nor shall any benefit under this Plan be subject to garnishment, attachment, execution, or levy of any kind. 

(c) Neither the establishment of this Plan, nor any modification thereof, nor the payment of any benefits hereunder, shall be construed as giving to any Participant or other person any legal or equitable right against the Company or the Plan Administrator, or any fiduciary, employee, or agent of the Company. 

(d) The Company shall have the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it reasonably believes it may have to withhold for federal, state, or local income or other taxes incurred by reason of payments pursuant to this Plan. In lieu thereof, the Company shall have the right to withhold the amounts of such taxes from any other sums due or to become due from the Company to a Participant upon such terms and conditions as the Plan Administrator may prescribe. 

(e) Should any provision of this Plan be deemed or held to be unlawful or invalid for any reason, such fact shall not adversely affect the other provisions of this Plan unless such determination shall render impossible or impracticable the functioning of this Plan, and in such case, an appropriate provision or provisions shall be adopted so that this Plan may continue to function properly. 

(f) Any benefits payable under this Plan shall not be deemed salary or other compensation to a Participant for the purposes of computing benefits to which he or she may be entitled under any pension plan or other arrangement of the Company maintained for the benefit of its employees, unless such plan or arrangement provides otherwise. 

(g) In the event that the Plan Administrator finds that a Participant is unable to care for his or her affairs because of illness or accident, then benefits payable hereunder, unless claim has been made therefor by a duly appointed guardian, committee, or other legal representative, may be paid in such manner as the Plan Administrator shall determine, and the application thereof shall be a complete discharge of all liability for any payments or benefits to which such Participant was or would have been otherwise entitled under this Plan. 

(h) All announcements, notices, and other communications regarding this Plan will be made by the Company in writing (whether in electronic form or otherwise). Except for written amendments to this Plan or official written communications issued by the Company in connection with this Plan, Participants in this Plan may not rely on any representation or statement made by the Company or its affiliates or any of its or their officers, directors, employees, or agents, whether written or oral, regarding such Participants’ participation in this Plan and any rights thereunder. 

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The Safeway Inc. Retention Bonus Plan is adopted by the Board of the Company on March 6, 2014.
	
	
	SAFEWAY INC.

	By: /s/ Robert A. Gordon

	Print Name:  Robert A. Gordon

	Title:  Senior Vice PresidentSWY-3.22.14-Ex10.2 Executive Severance Plan

SAFEWAY INC.
EXECUTIVE SEVERANCE PLAN
(AND SUMMARY PLAN DESCRIPTION)
EFFECTIVE FEBRUARY 19, 2014
This Safeway Inc. Executive Severance Plan (this “Plan”) was established effective as of February 19, 2014 (the “Effective Date”). The purpose of this Plan is to provide for severance benefits to certain eligible employees of Safeway Inc. (the “Company”) whose employment with the Company is terminated under certain circumstances.  The Plan is intended to replace each existing offer letter, employment agreement and severance agreement between the Company and Covered Employees (as defined below) regarding severance or Change in Control (as defined below) benefits.  
This Plan is an employee welfare benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  This Plan document is also the summary plan description of this Plan.  References in this Plan to “You” or “Your” are references to an employee of the Company.
1.General Eligibility.  The eligible employees in this Plan are employees of the Company who are employed at the level of Vice President or above (such eligible employees, the “Covered Employees”). Employees with the designation of “Assistant Vice President” are not considered to be “Vice Presidents” and are not considered to be “Covered Employees” under this Plan. Covered Employees remain eligible for this Plan in the case of sick leave, military leave or any other leave of absence approved pursuant to the regular leave policy of the Company. 
2.Severance Benefits.  If you are a Covered Employee and if, outside of a Change in Control Period (as defined below), the Company involuntarily terminates your employment with the Company without Cause or you terminate employment with the Company for Good Reason, then subject to you delivering to the Company a general release of all claims against the Company and its affiliates in a form acceptable to the Company (a “Release”) that becomes effective and irrevocable within sixty (60) days following the date of such termination, in addition to any accrued but unpaid salary, wages, vacation and other amounts required by applicable law, you will receive the following severance payments and benefits based upon your position or designation:
a.Continued Base Salary.  You will receive the continued payment of your Base Salary during the Severance Period (as defined below) in accordance with the Company’s standard payroll procedures; provided, however, that the first payment under this section shall be made on the first payroll date following the date your Release is no longer subject to revocation and with the first such payment to include any installments not made due to your Release not yet being effective and irrevocable; provided, further, that, if the sixty (60) day period in which your Release can become effective and irrevocable spans more than one taxable year, then the first payment shall not be made until the later taxable year. Notwithstanding the foregoing, if any Covered Employee is offered and accepts an offer of employment with the Company or any of its subsidiaries after his or her termination but before the conclusion of the Severance Period, his or her Base Salary continuation payments will cease upon such employee’s rehire date.
b.    Pro Rata Bonus Payment.  Upon attainment of the performance criteria with respect to your annual cash bonus for the bonus plan year in which the termination occurs, you will receive a pro-rated portion of the annual bonus based upon the actual number of days you were employed by the Company during the fiscal year.  The pro-rata bonus payment will be paid in accordance with the applicable bonus plan administrative rules, in a cash lump sum, at the same time bonuses are paid to the Company’s executives generally (but in no event later than two and one-half months following the end of the bonus plan year).  

c.    COBRA Premium Payment.  Subject to the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), if you validly elect health care continuation coverage under either (i) the Company’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or (ii) the Safeway Inc. Welfare Benefits Plan for Retirees, as amended from time to time (the “Early Retiree Plan”), to the extent that you are eligible to do so, then the Company shall directly pay or, at its election, reimburse you for the COBRA premiums, in the case of an election to continue coverage under the Company’s group health plans pursuant to COBRA, or your required participant contributions, in the case of an election to continue coverage under the Early Retiree Plan, for you and your covered dependents until the earlier of the end of the month during which your Severance Period ends or the date you become eligible for healthcare under a subsequent employer’s health plan; provided, however, that if the Company is unable to continue to cover you under its group health plans without incurring penalties (including without limitation, pursuant to Section 2716 of the Public Health Service Act), then an amount equal to each remaining Company subsidy shall thereafter be paid to you in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof).
3.    Change in Control Severance Benefits.  If you are a Covered Employee and if the Company involuntarily terminates your employment with the Company without Cause or you terminate employment with the Company for Good Reason during the twenty-four (24) month period following a Change in Control (the “Change in Control Period”), then subject to you delivering to the Company a Release that becomes effective and irrevocable within sixty (60) days following such termination of employment, in addition to any accrued but unpaid salary, wages, vacation and other amounts required by applicable law, and in lieu of benefits set forth in Section 2 above, you will be eligible to receive the following severance payments and benefits based upon your position or designation:
a.    Base Salary Severance.  You will receive a severance payment equal to your Base Salary for that number of months in the Severance Period, payable in a single lump sum, less applicable withholding obligations, within ten (10) days following the date your Release is no longer subject to revocation.
b.    Bonus Payment.  You will receive additional severance amount equal to your target cash bonus opportunity for the fiscal year of your termination to be paid to you in a cash lump sum, less applicable withholding obligations, within ten (10) days following the date your Release is no longer subject to revocation.
c.    COBRA Premium Payment.  Subject to the requirements of the Code, if you validly elect health care continuation coverage under either (i) the Company’s group health plans pursuant to COBRA or (ii) the Early Retiree Plan, to the extent that you are eligible to do so, then the Company shall directly pay or, at its election, reimburse you for the COBRA premiums, in the case of an election to continue coverage under the Company’s group health plans pursuant to COBRA, or your required participant contributions, in the case of an election to continue coverage under the Early Retiree Plan, for you and your covered dependents until the earlier of the end of the month during which your Severance Period ends or the date you become eligible for healthcare under a subsequent employer’s health plan; provided, however, that if the Company is unable to continue to cover you under its group health plans without incurring penalties (including without limitation, pursuant to Section 2716 of the Public Health Service Act), then an amount equal to each remaining Company subsidy shall thereafter be paid to you in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof).
4.    Definitions.  For the purposes of this Plan, the following terms shall have the following meanings:

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a.    “Base Salary” means the monthly base salary rate in effect immediately prior to your termination.
b.    “Cause” shall have the meaning ascribed to such term in any written employment agreement between or among you and the Company and/or any of its subsidiaries and, if no such written employment agreement shall be in force or effect, shall mean (a) conviction of, or the entry of a plea of guilty or no contest to, a felony or any other crime that causes the Company public disgrace or disrepute, or adversely affects the Company’s operations, financial performance, or relationship with its customers; (b) misappropriation of funds or other property of the Company or its affiliates; (c) refusal to perform the lawful and reasonable directives of your supervisor, the Company’s Chief Executive Officer or the Board; (d) your failure to perform the duties of your employment with the Company or any of its subsidiaries which continues for a period of fourteen (14) days (other than by reason of illness or injury); or (e) material breach of any agreement with or duty owed to the Company or any of its affiliates.  However, none of the foregoing events or conditions will constitute Cause unless the Company provides you with written notice of the event or condition and thirty (30) days to cure such event or condition (if curable) and the event or condition is not cured within such 30-day period.
c.     “Change in Control” means the occurrence of any of the following events: 
(1)    any “person” (as defined below) or “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),  and the rules thereunder), together with all affiliates of such person or group, shall become the “beneficial owner” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (“voting securities”) of the Company that represent 25% or more of the combined voting power of the Company’s then outstanding voting securities, other than an Exempt Person (as defined below); provided, however, that, notwithstanding the foregoing, a Change in Control shall not occur under this subsection (1) by reason of a person or group (together with the affiliates thereof) becoming the beneficial owner of 25% or more of the outstanding voting securities of the Company solely as a result of an acquisition of voting securities by the Company which, by reducing the number of voting securities outstanding, increases the proportionate number of voting securities beneficially owned by such person or group (together with the affiliates thereof) to 25% or more of the voting securities of the Company then outstanding; and, provided, further, that if a person or group (together with the affiliates thereof) shall become the beneficial owner of 25% or more of the voting securities of the Company then outstanding solely as a result of an acquisition of voting securities by the Company and shall, after such acquisition by the Company, become the beneficial owner of additional voting securities of the Company (other than pursuant to a dividend or distribution paid or made by the Company in voting securities or pursuant to a split or subdivision of the outstanding voting securities), then a Change in Control shall occur under this subsection (1) unless, upon becoming the beneficial owner of such additional voting securities, such person or group (together with the affiliates thereof) does not beneficially own 25% or more of the voting securities then outstanding;
(2)    during any 12-month period beginning on or after the Effective Date, individuals who, at the beginning of such period, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director during such 12-month period whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual 

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or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board;
(3)    the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of: (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case, if, as a result of the transaction, the Company’s voting securities outstanding immediately before the transaction (or the securities into which such voting securities are converted as a result of the transaction) fail to represent, directly or indirectly, more than 50% of the combined voting power of the outstanding voting securities of the Company (or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) immediately after the transaction; and
(4)    the Company’s stockholders approve a liquidation or dissolution of the Company. 
For purposes of subsection (1) above, the calculation of voting power shall be made as if the date on which the ownership of such person or group is measured were a record date for a vote of the Company’s stockholders, and for purposes of subsection (3) above, the calculation of voting power shall be made as if the date of the consummation of the transaction were a record date for a vote of the Company’s stockholders. For all purposes of this Plan, any calculation of the number of securities outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding voting securities of which any person or group is the beneficial owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.  For purposes of this definition of “Change in Control,” “person” means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, association or other entity.  For purposes of this definition of “Change in Control,” “Exempt Person” means any of the following: (a) a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company, (b) the Company or a subsidiary, and (c) a person that is owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their beneficial ownership of the voting securities of the Company; provided that no person who is an officer, director or employee of an Exempt Person shall be deemed, solely by reason of such person’s status or authority as such, to be the beneficial owner of any securities that are beneficially owned, including, without limitation, in a fiduciary capacity, by an Exempt Person or by any other such officer, director or employee of an Exempt Person.
Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any payment under this Plan that is subject to Section 409A of the Code, the transaction or event described in subsection (1), (2), (3) or (4) with respect to such payment (or portion thereof) must also constitute a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A.
d.     “Good Reason” shall have the meaning ascribed to such term in any written employment agreement between or among you and the Company and/or any of its subsidiaries and, if no such written employment agreement shall be in force or effect, shall mean the occurrence of any of the following, without your prior consent: (a) a material, adverse change in your responsibilities, authority or duties (including as a result of the assignment of duties materially inconsistent with your position); (b) a 

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material reduction in your base salary; (c) a material transfer of your principal place of employment to a location more than fifty (50) miles away from your principal place of employment immediately prior to the Change in Control; or (d) the Company’s material breach of this Agreement.  However, none of the foregoing events or conditions will constitute Good Reason unless: (x) you provide the Company with written objection to the event or condition within ninety (90) days following the occurrence thereof; (y) the Company does not reverse or otherwise cure the event or condition within thirty (30) days of receiving that written objection; and (z) you resign your employment within thirty (30) days following the expiration of that cure period.
e.    “Plan Administrator” means the Board of Directors of the Company (the “Board”) or any committee designated by the Board to administer the Plan.
f.    “Severance Period” shall mean that period of time commencing upon a Covered Employee’s termination of employment and ending upon:
(1)    With respect to Covered Employees at the level of Chief Executive Officer, the second anniversary of the Covered Employee’s termination of employment;
(2)    With respect to Covered Employees at the level of Executive Vice President, the eighteen (18) month anniversary of the Covered Employee’s termination of employment; 
(3)    With respect to Covered Employees at the level of Senior Vice President, the first anniversary of the Covered Employee’s termination of employment; and
(4)    With respect to Covered Employees at the level of Vice President, the six (6) month anniversary of the Covered Employee’s termination of employment.   
5.    Taxes.  All payments to be made under this Plan, including premium reimbursements,  will be subject to appropriate tax withholding and other deductions.  
6.    Best Pay Provision.  
a.    Notwithstanding any other provisions of this Plan, in the event that any payment or benefit received or to be received by the Covered Employee (whether pursuant to the terms of this Plan or any other plan, arrangement or agreement) (all such payments and benefits, including the payments and benefits under Sections 2 and 3 of this Plan, being hereinafter referred to as the “Total Payments”) would be subject (in whole or part), to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, the Total Payments shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Covered Employee would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).  The Total Payments shall be reduced in the following order: (A) reduction of any cash severance payments otherwise payable to the Covered Employee that are exempt from Section 409A of the Code, (B) reduction of any other cash payments or benefits otherwise payable to the Covered Employee that are exempt from Section 409A of the Code, but excluding any payment attributable to the 

5

acceleration of vesting or payment with respect to any stock option or other equity award with respect to the Company common stock that are exempt from Section 409A of the Code, (C) reduction of any other payments or benefits otherwise payable to the Covered Employee on a pro-rata basis or such other manner that complies with Section 409A of the Code, but excluding any payment attributable to the acceleration of vesting and payment with respect to any stock option or other equity award with respect to the Company common stock that are exempt from Section 409A of the Code, and (D) reduction of any payments attributable to the acceleration of vesting or payment with respect to any stock option or other equity award with respect to the Company common stock that are exempt from Section 409A of the Code.  The foregoing reductions shall be made in a manner that results in the maximum economic benefit to the Covered Employee and, to the extent economically equivalent, in a pro rata manner.
b.    For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Covered Employee shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the written opinion of an accounting firm or compensation consulting firm with nationally recognized standing and substantial expertise and experience on Section 280G matters (the “280G Firm”) selected by the Company, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of the 280G Firm, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the 280G Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
c.    The 280G Firm will be directed to submit its determination and detailed supporting calculations to both the Covered Employee and the Company within fifteen (15) days after notification from either the Company or the Covered Employee that the Covered Employee may receive payments which may be “parachute payments.”  The Covered Employee and the Company will each provide the 280G Firm access to and copies of any books, records and documents in their possession as may be reasonably requested by the 280G Firm, and otherwise cooperate with the 280G Firm in connection with the preparation and issuance of the determinations and calculations contemplated by this Section 6(c).  The fees and expenses of the 280G Firm for its services in connection with the determinations and calculations contemplated by this Section 6(c) will be borne by the Company.
7.    Amendment of Plan.  Prior to the consummation of a Change in Control, the Plan Administrator shall have the power to amend or terminate this Plan from time to time in its discretion and for any reason (or no reason); provided that no such amendment or termination shall be effective with respect to a termination of employment that occurred prior to the amendment or termination.  Notwithstanding the foregoing, during a Change in Control Period, no amendment or termination of the Plan shall impair any rights or obligations to any Covered Employee under this Plan unless such Covered Employee expressly consents to such amendment or termination.
8.    Claims Procedures.
a.    Normally, you do not need to present a formal claim to receive benefits payable under this Plan.
b.    If any person (the “Claimant”) believes that benefits are being denied improperly, that this Plan is not being operated properly, that fiduciaries of this Plan have breached their duties, or that 

6

the Claimant’s legal rights are being violated with respect to this Plan, the Claimant must file a formal claim, in writing, with the Plan Administrator.  This requirement applies to all claims that any Claimant has with respect to this Plan, including claims against fiduciaries and former fiduciaries, except to the extent the Plan Administrator determines, in its sole discretion that it does not have the power to grant all relief reasonably being sought by the Claimant.
c.    A formal claim must be filed within ninety (90) days after the date the Claimant first knew or should have known of the facts on which the claim is based, unless the Plan Administrator in writing consents otherwise.  The Plan Administrator shall provide a Claimant, on request, with a copy of the claims procedures established under subsection (d).
d.    The Plan Administrator has adopted procedures for considering claims (which are set forth in Appendix A), which it may amend from time to time, as it sees fit.  These procedures shall comply with all applicable legal requirements.  These procedures may provide that final and binding arbitration shall be the ultimate means of contesting a denied claim (even if the Plan Administrator or its delegates have failed to follow the prescribed procedures with respect to the claim).  The right to receive benefits under this Plan is contingent on a Claimant using the prescribed claims and arbitration procedures to resolve any claim.  
9.    Plan Administration.
a.    The Plan Administrator is responsible for the general administration and management of this Plan and shall have all powers and duties necessary to fulfill its responsibilities, including, but not limited to, the discretion to interpret and apply this Plan and to determine all questions relating to eligibility for benefits.  This Plan shall be interpreted in accordance with its terms and their intended meanings.  However, the Plan Administrator and all Plan fiduciaries shall have the discretion to interpret or construe ambiguous, unclear or implied (but omitted) terms in any fashion they deem to be appropriate in their sole discretion, and to make any findings of fact needed in the administration of this Plan.  The validity of any such interpretation, construction, decision or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly arbitrary or capricious.
b.    All actions taken and all determinations made in good faith by the Plan Administrator or by Plan fiduciaries will be final and binding on all persons claiming any interest in or under this Plan.  To the extent the Plan Administrator or any Plan fiduciary has been granted discretionary authority under this Plan, the Plan Administrator’s or Plan fiduciary’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter.
c.    If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Plan Administrator in its sole discretion, the provision shall be considered ambiguous and shall be interpreted by the Plan Administrator and all Plan fiduciaries in a fashion consistent with its intent, as determined in the sole discretion of the Plan Administrator.  The Plan Administrator shall amend this Plan retroactively to cure any such ambiguity.
d.    No Plan fiduciary shall have the authority to answer questions about any pending or final business decision of the Company or any affiliate that has not been officially announced, to make disclosures about such matters, or even to discuss them, and no person shall rely on any unauthorized, unofficial disclosure. Thus, before a decision is officially announced, no fiduciary is authorized to tell any employee, for example, that the employee will or will not be laid off or that the Company will or will not offer exit incentives in the future.  Nothing in this subsection shall preclude any fiduciary from fully participating in the consideration, making or official announcement of any business decision.

7

e.    This Section may not be invoked by any person to require this Plan to be interpreted in a manner inconsistent with its interpretation by the Plan Administrator or other Plan fiduciaries.
10.    Funding and Payment of Benefits.  This Plan shall be maintained in a manner to be considered “unfunded” for purposes of ERISA.  The Company shall be required to make payments only as benefits become due and payable.  No person shall have any right, other than the right of an unsecured general creditor against the Company, with respect to the benefits payable hereunder, or which may be payable hereunder, to any Covered Employee, surviving spouse or beneficiary hereunder.  If the Company, acting in its sole discretion, establishes a reserve or other fund associated with this Plan, no person shall have any right to or interest in any specific amount or asset of such reserve or fund by reason of amounts which may be payable to such person under this Plan, nor shall such person have any right to receive any payment under this Plan except as and to the extent expressly provided in this Plan.  The assets in any such reserve or fund shall be part of the general assets of the Company, subject to the control of the Company.  
11.    Plan Application.  This Plan shall be the only plan, agreement or arrangement with respect to which cash severance benefits may be provided to a Covered Employee upon a termination of a Covered Employee’s employment and supersedes all prior agreements, arrangements or related communications of the Company relating to cash separation benefits for the Covered Employees, whether formal or informal, or written or unwritten.  However, if a prior plan or agreement requires the consent of the employee in order for such prior plan or agreement to be modified or amended or superseded by this Plan, such consent must be obtained from such employee in order for this Plan to supersede such prior plan or agreement.  Subject to the foregoing, any benefits under this Plan will be provided to Covered Employees in lieu of benefits under any other separation plan or agreement.  
12.    Successors.  Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Plan and agree expressly to perform any of the Company’s obligations under this Plan.  For all purposes under this Plan, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers an assumption agreement or which becomes bound by the terms of the Plan by operation of law.  All of your rights hereunder shall inure to the benefit of, and be enforceable by, your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
13.    Limitation On Employee Rights; At-Will Employment.  This Plan shall not give any employee the right to be retained in the service of the Company or interfere with or restrict the right of the Company to discharge or retire the employee.  All employees of the Company are employed at will.
14.    No Third-Party Beneficiaries.  This Plan shall not give any rights or remedies to any person other than Covered Employees and the Company.
15.    Governing Law.  This Plan is a welfare plan subject to ERISA and it shall be interpreted, administered, and enforced in accordance with that law.  To the extent that state law is applicable, the statutes and common law of the jurisdiction in which the Covered Employee resides shall apply, excluding any that mandate the use of another jurisdiction’s laws.
16.    No Assignment of Benefits.  The rights of any person to payments or benefits under this Plan shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any action in violation of this subsection shall be void.

8

17.    Miscellaneous.  Where the context so indicates, the singular will include the plural and vice versa.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Plan.  Unless the context clearly indicates to the contrary, a reference to a statute or document shall be construed as referring to any subsequently enacted, adopted or executed counterpart.
18.    Section 409A.  
a.    Separation from Service.  Notwithstanding anything in this Plan to the contrary, any compensation or benefits payable under this Plan that constitutes “nonqualified deferred compensation” (“Deferred Compensation”) within the meaning of Section 409A of the Code, and which is designated under this Plan as payable upon your termination of employment shall be payable only upon your “separation from service” with the Company within the meaning of Section 409A of the Code (a “Separation from Service”) and, except as provided under Section 18(b) of this Plan, any such compensation or benefits shall not be paid, or, in the case of installments, shall not commence payment, until the sixtieth (60th) day following your Separation from Service.  Any installment payments that would have been made to you during the sixty (60) day period immediately following your Separation from Service but for the preceding sentence shall be paid to you on the sixtieth (60th) day following your Separation from Service and the remaining payments shall be made as provided in this Plan.
b.    Specified Employees.  Notwithstanding any provision herein to the contrary, if you are deemed by the Company at the time of your Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the benefits to which you are entitled under this Plan is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of your benefits shall not be provided to you prior to the earlier of (i) the expiration of the six-month period measured from the date of your Separation from Service or (ii) the date of your death.  Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to you (or your estate or beneficiaries), and any remaining payments due to you under this Plan shall be paid as otherwise provided herein.
c.    Installments.  Your right to receive any installment payments under this Plan shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Treasury Regulation Section 1.409A-2(b)(2)(iii).
d.    General.  To the extent applicable, this Plan shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the adoption of this Plan.  Notwithstanding any provision of this Plan to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to you under Section 409A of the Code and related Department of Treasury guidance, to the extent permitted under Section 409A of the Code, the Company may, to the extent permitted under Section 409A of the Code (i) cooperate in good faith to adopt such amendments to this Plan and appropriate policies and procedures, including amendments and policies with retroactive effect, that they determine necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Plan, preserve the economic benefits of this Plan and/or (ii) take such other actions as mutually determined necessary or appropriate to exempt the amounts payable hereunder from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes under such section.  To the extent applicable, each of the exceptions to Code Section 409A’s prohibition on acceleration of payments of Deferred Compensation provided under Treasury Regulation 1.409A-3(j)(4) shall be permitted under the Agreement.

9

APPENDIX A
Detailed Claims and Arbitration Procedures
1.    Claims Procedure
Initial Claims
All claims shall be presented to the Plan Administrator in writing.  Within ninety (90) days after receiving a claim, a claims official appointed by the Plan Administrator shall consider the claim and issue his or her determination thereon in writing.  If the Plan Administrator or claims official determines that an extension of time is necessary, the claims official may extend the determination period for up to an additional ninety (90) days by giving the Claimant written notice indicating the special circumstances requiring the extension of time prior to the termination of the initial ninety (90) day period.  Any claims that the Claimant does not pursue in good faith through the initial claims stage shall be treated as having been irrevocably waived.  
Claims Decisions
If the claim is granted, the benefits or relief the Claimant seeks shall be provided.  If the claim is wholly or partially denied, the claims official shall, within ninety (90) days (or a longer period, as described above), provide the Claimant with written notice of the denial, setting forth, in a manner calculated to be understood by the Claimant: (1) the specific reason or reasons for the denial; (2) specific references to the provisions on which the denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect the claim, together with an explanation of why the material or information is necessary; and (4) an explanation of the procedures for appealing denied claims.  If the Claimant can establish that the claims official has failed to respond to the claim in a timely manner, the Claimant may treat the claim as having been denied by the claims official.
Appeals of Denied Claims
Each Claimant shall have the opportunity to appeal the claims official’s denial of a claim in writing to an appeals official appointed by the Plan Administrator (which may be a person, committee, or other entity).  A Claimant must appeal a denied claim within sixty (60) days after receipt of written notice of denial of the claim, or within sixty (60) days after it was due if the Claimant did not receive it by its due date.  The Claimant shall have the opportunity to submit written comments, documents, records and other information relating to the Claimant’s claim.  The Claimant (or the Claimant’s duly authorized representative) shall be provided upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s claim.  The appeals official shall take into account during its review all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefits review.  Any claims that the Claimant does not pursue in good faith through the appeals stage, such as by failing to file a timely appeal request, shall be treated as having been irrevocably waived.
Appeals Decisions
The decision by the appeals official shall be made not later than sixty (60) days after the written appeal is received by the Plan Administrator, however, if the appeals official determines that an extension of time is necessary, the appeals official may extend the determination period for up to an additional 

Appendix A-1

sixty (60) days by giving the Claimant written notice indicating the special circumstances requiring the extension of time prior to the termination of the initial sixty (60) day period.  The appeal decision shall be in writing, shall be set forth in a manner calculated to be understood by the Claimant and shall include the following: (1) the specific reason or reasons for the denial; (2) specific references to the provisions on which the denial is based; (3) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s claim.  If a Claimant does not receive the appeal decision by the date it is due, the Claimant may deem the appeal to have been denied.
Procedures
The Plan Administrator shall adopt procedures by which initial claims shall be considered and appeals shall be resolved; different procedures may be established for different claims.  All procedures shall be designed to afford a Claimant full and fair consideration of his or her claim.
Arbitration of Rejected Appeals
If a Claimant has pursued a claim through the appeal stage of these claims procedures, the Claimant may contest the actual or deemed denial of that claim through arbitration, as described below.  In no event shall any denied claim be subject to resolution by any means (such as in a court of law) other than arbitration in accordance with the following provisions.
2.    Arbitration Procedure
Request for Arbitration
A Claimant must submit a request for arbitration to the Plan Administrator within sixty (60) days after receipt of the written denial of an appeal (or within sixty (60) days after he or she should have received the determination). The Claimant or the Plan Administrator may bring an action in any court of appropriate jurisdiction to compel arbitration in accordance with these procedures.
Applicable Arbitration Rules
If the Claimant has entered into a valid arbitration agreement with the Company, the arbitration shall be conducted in accordance with that agreement.  If not, the rules set forth in the balance of this Appendix shall apply: The arbitration shall be held under the auspices of the Judicial Arbitration and Mediation Service (“JAMS”).  Except as provided below, the arbitration shall be in accordance with JAMS’ then-current employment dispute resolution rules.  The Arbitrator shall apply the Federal Rules of Evidence and shall have the authority to entertain a motion to dismiss or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure.  The Federal Arbitration Act shall govern all arbitrations that take place under these Detailed Claims and Arbitration Procedures (or that are required to take place under them), and shall govern the interpretation or enforcement of these Procedures or any arbitration award.  To the extent that the Federal Arbitration Act is inapplicable, California law pertaining to arbitration agreements shall apply.
Arbitrator
The arbitrator (the “Arbitrator”) shall be an attorney familiar with employee benefit matters who is licensed to practice law in the state in which the arbitration is convened.  The Arbitrator shall be selected in the following manner from a list of eleven arbitrators drawn by the sponsoring organization under 

Appendix A-2

whose auspices the arbitration is being conducted and taken from its panel of labor and employment arbitrators.  Each party shall designate all arbitrators on the list whom they find acceptable; the parties shall then alternately strike arbitrators from the list of arbitrators acceptable to both parties, with the party who did not initiate the arbitration striking first.  If only one arbitrator is acceptable to both parties, he or she will be the Arbitrator.  If none of the arbitrators is acceptable to both parties, a new panel of arbitrators shall be obtained from the sponsoring organization and the selection process shall be repeated.
Location
The arbitration will take place in or near the city in which the Claimant is or was last employed by the Company or in which the Plan is principally administered, whichever is specified by the Plan Administrator, or in such other location as may be acceptable to both the Claimant and the Plan Administrator.
Authority of Arbitrator
The Arbitrator shall have the authority to resolve any factual or legal claim relating to the Plan or relating to the interpretation, applicability or enforceability of these arbitration procedures, including, but not limited to, any claim that these procedures are void or voidable.  The Arbitrator may grant a Claimant’s claim only if the Arbitrator determines that it is justified because: (1) the appeals official erred on an issue of law; or (2) the appeals official’s findings of fact, if applicable, were not supported by substantial evidence.  The arbitration shall be final and binding on all parties.
Limitation on Scope of Arbitration
The Claimant may not present any evidence, facts, arguments or theories at the arbitration that the Claimant did not pursue in his or her appeal, except in response to new evidence, facts, arguments or theories presented on behalf of the other parties to the arbitration.  However, an arbitrator may permit a Claimant to present additional evidence or theories if the Arbitrator determines that the Claimant was precluded from presenting them during the claim and appeal procedures due to procedural errors of the Plan Administrator or its delegates.
Administrative Record
The Plan Administrator shall submit to the Arbitrator a certified copy of the record on which the appeals official’s decision was made.
Experts, Depositions, and Discovery
Except as otherwise permitted by the Arbitrator on a showing of substantial need, either party may: (1) designate one expert witness; (2) take the deposition of one individual and the other party’s expert witness; (3) propound requests for production of documents; and (4) subpoena witnesses and documents relating to the discovery permitted in this paragraph.
Pre-Hearing Procedures
At least thirty (30) days before the arbitration hearing, the parties must exchange lists of witnesses, including any expert witnesses, and copies of all exhibits intended to be used at the hearing.  The Arbitrator shall have jurisdiction to hear and rule on pre-hearing disputes and is authorized to hold pre-hearing conferences by telephone or in person, as the Arbitrator deems necessary.

Appendix A-3

Transcripts
Either party may arrange for a court reporter to provide a stenographic record of the proceedings at the party’s own cost.
Post-Hearing Procedures
Either party, on request at the close of the hearing, may be given leave to file a post-hearing brief within the time limits established by the Arbitrator.
Costs and Attorneys’ Fees
The Claimant and the Company shall equally share the fees and costs of the Arbitrator, except that the Claimant shall not be required to pay any of the Arbitrator’s fees and costs if such a requirement would make mandatory arbitration under these procedures unenforceable. On a showing of material hardship, the Company, in its discretion, may advance all or part of the Claimant’s share of the fees and costs, in which case the Claimant shall reimburse the Company out of the proceeds of the arbitration award, if any, that the Claimant receives.  Each party shall pay its own costs and attorneys’ fees, except as required by applicable law.
Procedure for Collecting Costs from Claimant
Before the arbitration commences, the Claimant must deposit with the Plan Administrator his or her share of the anticipated fees and costs of the Arbitrator, as reasonably determined by the Plan Administrator.  At least two (2) weeks before delivering his or her decision, the Arbitrator shall send his or her final bill for fees and costs to the Plan Administrator for payment.  The Plan Administrator shall apply the amount deposited by the Claimant to pay the Claimant’s share of the Arbitrator’s fees and costs and return any surplus deposit.  If the Claimant’s deposit is insufficient, the Claimant will be billed for any remaining amount due.  Failure to pay any amount within ten (10) days after it is billed shall constitute the Claimant’s irrevocable election to withdraw his or her arbitration request and abandon his or her claim.
Arbitration Award
The Arbitrator shall render an award and opinion in the form typically rendered in labor arbitrations.  Within twenty (20) days after issuance of the Arbitrator’s award and opinion, either party may file with the Arbitrator a motion to reconsider, which shall be accompanied by a supporting brief.  If such a motion is filed, the other party shall have twenty (20) days from the date of the motion to respond, after which the Arbitrator shall reconsider the issues raised by the motion and either promptly confirm or promptly change his or her decision.  The decision shall then be final and conclusive on the parties.  Arbitrator fees and other costs of a motion for reconsideration shall be borne by the losing party, unless the Arbitrator orders otherwise.  Either party may bring an action in any court of appropriate jurisdiction to enforce an arbitration award.  A party opposing enforcement of an arbitration award may not do so in an enforcement proceeding, but must bring a separate action in a court of competent jurisdiction to set aside the award.  In any such action, the standard of review shall be the same as that applied by an appellate court reviewing the decision of a trial court in a nonjury trial.
Severability
The invalidity or unenforceability of any part of these arbitration procedures shall not affect the validity of the rest of the procedures.

Appendix A-4

APPENDIX B
ADDITIONAL INFORMATION
RIGHTS UNDER ERISA
As a participant in the Plan, you are entitled to certain rights and protections under ERISA.  ERISA provides that all Plan participants will be entitled to:
Receive Information About Your Plan and Benefits
1.    Examine, without charge, at the Company’s headquarters, all documents governing the Plan including collective bargaining agreements, if any, and annual reports and Plan descriptions.
2.    Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including collective bargaining agreements, if any, and copies of the latest annual report (Form 5500 Series) and summary plan description.  The Plan Administrator may make a reasonable charge for the copies.
3.    Receive a summary of the Plan’s annual financial report, if any.  The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report.
Prudent Actions by Plan Fiduciaries
In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.  No one, including the Company, your union or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your right under ERISA.
Enforce Your Rights
If your claim for a welfare benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.  Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request a copy of plan documents or the latest annual report from the Plan and do not receive them within thirty (30) days, you may file suit in a Federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for benefits, which is denied or ignored, in whole or in part, you may file suit in a state or Federal court.  In addition, if you disagree with the Plan’s decision or lack thereof concerning the qualified status of a domestic relations order or a medical child support order, you may file suit in Federal court.  If it should happen that Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

Appendix B-1

Assistance with Your Questions
If you have any questions about your Plan, you should contact the Plan Administrator.  If you should have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N. W., Washington, D. C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

	
		
	ADMINISTRATIVE INFORMATION

	Name of Plan:
	Safeway Inc. Executive Severance Plan

	Plan Administrator and Sponsor:
	Board of Directors 
Safeway Inc. 
5918 Stoneridge Mall Road 
Pleasanton, CA 94588-3229 
Tel: (925) 467-3000 
Fax: (925) 467-3214

	Type of Administration:
	Self-Administered

	Type of Plan:
	Severance Pay Employee Welfare Benefit Plan

	Employer Identification Number:
	94-3019135

	Direct Questions Regarding the Plan to:
	Board of Directors 
Safeway Inc. 
5918 Stoneridge Mall Road 
Pleasanton, CA 94588-3229 
Tel: (925) 467-3000 
Fax: (925) 467-3214

	Agent for Service of Legal Process:
	Secretary 
Safeway Inc. 
5918 Stoneridge Mall Road 
Pleasanton, CA 94588-3229
Tel: (925) 467-3000 
Fax: (925) 467-3214 
Service of Legal Process may also be made upon the Plan Administrator.

	Plan Year End:
	December 31

	 
	 

Appendix B-2

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