SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 3, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8140
FLEMING COMPANIES, INC.
(Exact name of registrant as specified in its charter)
OKLAHOMA 48-0222760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6301 Waterford Boulevard, Box 26647
Oklahoma City, Oklahoma 73126
(Address of principal executive offices) (Zip Code)
(405) 840-7200
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was re-
quired to file such reports), and (2) has been subject to such filing require-
ments for the past 90 days. Yes X No
The number of shares outstanding of each of the issuer's classes of common
stock, as of October 30, 1998 is as follows:
Class Shares Outstanding
Common stock, $2.50 par value 38,254,000
<PAGE>
INDEX
Page
Number
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Statements of Operations -
12 Weeks Ended October 3, 1998,
and October 4, 1997
Consolidated Condensed Statements of Operations -
40 Weeks Ended October 3, 1998,
and October 4, 1997
Consolidated Condensed Balance Sheets -
October 3, 1998, and December 27, 1997
Consolidated Condensed Statements of Cash Flows -
40 Weeks Ended October 3, 1998,
and October 4, 1997
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II. OTHER INFORMATION:
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Consolidated Condensed Statements of Operations
For the 12 weeks ended October 3, 1998, and October 4, 1997
(In thousands, except per share amounts)
<CAPTION>
- ------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Net sales $3,438,766 $3,453,261
Costs and expenses:
Cost of sales 3,108,887 3,131,023
Selling and administrative 297,019 272,826
Interest expense 37,348 39,084
Interest income (8,559) (11,116)
Equity investment results 2,669 3,710
Litigation charge 2,215 -
- ------------------------------------------------------------------------------
Total costs and expenses 3,439,579 3,435,527
- ------------------------------------------------------------------------------
Earnings (loss) before taxes (813) 17,734
Taxes on income 1,512 8,214
- ------------------------------------------------------------------------------
Earnings (loss) before extraordinary charge (2,325) 9,520
Extraordinary charge from early retirement
of debt (net of taxes) - 13,330
- ------------------------------------------------------------------------------
Net loss $ (2,325) $ (3,810)
- ------------------------------------------------------------------------------
Earnings (loss) per share:
Basic and diluted before extraordinary charge $(.06) $.25
Extraordinary charge - $.35
Basic and diluted net loss $(.06) $(.10)
Dividends paid per share $.02 $.02
Weighted average shares outstanding:
Basic 38,039 37,804
Diluted 38,039 37,840
- ------------------------------------------------------------------------------
</TABLE>
Fleming Companies, Inc. See notes to consolidated condensed financial
statements.
<PAGE>
<TABLE>
Consolidated Condensed Statements of Operations
For the 40 weeks ended October 3, 1998, and October 4, 1997
(In thousands, except per share amounts)
<CAPTION>
- ------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Net sales $11,511,835 $11,755,946
Costs and expenses:
Cost of sales 10,385,064 10,670,361
Selling and administrative 959,389 911,420
Interest expense 124,411 124,129
Interest income (28,172) (36,410)
Equity investment results 9,506 11,027
Litigation charge 7,385 19,218
- ------------------------------------------------------------------------------
Total costs and expenses 11,457,583 11,699,745
- ------------------------------------------------------------------------------
Earnings before taxes 54,252 56,201
Taxes on income 27,668 28,602
- ------------------------------------------------------------------------------
Earnings before extraordinary charge 26,584 27,599
Extraordinary charge from early retirement
of debt (net of taxes) - 13,330
- ------------------------------------------------------------------------------
Net earnings $ 26,584 $ 14,269
- ------------------------------------------------------------------------------
Earnings per share:
Basic and diluted before extraordinary charge $.70 $.73
Extraordinary charge - $.35
Basic and diluted net earnings $.70 $.38
Dividends paid per share $.06 $.06
Weighted average shares outstanding:
Basic 37,848 37,803
Diluted 38,058 37,825
- ------------------------------------------------------------------------------
</TABLE>
Fleming Companies, Inc. See notes to consolidated condensed financial
statements.
<TABLE>
Consolidated Condensed Balance Sheets
(In thousands)
<CAPTION>
- ------------------------------------------------------------------------------
October 3, December 27,
Assets 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 23,539 $ 30,316
Receivables 421,074 334,278
Inventories 1,026,934 1,018,666
Other current assets 113,104 111,730
- ------------------------------------------------------------------------------
Total current assets 1,584,651 1,494,990
Investments and notes receivable 132,282 150,221
Investment in direct financing leases 186,612 201,588
Property and equipment 1,652,084 1,598,786
Less accumulated depreciation
and amortization (723,254) (648,943)
- ------------------------------------------------------------------------------
Net property and equipment 928,830 949,843
Other assets 239,167 164,295
Goodwill 942,671 963,034
- ------------------------------------------------------------------------------
Total assets $4,014,213 $3,923,971
- ------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- ------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 910,847 $ 831,339
Current maturities of long-term debt 41,346 47,608
Current obligations under capital leases 22,693 21,196
Other current liabilities 255,311 254,454
- ------------------------------------------------------------------------------
Total current liabilities 1,230,197 1,154,597
Long-term debt 1,130,440 1,127,311
Long-term obligations under
capital leases 363,576 367,068
Deferred income taxes 70,883 61,425
Other liabilities 92,790 123,898
Commitments and contingencies
Shareholders' equity:
Common stock, $2.50 par value per share 96,325 95,660
Capital in excess of par value 509,322 504,451
Reinvested earnings 561,099 536,792
Accumulated other comprehensive income:
Cumulative currency translation adjustment - (4,922)
Additional minimum pension liability (37,715) (37,715)
- ------------------------------------------------------------------------------
Accumulated other comprehensive income (37,715) (42,637)
Less ESOP note (2,704) (4,594)
- ------------------------------------------------------------------------------
Total shareholders' equity 1,126,327 1,089,672
- ------------------------------------------------------------------------------
Total liabilities and shareholders' equity $4,014,213 $3,923,971
- ------------------------------------------------------------------------------
</TABLE>
Fleming Companies, Inc. See notes to consolidated condensed financial
statements.
<PAGE>
<TABLE>
Consolidated Condensed Statements of Cash Flows
For the 40 weeks ended October 3, 1998, and October 4, 1997
(In thousands)
<CAPTION>
- ------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 26,584 $ 14,269
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 140,735 139,738
Credit losses 11,969 14,840
Deferred income taxes 9,507 (577)
Equity investment results 9,506 11,027
Consolidation and restructuring reserve activity (4,662) (1,987)
Cost of early debt retirement - 22,227
Change in assets and liabilities, excluding
effect of acquisitions:
Receivables (106,791) 1,036
Inventories (6,595) 52,762
Accounts payable 79,508 (133,626)
Other assets and liabilities (28,868) (32,197)
Other adjustments, net (3,926) (5,480)
- ------------------------------------------------------------------------------
Net cash provided by operating activities 126,967 82,032
- ------------------------------------------------------------------------------
Cash flows from investing activities:
Collections on notes receivable 34,842 47,829
Notes receivable funded (21,236) (29,725)
Purchase of property and equipment (146,275) (82,348)
Proceeds from sale of
property and equipment 12,708 11,859
Investments in customers (1,007) (1,963)
Proceeds from sale of investment 3,483 2,196
Businesses acquired (6,557) (9,572)
Proceeds from sale of businesses - 13,093
Other investing activities 5,818 6,255
- -----------------------------------------------------------------------------
Net cash used in
investing activities (118,224) (42,376)
- -----------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term borrowings 50,000 869,638
Principal payments on long-term debt (53,133) (927,616)
Principal payments on capital
lease obligations (14,620) (15,362)
Sale of common stock under incentive
stock and stock ownership plans 4,997 491
Dividends paid (2,296) (2,260)
Other financing activities (468) (1,195)
- -----------------------------------------------------------------------------
Net cash used in
financing activities (15,520) (76,304)
- -----------------------------------------------------------------------------
Net decrease in cash
and cash equivalents (6,777) (36,648)
Cash and cash equivalents,
beginning of period 30,316 63,667
- -----------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 23,539 $ 27,019
- -----------------------------------------------------------------------------
Supplemental information:
Cash paid for interest $115,146 $119,529
Cash paid for taxes $12,026 $33,361
- -----------------------------------------------------------------------------
</TABLE>
Fleming Companies, Inc. See notes to consolidated condensed financial
statements.
<PAGE>
Notes to Consolidated Condensed Financial Statements
1. The consolidated condensed balance sheet as of October 3, 1998, and the
consolidated condensed statements of operations and cash flows for the 12-week
and 40-week periods ended October 3, 1998, and for the 12-week and 40-week
periods ended October 4, 1997, have been prepared by the company, without
audit. In the opinion of management, all adjustments necessary to present
fairly the company's financial position at October 3, 1998, and the results of
operations and cash flows for the periods presented have been made. All such
adjustments are of a normal, recurring nature except as disclosed. Both basic
and diluted earnings or loss per share are computed based on net earnings or
loss divided by weighted average shares as appropriate for each calculation.
The preparation of the consolidated condensed financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These consolidated condensed
financial statements should be read in conjunction with the consolidated
financial statements and related notes included in the company's 1997 annual
report on Form 10-K.
3. The LIFO method of inventory valuation is used for determining the cost of
most grocery and certain perishable inventories. The excess of current cost
of LIFO inventories over their stated value was $41 million at October 3,
1998, and $36 million at December 27, 1997.
4. Sales and operating earnings for the company's food distribution and retail
food segments are presented below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
For the 12 weeks ended
Oct. 3, Oct. 4,
($ in millions) 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Food distribution $3,126 $3,129
Intersegment elimination (495) (451)
- ------------------------------------------------------------------------------
Net food distribution 2,631 2,678
Retail food 808 775
- ------------------------------------------------------------------------------
Total sales $3,439 $3,453
- ------------------------------------------------------------------------------
Operating earnings:
Food distribution $50 $64
Retail food 11 11
Corporate (29) (26)
- ------------------------------------------------------------------------------
Total operating earnings 32 49
Interest expense (37) (39)
Interest income 9 12
Equity investment results (3) (4)
Litigation charge (2) -
- ------------------------------------------------------------------------------
Earnings (loss) before taxes $(1) $18
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
For the 40 weeks ended
Oct. 3, Oct. 4,
($ in millions) 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Food distribution $10,361 $10,594
Intersegment elimination (1,556) (1,467)
- ------------------------------------------------------------------------------
Net food distribution 8,805 9,127
Retail food 2,707 2,629
- ------------------------------------------------------------------------------
Total sales $11,512 $11,756
- ------------------------------------------------------------------------------
Operating earnings:
Food distribution $204 $215
Retail food 51 60
Corporate (88) (101)
- ------------------------------------------------------------------------------
Total operating earnings 167 174
Interest expense (124) (124)
Interest income 28 36
Equity investment results (10) (11)
Litigation charge (7) (19)
- ------------------------------------------------------------------------------
Earnings before taxes $ 54 $ 56
- ------------------------------------------------------------------------------
</TABLE>
General corporate expenses are not allocated to food distribution and retail
food segments. The transfer pricing between segments is at cost. Operating
earnings for 1997 have been restated due to adopting SFAS No. 131 -
Disclosures about Segments of an Enterprise and Related Information.
5. The company's comprehensive loss totaled $2.3 million and $3.8 million for
the 12 weeks ended October 3, 1998 and October 4, 1997, respectively.
Comprehensive income totaled $31.5 million and $14.3 million for the 40 weeks
ended October 3, 1998 and October 4, 1997, respectively. Comprehensive income
or loss was comprised of reported net income or loss and changes in foreign
currency translation adjustments.
6. In accordance with applicable accounting standards, the company records a
charge reflecting contingent liabilities (including those associated with
litigation matters) when management determines that a material loss is
"probable" and either "quantifiable" or "reasonably estimable." Additionally,
the company discloses material loss contingencies when the likelihood of a
material loss is deemed to be greater than "remote" but less than "probable."
Set forth below is information regarding certain material loss contingencies:
David's.
The company was sued by David's Supermarkets, Inc. ("David's") in 1993 for
allegedly overcharging for products. In April 1996, judgment of $211 million
was entered against the company; during the second quarter of 1996, the
judgment was vacated and a new trial was granted. Although the company denied
the allegations, in order to eliminate the uncertainty and expense of
protracted litigation the company paid $19.9 million to the plaintiff in
April 1997 in exchange for dismissal, with prejudice, of all plaintiff's
claims against the company. This settlement resulted in a charge to first
quarter 1997 earnings of $19.2 million ($9 million after-tax or $.24 per
share).
Furr's.
Furr's Supermarkets, Inc. ("Furr's"), which purchased approximately
$500 million of products from the company in 1997 under a supply contract
originally set to expire in 2001, filed suit against the company in February
1997 claiming it was overcharged for products. Fleming denied Furr's
allegations.
In October 1997, Fleming and Furr's reached an agreement dismissing all
litigation between the parties. Pursuant to the settlement agreement, Furr's
purchased Fleming's El Paso product supply center, together with related
inventory and equipment, in October 1998. Additionally as part of the
settlement agreement, Fleming paid Furr's $800,000 per month as a refund of
fees and charges until the sale of the product supply center closed and the
supply contract was terminated.
During the third quarter of 1998, Fleming recorded a charge of $2 million ($1
million after-tax or $.03 per share) relating to this matter; year to date,
Fleming recorded charges of $7 million ($4 million after tax and $.10 per
share). Fleming does not expect to incur any additional impairment.
Randall's.
In July 1997, Randall's Food Markets, Inc. ("Randall's") initiated arbitration
proceedings against Fleming claiming it had been overcharged for products. In
1997, Randall's purchased approximately $490 million of products from Fleming
under an eight-year supply contract entered into in 1993.
In July 1998, the arbitration panel resolved the dispute, denied Randall's
claim for significant damages and terminated the supply contract between
Fleming and Randall's. The company continues to supply Randall's pursuant to
an agreement which will permit Randall's to complete its self-distribution
plan by August of 1999. Although there is no expected impairment adjustment,
downsizing costs are expected but cannot yet be quantified.
Class Action Suits.
In 1996, the company and certain of its present and former officers and
directors were named as defendants in nine purported class action suits filed
by certain stockholders and one purported class action suit filed by a
noteholder. In April 1997, the court consolidated the stockholder cases as
City of Philadelphia, et al. v. Fleming Companies, Inc., et al.; the
noteholder case was also consolidated, but only for pre-trial purposes.
During the first quarter of 1998, the noteholder case was dismissed, without
prejudice, for failure to state a cause of action. The plaintiff has asked
the court to reconsider the matter.
The complaint filed in the consolidated cases asserts liability for the
company's alleged failure to properly account for and disclose the contingent
liability created by the David's litigation and by the company's alleged
"deceptive business practices." The plaintiffs claim that these alleged
failures and practices led to the David's litigation and to other material
contingent liabilities, caused the company to change its manner of doing
business at great cost and loss of profit, and materially inflated the trading
price of the company's common stock. The company denies each of these
allegations.
The plaintiffs seek undetermined but significant damages. Management is
unable to predict the ultimate outcome of this litigation. However, if the
district court ruling described below is upheld, Fleming believes the
litigation will not have a material adverse effect on the company.
In November 1997, the company won a declaratory judgment in the U.S. District
Court for the Western District of Oklahoma against certain of its insurance
carriers regarding directors and officers insurance policies ("D&O policies")
issued to Fleming for the benefit of its officers and directors. On motion
for summary judgment, the court ruled that the company's exposure, if any,
under the class action suits is covered by certain D&O policies written by the
insurance carriers (aggregating $60 million) and that the "larger settlement
rule" will be applicable to the case. According to the trial court, under the
larger settlement rule a D&O insurer is liable for the entire amount of
coverage available under a policy even if there is some overlap in the
liability created by the insured individuals and the uninsured corporation.
If a corporation's liability is increased by uninsured parties beyond that of
the insured individuals, then that portion of the liability is the sole
obligation of the corporation. The court also held that allocation is not
available to the insurance carriers as an affirmative defense. The insurance
carriers have appealed.
Century.
Century Shopping Center Fund I ("Century Fund I"), which managed the Howell
Plaza Shopping Center, commenced an action in November 1988 in the Milwaukee
County Circuit Court, State of Wisconsin against a former subsidiary of the
company which had operated a supermarket at Howell Plaza. In June 1993, three
former tenants of the Howell Plaza Shopping Center filed another case in the
same court and in September 1993, the trustee in bankruptcy for Howell Plaza,
Inc. (the predecessor to Century Fund I and its successor as the subsidiary's
landlord) filed a third case. The allegations of these cases were very
similar to the allegations made in the Century Fund I case and the cases were
ultimately consolidated.
In November 1993, an amended complaint was filed alleging breach of contract,
tortious interference with contract, tortious interference to business,
defamation, attempted monopolization, conspiracy to monopolize, conspiracy to
restrain trade and monopolization. Plaintiffs alleged that a company operated
store was wrongfully closed at Howell Plaza and reopened at a nearby competing
shopping center. In March 1997, plaintiffs supplied the company with an
analysis of damages alleging actual damages, after trebling but excluding any
punitive damages, of approximately $18 million. In July 1997, the trial court
granted plaintiffs' motion for summary judgment with respect to their breach
of contract claim against Fleming (as to liability only, not as to damages).
In October 1998, the case was settled and the court entered a judgemnt
ordering Fleming's insurance company to pay the full amount of the settlement.
The company does not believe the matter will have a material adverse effect on
the company.
Tru Discount Foods.
Fleming brought suit on a note and an open account against its former
customer, Tru Discount Foods. The case was referred to arbitration but later
the court vacated its referral and restored the case to its docket. This
action was appealed by Fleming. In December 1997, the defendant amended its
counter claim against the company alleging fraud, overcharges for products and
violations of the Oklahoma Deceptive Trade Practices Act. Although Tru
Discount Foods has not quantified damages, it has made demand in the amount of
$8 million. In October 1998, the appellate court reversed the trial court's
vacation order and directed that the matter be sent again to arbitration.
Management is unable to predict the ultimate outcome of this matter. However,
an unfavorable outcome could have a material adverse effect on the company.
Don's United Super (and related cases).
On March 18, 1998 the company and two retired executives were named in a suit
filed in the United States District Court for the Western District of Missouri
by approximately 20 current and former customers of the company (Don's United
Super, et al. v. Fleming, et al.). Plaintiffs operate retail grocery stores
in the St. Joseph and Kansas City metropolitan areas. Six plaintiffs who were
parties to supply contracts containing arbitration clauses were subsequently
permitted to withdraw from the case.
Previously, two cases had been filed in the same court (R&D Foods, Inc. et al.
v. Fleming, et al. and Robandee United Super, Inc. et al. v. Fleming, et al.)
by 10 customers, some of whom are plaintiffs in the Don's case. The earlier
two cases, which principally seek an accounting of the company's expenditure
of certain joint advertising funds, have been consolidated. All causes of
action in these cases have been stayed pending the arbitration of the causes
of action relating to supply contracts containing arbitration clauses.
The Don's suit alleges product overcharges, breach of contract,
misrepresentation, fraud, and RICO violations and seeks recovery of actual,
punitive and treble damages and a declaration that certain contracts are
voidable at the option of the plaintiffs. Damages have not been quantified.
However, the time period during which the alleged overcharges took place
exceeds 25 years with respect to some plaintiffs, and the company anticipates
that the plaintiffs will allege substantial monetary damages.
In October 1998, a group of 14 retailers (ten of whom had been or are
currently plaintiffs in the Don's case and/or Robandee case whose claims were
sent to arbitration or stayed pending arbitration) filed a new action against
the company and two former officers, one of whom was a director, in the
Western District of Missouri (Coddington Enterprises, Inc. et al. v. Dean
Werries, et al.). The plaintiffs assert claims virtually identical to those
set forth in the Don's complaint, but have not quantified damages.
The company intends to vigorously defend its interests in these related cases.
Although management is currently unable to predict the ultimate outcome of
this litigation, based upon the plaintiffs' allegations, an unfavorable
outcome could have a material adverse effect on the company.
Storehouse Markets.
In October 1998, the company and one of its associates were named in a suit
filed in the United States District for the District of Utah by three current
and former customers of the company (Storehouse Markets, Inc., et al. v.
Fleming Companies, Inc., et al.). The plaintiffs' allege product overcharges,
fraudulent misrepresentation, fraudulent nondisclosure and concealment, breach
of contract, breach of duty of good faith and fair dealing and RICO violations
and seek recovery of actual, punitive and treble damages and class action
status. Damages have not been quantified. However, the company anticipates
that the plaintiffs will seek substantial monetary damages. The company
intends to vigorously defend its interests in this case but is currently
unable to predict the ultimate outcome. Based upon the plaintiffs'
allegations, an unfavorable outcome could have a material adverse effect on
the company.
Y2K.
The company utilizes numerous computer systems which were developed employing
six digit date structures (i.e., two digits each for the month, day and year).
Where date logic requires the year 2000 or beyond, such date structures may
produce inaccurate results. Management has implemented a program to comply
with year-2000 requirements on a system-by-system basis. Fleming's plan
includes extensive systems testing and is expected to be substantially
completed by mid-1999. Code for the company's largest and most compre-
hensive system, FOODS, has been completely remediated and bench
tested and is being reinstalled throughout the company for final testing.
Although the company is developing greater levels of confidence regarding its
internal systems, ultimate success must still be verified through extensive
testing. Failure to ensure that the company's computer systems are year-2000
compliant could have a material adverse effect on the company's operations.
Program costs to comply with year-2000 requirements are being expensed as
incurred. Total third party expenditures in 1997 through completion in 1999
are not expected to exceed $10 million, none of which is incremental. Through
the end of the third quarter of 1998, these third party expenditures totaled
over $5 million.
Other.
The company's facilities and operations are subject to various laws,
regulations and judicial and administrative orders concerning protection of
the environment and human health, including provisions regarding the
transportation, storage, distribution, disposal or discharge of certain
materials. In conformity with these provisions, the company has a
comprehensive program for testing, removal, replacement or repair of its
underground fuel storage tanks and for site remediation where necessary. The
company has established reserves that it believes will be sufficient to
satisfy the anticipated costs of all known remediation requirements.
The company and others have been designated by the U.S. Environmental
Protection Agency ("EPA") and by similar state agencies as potentially
responsible parties under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") or similar state laws, as
applicable, with respect to EPA-designated Superfund sites. While liability
under CERCLA for remediation at such sites is generally joint and several with
other responsible parties, the company believes that, to the extent it is
ultimately determined to be liable for the expense of remediation at any site,
such liability will not result in a material adverse effect on its
consolidated financial position or results of operations. The company is
committed to maintaining the environment and protecting natural resources and
human health and to achieving full compliance with all applicable laws,
regulations and orders.
The company is a party to various other litigation and contingent loss
situations arising in the ordinary course of its business including: disputes
with customers and former customers; disputes with owners and former owners of
financially troubled or failed customers; disputes with employees and former
employees regarding labor conditions, wages, workers' compensation matters and
alleged discriminatory practices; disputes with insurance carriers; tax
assessments and other matters, some of which are for substantial amounts.
However, the company does not believe any such action will result in a
material adverse effect on the company.
7. Certain indebtedness is guaranteed by all direct and indirect subsidiaries
of the company (except for certain inconsequential subsidiaries), all of which
are wholly owned. The guarantees are joint and several, full, complete and
unconditional. There are no restrictions on the ability of the subsidiary
guarantors to transfer funds to the company in the form of cash dividends,
loans or advances. Full financial statements for the subsidiary guarantors
are not presented herein because management does not believe such information
would be material.
The following summarized financial information, which includes allocations of
material corporate-related expenses, for the combined subsidiary guarantors
may not necessarily be indicative of the results of operations or financial
position had the subsidiary guarantors been operated as independent entities.
<TABLE>
<CAPTION>
Oct. 3, Oct. 4,
(In millions) 1998 1997
-----------------------------------------------------
<S> <C> <C>
Current assets $34 $23
Noncurrent assets $70 $53
Current liabilities $12 $16
Noncurrent liabilities $ 7 $ 7
40 weeks ended
Oct. 3, Oct. 4,
(In millions) 1998 1997
-----------------------------------------------------
Net sales $269 $256
Costs and expenses $277 $256
Net earnings (loss) $ (4) -
</TABLE>
8. The accompanying operating statements include the following:
<TABLE>
<CAPTION>
12 weeks
--------
(In thousands) 1998 1997
------------------------------------------------------
<S> <C> <C>
Depreciation and
amortization (includes
amortized costs in
interest expense) $42,509 $41,113
Amortized costs in
interest expense $1,083 $1,668
40 weeks
--------
(In thousands) 1998 1997
--------------------------------------------------------
Depreciation and
amortization (includes
amortized costs in
interest expense) $140,735 $139,738
Amortized costs in
interest expense $4,058 $7,165
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition And
Results of Operations
Results of Operations
Management believes that the company's ultimate success will depend on its
ability to expand profitable operations while continuing to cut costs. The
company has revised its marketing plans and is taking other steps to reverse
sales declines. These initiatives include increased marketing emphasis and
expanded offerings of Fleming Retail Services, streamlining and expanding
Fleming Brands, developing and marketing additional foodservice products and
growing retail food operations through remodels, new store development and
selective acquisitions. While the company believes considerable progress has
been made to date, no assurance can be given that the company will be
successful in continuing to cut costs, in reversing sales declines or in
increasing higher margin activities.
Set forth in the following table is information for the 12-weeks ended October
3, 1998 and October 4, 1997 and the 40-weeks ended October 3, 1998 and October
4, 1997 regarding components of the company's earnings expressed as a
percentage of net sales.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
October 3, October 4,
For the 12-weeks ended 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Net sales 100.00 % 100.00 %
Gross margin 9.59 9.33
Less:
Selling and administrative 8.64 7.90
Interest expense 1.09 1.13
Interest income (.25) (.32)
Equity investment results .08 .11
Litigation charge .06 -
- -----------------------------------------------------------------------------
Total expenses 9.62 8.82
- -----------------------------------------------------------------------------
Earnings (loss) before taxes (.03) .51
Taxes on income .04 .23
- -----------------------------------------------------------------------------
Earnings (loss) before extraordinary charge (.07) .28
Extraordinary charge from early retirement
of debt (net of taxes) - .39
- -----------------------------------------------------------------------------
Net loss (.07)% (.11)%
- -----------------------------------------------------------------------------
October 3, October 4,
For the 40-weeks ended 1998 1997
- -----------------------------------------------------------------------------
Net sales 100.00 % 100.00 %
Gross margin 9.79 9.23
Less:
Selling and administrative 8.34 7.76
Interest expense 1.08 1.06
Interest income (.24) (.31)
Equity investment results .08 .09
Litigation charge .06 .16
- -----------------------------------------------------------------------------
Total expenses 9.32 8.76
- -----------------------------------------------------------------------------
Earnings before taxes .47 .47
Taxes on income .24 .24
- -----------------------------------------------------------------------------
Earnings before extraordinary charge .23 .23
Extraordinary charge from early retirement
of debt (net of taxes) - .11
- -----------------------------------------------------------------------------
Net earnings .23 % .12 %
- -----------------------------------------------------------------------------
</TABLE>
Net sales.
Sales for the third quarter (12 weeks) of 1998 decreased by $14 million, or
.4%, to $3.4 billion from the same period in 1997. Year to date, sales
decreased by $244 million, or 2.1%, to $11.5 billion from the same period in
1997. Several factors, none of which are individually material, adversely
affected net sales including: lower sales to continuing customers due to
competitive pressures, lower sales at certain company-owned retail stores and
the closing or sale of certain other company-owned retail stores, offset in
part by new business added primarily in the second quarter. Although the
company expects to continue to add new business, the loss of sales for the
near term from Furr's (in the fourth quarter of 1998) and Randall's (by August
of 1999) move to self-distribution will result in sales comparisons to prior
periods being negative for some time.
Retail sales generated by the same stores for the third quarter and year-to-
date periods in 1998 compared to the same periods in 1997 decreased 2.1% and
3.9%, respectively. The decrease was attributable, in part, to new stores
opened by competitors in some markets and aggressive marketing initiatives by
certain competitors. Although the same store comparison is a negative 2.1% in
the third quarter of 1998, it is an improvement from the negative 5.2%
reported in the third quarter of 1997.
Fleming measures inflation using data derived from the average cost of a ton
of product sold by the company. Food price inflation year-to-date was 1.8%
compared to 1.4% for the same period in 1997.
Gross margin.
Gross margin for the third quarter of 1998 increased by $8 million, or 2%, to
$330 million from $322 million for the same period in 1997, and also increased
as a percentage of net sales to 9.59% from 9.33% for the same period in 1997.
Year to date, gross margin increased by $41 million, or 4%, to $1.13 billion
from $1.09 billion for the same period in 1997, and also increased as a
percentage of net sales to 9.79% from 9.23% for the same period in 1997. The
increase was due, in part, to an overall increase in the retail food segment,
which has the better margins of the two segments, and the unfavorable impact
of gains from dispositions that occurred in 1997, but not in 1998. Year to
date, gross margin also reflects favorable adjustments for closed stores due
to better-than-expected lease buyouts. In addition, product handling expenses,
consisting of warehouse, transportation and building expenses, were lower as a
percentage of net sales in 1998 compared to 1997, reflecting productivity
improvements.
Selling and administrative expenses.
Selling and administrative expenses for the third quarter of 1998 increased by
$24 million, or 9%, to $297 million from $273 million for the same period in
1997 and increased as a percentage of net sales to 8.64% for 1998 from 7.90%
in 1997. Year to date, selling and administrative expenses increased by $48
million, or 5%, to $959 million from $911 million in 1997 and increased as a
percentage of net sales to 8.34% for 1998 from 7.76% in 1997. The increase
was partly due to increased operating expense in the retail food segment.
Selling expense was higher than the previous year as the company continues to
work at reversing recent sales declines. Other non-recurring costs reflected
in the third quarter of 1998 were severance expense related to executive
retirements and impairment costs related to the sale of the Portland division.
A charge for $4 million related to the sale of the El Paso warehouse to Furr's
was recorded in the first quarter of 1998. The sale closed on October 19,
1998 and the final accounting will be reflected in the fourth quarter. A $3.7
million facility consolidation reversal was also recorded during the first
quarter.
As more fully described in the 1997 Annual Report on Form 10-K, the company
has a significant amount of credit extended to its customers through various
methods. These methods include customary and extended credit terms for
inventory purchases and equity investments in and secured and unsecured loans
to certain customers. Secured loans generally have terms up to ten years.
Credit loss expense is included in selling and administrative expenses and was
$4 million for the third quarter of 1998 which was unchanged from the
comparable period in 1997. Year to date, credit loss expense was $12 million
in 1998 compared to $15 million in 1997. Credit loss expense has consistently
improved over the last few years due to tighter credit practices and reduced
emphasis on credit extensions to and investments in customers. Although the
company plans to continue these ongoing credit practices, it is not expected
that the credit loss expense will remain at current low levels.
Interest expense.
Interest expense was $37 million for the third quarter of 1998 compared to $39
million in the same period in 1997. Year-to-date interest expense of $124
million was unchanged from the same period in 1997. Interest expense was lower
for the quarter due to lower average interest rates. Year-to-date interest
expense included a reduction of interest accruals relating to the favorable
settlement of tax assessments. Without this reduction, interest expense would
have been $2 million higher due primarily to higher average balances.
The company's derivative agreements have consisted of simple "floating-to-
fixed rate" interest rate caps and swaps. For the third quarter of 1998,
interest rate hedge agreements contributed $0.8 million of net interest
expense compared to $1.4 million in the same period of 1997. Year to date,
interest rate hedge agreements contributed $3.2 million of net interest
expense compared to $5.9 million of net interest expense in 1997. In 1998,
hedge agreements covered a lower amount of floating rate debt versus 1997.
Interest income.
Interest income for the third quarter of 1998 decreased by approximately $2
million to $9 million from $11 million for the same period in 1997. Year to
date, interest income decreased by $8 million to $28 million from $36 million
in 1997. The decrease is partly due to the sale of notes receivable in the
fourth quarter of 1997 when the company sold $29 million of notes receivable
with limited recourse and a reduced amount of notes receivable funded. The
decrease is also due to a lower balance of investments in direct financing
leases. These items reduced the amount available to produce interest income.
Equity investment results.
The company's portion of operating losses from equity investments for the
third quarter of 1998 decreased by $1 million to $3 million from $4 million in
1997. Year to date, operating losses from equity investments decreased by
approximately $1 million to $10 million from $11 million in 1997. The
reduction in losses is due to improved results of operations in certain of the
underlying investments.
Litigation charge.
In October 1997, the company began paying Furr's $800,000 per month as part of
a settlement agreement. In 1998, the $2 million charge in the third quarter
and the $7 million charge year-to-date represent this payment. The payments
ceased upon the closing of the sale of the El Paso product supply center to
Furr's on October 19, 1998. In the first quarter of 1997, the company
expensed $19.2 million in settlement of the David's litigation. See Note 6 in
the notes to the consolidated condensed financial statements.
Taxes on income.
The effective tax rate for 1998 is presently estimated at 51.0% which was used
to calculate the 1998 year-to-date income tax amount. The effective tax rate
was estimated at 47.5% at the end of the second quarter. The tax expense in
the third quarter of 1998 includes additional expense to adjust for the first
and second quarter's lower rate. The increase in the estimated year-to-date
rates from 47.5% to 51.0% was due to lower earnings expectations in 1998 with
basically no change in nondeductible dollar amounts. The year-to-date tax
rate used for 1997 was 58.0%. Like the 1998 third quarter, the third quarter
of 1997 included adjustments for the first two quarters of 1997 to get to the
year-to-date rate of 58.0%. The tax rate was estimated at 53.0% at the end of
the second quarter of 1997. The lower rates in 1998 compared to 1997 were
primarily due to the favorable settlement of a tax assessment in the second
quarter and anticipated higher earnings in 1998 compared to 1997 with
basically no change in nondeductible dollar amounts. The presentation of the
tax in 1997 is split by reflecting a tax benefit at the statutory rate of 40%
for the extraordinary charge and reflecting the balance of the tax amount on
the taxes on income line.
Litigation and contingencies.
From time to time the company faces litigation or other contingent loss
situations resulting from owning and operating its assets, conducting its
business or complying (or allegedly failing to comply) with federal, state and
local laws, rules and regulations which may subject the company to material
contingent liabilities. In accordance with applicable accounting standards,
the company records as a liability amounts reflecting such exposure when a
material loss is deemed by management to be both "probable" and "quantifiable"
or "reasonably estimable." Furthermore, the company discloses material loss
contingencies in the notes to its financial statements when the likelihood of
a material loss has been determined to be greater than "remote" but less than
"probable." Such contingent matters are discussed in Note 6 in the notes to
the consolidated condensed financial statements. An adverse outcome
experienced in one or more of such matters, or an increase in the likelihood
of such an outcome, could have a material adverse effect on the company. Also
see "Legal Proceedings."
Fleming has numerous computer systems which were developed employing six digit
date structures (i.e., two digits each for month, day and year). Where date
logic requires the year 2000 or beyond, such date structures may produce
inaccurate results. Management has implemented a program to comply with year-
2000 requirements on a system-by-system basis including both information
technology (IT) and non-IT systems, e.g., microcontrollers. Fleming's plan
includes extensive systems testing and is expected to be substantially
completed by mid-1999. Code for the company's largest and most comprehensive
system, FOODS, has been completely remediated and bench tested and is being
reinstalled throughout the company for final testing. Although the company
believes contingency plans will not be necessary based on progress to date,
contingency plans have been developed for each critical system. The content
of the contingency plans varies depending on the system and the assessed
probability of failure and such plans are modified periodically based on
remediation and testing. The plans are comprised of activities such as
reallocating internal resources, obtaining additional outside resources,
implementing temporary manual processes or temporarily rolling back the
internal clocks. Although the company is developing greater levels of
confidence regarding its internal systems, ultimate success must still be
verified through extensive testing. Failure to ensure that the company's
computer systems are year-2000 compliant could have a material adverse effect
on the company's operations.
The company is also assessing the status of its vendors' and customers'
year-2000 readiness through meetings, discussions, notices and questionnaires.
Vendor and customer responses and feedback are encouraging, but not
conclusive. Failure of the company's suppliers or its customers to become
year-2000 compliant might also have a material adverse impact on the company's
operations.
Program costs to comply with year-2000 requirements are being expensed as
incurred. Total third party expenditures in 1997 through completion in 1999
are not expected to exceed $10 million, none of which is incremental. Through
the end of the third quarter of 1998, these third party expenditures totaled
over $5 million. To compensate for the dilutive effect on results of
operations, the company has delayed other non-critical development and support
initiatives. Accordingly, the company expects that annual information
technology expenses will not differ significantly from prior years.
Other.
Several factors negatively affecting earnings in the first 40-weeks of 1998
are likely to continue for the near term. Management believes that these
factors include lower sales, operating losses in certain company-owned retail
stores and legal fees and expenses related to litigation.
The company is continuing the process of strategic planning with the
assistance of an outside consulting firm to identify the best strategies for
the future. The basic economics of the wholesaling operations are being
looked at on a location-by-location basis. This includes examining the
current market position of each product supply center and its potential to
grow relative to the competitive challenges in its market. Similar overall
assessments are being done to the retail operations. Additionally, the total
overhead cost structure, both at corporate and in the field, are being looked
at to reduce expenses and bring them more in line with sales. The strategic
planning process is expected to be finalized and submitted to the Board of
Directors for consideration before the end of 1998. If the Board approves the
plan, future cash flows of certain business units are likely to be altered
such that long-lived asset impairments or dispositions are required.
Management is unable to predict the ultimate outcome of the planning process
or any related impairments or dispositions, although such impairments or
dispositions could be material.
Segment information.
Sales and operating earnings for the company's food distribution and retail
food segments are presented below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
For the 12 weeks ended
Oct. 3, Oct. 4,
($ in millions) 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
Sales:
Food distribution $2,631 $2,678
Retail food 808 775
- -----------------------------------------------------------------------------
Total sales $3,439 $3,453
- -----------------------------------------------------------------------------
Operating earnings:
Food distribution $50 $64
Retail food 11 11
Corporate (29) (26)
- -----------------------------------------------------------------------------
Total operating earnings $32 $49
- -----------------------------------------------------------------------------
For the 40 weeks ended
Oct. 3, Oct. 4,
($ in millions) 1998 1997
- -----------------------------------------------------------------------------
Sales:
Food distribution $ 8,805 $ 9,127
Retail food 2,707 2,629
- -----------------------------------------------------------------------------
Total sales $11,512 $11,756
- -----------------------------------------------------------------------------
Operating earnings:
Food distribution $204 $215
Retail food 51 60
Corporate (88) (101)
- -----------------------------------------------------------------------------
Total operating earnings $167 $174
- -----------------------------------------------------------------------------
</TABLE>
Operating earnings for industry segments consist of net sales less related
operating expenses. Operating expenses exclude interest expense, interest
income, equity investment results, litigation charge and taxes on income.
General corporate expenses are not allocated to food distribution and retail
food segments. The transfer pricing between segments is at cost. Operating
earnings for 1997 have been restated as of year-end 1997 due to adopting SFAS
No. 131 - Disclosures about Segments of an Enterprise and Related Information.
Liquidity and Capital Resources
Set forth below is certain information regarding the company's capital
structure at the end of the third quarter of 1998 and at the end of fiscal
1997:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Capital Structure (In millions) October 3, 1998 December 27, 1997
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-term debt $1,172 43.6% $1,175 44.3%
Capital lease obligations 386 14.4 388 14.6
- -----------------------------------------------------------------------------
Total debt 1,558 58.0 1,563 58.9
Shareholders' equity 1,126 42.0 1,090 41.1
- -----------------------------------------------------------------------------
Total capital $2,684 100.0% $2,653 100.0%
- -----------------------------------------------------------------------------
</TABLE>
Note: The above table includes current maturities of long-term debt and
current obligations under capital leases.
The total of net cash provided from operations plus net collections on notes
receivable plus cash proceeds from the sale of assets and investments plus a
reduction in cash balances exceeded net cash required for investing activities
and scheduled payments on funded debt and capital leases. As a consequence,
long-term debt was $3 million lower at the end of the third quarter of 1998
compared to year-end 1997. Capital lease obligations also decreased $2
million in 1998 because repayments exceeded leases added for new retail
stores.
The debt-to-capital ratio at third quarter-end 1998 was 58.0%, down from 58.9%
at year-end 1997. The company's long-term target ratio is between 50% and 55%.
Operating activities generated $127 million of net cash flows for the first
three quarters of 1998 compared to $82 million in the same period of 1997. The
difference was principally due to changes in working capital and higher
deferred taxes, offset by lower cash earnings. Working capital was
$354 million at the end of the third quarter of 1998, an increase from
$340 million at year-end 1997. The current ratio of 1.29 to 1 was unchanged
from year-end 1997.
Capital expenditures were $146 million for the first three quarters in 1998
compared to $82 million for the same period in 1997. Total capital
expenditures for 1998 (excluding acquisitions, if any) are expected to be
approximately $200 million to $210 million. The company intends to increase
its retail operations by increasing investments in stores through acquisition,
construction and remodeling in the company's existing retail chains.
The company's principal sources of liquidity for the first three quarters of
1998 have been cash flows from operating activities, the sale of certain
assets and investments and, as needed, borrowings under its credit facility.
The company's principal sources of capital, excluding shareholders' equity,
are banks and other lenders and lessors.
The company's credit agreement and the indentures under which other company
debt instruments were issued contain customary covenants associated with
similar facilities. The credit agreement currently contains the following more
significant financial covenants: maintenance of a fixed charge coverage ratio
of at least 1.7 to 1, based on earnings before interest, taxes, depreciation
and amortization and net rent expense; maintenance of a ratio of
inventory-plus-accounts receivable to funded bank debt (including letters of
credit) of at least 1.4 to 1; and a limitation on restricted payments,
including dividends. Covenants contained in the company's indentures under
which other company debt instruments were issued are generally less
restrictive than those of the credit agreement. The company is in compliance
with all financial covenants under the credit agreement and its indentures.
In addition, the credit facility may be terminated in the event of a defined
change of control. Under the company's indentures, noteholders may require the
company to repurchase notes in the event of a defined change of control
coupled with a defined decline in credit ratings.
At the end of the third quarter 1998, borrowings under the credit facility
totaled $224 million in term loans and $75 million of revolver borrowings, and
$80 million of letters of credit had been issued. Letters of credit are needed
primarily for insurance reserves associated with the company's normal risk
management activities. To the extent that any of these letters of credit would
be drawn, payments would be financed by borrowings under the credit agreement.
At the end of the third quarter 1998, the company would have been allowed to
borrow an additional $445 million under the revolving credit facility
contained in the credit agreement based on the actual borrowings and letters
of credit outstanding. Under the company's most restrictive borrowing
covenant, which is the fixed charges coverage ratio contained in the credit
agreement, $45 million of additional fixed charges could have been incurred.
The average interest rate for total debt (including capital lease obligations)
before the effect of interest rate hedges was 10.1% for the third quarter of
1998, versus 10.6% for the same period in 1997. Including the effect of
interest rate hedges, the average interest rate of debt was 10.4% and 10.8%
for the third quarter of 1998 and the same period in 1997, respectively.
At the end of the third quarter of 1998, the company employed interest rate
swaps covering a total of $250 million of floating rate indebtedness with
three counterparty banks possessing investment grade credit ratings. The swaps
have an average fixed interest rate of 7.22% and an average remaining term of
1.6 years. Net interest payments made or received under interest rate swaps
are included in interest expense. See "-Results of Operations-Interest
Expense" above.
Dividend payments in the third quarter of 1998 were $.02 per share. The credit
agreement and the indentures for the $500 million of senior subordinated notes
limit restricted payments, including dividends, to $70 million at the end of
the third quarter of 1998 based on a formula tied to net earnings and equity
issuances.
For the foreseeable future, cash flows from operating activities and the
company's ability to borrow under its credit agreement are expected to be the
company's principal sources of liquidity and capital. In addition, lease
financing may be employed for new stores and certain equipment. Management
believes these sources will be adequate to meet working capital needs, capital
expenditures (including expenditures for acquisitions, if any) and other
capital needs for the next 12 months.
Forward-Looking Information
This report includes statements that (a) predict or forecast future events or
results, (b) depend on future events for their accuracy, or (c) embody
assumptions which may prove to have been inaccurate, including the company's
ability to reverse sales declines, cut costs and improve earnings; the
company's assessment of the probability and materiality of losses associated
with litigation and other contingent liabilities; the company's ability to
develop and implement year-2000 systems solutions; the company's ability to
expand portions of its business or enter new facets of its business which it
believes will be more profitable than its food distribution business; and the
company's expectations regarding the adequacy of capital and liquidity. These
forward-looking statements and the company's business and prospects are
subject to a number of factors which could cause actual results to differ
materially including the: finalization and implementation of the company's
strategic business plan; adverse effects of the changing industry environment
and increased competition; continuing sales declines and loss of customers;
exposure to litigation and other contingent losses; failure of the company to
achieve necessary cost savings; failure of the company, its vendors or its
customers to develop and implement year-2000 system solutions; and the
negative effects of the company's substantial indebtedness and the limitations
imposed by restrictive covenants contained in the company's debt instruments.
These and other factors are described in the company's periodic reports
available from the Securities and Exchange Commission including the company's
1997 annual report on Form 10-K and the company's 1998 quarterly reports on
Form 10-Q.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Set forth below is information regarding litigation which became reportable or
as to which a material development has occurred since the date of the
company's Quarterly Report on Form 10-Q for the fiscal quarter ended October
3, 1998:
(1) Century. (See earlier discussions in the 1997 Form 10-K). In October
1998, the case was settled without any material effect on the company.
(2) Tobacco Cases. (See earlier discussions in the 1997 Form 10-K and in the
first and second quarter 1998 Form 10-Q). Four cases have been dismissed
(Joseph Aezen, Najiyya El-Haddi, Carla Boyce and Florence Ferguson) and twelve
cases have been dismissed without prejudice (Ella Daly, Janet Anes, Kym
Glasser, Welton Lee Upshur, Donald G. Teti, George Thompson, Ronald Folkman,
Sandy and Howard Greenfield, Francis Ryziw, Charles Simmons Sr. and Patricia
Simmons, Joseph Pennetti and Mable A. Tiscavitch) in the Court of Common
Pleas, Philadelphia, Pennsylvania; one case has been dismissed without
prejudice in the Court of Common Pleas, Dauphin County, Pennsylvania (Doyle
Smith); and one case has been dismissed in East Baton Rouge Parish, Louisiana
(Kathy Landry). Additionally, one new case (John H. Harley v. The American
Tobacco Company) has been filed in the Court of Common Pleas, Philadelphia
County, Pennsylvania. The new case is being defended, and the company is
being indemnified, by a substantial defendant.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Page
Number Description Number
- ------- ----------- ------
4.8 First Amendment (dated October 5, 1998) to Credit Agreement
dated July 25, 1997
10.30* Form of Amended and Restated Agreement for Fleming
Companies, Inc. Executive Past Service Benefit Plan
10.31* Form of Amended and Restated Agreement for Fleming
Companies, Inc. Executive Deferred Compensation Plan
10.32* Amended and Restated Supplemental Retirement Income
Agreement between William J. Dowd and Fleming Companies,
Inc. dated August 18, 1998
10.33* Form of Amended and Restated Restricted Stock Award
Agreement under Fleming Companies, Inc. 1996 Stock
Incentive Plan
10.34* Form of Amended and Restated Non-Qualified Stock Option
Agreement under the Fleming Companies, Inc. 1996 Stock
Incentive Plan
10.35* Amendment No. 1 to Fleming Companies, Inc. 1990 Stock
Incentive Plan
10.36* First Amendment to Economic Value Added Incentive Bonus
Plan for Fleming Companies, Inc. and Its Subsidiaries
10.37* Amendment No. 2 to Economic Value Added Incentive Bonus
Plan for Fleming Companies, Inc. and Its Subsidiaries
10.38* Form of Amendment to Certain Employment Agreements
10.39* Form of First Amendment to Restricted Stock Award
Agreement for Fleming Companies, Inc. 1996 Stock
Incentive Plan
10.40 Settlement and Severance Agreement by and between Fleming
Companies, Inc. and Robert E. Stauth dated as of August
28, 1998
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
__________
* Management contract, compensatory plan or arrangement.
(b) Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FLEMING COMPANIES, INC.
(Registrant)
Date: November 5, 1998 KEVIN TWOMEY
Kevin Twomey
Vice President-Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Method of Filing
- ---------- ---------------------------------------------- ----------------
4.8 First Amendment (dated October 5, 1998) to the Filed
Credit Agreement dated July 25, 1997 herewith
electronically
10.30* Form of Amended and Restated Agreement for Filed
Fleming Companies, Inc. Executive Past Service herewith
Benefit Plan electronically
10.31* Form of Amended and Restated Agreement for Filed
Fleming Companies, Inc. Executive Deferred herewith
Compensation Plan electronically
10.32* Amended and Restated Supplemental Retirement Filed
Income Agreement between William J. Dowd and herewith
Fleming Companies, Inc. dated August 18, 1998 electronically
10.33* Form of Amended and Restated Restricted Stock Filed
Award Agreement under Fleming Companies, Inc. herewith
1996 Stock Incentive Plan electronically
10.34* Form of Amended and Restated Non-Qualified Stock Filed
Option Agreement under the Fleming Companies, herewith
Inc. 1996 Stock Incentive Plan electronically
10.35* Amendment No. 1 to Fleming Companies, Inc. 1990 Filed
Stock Incentive Plan herewith
electronically
10.36* First Amendment to Economic Value Added Filed
Incentive Bonus Plan for Fleming Companies, Inc. herewith
and Its Subsidiaries electronically
10.37* Amendment No. 2 to Economic Value Added Filed
Incentive Bonus Plan for Fleming Companies, Inc. herewith
and Its Subsidiaries electronically
10.38* Form of Amendment to Certain Employment Agreements Filed
herewith
electronically
10.39* Form of First Amendment to Restricted Stock Filed
Award Agreement for Fleming Companies, Inc. 1996 herewith
Stock Incentive Plan
10.40 Settlement and Severance Agreement by and Filed
between Fleming Companies, Inc. and Robert E. herewith
Stauth dated as of August 28, 1998 electronically
12 Computation of Ratio of Earnings to Fixed Filed
Charges herewith
electronically
27 Financial Data Schedule Filed
herewith
electronically
_________
* Management contract, compensatory plan or arrangement.
FIRST AMENDMENT dated as of October 5,
1998 (this "Amendment"), among FLEMING
COMPANIES, INC. (the "Borrower"), the LENDERS
party hereto, BANCAMERICA SECURITIES, INC., as
Syndication Agent, SOCIETE GENERALE, as
Documentation Agent, and THE CHASE MANHATTAN
BANK, as Administrative Agent.
A. Reference is made to the Credit Agreement dated
as of July 25, 1997 (the "Credit Agreement") among the
Borrower, the Lenders, the Administrative Agent, the
Syndication Agent and the Documentation Agent. Capitalized
terms used but not otherwise defined herein have the meanings
assigned to them in the Credit Agreement.
B. The Borrower has requested that the Lenders
amend certain provisions of the Credit Agreement. The Lenders
are willing to do so, subject to the terms and conditions of
this Amendment.
Accordingly, in consideration of the mutual
agreements herein contained and other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1.01. Amendment to Section 2.11(b). Section
2.11(b) of the Credit Agreement is hereby modified by:
(a) deleting from clause (i) thereof the words "and
is permitted to be prepaid, repurchased or redeemed under
Section 6.03(b)"; and
(b) replacing the period at the end of the first
sentence thereof with the following:
"; provided further, that, notwithstanding the
foregoing proviso, in the event that (1) any Net
Proceeds are received by or on behalf of the
Borrower or any Subsidiary in respect of any Asset
Disposition and (2) the property disposed of in
such Asset Disposition, together with all other
property sold, leased, transferred or disposed of
(other than in the ordinary course of business and
other than as permitted by last sentence of Section
6.02) during the same fiscal year of the Borrower,
contributed more than 20% of EBITDAR for any one of
the immediately preceding three fiscal years of the
Borrower, the Borrower shall prepay Term Borrowings
(or, after the Term Borrowings have been repaid or
prepaid in full, either prepay Revolving Loans or
prepay, repurchase, retire or redeem the 10 5/8%
Senior Notes) in an aggregate amount equal to 100%
of the Net Proceeds of such Asset Disposition."
SECTION 1.02. Amendment to Section 6.02. Section
6.02 of the Credit Agreement is hereby modified by replacing
the reference to "20% of Consolidated Net Income" with a
reference to "30% of EBITDAR".
SECTION 1.03. Amendment to Section 6.03(b).
Section 6.03(b) of the Credit Agreement is hereby modified by
replacing clause (iv) thereof with the following:
"(iv) Indebtedness referred to in clause (A), (B)
or (C) of Section 2.11(b) or Indebtedness of the
character described in clauses (vi), (viii), (ix), (x),
(xi), (xii), (xiii) and (xiv) of Section 6.03(a) that is
not Later Maturing Indebtedness;"
SECTION 2. Credit Agreement. Except as
specifically stated herein, the Credit Agreement shall
continue in full force and effect in accordance with the
provisions thereof. As used therein, the terms "Agreement",
"herein", "hereunder", "hereto", "hereof" and words of similar
import shall, unless the context otherwise requires, refer to
the Credit Agreement as modified hereby.
SECTION 3. APPLICABLE LAW. THIS AMENDMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 4. Counterparts. This Amendment may be
executed in any number of counterparts, each of which shall be
an original but all of which, when taken together, shall
constitute but one instrument. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy
shall be effective as delivery of a manually executed
counterpart of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed by their respective
authorized officers as of the date first above written.
FLEMING COMPANIES, INC.
by
JOHN M. THOMPSON
Name: John M. Thompson
Title: Vice President &
Treasurer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
by
BARRY K. BERGMAN
Name: Barry K. Bergman
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
by
THOMAS BARNETT
Name: Thomas Barnett
Title: Managing Director
BANK OF HAWAII,
by
BRENDA TESTERMAN
Name: Brenda Testerman
Title: Vice President
BANK OF MONTREAL,
by
L.A. DURNING
Name: L.A. Durning
Title: Portfolio Manager
BANK OF SCOTLAND,
by
JANET TAFFE
Name: Janet Taffe
Title: Assistant Vice President
BEAR STEARNS INVESTMENT
PRODUCTS INC.,
by
HARRY ROSENBERG
Name: Harry Rosenberg
Title: Authorized Signatory
COMERICA BANK,
by
REGINALD M.
GOLDSMITH, III
Name: Reginald M. Goldsmith, III
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
by
ROBERT IVOSEVICH
Name: Robert Ivosevich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD.,
by
MASAAKI ISHIKURA
Name: Masaaki Ishikura
Title: Vice President
FIRST HAWAIIAN BANK,
by
CHARLES L. JENKINS
Name: Charles L. Jenkins
Title: Vice President and
Manager
THE FUJI BANK, LIMITED,
by
TEIJI TERAMOTO
Name: Teiji Teramoto
Title: Vice President &
Manager
IBJ SCHRODER BANK & TRUST
COMPANY,
by
CHARLES B. FEARS
Name: Charles B. Fears
Title: Director
BANK ONE, OKLAHOMA, NA,
by
MARK C. DEMOS
Name: Mark C. Demos
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.,
by
SADAO MURAOKA
Name: Sadao Muraoka
Title: Head of Southwest Region
MANUFACTURERS AND TRADERS
TRUST COMPANY,
by
R. BUFORD SEARS
Name: R. Buford Sears
Title: Administrative Vice President
THE MITSUBISHI TRUST AND BANKING CORPORATION,
CHICAGO BRANCH,
by
NOBUO TOMINAGA
Name: Nobuo Tominaga
Title: Chief Manager
NATEXIS BANQUE BFCE,
by
MARK A. HARRINGTON
Name: Mark A. Harrington
Title: Senior Vice President and
Regional Manager
by
PAUL H. DIOURI
Name: Paul H. Diouri
Title: Assistant Treasurer
NATIONAL BANK OF CANADA,
by
DOUG CLARK
Name: Doug Clark
Title: Vice President
by
RANDALL K. WILHOIT
Name: Randall K. Wilhoit
Title: Vice President
NATIONAL CITY BANK, KENTUCKY,
by
TODD ETHINGTON
Name: Todd Ethington
Title: Vice President
PARIBAS,
by
Name:
Title:
THE SANWA BANK LIMITED,
by
Name:
Title:
SENIOR DEBT PORTFOLIO,
by
Name:
Title:
SOCIETE GENERALE, SOUTHWEST AGENCY,
by
RICHARD M. LEWIS
Name: Richard M. Lewis
Title: Director
SUMITOMO BANK OF CALIFORNIA,
by
SHUJI ITO
Name: Shuji Ito
Title: Vice President
THE SUMITOMO BANK, LIMITED,
by
Name:
Title:
THE SUMITOMO TRUST AND BANKING
CO., LTD., NEW YORK BRANCH,
by
STEPHEN STRATICO
Name: Stephen Stratico
Title: Vice President
SUMMIT BANK,
by
BRUCE A. GRAY
Name: Bruce A. Gray
Title: Vice President
TRANSAMERICA BUSINESS CREDIT
CORPORATION,
by
PERRY VAVOULES
Name: Perry Vavoules
Title: Senior Vice President
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST,
by
JEFFREY W. MAILLET
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
VAN KAMPEN CLO I LIMITED,
By: Van Kampen American
Capital Management, Inc.
As Collateral Manager
by
JEFFREY W. MAILLET
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
AMENDED AND RESTATED
AGREEMENT FOR FLEMING COMPANIES, INC.
EXECUTIVE PAST SERVICE BENEFIT PLAN
THIS AMENDED AND RESTATED AGREEMENT FOR FLEMING
COMPANIES, INC. EXECUTIVE PAST SERVICE BENEFIT PLAN is made as of
the 18th day of August, 1998 by and between __________, an individ-
ual (herein referred to as the "Participant") and FLEMING
COMPANIES, INC. (the "Company") with respect to the following:
WHEREAS, the Company has adopted that certain non-qualified
deferred compensation plan known as "Fleming Companies,
Inc. Executive Past Service Benefit Plan" (the "Plan"); and
WHEREAS, the Plan was established by the Company for the
purpose of providing supplemental retirement income under a
nonqualified plan of deferred compensation for a select group of
key management Associates of the Company; and
WHEREAS, the Participant was formerly a participant in
the Amended and Restated Supplemental Retirement Income Plan of
Fleming Companies, Inc. and Its Subsidiaries (the "Prior Plan")
which was terminated as to the Participant effective November 1,
1997; and
WHEREAS, at the time of the termination of the Prior Plan
the Participant had not accrued any benefit nor was he vested in
any rights under the Prior Plan; and
WHEREAS, the Company in recognition of the Participant's
past and future services with the Company selected the Participant
for participation in the Plan by establishing for him a Past
Service Benefit as provided in that certain Agreement for Fleming
Companies, Inc. Executive Past Service Benefit Plan (the "Original
Agreement") which will be paid following his termination of
employment in accordance with the terms of the Plan; and
WHEREAS, the Company and the Participant desire to amend
the Original Agreement by execution of this Amended and Restated
Agreement for Fleming Companies, Inc. Executive Past Service
Benefit Plan (the "Agreement") which shall evidence the
Participant's participation in the Plan and his agreement to be
bound by the terms and provisions of the Plan and this Agreement
and shall serve as an amendment, restatement and continuation of
the Original Agreement as amended by this Agreement.
NOW, THEREFORE, in consideration of mutual covenants
hereinafter contained, the parties hereto agree as follows. All
capitalized words used in this Agreement shall have the same
meaning ascribed to such terms in the Plan unless specifically
denoted otherwise.
1. The Plan and the Amount of Past Service Benefit. A
copy of the Plan is attached hereto as Exhibit "A" and is incorpo-
rated by reference herein and made a part hereof for all purposes,
and when taken with this Agreement shall govern the Participant's
rights and those of the Company with respect to the Participant's
benefits under the Plan. The Participant has been credited with
$__________ in the form of the Past Service Benefit pursuant to the
terms of the Plan. The Past Service Benefit will be credited to
the Account established for the Participant under the Plan and the
Trust related thereto.
2. Manner of Payment of Past Service Benefit. As of
the date of this Agreement, the Participant must elect the form
under which his Past Service Benefit will be paid in the future
following the Participant's termination of employment under the
terms of the Plan. Please check the form in which the
Participant's Past Service is to be paid in the box provided below:
(Please Check and Initial One Box Only)
Optional Forms of Payment
1. [ ] Life of Participant Only
2. [ ] 50% Joint Annuitant Survivor Benefit
3. [ ] 75% Joint Annuitant Survivor Benefit
4. [ ] 100% Joint Annuitant Survivor Benefit
5. [ ] 5 Year Period Certain
6. [ ] 10 Year Period Certain
7. [ ] 15 Year Period Certain
The actual amounts payable at retirement or death will depend upon
the Participant's age and/or the age of his Beneficiary and the
form of payment elected by the Participant. Refer to Exhibit "B"
for a complete description of the Methods of Payment. Payments to
which the Participant is entitled pursuant to the terms of the Plan
will commence within 30 days following your termination of
employment and will continue to be paid in accordance with the
terms of the manner of payment elected by the Participant. With
the consent of the Committee, and if requested by the Participant
or his Beneficiary in the case of the Participant's death, the
Participant or his Beneficiary may request that the Participant's
Past Service Benefit be paid in any of the optional forms described
above or in a single lump sum payment. See Section 10.1 of the
Plan. Provided, in the event that a Participant has elected to
receive his Past Service Benefit for the Life of Participant Only
(Option 1 above) and such Participant dies prior to the time his
benefits commence in accordance with the terms of the Plan, then,
the deceased Participant's Beneficiary shall automatically receive
a benefit based upon the actuarial equivalent of the Participant's
Past Service Benefit, which will be paid as a 50% Joint Annuitant
Survivor Benefit (Option 2 above).
3. Amendment or Termination. This Agreement may be
amended, altered or terminated by the Company from time to time
upon notice to the Participant as provided in paragraph 12 below;
provided, however, this Agreement may not be amended, modified or
altered or terminated in any manner which adversely affects the
Participant without the consent of the Participant.
4. Expenses. The expenses of administering this
Agreement shall be borne by the Company and shall not be charged
against the Participant's Past Service Benefit.
5. Applicable Law. The provisions of this Agreement
shall be construed, administered and enforced according to the laws
of the State of Oklahoma.
6. No Assignability. Neither the Participant, his
Beneficiary, nor any other person shall acquire any right to or
interest in any Past Service Benefit and accruals thereon,
otherwise than by actual payment in accordance with the provisions
of the Plan and this Agreement, or have any power to transfer,
assign, anticipate, pledge, mortgage or otherwise encumber or
alienate any rights hereunder in advance of any of the payments to
be made pursuant to the Agreement or any portion thereof which is
expressly declared to be nonassignable and nontransferable. No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit.
7. Agreement Does Not Guarantee Continued Employment of
Participant. The execution of this Agreement by the Company and
the Participant, in no way whatsoever guarantees the continuation
of employment of the Participant with the Company.
8. Withholding. The Company and the Participant shall
comply with all federal and state laws and regulations respecting
the withholding, deposit and payment of any income, employment or
other taxes relating to any payments or rights to payments under
this Agreement.
9. Designation of Beneficiary.
(a) The Participant, hereby designate the following
individual as his Beneficiary to receive any Past Service Benefit
(including any benefit to be paid to such Beneficiary as the
surviving "joint annuitant" pursuant to Section 2 hereof) payable
to the Participant under this Agreement or the Plan in the event of
the Participant's death:
Name Address Relationship
______ ________________________________ _____________
(b) The Participant understands that during his
lifetime, the Participant may at any time change the Beneficiary
designated herein by delivering to the Committee a new designation
of a Beneficiary executed by the Participant and the Committee.
10. Relationship Between Agreement and Plan. This
Agreement has been entered into by and between the Company and the
Participant in accordance with and pursuant to authority granted to
the Committee pursuant to the terms and provisions of the Plan.
Except for the definition of the term "Change of Control" which
shall be governed by Section 16 of this Agreement and not by
Section 9.1 of the Plan, in the event that there develops a
conflict between this Agreement and the terms and provisions of the
Plan, the terms and provisions of the Plan, as interpreted by the
Committee in its sole discretion, shall control and be final and
conclusive.
11. Limitation on Payment of Benefits. The payment of
the Past Service Benefit as provided in this Agreement shall accrue
and be payable to the Participant or his Beneficiary, as the case
may be, only at such times and upon the occurrence of such
conditions as heretofore described. In no event whatsoever shall
the Participant or his Beneficiary have any right, claim, or
interest of any kind whatsoever in any future payments of such Past
Service Benefit and such payments shall accrue and be payable only
on a monthly basis as provided hereinabove.
12. Notices. All notices that are required or may be
given pursuant to this Agreement must be in writing and delivered
personally, by a recognized courier service, by a recognized
overnight delivery service, by facsimile or by registered or
certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other
address as either party may provide to the other party by notice in
accordance with this paragraph 12:
if to the Company:
Fleming Companies, Inc.
6301 Waterford Blvd.
Oklahoma City, OK 73126
Attn: Craig A. Grant
Senior Vice President -
Organizational Strategies
and Management Development
Facsimile: (405) 840-7226
if to the Participant:
______________________________
______________________________
______________________________
13. Agreement Supersedes All Other Benefits and Release
of Claims. Effective as of the date of the execution and delivery
of this Agreement, this Agreement shall supersede and replace any
and all other agreements entered into by and between the Company or
any Subsidiary and the Participant with respect to the providing of
supplemental retirement benefits on a nonqualified basis pursuant
to the Prior Plan which was terminated by the Company effective
November 1, 1997. The Participant agrees that as of the date of
termination of the Prior Plan, he was not entitled to any benefit
under the Prior Plan and any rights or interest in the Prior Plan
were subject to total forfeiture as of November 1, 1997. Further,
recognizing that the Participant has been selected by the Committee
to participate in this Plan and the Fleming Companies, Inc.
Executive Deferred Compensation Plan, both of which may provide
substantial benefits to the Participant, the Participant hereby
releases the Company, its officer, directors, agents and assigns
from any and all obligations under the Prior Plan and agrees that
the Participant will not bring any action, claim or demand of any
kind whatsoever with respect to any benefits to which the Partici-
pant would have otherwise been entitled had the Participant con-
tinued participating in the Prior Plan.
14. Benefit Subject to Claims of Creditors. The
Participant and his Beneficiary shall not have any interest in any
particular assets of the Company, its parent, if applicable, or any
Subsidiary by reason of the right to receive a benefit under the
Plan or this Agreement, and the Participant and his Beneficiary or
any other person shall have only the rights of a general unsecured
creditor of the Company, its parent, if applicable, or a Subsidiary
with respect to any rights under the Plan or this Agreement.
15. Effective Date. This Agreement shall be effective
from and after the day and year first above written.
16. Change of Control. Notwithstanding the language of
Section 9.1 of the Plan, for purposes of this Agreement and this
Participant, the term "Change of Control" shall have the meaning
set forth in this Section 16 and not in Section 9.1 of the Plan.
Except for the definition of the term Change of Control, all other
provisions of Section 9.1 of the Plan shall be applicable to this
Participant. For purposes of this Agreement and this Participant,
the term Change of Control shall mean:
(i) The acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Ex-
change Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more (the
"Triggering Percentage") of either (i) the
then outstanding shares of common stock of the
Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of
the then outstanding voting securities of the
Company entitled to vote generally in the
election of directors (the "Outstanding
Company Voting Securities"); provided, how-
ever, in the event the "Incumbent Board" (as
such term is hereinafter defined) pursuant to
authority granted in any rights agreement to
which the Company is a party (the "Rights
Agreement") lowers the acquisition threshold
percentages set forth in such Rights Agree-
ment, the Triggering Percentage shall be
automatically reduced to equal the threshold
percentages set pursuant to authority granted
to the board in the Rights Agreement; and
provided, further, however, that the following
acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from
the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, or (iv) any acqui-
sition by any corporation pursuant to a trans-
action which complies with clauses (x), (y),
and (z) of subsection (iii) of this Section
16; or
(ii) Individuals who, as of the date
hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at
least a majority of the Board; provided,
however, that any individual becoming a direc-
tor subsequent to the date hereof whose elec-
tion, appointment or nomination for election
by the Company's shareholders, 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 purposes of this definition, any such
individual whose initial assumption of office
occurs as a result of an actual 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; or
(iii) Approval by the shareholders of
the Company of a reorganization, share ex-
change, merger or consolidation or acquisition
of assets of another corporation (a "Business
Combination"), in each case, unless, following
such Business Combination, (x) all or substan-
tially all of the individuals and entities who
were the beneficial owners, respectively, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities immedi-
ately prior to such Business Combination will
beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstand-
ing shares of common stock and the combined
voting power of the then outstanding voting
securities entitled to vote generally in the
election of directors, as the case may be, of
the corporation resulting from such Business
Combination (including, without limitation, a
corporation which as a result of such transac-
tion will own the Company through one or more
subsidiaries) in substantially the same pro-
portions as their ownership, immediately prior
to such Business Combination of the Outstand-
ing Company Common Stock and Outstanding
Company Voting Securities, as the case may be,
(y) no Person (excluding any employee benefit
plan (or related trust) of the Company or such
corporation resulting from such Business
Combination) will beneficially own, directly
or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of
the corporation resulting from such Business
Combination or the combined voting power of
the then outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business Combi-
nation, and (z) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination will have been members of the
Incumbent Board at the time of the execution
of the initial agreement, or of the action of
the Board, providing for such Business Combi-
nation; or
(iv) Approval by the shareholders of the
Company of (x) a complete liquidation or
dissolution of the Company or, (y) the sale or
other disposition of all or substantially all
of the assets of the Company, other than to a
corporation, with respect to which following
such sale or other disposition, (A) more than
50% of, respectively, the then outstanding
shares of common stock of such corporation and
the combined voting power of the then out-
standing voting securities of such corporation
entitled to vote generally in the election of
directors will be beneficially owned, directly
or indirectly, by all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the Out-
standing Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantial-
ly the same proportion as their ownership,
immediately prior to such sale or other dispo-
sition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securi-
ties, as the case may be, (B) less than 20%
of, respectively, the then outstanding shares
of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled
to vote generally in the election of directors
will be beneficially owned, directly or indi-
rectly, by any Person (excluding any employee
benefit plan (or related trust) of the Company
or such corporation), except to the extent
that such Person owned 20% or more of the
Outstanding Company Common Stock or Outstand-
ing Company Voting Securities prior to the
sale or disposition, and (C) at least a major-
ity of the members of the board of directors
of such corporation will have been members of
the Incumbent Board at the time of the execu-
tion of the initial agreement, or of the
action of the Board, providing for such sale
or other disposition of assets of the Company.
DATED the day and year first above written.
FLEMING COMPANIES, INC., an Oklahoma
corporation
By
Craig A. Grant
Senior Vice President -
Organizational Strategies and
Management Development
"COMPANY"
___________________________
"PARTICIPANT"
<PAGE>
EXHIBIT "B"
Description of Optional Forms of Payment
OPTION 1 - Life of
Participant Only: A Past Service Benefit will be paid
for the Participant's life only.
Upon the Participant's death, all
payments of Past Service Benefit
shall cease.
OPTION 2 - 50%
Joint Annuitant
Survivor Benefit: A reduced amount of Past Service
Benefit will be paid to Participant
for the Participant's life, then, at
the Participant's death 50% of such
amount shall be paid to the Partici-
pant's surviving Beneficiary. In
the event that the Participant's
surviving Beneficiary has predeceas-
ed Participant, or should otherwise
die after the Participant's death,
then no further payments will be
paid under OPTION 2 or this Agree-
ment.
OPTION 3 - 75%
Joint Annuitant
Survivor Benefit: A reduced amount of Past Service
Benefit will be paid to Participant
for the Participant's life, then, at
the Participant's death 75% of such
amount shall be paid to the Partici-
pant's surviving Beneficiary. In
the event that the Participant's
surviving Beneficiary has predeceased
Participant, or should other-
wise die after the Participant's
death, then no further payments will
be due under OPTION 3 or this
Agreement.
OPTION 4 - 100%
Joint Annuitant
Survivor Benefit: A reduced amount of Past Service
Benefit will be paid to Participant
for the Participant's life, then, at
the Participant's death 100% of such
amount shall be paid to the Parti-
cipant's surviving Beneficiary. In
the event that the Participant's
surviving Beneficiary has predecea-
sed Participant, or should otherwise
die after the Participant's death,
then no further payments will be due
under OPTION 4 or this Agreement.
OPTION 5 - 5 Year
Period Certain: A reduced amount of Past Service
Benefit will be paid for a period of
5 years certain. After the expira-
tion of such 5 year period, payments
shall then continue for the
Participant's life in the same
amount. In the event of the Partic-
ipant's death during the 5 year
period certain, then, the balance of
such payments due only during such 5
year period will be paid to the
Participant's surviving Beneficiary.
After the expiration of such 5 year
period, then all payments shall
cease. In the event of the
expiration of such 5 year period,
and Participant die, then, no fur-
ther benefits will be paid under
OPTION 5 or this Agreement.
OPTION 6 - 10 Year
Period Certain: A reduced amount of Past Service
Benefit shall be paid for a period
of 10 years certain. After the
expiration of such 10 year period,
payments shall then continue for the
Participant's life in the same
amount. In the event of the Partic-
ipant's death during the 10 year
period certain, then, the balance of
such payments due only during such
10 year period will be paid to the
Participant's surviving Beneficiary.
After the expiration of such 10 year
period, then all payments shall
cease. In the event of the
expiration of such 10 year period,
and Participant die, then, no fur-
ther benefits will be paid under
OPTION 6 or this Agreement.
OPTION 7 - 15 Year
Period Certain: A reduced amount of Past Service
Benefit shall be paid for a period
of 15 years certain. After the
expiration of such 15 year period,
payments shall then continue for the
Participant's life in the same
amount. In the event of the Partic-
ipant's death during the 15 year
period certain, then, the balance of
such payments due only during such
15 year period will be paid to the
Participant's surviving Beneficiary.
After the expiration of such 15 year
period, then all payments shall
cease. In the event of the
expiration of such 15 year period,
and Participant die, then, no fur-
ther benefits will be paid under
OPTION 7 or this Agreement.
AMENDED AND RESTATED AGREEMENT FOR
EXECUTIVE DEFERRED COMPENSATION PLAN
THIS AMENDED AND RESTATED AGREEMENT FOR FLEMING
COMPANIES, INC. EXECUTIVE DEFERRED COMPENSATION PLAN is made as of
the 18th day of August, 1998 by and between __________, an indi-
vidual (herein referred to as the "Participant") and FLEMING
COMPANIES, INC. (the "Company") with respect to the following:
WHEREAS, the Company has adopted that certain non-qualified
deferred compensation plan known as "Fleming Companies,
Inc. Executive Deferred Compensation Plan" (the "Plan") which is an
"excess plan" providing for benefits to the Participants in the
Plan in excess of the limitations on benefits under qualified plans
imposed by Sections 415 and/or 401(a)(17) of the Internal Revenue
Code of 1986, as amended; and
WHEREAS, the Company and the Participant entered into
that certain Agreement For Fleming Companies, Inc. Executive
Deferred Compensation Plan (the "Original Agreement") to evidence
the Participant's participation in the Plan and his agreement to be
bound by the terms and provisions of the Plan and the Original
Agreement; and
WHEREAS, the Company and the Executive desire to amend
the Original Agreement by execution of this Amended and Restated
Agreement for Fleming Companies, Inc. Executive Deferred Compensa-
tion Plan (the "Agreement") which shall serve as an amendment,
restatement and continuation of the Original Agreement, as amended
by this Agreement.
NOW, THEREFORE, in consideration of mutual covenants
hereinafter contained, the parties hereto agree as follows. All
capitalized words used in this Agreement shall have the same
meaning ascribed to such terms in the Plan unless specifically
denoted otherwise.
1. Purpose of Plan. The purpose of the Plan and this
Agreement is to provide to the Participant, the opportunity to earn
supplemental retirement income as provided in the Plan in order to
retain the Participant, as a key management Associate, with the
Company. Payment of the Supplemental Normal Retirement Income
shall be made to the Participant in consideration of future
services rendered by the Participant and shall be paid to the
Participant or the Participant's Beneficiary as hereinafter
provided. A copy of the Plan is attached hereto as Exhibit "A,"
and is incorporated by reference herein and made a part hereof for
all purposes and when taken with this Agreement, shall govern the
Participant's rights and those of the Company with respect to the
Participant's benefits under the Plan.
2. Calculation and Manner of Payment of Supplemental
Normal Retirement Income.
(a) General. The Participant is also a participant
in the Qualified Plan sponsored by the Company. Further, the
Participant have also earned a benefit in the form of a Normal
Retirement Income pursuant to the terms of the Qualified Plan as of
the Effective Date or a date subsequent thereto. The Participant's
Supplemental Normal Retirement Income will equal the difference
between the Participant's Qualified Plan Benefit and the benefit
which would otherwise be provided to the Participant under the
Qualified Plan without considering the limitations imposed by
Internal Revenue Service under Section 415 and/or 401(a)(17) of the
Code which limits the amount of compensation which may be consid-
ered for calculation of benefits under the Qualified Plan. An
example of the calculation of the calculation of a Supplemental
Normal Retirement Income under the Plan is described on Exhibit "B"
attached hereto.
(b) Manner of Payment of Supplemental Normal
Retirement Income. As of the date of this Agreement, the Partici-
pant must elect the form under which his Supplemental Normal
Retirement Income will be paid in the future following the Partici-
pant's termination of employment under the terms of the Plan.
Please check the form in which the Participant's Supplemental
Normal Retirement Income will be paid in the box provided below:
(Please Check and Initial One Box Only)
Optional Forms of Payment
1. [ ] Life of Participant Only
2. [ ] 50% Joint Annuitant Survivor Benefit
3. [ ] 75% Joint Annuitant Survivor Benefit
4. [ ] 100% Joint Annuitant Survivor Benefit
5. [ ] 5 Year Period Certain
6. [ ] 10 Year Period Certain
7. [ ] 15 Year Period Certain
The actual amounts payable at retirement or death will depend upon
the Participant's age and/or the age of his Beneficiary and form of
payment elected by the Participant. With the consent of the
Committee, and if requested by the Participant or his Beneficiary
in the case of the Participant's death, the Participant or his
Beneficiary may request that the Participant's Supplemental Normal
Retirement Income be paid in any of the optional forms described
above. See Section 10.1 of the Plan. Further, in the event that
a Participant has elected to receive his Supplemental Normal
Retirement Income for the "Life of Participant Only" (Option 1) and
such Participant dies, before payment of such benefit would other-
wise commence in accordance with the terms of the Plan, then, such
deceased Participant's Beneficiary shall be automatically paid a
"survivor benefit" in the form of a "50% Joint Annuitant Survivor
Benefit" (Option 2). Refer to Exhibit "C" for a complete Descrip-
tion of Payment.
3. Commencement of Supplemental Retirement Income.
Subject to the provisions of Section 9.2 of the Plan with respect
to termination following a Change of Control, based upon the manner
of payment elected by the Participant for payment of the Partici-
pant's Supplemental Normal Retirement Income, payments shall
commence as of the Participant's Early Retirement Date, Normal
Retirement Date, Disability Retirement Date, Postponed Retirement
Date, or date of death, as the case may be, and will continue to be
paid in accordance with the form of payment elected by the Partici-
pant.
4. Amendment or Termination. This Agreement may be
amended, altered or terminated by the Company from time to time
upon notice to the Participant as provided in paragraph 13 below;
provided, however, this Agreement may not be amended, modified, or
altered or terminated in any manner which adversely affects the
Participant's Supplemental Normal Retirement Income earned as of
the date of amendment or termination, as the case may be, without
the consent of the Participant. Further, in such event of termina-
tion, the Participant's Supplemental Normal Retirement Income
earned as of such date will be paid pursuant to the Plan.
5. Expenses. The expenses of administering this
Agreement shall be borne by the Company and shall not be charged
against the Participant's Supplemental Normal Retirement Income.
6. Applicable Law. The provisions of this Agreement
shall be construed, administered and enforced according to the laws
of the State of Oklahoma.
7. No Assignability. Neither the Participant, his
Beneficiary, nor any other person shall acquire any right to or
interest in any Supplemental Normal Retirement Income and accruals
thereon, otherwise than by actual payment in accordance with the
provisions of this Agreement, or have any power to transfer,
assign, anticipate, pledge, mortgage or otherwise encumber or
alienate any rights hereunder in advance of any of the payments to
be made pursuant to the Agreement or any portion thereof which is
expressly declared to be nonassignable and nontransferable. No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit.
8. Agreement Does Not Guarantee Continued Employment of
Participant. The execution of this Agreement by the Company and
the Participant, in no way whatsoever guarantees the continuation
of employment of the Participant with the Company.
9. Withholding. The Company and the Participant shall
comply with all federal and state laws and regulations respecting
the withholding, deposit and payment of any income, employment or
other taxes relating to any payments or rights to payments under
this Agreement.
10. Designation of Beneficiary.
(a) The Participant, as the Participant, hereby
designate the following individual as his Beneficiary to receive
any Supplemental Death Benefit (including any benefit to be paid to
such Beneficiary as the surviving "joint annuitant" pursuant to
Section 2(b) hereof) payable to the Participant under this
Agreement or the Plan in the event of the Participant's death:
Name Address Relationship
___________ ___________________________ _____________
___________________________
(b) The Participant understand that during his
lifetime, the Participant may at any time change the Beneficiary
designated herein by delivering to the Committee a new designation
of a Beneficiary, executed by the Participant and the Committee.
If the Participant desires to change a beneficiary designation,
please contact the Senior Vice President, Human Resources for a new
beneficiary designation form.
11. Relationship Between Agreement and Plan. This
Agreement has been entered into by and between the Company and the
Participant in accordance with and pursuant to authority granted to
the Committee pursuant to the terms and provisions of the Plan.
Except for the definition of the term "Change of Control" which
shall be governed by Section 17 of this Agreement and not by
Section 9.2 of the Plan, in the event that there develops a
conflict between this Agreement and the terms and provisions of the
Plan, the terms and provisions of the Plan, as interpreted by the
Committee in its sole discretion, shall control and be final and
conclusive.
12. Limitation on Payment of Benefits. The payment of
the Supplemental Normal Retirement Income as provided in this
Agreement shall accrue and be payable to the Participant or his
Beneficiary, as the case may be, only at such times and upon the
occurrence of such conditions as heretofore described. In no event
whatsoever shall the Participant or the Participant's Beneficiary
have any right, claim, or interest of any kind whatsoever in any
future payments of such Supplemental Normal Retirement Income and
such payments shall accrue and be payable only on a monthly basis
as provided hereinabove. In no event may the Participant or the
Participant's Beneficiary be entitled to receive a lump sum payment
or other sum approximating the right to receive any future payments
of Supplemental Normal Retirement Income hereunder.
13. Notices. All notices that are required or may be
given pursuant to this Agreement must be in writing and delivered
personally, by a recognized courier service, by a recognized
overnight delivery service, by facsimile or by registered or
certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other
address as either party may provide to the other party by notice in
accordance with this paragraph 13:
if to the Company:
Fleming Companies, Inc.
6301 Waterford Boulevard
Oklahoma City OK 73126
Attn: Craig A. Grant
Senior Vice President -
Organizational Strategies
and Management Development
Facsimile: (405) 840-7226
if to the Participant:
______________________________
______________________________
______________________________
14. Agreement Supersedes All Other Benefits and Release
of Claims. Effective as of the date of the execution and delivery
of this Agreement, this Agreement shall supersede and replace any
and all other agreements entered into by and between the Company or
any Subsidiary and the Participant with respect to the providing of
supplemental retirement benefits on a nonqualified basis pursuant
to the Prior Plan which was terminated by the Company effective
November 1, 1997. The Participant agrees that as of the date of
termination of the Prior Plan, the Participant was not entitled to
any benefit under the Prior Plan and any rights or interest in the
Prior Plan were subject to total forfeiture as of November 1, 1997.
Further, recognizing that the Participant has been selected by the
Committee to participate in this Plan and the Fleming Companies,
Inc. Executive Past Service Benefit Plan, both of which may provide
substantial benefits to the Participant, the Participant hereby
releases the Company, its officers, directors, agents and assigns
from any and all obligations under the Prior Plan and agrees that
the Participant will not bring any action, claim or demand of any
kind whatsoever with respect to any benefits to which the Partici-
pant would have otherwise been entitled had the Participant
continued participating in the Prior Plan.
15. Benefit Subject to Claims of Creditors. The
Participant and his Beneficiary shall not have any interest in any
particular assets of the Company, its parent, if applicable, or any
Subsidiary by reason of the right to receive a benefit under the
Plan or this Agreement, and the Participant and his Beneficiary or
any other person shall have only the rights of a general unsecured
creditor of the Company, its parent, if applicable, or a Subsidiary
with respect to any rights under the Plan or this Agreement.
16. Effective Date. This Agreement shall be effective
from and after the day and year first above written.
17. Change of Control. Notwithstanding the language of
Section 9.2 of the Plan, for purposes of this Agreement and this
Participant, the term "Change of Control" shall have the meaning
set forth in this Section 17 and not in Section 9.2 of the Plan.
Except for the definition of the term Change of Control, all other
provisions of Section 9.2 of the Plan shall be applicable to this
Participant. For purposes of this Agreement and this Participant,
the term Change of Control shall mean:
(i) The acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Ex-
change Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more (the
"Triggering Percentage") of either (i) the
then outstanding shares of common stock of the
Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of
the then outstanding voting securities of the
Company entitled to vote generally in the
election of directors (the "Outstanding
Company Voting Securities"); provided,
however, in the event the "Incumbent Board"
(as such term is hereinafter defined) pursuant
to authority granted in any rights agreement
to which the Company is a party (the "Rights
Agreement") lowers the acquisition threshold
percentages set forth in such Rights Agree-
ment, the Triggering Percentage shall be
automatically reduced to equal the threshold
percentages set pursuant to authority granted
to the board in the Rights Agreement; and
provided, further, however, that the following
acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from
the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, or (iv) any acqui-
sition by any corporation pursuant to a trans-
action which complies with clauses (x), (y),
and (z) of subsection (iii) of this Section
17; or
(ii) Individuals who, as of the date
hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at
least a majority of the Board; provided,
however, that any individual becoming a direc-
tor subsequent to the date hereof whose elec-
tion, appointment or nomination for election
by the Company's shareholders, 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 purposes of this definition, any such
individual whose initial assumption of office
occurs as a result of an actual 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; or
(iii) Approval by the shareholders of
the Company of a reorganization, share ex-
change, merger or consolidation or acquisition
of assets of another corporation (a "Business
Combination"), in each case, unless, following
such Business Combination, (x) all or substan-
tially all of the individuals and entities who
were the beneficial owners, respectively, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities immedi-
ately prior to such Business Combination will
beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstand-
ing shares of common stock and the combined
voting power of the then outstanding voting
securities entitled to vote generally in the
election of directors, as the case may be, of
the corporation resulting from such Business
Combination (including, without limitation, a
corporation which as a result of such transac-
tion will own the Company through one or more
subsidiaries) in substantially the same pro-
portions as their ownership, immediately prior
to such Business Combination of the Outstand-
ing Company Common Stock and Outstanding
Company Voting Securities, as the case may be,
(y) no Person (excluding any employee benefit
plan (or related trust) of the Company or such
corporation resulting from such Business
Combination) will beneficially own, directly
or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of
the corporation resulting from such Business
Combination or the combined voting power of
the then outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business Combi-
nation, and (z) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination will have been members of the
Incumbent Board at the time of the execution
of the initial agreement, or of the action of
the Board, providing for such Business Combi-
nation; or
(iv) Approval by the shareholders of the
Company of (x) a complete liquidation or
dissolution of the Company or, (y) the sale or
other disposition of all or substantially all
of the assets of the Company, other than to a
corporation, with respect to which following
such sale or other disposition, (A) more than
50% of, respectively, the then outstanding
shares of common stock of such corporation and
the combined voting power of the then out-
standing voting securities of such corporation
entitled to vote generally in the election of
directors will be beneficially owned, directly
or indirectly, by all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the Out-
standing Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantial-
ly the same proportion as their ownership,
immediately prior to such sale or other dispo-
sition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securi-
ties, as the case may be, (B) less than 20%
of, respectively, the then outstanding shares
of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled
to vote generally in the election of directors
will be beneficially owned, directly or indi-
rectly, by any Person (excluding any employee
benefit plan (or related trust) of the Company
or such corporation), except to the extent
that such Person owned 20% or more of the
Outstanding Company Common Stock or Outstand-
ing Company Voting Securities prior to the
sale or disposition, and (C) at least a major-
ity of the members of the board of directors
of such corporation will have been members of
the Incumbent Board at the time of the execu-
tion of the initial agreement, or of the
action of the Board, providing for such sale
or other disposition of assets of the Compa-
ny."
DATED the day and year first above written.
FLEMING COMPANIES, INC., an Oklahoma
corporation
By
Craig A. Grant
Senior Vice President -
Organizational Strategies and
Management Development
"COMPANY"
-----------------------------------------
-----------------------------
"PARTICIPANT"
<PAGE>
EXHIBIT "B"
EXAMPLE OF CALCULATION OF SUPPLEMENTAL NORMAL
RETIREMENT INCOME ASSUMING RETIREMENT AT AGE 65
$225,000
Retirement Income (Annual)*
Using Qualified Plan
formula without
IRS limitations
Less:
Qualified Plan Benefit (Annual) $125,000
--------
Supplemental Norman Retirement
Income (Annual) payable at 65 $100,000
========
* This calculation is only an example of how a Supplemental
Retirement Income will be calculated, and does not represent the
benefit which the Participant would be entitled under the Plan.
<PAGE>
EXHIBIT "C"
Description of Optional Forms of Payment
OPTION 1 - Life of
Participant Only: A Supplemental Normal Retirement
Income will be paid for the Partici-
pant's life only. Upon the Partici-
pant's death, all payments of Sup-
plemental Normal Retirement Income
shall cease.
OPTION 2 - 50%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Normal Retirement Income will be
paid to the Participant for the
Participant's life, then, at the
Participant's death 50% of such
amount shall be paid to the Partici-
pant's surviving Beneficiary. In
the event that the Participant's
surviving Beneficiary has predeceased
the Participant, or should
otherwise die after the Participant's
death, then no further pay-
ments will be paid under OPTION 2 or
this Agreement.
OPTION 3 - 75%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Normal Retirement Income will be
paid to the Participant for the
Participant's life, then, at the
Participant's death 75% of such
amount shall be paid to the Partici-
pant's surviving Beneficiary. In
the event that the Participant's
surviving Beneficiary has predeceased
the Participant, or should
otherwise die after the Participant's
death, then no further pay-
ments will be due under OPTION 3 or
this Agreement.
OPTION 4 - 100%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Normal Retirement Income will be
paid to the Participant for the
Participant's life, then, at the
Participant's death 100% of such
amount shall be paid to the Parti-
cipant's surviving Beneficiary. In
the event that the Participant's
surviving Beneficiary has predeceased
the Participant, or should
otherwise die after the Participant's
death, then no further pay-
ments will be due under OPTION 4 or
this Agreement.
OPTION 5 - 5 Year
Period Certain: A reduced amount of Supplemental
Normal Retirement Income will be
paid for a period of 5 years cer-
tain. After the expiration of such
5 year period, payments shall then
continue for the Participant's life
in the same amount. In the event of
the Participant's death during the 5
year period certain, then, the bal-
ance of such payments due only dur-
ing such 5 year period will be paid
to the Participant's surviving Bene-
ficiary. After the expiration of
such 5 year period, then all pay-
ments shall cease. In the event of
the expiration of such 5 year
period, and the Participant dies,
then, no further benefits will be
paid under OPTION 5 or this Agree-
ment.
OPTION 6 - 10 Year
Period Certain: A reduced amount of Supplemental
Normal Retirement Income shall be
paid for a period of 10 years cer-
tain. After the expiration of such
10 year period, payments shall then
continue for the Participant's life
in the same amount. In the event of
the Participant's death during the
10 year period certain, then, the
balance of such payments due only
during such 10 year period will be
paid to the Participant's surviving
Beneficiary. After the expiration
of such 10 year period, then all
payments shall cease. In the event
of the expiration of such 10 year
period, and the Participant dies,
then, no further benefits will be
paid under OPTION 6 or this Agree-
ment.
OPTION 7 - 15 Year
Period Certain: A reduced amount of Supplemental
Normal Retirement Income shall be
paid for a period of 15 years cer-
tain. After the expiration of such
15 year period, payments shall then
continue for the Participant's life
in the same amount. In the event of
the Participant's death during the
15 year period certain, then, the
balance of such payments due only
during such 15 year period will be
paid to the Participant's surviving
Beneficiary. After the expiration
of such 15 year period, then all
payments shall cease. In the event
of the expiration of such 15 year
period, and the Participant dies,
then, no further benefits will be
paid under OPTION 7 or this Agree-
ment.
AMENDED AND RESTATED
SUPPLEMENTAL RETIREMENT INCOME AGREEMENT
THIS AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT INCOME
AGREEMENT by and between FLEMING COMPANIES, INC., an Oklahoma
corporation (the "Company") and WILLIAM J. DOWD, an individual (the
"Executive") dated this 18th day of August, 1998 (the "Agreement").
WITNESSETH:
WHEREAS, the Executive has previously executed that
certain Offer For Compensation dated July 7, 1995 (the "Offer")
which provided the Executive a "supplemental retirement income"
(the "Prior Benefit") in addition to other benefits; and
WHEREAS, subsequent to the Offer, the Company selected
the Executive to be a participant in that certain nonqualified
retirement plan entitled "Supplemental Retirement Income Plan of
Fleming Companies, Inc. and Its Subsidiaries" (the "Prior Plan");
and
WHEREAS, the Company and the Executive never executed an
agreement to evidence the participation of the Executive in the
Prior Plan; and
WHEREAS, the Executive and the Company cancelled that
portion of the Offer which provided for the Prior Benefit upon the
execution of that certain Supplemental Retirement Income Agreement
dated February 25, 1997 (the "Original Agreement") and
WHEREAS, the Company provided a "supplemental retirement
income" pursuant to the terms of the Original Agreement; and
WHEREAS, the Company and the Executive executed that
certain First Amendment to the Supplemental Retirement Income
Agreement on February 23, 1998 (the "First Amendment"); and
WHEREAS, the Company and the Executive desire to further
amend the Original Agreement by execution of this Amended and
Restated Supplemental Retirement Income Agreement (the "Agreement")
which shall serve as an amendment, restatement and continuation of
the Original Agreement, as amended by the First Amendment and this
Agreement.
NOW, THEREFORE, in consideration of the covenants,
provisions and other valuable consideration, the receipt of which
is hereby acknowledged by the Executive, the parties hereto agree
as follows:
1. Supplemental Retirement Income and Cancellation of
Prior Benefit.
(a) Supplemental Retirement Income. The Executive
shall be entitled to receive annual supplemental retirement income
(the "Supplemental Retirement Income") upon his termination from
the employ of the Company or any subsidiary (the "Subsidiary") of
which the Company owns 80% or more of the outstanding voting common
stock, provided, he remains continuously employed as of the
following applicable dates:
Vested
Attained Date Annual Supplemental
Year of Employment Retirement Income
After year 1 7/24/1996 -0-
2 7/24/1997 -0-
3 7/24/1998 -0-
4 7/24/1999 -0-
5 7/24/2000 $81,000
6 7/24/2001 92,570
7 7/24/2002 104,140
8 7/24/2003 115,710
9 7/24/2004 127,280
10 7/24/2005 138,850
11 7/24/2006 150,420
12 7/24/2007 162,000
Further, in the event that the Executive terminates employment
between any of the applicable required attained dates of employ-
ment, the Executive's Supplemental Retirement Income will be
interpolated by subtracting the most recent vested amount of
Supplemental Retirement Income from the next vested amount of
Supplemental Retirement Income, dividing such difference by 12 and
multiplying the quotient by the number of completed whole months of
employment between the last attained date of employment and the
date of termination of employment of the Executive.
For example, if the Executive terminates employment with the
Company or a Subsidiary on October 15th, 2000, then, the Execu-
tive's Supplemental Retirement Income would equal $82,928.32
calculated as follows:
Supplemental Retirement Income at 7/24/2001: $92,570
Supplemental Retirement Income at 7/24/2000 = $81,000
-------
Difference 11,570
Divided by 12 = $964.17
Completed months of service from 7/24/2000-10/15/2000 x 2
Additional Supplemental Retirement Income $1,928.34
Vested Supplemental Retirement Income at 7/24/2000 81,000.00
---------
Total Supplemental Retirement Income $82,928.34
==========
(b) Cancellation of Prior Benefit. In
consideration of the Supplemental Retirement Income provided in
this Agreement, the Prior Benefit is hereby cancelled and rescinded
in all respects. Except to the extent that the Offer has been
amended to delete the Prior Benefit, the Offer shall continue in
accordance with its terms.
2. Manner of Payment of Supplemental Retirement Income.
The Supplemental Retirement Income will be paid to the Executive
and his designated beneficiary (the "Beneficiary"), if applicable,
in the manner elected below: (Check and initial One Box Only)
Methods of Payment
Option 1. [ ] Life of Executive Only (Single Life Basis)
Option 2. [ ] 50% Joint Annuitant Survivor Benefit
Option 3. [ ] 75% Joint Annuitant Survivor Benefit
Option 4. [X] 100% Joint Annuitant Survivor Benefit
Option 5. [ ] 5 Year Period Certain
Option 6. [ ] 10 Year Period Certain
Option 7. [ ] 15 Year Period Certain
The actual amounts payable to the Executive will depend upon the
date that the Executive terminates employment. The Supplemental
Retirement Income will be paid at least quarterly as determined by
the Compensation and Organization Committee (the "Committee") of
the Company. If no election is made, the benefit will automat-
ically be paid on a "single life basis" under Option 1, above.
Refer to Exhibit "A" for a complete description of the Methods of
Payment.
Provided, notwithstanding that the Executive has elected
the optional form of benefit as provided in this Section 2, at any
time prior to the date the payment of the Executive's Supplemental
Retirement Income commences, the Executive (or his Beneficiary in
the case of death) may make a written request to the Committee that
his Supplemental Retirement Income be paid in any of the optional
forms of payment described above or in the form of a single lump
sum payment, and, if the Committee approves such request consid-
ering all relevant facts and circumstances, payment may be made in
one of such optional forms of payment or in a lump sum. The deci-
sion to make payment in one of the optional forms of payment or in
a lump sum shall be made in the Committee's sole discretion and its
decision shall be final and conclusive.
3. Termination of Employment.
(a) Termination Prior to July 24, 2000. In the
event that the Executive terminates employment for any reason prior
to July 24, 2000, then, except as provided in Section (b) below,
the Executive shall have no rights of any kind whatsoever in the
Supplemental Retirement Income (or any other benefit) otherwise
paid pursuant to this Agreement.
(b) Acceleration of Accrual of Supplemental
Retirement Income Upon Change of Control. In the event that there
is a "change of control" ("Change of Control") as such term is
defined in Section 3(c) of this Agreement, and within three years
following such Change of Control, the Executive's employment is
terminated for any reason by either the Company or the Executive,
the Executive shall be entitled to his Supplemental Retirement
Income earned by such Executive as of his date of termination of
employment but in no event will the amount be less than the benefit
which the Executive would have been entitled to if the Executive
remained in the continuous employ of the Company until July 24,
2000 ($81,000 paid annually on a single life basis), with such
Supplemental Retirement Income to be paid beginning immediately
upon the termination of employment.
(c) Change of Control. For purposes of this
Agreement, a "Change of Control" shall mean:
(i) The acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Ex-
change Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more (the
"Triggering Percentage") of either (i) the
then outstanding shares of common stock of the
Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of
the then outstanding voting securities of the
Company entitled to vote generally in the
election of directors (the "Outstanding
Company Voting Securities"); provided, how-
ever, in the event the "Incumbent Board" (as
such term is hereinafter defined) pursuant to
authority granted in any rights agreement to
which the Company is a party (the "Rights
Agreement") lowers the acquisition threshold
percentages set forth in such Rights Agree-
ment, the Triggering Percentage shall be
automatically reduced to equal the threshold
percentages set pursuant to authority granted
to the board in the Rights Agreement; and
provided, further, however, that the following
acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from
the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, or (iv) any acqui-
sition by any corporation pursuant to a trans-
action which complies with clauses (x), (y),
and (z) of subsection (iii) of this Section
3(c); or
(ii) Individuals who, as of
the date hereof, constitute the
Board (the "Incumbent Board") cease
for any reason to constitute at
least a majority of the Board; pro-
vided, however, that any individual
becoming a director subsequent to
the date hereof whose election,
appointment or nomination for elec-
tion by the Company's shareholders,
was approved by a vote of at least a
majority of the directors then com-
prising the Incumbent Board shall be
considered as though such individual
were a member of the Incumbent
Board, but excluding, for purposes
of this definition, any such indi-
vidual whose initial assumption of
office occurs as a result of an
actual or threatened election con-
test 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; or
(iii) Approval by the share-
holders of the Company of a reorga-
nization, share exchange, merger or
consolidation or acquisition of
assets of another corporation (a
"Business Combination"), in each
case, unless, following such Busi-
ness Combination, (x) all or sub-
stantially all of the individuals
and entities who were the beneficial
owners, respectively, of the Out-
standing Company Common Stock and
Outstanding Company Voting Securi-
ties immediately prior to such Busi-
ness Combination will beneficially
own, directly or indirectly, more
than 50% of, respectively, the then
outstanding shares of common stock
and the combined voting power of the
then outstanding voting securities
entitled to vote generally in the
election of directors, as the case
may be, of the corporation resulting
from such Business Combination (in-
cluding, without limitation, a cor-
poration which as a result of such
transaction will own the Company
through one or more subsidiaries) in
substantially the same proportions
as their ownership, immediately
prior to such Business Combination
of the Outstanding Company Common
Stock and Outstanding Company Voting
Securities, as the case may be, (y)
no Person (excluding any employee
benefit plan (or related trust) of
the Company or such corporation
resulting from such Business Combi-
nation) will beneficially own, di-
rectly or indirectly, 20% or more
of, respectively, the then outstand-
ing shares of common stock of the
corporation resulting from such
Business Combination or the combined
voting power of the then outstanding
voting securities of such corpora-
tion except to the extent that such
ownership existed prior to the Busi-
ness Combination, and (z) at least a
majority of the members of the board
of directors of the corporation
resulting from such Business Combi-
nation will have been members of the
Incumbent Board at the time of the
execution of the initial agreement,
or of the action of the Board, pro-
viding for such Business Combina-
tion; or
(iv) Approval by the share-
holders of the Company of (x) a
complete liquidation or dissolution
of the Company or, (y) the sale or
other disposition of all or substan-
tially all of the assets of the
Company, other than to a corpora-
tion, with respect to which follow-
ing such sale or other disposition,
(A) more than 50% of, respectively,
the then outstanding shares of com-
mon stock of such corporation and
the combined voting power of the
then outstanding voting securities
of such corporation entitled to vote
generally in the election of direc-
tors will be beneficially owned,
directly or indirectly, by all or
substantially all of the individuals
and entities who were the beneficial
owners, respectively, of the Out-
standing Company Common Stock and
Outstanding Company Voting Securi-
ties immediately prior to such sale
or other disposition in substantial-
ly the same proportion as their
ownership, immediately prior to such
sale or other disposition, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securi-
ties, as the case may be, (B) less
than 20% of, respectively, the then
outstanding shares of common stock
of such corporation and the combined
voting power of the then outstanding
voting securities of such corpora-
tion entitled to vote generally in
the election of directors will be
beneficially owned, directly or
indirectly, by any Person (excluding
any employee benefit plan (or relat-
ed trust) of the Company or such
corporation), except to the extent
that such Person owned 20% or more
of the Outstanding Company Common
Stock or Outstanding Company Voting
Securities prior to the sale or
disposition, and (C) at least a
majority of the members of the board
of directors of such corporation
will have been members of the Incum-
bent Board at the time of the execu-
tion of the initial agreement, or of
the action of the Board, providing
for such sale or other disposition
of assets of the Company.
4. Restrictions on Alienation of Benefits. No right or
benefit under this Agreement shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge the same shall be void. No right or benefit
hereunder shall in any manner be liable for or subject to the
debts, contracts, liabilities, or torts of the person entitled to
such benefit. If the Executive or Beneficiary under this Agreement
should become bankrupt or attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge any right to a benefit under
this Agreement, then such right or benefit shall, in the discretion
of the Committee, be held or applied for the benefit of the
Executive or Beneficiary, his spouse, children, or other depen-
dents, or any of them, in such manner and in such portion as the
Committee, in its sole and absolute discretion, may deem proper.
5. No Trust. No action under this Agreement by the
Company, its Board of Directors or the Committee shall be construed
as creating a trust, escrow or other secured or segregated fund in
favor of the Executive, his Beneficiary, or any other persons
otherwise entitled to his Supplemental Retirement Income. The
status of the Executive and his Beneficiary with respect to any
liabilities assumed by the Company hereunder shall be solely those
of unsecured creditors of the Company and/or any Subsidiary. Any
asset acquired or held by the Company or any Subsidiary in
connection with liabilities assumed by it hereunder, shall not be
deemed to be held under any trust, escrow or other secured or
segregated fund for the benefit of the Executive or his Benefici-
aries or to be security for the performance of the obligations of
the Company or any Subsidiary, but shall be, and remain a general,
unpledged, unrestricted asset of the Company or any Subsidiary at
all times subject to the claims of general creditors of the Company
or any Subsidiary.
6. Withholding and Other Employment Taxes. The Company
shall comply with all federal and state laws and regulations
respecting the withholding, deposit and payment of any income or
other taxes relating to any payments made under this Agreement.
7. Claims Procedure.
(a) The Committee shall make all determinations as
to the right of any person to benefits. If any request for a
benefit is wholly or partially denied, the Committee shall notify
the person requesting the pension benefits, in writing, of such
denial, including in such notification the following information:
(b) the specific reason or reasons for such denial;
(c) the specific references to the pertinent
Agreement provisions upon which the denial is based;
(d) a description of any additional material and
information which may be needed to clarify the request,
including an explanation of why such information is
required; and
(e) an examination of this Agreement's review
procedure with respect to denial of benefits.
Provided, that any such notice to be delivered to any Executive or
Beneficiary shall be mailed by certified or registered mail and
shall be written to the best of the Committee's ability in a manner
that may be understood without legal counsel.
8. Review Procedure. The Executive or Beneficiary
whose claim has been denied in accordance with Section 7 herein may
appeal to the Committee for review of such denial by making a
written request therefor within 60 days of receipt of the notifica-
tion of such denial. The Executive or Beneficiary may examine
documents pertinent to the review and may submit to the Committee
written issues and comments. Within 60 days after receipt of the
request for review, the Committee shall communicate to the
claimant, in writing, its decision, and the communication shall set
forth the reason or reasons for the decision and specific reference
to those Agreement provisions upon which the decision is based.
9. Records and Reports. The Committee shall exercise
such authority and responsibility as it deems appropriate in order
to comply with governmental regulations relating to records of the
Executive's accounts and benefits which may be paid under the
Agreement; and to notify the Executive and Beneficiaries as
required.
10. Other Committee Powers and Duties. The Committee
shall have such duties and powers as may be necessary to discharge
its duties hereunder, including, but not by way of limitation, the
following:
(a) to construe and interpret the Agreement in its
sole and absolute discretion, decide all questions of
eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(b) to prescribe procedures to be followed by the
Executive or Beneficiary filing applications for bene-
fits;
(c) to prepare and distribute, in such manner as
the Committee determines to be appropriate, information
explaining the Agreement;
(d) to receive from the Company and from the Execu-
tive and Beneficiaries such information as shall be
necessary for the proper administration of the Agreement;
(e) to furnish the Company, upon request, such
reports with respect to the administration of the
Agreement as are reasonable and appropriate;
(f) to appoint and employ individuals and any other
agents it deems advisable, including legal counsel, to
assist in the administration of the Agreement and to
render advice with respect to any responsibility of the
Committee, or any of its individual members, under the
Agreement;
(g) to allocate among themselves who shall be
responsible for specific duties and to designate fiduci-
aries (other than Committee members) to carry out
responsibilities under the Agreement; provided that any
such allocations shall be reduced to writing, signed by
all Committee members, and filed in a permanent Committee
minute book; and
(h) to maintain continuing review of applicable
laws, implementing regulations thereto and suggest
changes and modifications to the Company in connection
with delegations of responsibility, as appropriate, and
amendments to the Agreement.
11. Rules and Decisions. The Committee may adopt such
rules as it deems necessary, desirable, or appropriate. When
making a determination or calculation, the Committee shall be
entitled to rely upon information furnished by a Executive or
Beneficiary, the Company or the legal counsel of the Company.
12. Committee Procedures. The Committee may act at a
meeting or in writing without a meeting. The Committee shall have
a chairman, and appoint a secretary, who may or may not be a
Committee member. The secretary shall keep a record of all
meetings in a permanent Committee minute book and forward all
necessary communications to the Company. The Committee may adopt
such bylaws and regulations as it deems desirable for the conduct
of its affairs. All decisions of the Committee shall be made by
the vote of the majority including actions in writing taken without
a meeting. A dissenting Committee member who, within a reasonable
time after he has knowledge of any action or failure to act by the
majority, registers his dissent in writing delivered to the other
Committee members, to the extent permitted by law, shall not be
responsible for any such action or failure to act.
13. Assumption of Agreement. The Company will require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree
to perform the Company's and any Subsidiary's obligations under
this Agreement in the same manner and to the same extent that the
Company or such Subsidiary would be required to perform if no such
succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any succes-
sion shall be a breach by the Company of its obligations under this
Agreement and shall entitle the Executive to payment from the
Company in the same amount and on the same terms as the Executive
would be entitled to hereunder if the Executive's employment was
terminated immediately following a Change of Control, except that
for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the date of
termination of employment.
14. Forfeiture of All Benefits. In the event that (i)
the Executive is discharged from employment service with the
Company for acts of dishonesty, fraud, theft, embezzlement, (ii)
upon the conviction by a court of competent jurisdiction of a crime
that is deemed to be a felony under the laws of the State of
Oklahoma (or any other state) or laws of the United States, or
(iii) in the event the Executive commits any other act or acts
which are injurious and adversely impacts the Company in any manner
whatsoever, then, in such events, the Committee, in its sole
discretion, may determine that any benefit which would otherwise be
provided to the Executive under the Agreement or the Agreement
shall be forfeited in its entirety, and it shall thereafter be
deemed as if the Executive never was selected for participation in
the Agreement.
15. Minimum Benefit. Notwithstanding any provision of
this Agreement to the contrary, in the event that the Company
selects and the Executive agrees to be a participant in the Prior
Plan or any successor thereto, then, the Supplemental Retirement
Income accrued under this Agreement shall be the minimum benefits
to be provided to the Executive under such Prior Plan.
16. Miscellaneous.
16.1 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Oklahoma, without reference to principles of conflict of laws.
16.2 Headings. The captions of this Agreement are
not part of the provisions hereof and shall have no force and
effect.
16.3 Taxes. The Executive acknowledges that the
payments and benefits to which he is entitled to under this
Agreement will be includable in his taxable income. Accordingly,
Executive agrees (i) to pay all required income, employment and
other taxes attributable to such payments and benefits and (ii)
that the Company may be required to withhold all applicable taxes
from such payments and benefits.
16.4 Amendment. This Agreement may not be amended
or modified otherwise than by a written agreement executed by the
parties hereto or their respective heirs, successors, assigns or
the legal representatives, as the case may be.
16.5 Notices. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Executive:
William J. Dowd
18701 Woody Creek Drive
Oklahoma City, Oklahoma 73003
If to the Company:
Fleming Companies, Inc.
6301 Waterford Boulevard
P.O. Box 26647
Oklahoma City, Oklahoma 73126
Attention: Craig A. Grant, Senior Vice President -
Organizational Strategies and Management
Development
or such other address as either party shall have furnished to the
other in writing in accordance herewith. Notices and communica-
tions shall be effective when actually received by the addressee.
16.6 Severability. The invalidity or enforce-
ability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agree-
ment.
16.7 No Waiver. The Company's or the Executive's
failure to insist upon strict compliance with any provision hereof
shall not be deemed to be a waiver of such provision or any other
provision hereof.
16.8 Entire Agreement. This Agreement contains the
entire understanding of the Company and Executive with respect to
the subject matter hereof.
16.9 Binding Effect. This Agreement shall inure
to the benefit of and be binding upon the Company, Executive, their
respective heirs, successors, assigns or legal representatives, as
the case may be.
IN WITNESS WHEREOF, Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the
Company has caused these presents to be executed in its name on its
behalf, all as of the day and year first above written.
EXECUTED the date and year first above written.
FLEMING COMPANIES, INC., a corpo-
ration
By:
Craig A. Grant
Senior Vice President -
Organizational Strategies and
Management Development
"COMPANY"
William J. Dowd
"EXECUTIVE"
<PAGE>
EXHIBIT "A"
Description of Methods of Payment
METHOD 1 - Life of
Participant Only: A Supplemental Retirement Income
will be paid for the Executive's
life only. Upon the Executive's
death, all payments of Supplemen-
tal Normal Retirement Income
shall cease.
METHOD 2 - 50%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Retirement Income will be paid to
the Executive for his life, then,
at the Executive's death 50% of
such amount shall be paid to the
Executive's surviving Bene-
ficiary. In the event that the
Executive's surviving Beneficiary
has predeceased him, or should
otherwise die after the Execu-
tive's death, then no further
payments will be paid under
Method 2 or this Agreement.
METHOD 3 - 75%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Retirement Income will be paid to
the Executive for his life, then,
at the Executive's death 75% of
such amount shall be paid to the
Executive's surviving Beneficiary.
In the event that the
Executive's surviving Beneficiary
has predeceased him, or should
otherwise die after the Execu-
tive's death, then no further
payments will be due under Method
3 or this Agreement.
METHOD 4 - 100%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Retirement Income will be paid to
the Executive for his life, then,
at the Executive's death 100% of
such amount shall be paid to the
Executive's surviving Bene-
ficiary. In the event that the
Executive's surviving Beneficiary
has predeceased him, or should
otherwise die after the Execu-
tive's death, then no further
payments will be due under Method
4 or this Agreement.
METHOD 5 - 5 Year
Period Certain: A reduced amount of Supplemental
Retirement Income will be paid
for a period of 5 years certain.
After the expiration of such 5
year period, payments shall then
continue for the Executive's life
in the same amount. In the event
of the Executive's death during
the 5 year period certain, then,
the balance of such payments due
only during such 5 year period
will be paid to the Executive's
surviving Beneficiary. After the
expiration of such 5 year period,
then all payments shall cease.
In the event of the expiration of
such 5 year period, and the Executive
dies, then, no further benefits will
be paid under METHOD 5 or this Agreement.
METHOD 6 - 10 Year
Period Certain: A reduced amount of Supplemental
Retirement Income shall be paid
for a period of 10 years certain.
After the expiration of such 10
year period, payments shall then
continue for the Executive's life
in the same amount. In the event
of the Executive's death during
the 10 year period certain, then,
the balance of such payments due
only during such 10 year period
will be paid to the Executive's
surviving Beneficiary. After the
expiration of such 10 year
period, then all payments shall
cease. In the event of the
expiration of such 10 year
period, and the Executive dies,
then, no further benefits will be
paid under METHOD 6 or this Agreement.
METHOD 7 - 15 Year
Period Certain: A reduced amount of Supplemental
Retirement Income shall be paid
for a period of 15 years certain.
After the expiration of such 15
year period, payments shall then
continue for the Executive's life
in the same amount. In the event
of the Executive's death during
the 15 year period certain, then,
the balance of such payments due
only during such 15 year period
will be paid to the Executive's
surviving Beneficiary. After the
expiration of such 15 year
period, then all payments shall
cease. In the event of the
expiration of such 15 year
period, and the Executive dies,
then, no further benefits will be
paid under METHOD 7 or this Agreement.
1997 AWARD NO. __
FLEMING COMPANIES, INC.
1996 STOCK INCENTIVE PLAN
_________________________
AMENDED AND RESTATED
RESTRICTED STOCK AWARD AGREEMENT
1996 PLAN
Participant
Name: _______________
Grant Date: November 1, 1997
Shares Subject to Restricted
Stock Award: ______
Expiration Date: December 31, 2000
(Amended and Restated as of August 18, 1998)
<PAGE>
AMENDED AND RESTATED
RESTRICTED STOCK AWARD AGREEMENT FOR
THE FLEMING COMPANIES, INC.
1996 STOCK INCENTIVE PLAN
THIS AMENDED AND RESTATED RESTRICTED STOCK AWARD
AGREEMENT entered into as of the 18th day of August, 1998, by and
between Fleming Companies, Inc., an Oklahoma corporation (the
"Company"), and _______________ (herein referred to as the
"Participant");
W I T N E S S E T H:
WHEREAS, the Participant is a key management employee of
the Company; and
WHEREAS, the Company desires to encourage the Participant
to remain in the employ of the Company in the future; and
WHEREAS, the Company has previously adopted the Fleming
Companies, Inc. 1996 Stock Incentive Plan and certain amendments
thereto (the "Plan"); and
WHEREAS, in consideration of the premises and the mutual
promises and covenants herein contained, the Company provided the
Participant the opportunity to acquire shares of voting common
stock of the Company in exchange for the Participant's performing
future services for the Company pursuant to that certain Restricted
Stock Award Agreement for the Fleming Companies, Inc. 1996 Stock
Incentive Plan dated as of November 1, 1997; and
WHEREAS, the Company and the Participant desire to amend
the Original Agreement by execution of this Amended and Restated
Restricted Stock Award Agreement for the Fleming Companies, Inc.
1996 Stock Incentive Plan (the "Agreement") which shall serve as an
amendment, restatement and continuation of the Original Agreement
as amended by this Agreement; and
WHEREAS, the Company has established a trust entitled
"Fleming Companies, Inc. Executive Deferred Compensation Trust"
(the "Trust") as a device for assisting the Company to meet its
obligations under the Plan and other employee benefit plans
sponsored by the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual promises and covenants herein contained, the Participant and
the Company agree as follows (all capitalized terms used herein,
unless otherwise defined, have the meaning ascribed to such terms
as set forth in the Plan):
1. The Plan. The Plan, a copy of which is attached
hereto as Exhibit "A", is hereby incorporated by reference herein
and made a part hereof for all purposes, and when taken with this
Agreement shall govern the rights of the Participant and the
Company with respect to the Award (as defined below).
2. Grant of Award. The Company hereby grants to the
Participant an award (the "Award") of ______ shares of Company
common stock, par value $____ (the "Stock"), on the terms and
conditions set forth herein and in the Plan.
3. Terms of Award.
(a) Vesting. Certificates representing the shares
of Stock subject to the Award shall be issued in the name of and
delivered to Liberty Bank and Trust Company of Oklahoma City, N.A.,
the trustee of the Trust (the "Trustee"). Subject to the terms of
the Plan, the Participant shall become vested in the number of the
shares of Stock within the Award in accordance with the vesting
schedule attached hereto as Exhibit "B" and incorporated by
reference, provided that such Participant has at all times remained
in the full-time and continuous employment of the Company through
the date of vesting.
Except as provided in the Plan, in the event the Partici-
pant terminates employment for any reason whatsoever prior to the
vesting of all shares of Stock subject to the Award, then, all
remaining shares of Stock which have not yet been vested (including
dividends paid and held by the Trustee on such shares) shall be
absolutely forfeited and the Participant shall have no further
interest therein of any kind whatsoever.
(b) Change of Control Event. Notwithstanding any
contrary provisions of this Agreement or the Plan, the Company and
the Committee have determined that the Participant shall be deemed
vested in all remaining shares of Stock subject to the Award which
have not yet vested upon the occurrence of a Change of Control
Event as such term is defined in this Section 3(b) and not as
defined in Section 2.4 of the Plan. For purposes of this Agreement
and this Participant the term "Change of Control Event" shall mean:
(i) The acquisition by any
individual, entity or group (within
the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Ex-
change Act")) (a "Person") of bene-
ficial ownership (within the meaning
of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more (the
"Triggering Percentage") of either
(i) the then outstanding shares of
common stock of the Company (the
"Outstanding Company Common Stock")
or (ii) the combined voting power of
the then outstanding voting securi-
ties of the Company entitled to vote
generally in the election of direc-
tors (the "Outstanding Company Vot-
ing Securities"); provided, however,
in the event the "Incumbent Board"
(as such term is hereinafter defined)
pursuant to authority granted
in any rights agreement to which the
Company is a party (the "Rights
Agreement") lowers the acquisition
threshold percentages set forth in
such Rights Agreement, the Trigger-
ing Percentage shall be automatical-
ly reduced to equal the threshold
percentages set pursuant to authori-
ty granted to the board in the
Rights Agreement; and provided,
further, however, that the following
acquisitions shall not constitute a
Change of Control: (i) any acquisi-
tion directly from the Company, (ii)
any acquisition by the Company,
(iii) any acquisition by any
employee benefit plan (or related
trust) sponsored or maintained by
the Company or any corporation con-
trolled by the Company, or (iv) any
acquisition by any corporation pur-
suant to a transaction which com-
plies with clauses (x), (y), and (z)
of subsection (iii) of this Section
3(b); or
(ii) Individuals who, as of the
date hereof, constitute the Board
(the "Incumbent Board") cease for
any reason to constitute at least a
majority of the Board; provided,
however, that any individual becom-
ing a director subsequent to the
date hereof whose election, appoint-
ment or nomination for election by
the Company's shareholders, was
approved by a vote of at least a
majority of the directors then com-
prising the Incumbent Board shall be
considered as though such individual
were a member of the Incumbent
Board, but excluding, for purposes
of this definition, any such indi-
vidual whose initial assumption of
office occurs as a result of an
actual or threatened election con-
test with respect to the election or
removal of directors or other actual
or threatened solicitation of prox-
ies or consents by or on behalf of a
Person other than the Board; or
(iii) Approval by the share-
holders of the Company of a reorga-
nization, share exchange, merger or
consolidation or acquisition of
assets of another corporation (a
"Business Combination"), in each
case, unless, following such Busi-
ness Combination, (x) all or sub-
stantially all of the individuals
and entities who were the beneficial
owners, respectively, of the Out-
standing Company Common Stock and
Outstanding Company Voting Securi-
ties immediately prior to such Busi-
ness Combination will beneficially
own, directly or indirectly, more
than 50% of, respectively, the then
outstanding shares of common stock
and the combined voting power of the
then outstanding voting securities
entitled to vote generally in the
election of directors, as the case
may be, of the corporation resulting
from such Business Combination (in-
cluding, without limitation, a cor-
poration which as a result of such
transaction will own the Company
through one or more subsidiaries) in
substantially the same proportions
as their ownership, immediately
prior to such Business Combination
of the Outstanding Company Common
Stock and Outstanding Company Voting
Securities, as the case may be, (y)
no Person (excluding any employee
benefit plan (or related trust) of
the Company or such corporation
resulting from such Business Combi-
nation) will beneficially own, di-
rectly or indirectly, 20% or more
of, respectively, the then outstand-
ing shares of common stock of the
corporation resulting from such
Business Combination or the combined
voting power of the then outstanding
voting securities of such corpora-
tion except to the extent that such
ownership existed prior to the Busi-
ness Combination, and (z) at least a
majority of the members of the board
of directors of the corporation
resulting from such Business Combi-
nation will have been members of the
Incumbent Board at the time of the
execution of the initial agreement,
or of the action of the Board, pro-
viding for such Business Combina-
tion; or
(iv) Approval by the sharehold-
ers of the Company of (x) a complete
liquidation or dissolution of the
Company or, (y) the sale or other
disposition of all or substantially
all of the assets of the Company,
other than to a corporation, with
respect to which following such sale
or other disposition, (A) more than
50% of, respectively, the then out-
standing shares of common stock of
such corporation and the combined
voting power of the then outstanding
voting securities of such corpora-
tion entitled to vote generally in
the election of directors will be
beneficially owned, directly or
indirectly, by all or substantially
all of the individuals and entities
who were the beneficial owners,
respectively, of the Outstanding
Company Common Stock and Outstanding
Company Voting Securities immediate-
ly prior to such sale or other dis-
position in substantially the same
proportion as their ownership, imme-
diately prior to such sale or other
disposition, of the Outstanding
Company Common Stock and Outstanding
Company Voting Securities, as the
case may be, (B) less than 20% of,
respectively, the then outstanding
shares of common stock of such cor-
poration and the combined voting
power of the then outstanding voting
securities of such corporation enti-
tled to vote generally in the elec-
tion of directors will be benefi-
cially owned, directly or indirect-
ly, by any Person (excluding any
employee benefit plan (or related
trust) of the Company or such corpo-
ration), except to the extent that
such Person owned 20% or more of the
Outstanding Company Common Stock or
Outstanding Company Voting Securi-
ties prior to the sale or disposi-
tion, and (C) at least a majority of
the members of the board of direc-
tors of such corporation will have
been members of the Incumbent Board
at the time of the execution of the
initial agreement, or of the action
of the Board, providing for such
sale or other disposition of assets
of the Company.
4. Legends. The shares of Stock which are the subject
of the Award shall be subject to the following legend:
"THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO AND ARE TRANSFERRABLE ONLY IN ACCORDANCE WITH
THAT CERTAIN RESTRICTED STOCK AWARD AGREEMENT FOR THE
FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN DATED
THE 1ST DAY OF NOVEMBER, 1997. ANY ATTEMPTED TRANSFER OF
THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE IN
VIOLATION OF SUCH AGREEMENT SHALL BE NULL AND VOID AND
WITHOUT EFFECT. A COPY OF THE AGREEMENT MAY BE OBTAINED
FROM THE SECRETARY OF FLEMING COMPANIES, INC."
5. Automatic Deferral of Vested Shares and Dividends.
The Participant agrees that the grant of the Award under this
Agreement is subject to the restrictions herein contained and that
all shares of Stock subject to the Award and dividends thereon, if
any, made under this Agreement shall be automatically and irrevoca-
bly delivered directly to the Trustee and shall not be distributed
by the Trustee to the Participant until the Participant terminates
employment with the Company or a Subsidiary and all the following
conditions have been satisfied:
(a) The Participant completes at least two years of
employment service with the Company or a Subsidiary;
(b) The Participant satisfies the "Rule of 70"
where the Participant's age plus completed years of employment
service with the Company or a Subsidiary equals 70 or more; and
(c) The Participant has attained the age of 55 and
has earned at least 10 years of employment service with the Company
or a Subsidiary.
Provided, for purposes of determining a Participant's years of
employment service with the Company or a Subsidiary, such service
shall be based upon the 12 month period commencing with the
Participant's initial date of hire (or date of rehire) with the
Company or a Subsidiary and 12 month anniversaries of such date
during which time the Participant remains in the continuous full-
time employ of the Company or a Subsidiary. For purposes of
calculating the years of employment service with the Company or a
Subsidiary under Subsections 5(b) and 5(c) above, service will be
considered both before and after the date of the Award. For
purposes of calculating the years of employment service with the
Company or a Subsidiary under Section 5(a) above, service will be
considered as commencing on November 1, 1997. With regard to the
calculation of years of employment service with respect to any
Participant who is hired and then terminated employment and was
subsequently rehired by the Company or a Subsidiary, then, the
Committee shall make the determination and calculation as to number
of completed years of employment service by disregarding the break
in employment service considering such periods of employment
service to be cumulative, i.e., counting one or more periods of
employment.
Provided further, notwithstanding the fact that the Participant has
not satisfied the foregoing requirements of this Section 5, in the
event that the Participant dies, incurs a Disability, or a Change
of Control Event occurs as defined in Section 3(b) of this
Agreement, then (i) the Award (all shares of Stock) will be
automatically fully vested and nonforfeitable and (ii) such vested
shares of Stock and dividends attributable to the Award (all shares
of Stock) will be distributed by the Trustee to the Participant (or
his Beneficiary in the event of his death) within thirty (30) days
following the occurrence of the event which would cause distribu-
tion of such vested shares of Stock.
Provided further, the Committee will make all decisions, in its
sole discretion, with regard to whether the requirements for
distribution of any Award have been satisfied, and may, in its sole
discretion, waive all or any restrictions with respect to any
shares of Stock.
6. No Rights in Stock. The Participant agrees that
until such vested shares of Stock are distributed to him, he has no
rights or interest in such shares as a shareholder of the Company
or otherwise, and that such shares shall be held by the Trustee in
accordance with the terms of the Trust and shall be voted by the
Trustee. Specifically, the Participant hereby waives the right to
require the certificate representing the shares of Stock granted
under the Award to be in his name and any right to vote such shares
of Stock as provided in Section 7.2(c) of the Plan. Further, the
Participant has no interest in the Trust of any kind whatsoever.
As a condition precedent to issuing a certificate representing the
shares of Stock granted under the Award, the Company require and
the Participant agrees to deliver to the Trustee a duly executed
irrevocable stock power (in blank) covering such shares
representing the certificate which will be utilized by the Trustee
in the event the Participant terminates employment with the Company
or a Subsidiary prior to the time he becomes vested in such shares
of Stock, and will be executed by the Trustee transferring such
shares of Stock to the Company.
7. Nontransferability of Award. With respect to all
shares of Stock held by the Trust which are subject to this Award,
and dividends on such Stock held by the Trust, the Participant
shall not have the right to sell, assign, transfer, convey,
dispose, pledge, hypothecate, burden, encumber or charge shares of
Stock held by the Trustee and dividends or any interest therein in
any manner whatsoever.
8. Notices. All notices or other communications
relating to the Plan and this Agreement as it relates to the
Participant shall be in writing, shall be deemed to have been made
if personally delivered in return for a receipt, or if mailed, by
regular U.S. mail, postage prepaid, by the Company to the Partici-
pant at the following address:
______________________________
______________________________
______________________________
or such other address as the Participant may advise the Company in
writing. The date of personal delivery shall be the date of giving
notice, or if made by mail in the manner prescribed above, notice
shall be deemed to have been given three (3) business days after
the date of mailing.
9. Binding Effect and Governing Law. This Agreement
shall be (i) binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors and assigns except as
may be limited by the Plan and (ii) governed and construed under
the laws of the State of Oklahoma.
10. Withholding. The Company and the Participant shall
comply with all federal and state laws and regulations respecting
the withholding, deposit and payment of any income, employment or
other taxes relating to the Award.
11. Award Subject to Claims or Creditors. The
Participant shall not have any interest in any particular assets of
the Company, its parent, if applicable, or any Subsidiary by reason
of the right to earn an Award under the Plan and this Agreement,
and the Participant or any other person shall have only the rights
of a general unsecured creditor of the Company, its parent, if
applicable, or a Subsidiary with respect to any rights under the
Plan or this Agreement.
12. Captions. The captions of specific provisions of
this Agreement are for convenience and reference only, and in no
way define, describe, extend or limit the scope of this Agreement
or the intent of any provision hereof.
13. Counterparts. This Agreement may be executed in any
number of identical counterparts, each of which shall be deemed an
original for all purposes, but all of which taken together shall
form but one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
"COMPANY" FLEMING COMPANIES, INC., an Oklahoma
corporation
By
Craig A. Grant
Senior Vice President -
Organizational Strategies and
Management Development
"PARTICIPANT"
______________________, Participant
<PAGE>
1996 PLAN
EXHIBIT "B"
VESTING OF RESTRICTED STOCK
Restricted Stock shall vest in accordance with the following
terms during the "Award Period" which shall commence November 1,
1997 and shall terminate December 31, 2000 if not sooner vested.
Shares not fully vested during the Award Period shall be forfeited
by the Participant at the end of the Award Period.
A. One-half of the number of shares of Stock in the Award will be
subject to vesting based upon the Participant's continuous
employment with the Company and/or any of its Subsidiaries through
the vesting dates set forth on the following table:
Vesting Date Number of Shares Vested
_______________ _____
_______________ _____
_______________ _____
B. One-half of the number of shares of Stock in the Award will be
subject to vesting based upon the Stock of the Company achieving
and maintaining for 20 consecutive trading days from and after
October 31, 1997, the following Current Market Values:
Current Market Value Number of Shares Vested
$_____ _____
$_____ _____
$_____ _____
For purposes of this Agreement, "Current Market Value"
shall mean the closing price for shares of Stock as reported on the
New York Stock Exchange as reflected in the Wall Street Journal
Southwest Edition.
FLEMING COMPANIES, INC.
______________________________________________________________________________
AMENDED AND RESTATED
NON-QUALIFIED STOCK OPTION AGREEMENT (1996 STOCK INCENTIVE PLAN)
______________________________________________________________________________
Name: _______________ Grant Date: _________________
Option Price: $_____ Exercise Date: _________________ - 25%
Shares Granted: _____ _________________ - 50%
Expiration Date: _________________ _________________ - 75%
_________________ - 100%
(Amended and Restated as of August 18, 1998)
<PAGE>
AMENDED AND RESTATED
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE FLEMING COMPANIES, INC.
1996 STOCK INCENTIVE PLAN
THIS AMENDED AND RESTATED NON-QUALIFIED STOCK OPTION
AGREEMENT, made as of this 18th day of August, 1998, at Oklahoma City, Oklahoma
by and between ______________ (hereinafter referred to as the "Participant", and
Fleming Companies, Inc. (hereinafter referred to as the "Company"):
W I T N E S S E T H:
WHEREAS, the Participant is a key employee of the Company, its parent or
any subsidiary of the Company, and it is important to the Company that the Par-
ticipant be encouraged to remain in the employ of the Company, its parent or
any subsidiary of the Company; and
WHEREAS, in recognition of such facts, the Company has provided to the
Participant an opportunity to purchase shares of the common stock of the Com-
pany, as hereinafter provided, pursuant to the "Fleming Companies, Inc. 1996
Stock Incentive Plan" (the "Plan") and the Company and the Participant have
executed that certain Non-Qualified Stock Option Agreement under the Fleming
Companies, Inc. 1996 Stock Incentive Plan dated as of February 24, 1997 (the
"Original Agreement"); and
WHEREAS, the Company and the Participant desire to amend the Original
Agreement by execution of this Amended and Restated Non-Qualified Stock Option
Agreement under the Fleming Companies, Inc. 1996 Stock Incentive Plan (the
"Option Agreement") which shall serve as an amendment, restatement and con-
tinuation of the Original Agreement as amended by this Option Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for good and valuable consideration, the Participant and the Com-
pany hereby agree as follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the
Participant a non-qualified stock option (the "Stock Option") as described
in Sections 83 and 421 of the Internal Revenue Code of 1986 (the "Code") to
purchase all or any part of an aggregate of _____ shares of its common stock
(the "Stock") of the Company as set forth below, under and subject to the
terms and conditions of this Option Agreement and the Plan, which is incorpo-
rated herein by reference and made a part hereof for all purposes. The pur-
chase price per share for each share of Stock to be purchased hereunder
shall be $_____ (the "Option Price").
2. TIMES OF EXERCISE OF STOCK OPTION. After, and only after, the
conditions of Section 9 hereof have been satisfied, the Participant shall
be eligible to exercise that portion of his Stock Option pursuant to the
schedule set forth hereinafter. If the Participant's employment with the
Company (or its parent or of any one or more of the subsidiaries of the
Company) remains full-time and continuous at all times to any of the
"Exercise Dates" specified hereafter, then the Participant shall be entitled,
subject to the applicable provisions of the Plan and this Option Agreement
having been satisfied, to exercise on or after the applicable Exercise Date,
on a cumulative basis, the number of shares of Stock determined by multiply-
ing the aggregate number of shares set forth in the foregoing Section 1 by
the designated percentage set forth hereafter.
Percent of Stock
Exercise Dates Option Exercisable
After _________________ 25%
After _________________ 50%
After _________________ 75%
After _________________ 100%
3. TERM OF STOCK OPTION. Except as specifically provided to the
contrary in this Option Agreement or in the Plan, with regard to the death of a
Participant, no Stock Option shall be exercisable within six months from nor
more than ten years after the date of grant (the "Option Period"). Stock
Options shall be exercisable only by the Participant while actively employed
by the Company or a subsidiary, except that (i) any such Stock Option granted
and which is otherwise exercisable, may be exercised by the personal repre-
sentative of a deceased Participant within 12 months after the death of such
Participant and (ii) if a Participant terminates his employment with the
Company or a subsidiary, such Participant may exercise any Stock Option
which is otherwise exercisable at any time within three months of such
date of termination. If a Participant should die during the applicable three
month period following the date of such Participant's termination, the rights
of the personal representative of such deceased Participant as such relate to
any Stock Options granted to such deceased Participant shall be governed in
accordance with this Section 3(i).
4. NONTRANSFERABILITY OF STOCK OPTIONS. Except as otherwise
herein provided, any Stock Option granted shall not be transferable other-
wise than by will or the laws of descent and distribution, and the Stock
Option may be exercised, during the lifetime of the Participant, only by him.
More particularly (but without limiting the generality of the foregoing), the
Stock Option may not be assigned, transferred (except as provided above),
pledged or hypothecated in any way, shall not be assignable by operation
of law and shall not be subject to execution, attachment, or similar
process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of the Stock Option contrary to the provisions hereof shall
be null and void and without effect.
5. EMPLOYMENT. So long as the Participant shall continue to be a full-
time and continuous employee of the Company, its parent or one or more of the
subsidiaries of the Company, any Stock Option granted to him shall not be
affected by any change of duties or position. Nothing in the Plan or in
this Option Agreement shall confer upon the Participant any right to con-
tinue in the employ of the Company, its parent or any of the subsidiaries
of the Company, or interfere in any way with the right of the Company, its
parent or any of the subsidiaries of the Company to terminate such
Participant's employment at any time.
6. SPECIAL RULES WITH RESPECT TO STOCK OPTIONS. With respect to
Stock Options granted hereunder, the following special rules shall apply:
(a) Acceleration of Otherwise Unexercisable Stock Option on
Termination of Employment or Death. The Committee, in its sole discretion, may
permit (i) a Participant who terminates employment with the Company or a sub-
sidiary or (ii) the personal representative of a deceased Participant, to
exercise and purchase (within three months of such date of termination of
employment or 12 months in the case of a deceased Participant) all or any
part of the shares subject to the Stock Option on the date of the Partici-
pant's death or termination, notwithstanding that all installments, if any,
with respect to such Stock Option, had not accrued on such date.
Provided, such discretionary authority of the Committee may not be
exercised with respect to any Stock Option (or portion thereof) if
the applicable six month waiting period for exercise had not expired
except in the event of the death of the Participant when the personal
representative of the deceased Participant may, with the consent
of the Committee, exercise such Stock Option notwithstanding the
fact that the applicable six month waiting period had not yet expired.
(b) Number of Stock Options Granted. Participants may be granted
more than one Stock Option. In making any such determination, the Committee
shall obtain the advice and recommendation of the officers of the Company,
its parent, or a subsidiary of the Company which have supervisory authority
over such Participants. Further, the granting of a Stock Option under this
Option Agreement shall not affect any outstanding Stock Option previously
granted to a Participant under the Plan.
(c) Payment of Withholding Taxes. Upon the exercise of any Stock
Option as provided herein, no such exercise shall be permitted, nor shall any
Stock be issued to any Participant until the Company receives full payment for
the Stock purchased which shall include any required state and federal with-
holding taxes. Further, upon the exercise of any Stock Option the Partici-
pant may direct the Company to retain from the shares of Stock to be issued
upon exercise of the Stock Option that number of initial shares of Stock
(based on fair market value) that would satisfy the requirements for with-
holding any amounts due upon the exercise.
7. METHOD OF EXERCISING STOCK OPTION.
(a) Procedures for Exercise. The manner of exercising the Stock
Option herein granted shall be by written notice to the Company at least two
days before the date the Stock Option, or part thereof, is to be exercised,
and in any event prior to the expiration of the Option Period. Such notice
shall state the election to exercise the Stock Option and the number of
shares of Stock with respect to that portion of the Stock Option being
exercised, and shall be signed by the person or persons so exercising the
Stock Option. The notice shall be accompanied by payment of the full
purchase price of such shares, in which event the Company shall deliver a
certificate or certificates representing such shares to the person or
persons entitled thereto as soon as practicable after the notices shall be
received.
(b) Form of Payment. Payment for shares of Stock purchased under
this Option Agreement shall be made in full and in cash or check made payable
to the Company. Provided, payment for shares of Stock purchased under this
Option Agreement may also be made in common stock of the Company or a
combination of cash and common stock of the Company. In the event that
common stock of the Company is utilized in consideration for the purchase
of Stock upon the exercise of a Stock Option, then, such common stock shall
be valued at the "fair market value" as defined in Section 2.10 of the Plan.
In addition to the foregoing procedure which may be available for the
exercise of any Stock Option, the Participant may deliver to the
Company a notice of exercise including an irrevocable instruction to
the Company to deliver the stock certificate representing the shares
subject to a Stock Option to a broker authorized to trade in the common
stock of the Company. Upon receipt of such notice, the Company will
acknowledge receipt of the executed notice of exercise and forward this
notice to the broker. Upon receipt of the copy of the notice which has
been acknowledged by the Company, and without waiting for issuance of the
actual stock certificate with respect to the exercise of the Stock Option,
the broker may sell the Stock (or that portion of the Stock necessary to
cover the Option Price and any withholding taxes due, if any). Upon receipt
of the stock certificate from the Company, the broker will deliver directly
to the Company that portion of the sales proceeds to cover the Option Price
and any withholding taxes. Further, the broker may also facilitate a
loan to the Participant upon advance receipt of the exercise notice for
issuance of the actual stock certificate as an alternative means of
financing and facilitating the exercise of any Stock Option. For all
purposes of effecting the exercise of a Stock Option, the date on which
the Participant gives the notice of exercise to the Company will be the
date he becomes bound contractually to take and pay for the
shares of Stock underlying the Stock Option. No Stock shall be issued to the
Participant until the Company receives full payment for the Stock purchased
under the Stock Option which shall include any required state and federal
withholding taxes.
(c) Further Information. In the event the Stock Option is
exercised, pursuant to the foregoing provisions of this Section 7, by
any person or persons other than the Participant in the event of the
death of the Participant, such notice shall also be accompanied by
appropriate proof of the right of such person or persons to exercise
the Stock Option. The notice so required shall be given by personal
delivery to the Secretary of the Company or by registered or certified
mail, addressed to the Company at 6301 Waterford Boulevard, Oklahoma
City, Oklahoma 73118, and it shall be deemed to have been given when
it is so personally delivered or when it is deposited in the United
States mail in an envelope addressed to the Company, as aforesaid,
properly stamped for delivery as a registered or certified letter.
8. ACCELERATION OF OPTIONS UPON CHANGE OF CONTROL.
Notwithstanding anything to the contrary in the Plan, upon the occurrence
of a "Change of Control Event" (as such term is defined in Section 8 of
this Option Agreement and not in the Plan), any and all Stock Options will
become automatically fully vested and immediately exercisable with such
acceleration to occur without the requirement of any further act by either
the Company or the Participant. For purposes of this Participant and this
Option Agreement, the term "Change of Control Event" shall mean:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more (the "Triggering
Percentage") of either (i) the then outstanding shares of
common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided,
however, in the event the "Incumbent Board" (as such term
is hereinafter defined) pursuant to authority granted in any
rights agreement to which the Company is a party (the
"Rights Agreement") lowers the acquisition threshold
percentages set forth in such Rights Agreement, the
Triggering Percentage shall be automatically reduced to
equal the threshold percentages set pursuant to authority
granted to the board in the Rights Agreement; and provided,
further, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company, (ii) any acquisition by the Company, (iii)
any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (iv) any
acquisition by any corporation pursuant to a transaction
which complies with clauses (x), (y), and (z) of subsection
(iii) of this Section 8; or
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, appointment
or nomination for election by the Company's shareholders,
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 purposes of this
definition, any such individual whose initial assumption of
office occurs as a result of an actual 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;
or
(iii) Approval by the shareholders of the Company of
a reorganization, share exchange, merger or consolidation
or acquisition of assets of another corporation (a "Business
Combination"), in each case, unless, following such
Business Combination, (x) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately
prior to such Business Combination will beneficially own,
directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction will own the Company through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination
of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may
be, (y) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting
from such Business Combination) will beneficially own,
directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination, and (z) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination will
have been members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company
of (x) a complete liquidation or dissolution of the Company
or, (y) the sale or other disposition of all or substantially all
of the assets of the Company, other than to a corporation,
with respect to which following such sale or other
disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote
generally in the election of directors will be beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately
prior to such sale or other disposition in substantially the
same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) less than 20% of,
respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors will be
beneficially owned, directly or indirectly, by any Person
(excluding any employee benefit plan (or related trust) of
the Company or such corporation), except to the extent that
such Person owned 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting
Securities prior to the sale or disposition, and (C) at least a
majority of the members of the board of directors of such
corporation will have been members of the Incumbent Board
at the time of the execution of the initial agreement, or of
the action of the Board, providing for such sale or other
disposition of assets of the Company.
9. SECURITIES LAW RESTRICTIONS. Stock Options shall be exercised and
Stock issued only upon compliance with the Securities Act of 1933, as amended
(the "Act"), and any other applicable securities law, or pursuant to an
exemption therefrom.
10. NOTICES. All notices or other communications relating to the Plan and
this Option Agreement as it relates to the Participant shall be in writing and
shall be mailed (U.S. Mail) by the Company to the Participant at the then cur-
rent address as maintained by the Company or such other address as the Partici-
pant may advise the Company in writing.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
duly executed by its officers thereunto duly authorized, and the Participant has
hereunto set his hand and seal, all on the day and year first above written.
COMPANY: FLEMING COMPANIES, INC., an
Oklahoma corporation
By: ______________________________________
Craig A. Grant, Senior Vice President -
Organizational Strategies and
Management Development
PARTICIPANT: _________________________________________
_________________________
AMENDMENT NO. 1
TO
FLEMING COMPANIES, INC.
1990 STOCK INCENTIVE PLAN
WHEREAS, Fleming Companies, Inc. (the "Company")
presently has in existence the 1990 Stock Incentive Plan (the
"Plan"); and
WHEREAS, Section 9.1 of the Plan contains a definition of
the term "change of control"; and
WHEREAS, the Company believes that Section 9.1 of the
Plan should be amended; and
WHEREAS, the Board of Directors of the Company has
authorized and approved this Amendment No. 1 to the Plan at a
meeting held on August 18, 1998;
NOW, THEREFORE, the Plan is hereby amended as follows:
Section 9.1. Section 9.1 of the Plan is
hereby amended by deleting subsections 9.1(a),
9.1(b), 9.1(c) and 9.1(d) in their entirety
and replacing them with the following:
(a) The acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Ex-
change Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more (the
"Triggering Percentage") of either (i) the
then outstanding shares of common stock of the
Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of
the then outstanding voting securities of the
Company entitled to vote generally in the
election of directors (the "Outstanding
Company Voting Securities"); provided, how-
ever, in the event the "Incumbent Board" (as
such term is hereinafter defined) pursuant to
authority granted in any rights agreement to
which the Company is a party (the "Rights
Agreement") lowers the acquisition threshold
percentages set forth in such Rights Agree-
ment, the Triggering Percentage shall be
automatically reduced to equal the threshold
percentages set pursuant to authority granted
to the board in the Rights Agreement; and
provided, further, however, that the following
acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from
the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, or (iv) any acqui-
sition by any corporation pursuant to a trans-
action which complies with clauses (x), (y),
and (z) of subsection (c) of this Section 9.1;
or
(b) Individuals who, as of the date
hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at
least a majority of the Board; provided,
however, that any individual becoming a direc-
tor subsequent to the date hereof whose elec-
tion, appointment or nomination for election
by the Company's shareholders, 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 purposes of this definition, any such
individual whose initial assumption of office
occurs as a result of an actual 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; or
(c) Approval by the shareholders of the
Company of a reorganization, share exchange,
merger or consolidation or acquisition of
assets of another corporation (a "Business
Combination"), in each case, unless, following
such Business Combination, (x) all or substan-
tially all of the individuals and entities who
were the beneficial owners, respectively, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities immedi-
ately prior to such Business Combination will
beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstand-
ing shares of common stock and the combined
voting power of the then outstanding voting
securities entitled to vote generally in the
election of directors, as the case may be, of
the corporation resulting from such Business
Combination (including, without limitation, a
corporation which as a result of such transac-
tion will own the Company through one or more
subsidiaries) in substantially the same pro-
portions as their ownership, immediately prior
to such Business Combination of the Outstand-
ing Company Common Stock and Outstanding
Company Voting Securities, as the case may be,
(y) no Person (excluding any employee benefit
plan (or related trust) of the Company or such
corporation resulting from such Business
Combination) will beneficially own, directly
or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of
the corporation resulting from such Business
Combination or the combined voting power of
the then outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business Combi-
nation, and (z) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination will have been members of the
Incumbent Board at the time of the execution
of the initial agreement, or of the action of
the Board, providing for such Business Combi-
nation; or
(d) Approval by the shareholders of the
Company of (x) a complete liquidation or
dissolution of the Company or, (y) the sale or
other disposition of all or substantially all
of the assets of the Company, other than to a
corporation, with respect to which following
such sale or other disposition, (A) more than
50% of, respectively, the then outstanding
shares of common stock of such corporation and
the combined voting power of the then out-
standing voting securities of such corporation
entitled to vote generally in the election of
directors will be beneficially owned, directly
or indirectly, by all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the Out-
standing Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantial-
ly the same proportion as their ownership,
immediately prior to such sale or other dispo-
sition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securi-
ties, as the case may be, (B) less than 20%
of, respectively, the then outstanding shares
of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled
to vote generally in the election of directors
will be beneficially owned, directly or indi-
rectly, by any Person (excluding any employee
benefit plan (or related trust) of the Company
or such corporation), except to the extent
that such Person owned 20% or more of the
Outstanding Company Common Stock or Outstand-
ing Company Voting Securities prior to the
sale or disposition, and (C) at least a major-
ity of the members of the board of directors
of such corporation will have been members of
the Incumbent Board at the time of the execu-
tion of the initial agreement, or of the
action of the Board, providing for such sale
or other disposition of assets of the Company.
Except as provided in this Amendment No. 1, in all other
respects the Plan is hereby ratified and confirmed. The effective
date of this Amendment No. 1 shall be August 18, 1998.
FIRST AMENDMENT TO EVA PLAN ADOPTED FEBRUARY 24, 1997
"In the event bonuses are declared under the EVA Plan for 1997,
1997 will represent year one for all current participants in the
plan and the payout percentage for 1997 will be 67% and that the
payout percentage for years two through four thereafter will be
50%, 40% and 33%, respectively, and will remain 33% after year
four."
AMENDMENT NO. 2
TO
ECONOMIC VALUE ADDED INCENTIVE BONUS PLAN
FOR
FLEMING COMPANIES, INC. AND ITS SUBSIDIARIES
WHEREAS, Fleming Companies, Inc. (the "Company")
presently has in existence the Economic Value Added Incentive Bonus
Plan (the "Plan"); and
WHEREAS, Section 7.01 of the Plan contains a definition
of the term "change of control"; and
WHEREAS, the Company believes that Section 7.01 of the
Plan should be amended; and
WHEREAS, the Board of Directors of the Company has
authorized and approved this Amendment No. 2 to the Plan at a
meeting held on August 18, 1998;
NOW, THEREFORE, the Plan is hereby amended as follows:
Section 7.01. Section 7.01 of the Plan is hereby amended
by deleting subsections 7.01(a), 7.01(b), 7.01(c) and
7.01(d) in their entirety, and replacing them with the
following:
(a) The acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Ex-
change Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more (the
"Triggering Percentage") of either (i) the
then outstanding shares of common stock of the
Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of
the then outstanding voting securities of the
Company entitled to vote generally in the
election of directors (the "Outstanding
Company Voting Securities"); provided, how-
ever, in the event the "Incumbent Board" (as
such term is hereinafter defined) pursuant to
authority granted in any rights agreement to
which the Company is a party (the "Rights
Agreement") lowers the acquisition threshold
percentages set forth in such Rights Agree-
ment, the Triggering Percentage shall be
automatically reduced to equal the threshold
percentages set pursuant to authority granted
to the board in the Rights Agreement; and
provided, further, however, that the following
acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from
the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, or (iv) any acqui-
sition by any corporation pursuant to a trans-
action which complies with clauses (x), (y),
and (z) of subsection (c) of this Section
7.01; or
(b) Individuals who, as of the date
hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at
least a majority of the Board; provided,
however, that any individual becoming a direc-
tor subsequent to the date hereof whose elec-
tion, appointment or nomination for election
by the Company's shareholders, 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 purposes of this definition, any such
individual whose initial assumption of office
occurs as a result of an actual 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; or
(c) Approval by the shareholders of the
Company of a reorganization, share exchange,
merger or consolidation or acquisition of
assets of another corporation (a "Business
Combination"), in each case, unless, following
such Business Combination, (x) all or substan-
tially all of the individuals and entities who
were the beneficial owners, respectively, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities immedi-
ately prior to such Business Combination will
beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstand-
ing shares of common stock and the combined
voting power of the then outstanding voting
securities entitled to vote generally in the
election of directors, as the case may be, of
the corporation resulting from such Business
Combination (including, without limitation, a
corporation which as a result of such transac-
tion will own the Company through one or more
subsidiaries) in substantially the same pro-
portions as their ownership, immediately prior
to such Business Combination of the Outstand-
ing Company Common Stock and Outstanding
Company Voting Securities, as the case may be,
(y) no Person (excluding any employee benefit
plan (or related trust) of the Company or such
corporation resulting from such Business
Combination) will beneficially own, directly
or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of
the corporation resulting from such Business
Combination or the combined voting power of
the then outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business Combi-
nation, and (z) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination will have been members of the
Incumbent Board at the time of the execution
of the initial agreement, or of the action of
the Board, providing for such Business Combi-
nation; or
(d) Approval by the shareholders of the
Company of (x) a complete liquidation or
dissolution of the Company or, (y) the sale or
other disposition of all or substantially all
of the assets of the Company, other than to a
corporation, with respect to which following
such sale or other disposition, (A) more than
50% of, respectively, the then outstanding
shares of common stock of such corporation and
the combined voting power of the then out-
standing voting securities of such corporation
entitled to vote generally in the election of
directors will be beneficially owned, directly
or indirectly, by all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the Out-
standing Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantial-
ly the same proportion as their ownership,
immediately prior to such sale or other dispo-
sition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securi-
ties, as the case may be, (B) less than 20%
of, respectively, the then outstanding shares
of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled
to vote generally in the election of directors
will be beneficially owned, directly or indi-
rectly, by any Person (excluding any employee
benefit plan (or related trust) of the Company
or such corporation), except to the extent
that such Person owned 20% or more of the
Outstanding Company Common Stock or Outstand-
ing Company Voting Securities prior to the
sale or disposition, and (C) at least a major-
ity of the members of the board of directors
of such corporation will have been members of
the Incumbent Board at the time of the execu-
tion of the initial agreement, or of the
action of the Board, providing for such sale
or other disposition of assets of the Company.
Except as provided in this Amendment No. 2, in all other
respects the Plan is hereby ratified and confirmed. The effective
date of this Amendment No. 2 shall be August 18, 1998.
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT dated as of
August 18, 1998 (the "Amendment"), is made by and between Fleming
Companies, Inc., an Oklahoma corporation (the "Company"), and _____
__________, an individual (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive entered into that
certain Employment Agreement dated as of March 2, 1998 (the
"Employment Agreement"); and
WHEREAS, the Company and the Executive mutually desire to
amend the Employment Agreement, and it is to the mutual benefit of
the Company and the Executive to amend the Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, the Company and
the Executive hereby amend the Employment Agreement as follows:
1. The Amendment. Section 2 of the Employment Agreement is
amended by deleting it in its entirety and replacing it with the
following:
2. For purposes of this Agreement, a "Change of
Control" shall mean:
(i) The acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or
more (the "Triggering Percentage") of either
(i) the then outstanding shares of common
stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting
power of the then outstanding voting
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities");
provided, however, in the event the "Incumbent
Board" (as such term is hereinafter defined)
pursuant to authority granted in any rights
agreement to which the Company is a party (the
"Rights Agreement") lowers the acquisition
threshold percentages set forth in such Rights
Agreement, the Triggering Percentage shall be
automatically reduced to equal the threshold
percentages set pursuant to authority granted
to the board in the Rights Agreement; and
provided, further, however, that the following
acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from
the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, or (iv) any
acquisition by any corporation pursuant to a
transaction which complies with clauses (x),
(y), and (z) of subsection (iii) of this
Section 2; or
(ii) Individuals who, as of the date
hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at
least a majority of the Board; provided,
however, that any individual becoming a
director subsequent to the date hereof whose
election, appointment or nomination for
election by the Company's shareholders, 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 purposes of this
definition, any such individual whose initial
assumption of office occurs as a result of an
actual 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; or
(iii) Approval by the shareholders of
the Company of a reorganization, share
exchange, merger or consolidation or
acquisition of assets of another corporation
(a "Business Combination"), in each case,
unless, following such Business Combination,
(x) all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such Business Combination
will beneficially own, directly or indirectly,
more than 50% of, respectively, the then
outstanding shares of common stock and the
combined voting power of the then outstanding
voting securities entitled to vote generally
in the election of directors, as the case may
be, of the corporation resulting from such
Business Combination (including, without
limitation, a corporation which as a result of
such transaction will own the Company through
one or more subsidiaries) in substantially the
same proportions as their ownership,
immediately prior to such Business Combination
of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (y) no Person (excluding any
employee benefit plan (or related trust) of
the Company or such corporation resulting from
such Business Combination) will beneficially
own, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting from
such Business Combination or the combined
voting power of the then outstanding voting
securities of such corporation except to the
extent that such ownership existed prior to
the Business Combination, and (z) at least a
majority of the members of the board of
directors of the corporation resulting from
such Business Combination will have been
members of the Incumbent Board at the time of
the execution of the initial agreement, or of
the action of the Board, providing for such
Business Combination; or
(iv) Approval by the shareholders of the
Company of (x) a complete liquidation or
dissolution of the Company or, (y) the sale or
other disposition of all or substantially all
of the assets of the Company, other than to a
corporation, with respect to which following
such sale or other disposition, (A) more than
50% of, respectively, the then outstanding
shares of common stock of such corporation and
the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in the
election of directors will be beneficially
owned, directly or indirectly, by all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (B) less than 20% of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled
to vote generally in the election of directors
will be beneficially owned, directly or
indirectly, by any Person (excluding any
employee benefit plan (or related trust) of
the Company or such corporation), except to
the extent that such Person owned 20% or more
of the Outstanding Company Common Stock or
Outstanding Company Voting Securities prior to
the sale or disposition, and (C) at least a
majority of the members of the board of
directors of such corporation will have been
members of the Incumbent Board at the time of
the execution of the initial agreement, or of
the action of the Board, providing for such
sale or other disposition of assets of the
Company.
2. The Agreement. The term "Agreement" as used in the
Employment Agreement and in this Amendment shall hereafter mean the
Employment Agreement as amended by this Amendment. The Employment
Agreement, as amended hereby, shall continue in full force and
effect in accordance with the terms thereof.
3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Oklahoma.
4. Counterparts. This Amendment may be executed in one or
more counterparts, all of which shall be considered one and the
same instrument and shall become effective when one or more of the
counterparts have been signed by each of the parties and delivered
to the other parties.
IN WITNESS WHEREOF, the parties have caused this
Amendment to be duly executed on the date first written above.
FLEMING COMPANIES, INC., an
Oklahoma corporation
By
William J. Dowd, President and
Chief Operating Officer
"COMPANY"
_______________, an individual
"EXECUTIVE"
FIRST AMENDMENT TO
RESTRICTED STOCK AWARD AGREEMENT FOR
FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN
THIS FIRST AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT
FOR FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN dated as of
August 18, 1998 (the "Amendment"), is made by and between Fleming
Companies, Inc., an Oklahoma corporation (the "Company"), and ____
______________, an individual (the "Participant").
W I T N E S S E T H:
WHEREAS, the Company and the Participant entered into
that certain Restricted Stock Award Agreement for Fleming
Companies, Inc. 1996 Stock Incentive Plan dated as of November 1,
1997 (the "Restricted Stock Agreement"); and
WHEREAS, the Company and the Participant mutually desire
to amend the Restricted Stock Agreement, and it is to the mutual
benefit of the Company and the Participant to amend the Restricted
Stock Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, the Company and
the Participant hereby amend the Restricted Stock Agreement as
follows:
1. The Amendments.
(a) Section 3(b). Section 3(b) of the Restricted Stock
Agreement is amended by deleting the words "which have not yet
vested upon a Change of Control of the Company, as such term is
defined in Section 2.4(a) of the Plan" at the end thereof and
replacing them with the following:
"which have not yet vested upon the occurrence
of a Change of Control Event as such term is
defined in Section 2.4 of the Plan."
(b) Section 5. Section 5 of the Restricted Stock
Agreement is amended by deleting the words "or a Change of Control
of the Company occurs as defined in Section 2.4(a) of the Plan" in
the third paragraph thereof and replacing them with the following:
"or a Change of Control Event occurs as
defined in Section 2.4 of the Plan."
2. The Agreement. The term "Agreement" as used in the
Restricted Stock Agreement and in this Amendment shall hereafter
mean the Restricted Stock Agreement as amended by this Amendment.
The Restricted Stock Agreement, as amended hereby, shall continue
in full force and effect in accordance with the terms thereof.
3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Oklahoma.
4. Counterparts. This Amendment may be executed in one or
more counterparts, all of which shall be considered one and the
same instrument and shall become effective when one or more of the
counterparts have been signed by each of the parties and delivered
to the other parties.
IN WITNESS WHEREOF, the parties have caused this
Amendment to be duly executed on the date first written above.
FLEMING COMPANIES, INC., an
Oklahoma corporation
By
Craig A. Grant
Senior Vice President -
Organizational Strategies and
Management Development
"COMPANY"
______________, an individual
"Participant"
SETTLEMENT AND SEVERANCE AGREEMENT
THIS SETTLEMENT AND SEVERANCE AGREEMENT ("Agreement") is
entered into as of the 28th day of August, 1998, by and between
FLEMING COMPANIES, INC., an Oklahoma corporation (the "Company")
and ROBERT E. STAUTH, an individual ("Stauth") with respect to the
following:
W I T N E S S E T H
WHEREAS, Stauth has resigned as Chairman of the Board and
Chief Executive Officer and as a member of the Board of Directors
of the Company effective July 18, 1998;
WHEREAS, the Company desires to provide Stauth certain
benefits upon the severance of his employment status with the
Company; and
WHEREAS, Stauth desires to receive those benefits in
exchange for certain promises and other consideration.
NOW, THEREFORE, BE IT RESOLVED, that the Company and
Stauth, in consideration of the covenants herein set forth, agree
as follows:
1. Resignation and Retirement. Stauth agrees to and
does hereby voluntarily resign and retire as the Company's Chief
Executive Officer. Stauth also agrees to and does hereby volun-
tarily resign as Chairman and as a member of the Company's Board
of Directors (the "Board") and as a member of any committees of the
Company and/or the Board on which he currently serves. Stauth
further agrees to and does hereby resign from all other positions
which he may currently hold as an officer or member of the board of
directors of any of the Company's subsidiaries and as a member of
any committees of such subsidiaries or their boards of directors.
All such resignations shall be effective July 18, 1998, and Stauth
shall sign and deliver to the Company such other documents as may
be necessary to effect or reflect resignations as of that date.
Stauth will receive his regular base pay and benefits through July
18, 1998.
2. Severance.
2.1 Salary Replacement. The Company will pay
Stauth the sum of $1,250,000 (the "Salary Replacement Amount"),
which is the equivalent of two times Stauth's current annual base
pay. This gross amount will be paid in a lump sum payment within
ten (10) days after Stauth signs this Agreement and delivers to the
Company the General Release described in paragraph 7.1. In the
event of Stauth's death, any unpaid portion of the Salary Replace-
ment Amount will be paid in the same manner to his executor or
personal representative, as applicable.
2.2 EVA Target Bonus. If the Company determines
at the conclusion of 1998 that Stauth would, if his employment had
continued through 1998, have been eligible for a bonus (the "EVA
Target Bonus") under the Economic Value Added Incentive Bonus Plan
for Fleming Companies, Inc. and its Subsidiaries (the "EVA Plan")
earned through actual corporate performance during such year, the
Company will pay Stauth a gross amount equal to twice what he would
have earned had he remained Chief Executive Officer through the
balance of 1998 up to, but not to exceed, $1,125,000, which is the
equivalent of a maximum of two times Stauth's 1998 EVA Target
Bonus. The determination and calculation of the amount, if any, of
Stauth's EVA Target Bonus shall be made by the Company in accor-
dance with the EVA Plan as interpreted by the Company in its sole
discretion. The Company shall be fair and reasonable and shall
make its determination for Stauth using the same criteria,
including any exclusions of extraordinary charges as has been done
in the past, as it uses for all other participants in the EVA Plan.
The EVA Target Bonus, if any, will be paid on or about March 15,
1999. In the event of Stauth's death prior to March 15, 1999 (or
any later payment date), the EVA Target Bonus, if any, will be paid
to his executor or personal representative, as applicable.
2.3 Bonus Bank. Under the EVA Plan a portion of
a participant's bonus is retained by the Company for potential
future payout and maintained in a bookkeeping account (the "Bonus
Bank"). Stauth's Bonus Bank is $225,922 and the Company will make
a distribution to Stauth in the gross amount of $225,922 from his
Bonus Bank. This payment will be made within ten (10) days after
Stauth signs the Agreement and delivers it to the Company with the
General Release described in paragraph 7.1. In the event of
Stauth's death prior to his receipt of his Bonus Bank, the Bonus
Bank will be paid to his executor or personal representative, as
applicable.
2.4 Accrued Vacation. The Company will pay Stauth
for three (3) weeks' accrued and unused 1998 vacation in the gross
amount of $36,058 (the "Vacation Accrual"). The Vacation Accrual
will be paid within ten (10) days after Stauth signs this Agreement
and delivers to the Company the General Release described in
paragraph 7.1.
3. Stock Options. Subject to the provisions of this
paragraph, the Compensation and Organization Committee of the Board
(the "Compensation Committee") by its approval and adoption of this
Agreement, as noted below, does hereby accelerate vesting (to the
extent not already vested) of the following nonqualified stock
options heretofore granted to Stauth under the Fleming Companies,
Inc. 1990 Stock Option Plan (the "1990 SOP") and permit Stauth (or
his executor or personal representative, as applicable) to exercise
and purchase during the two-year period from July 18, 1998 through
July 17, 2000 (the "Exercise Period") all or any part of the shares
subject to such stock options:
Number of Options Exercise Price
30,000 $24.9375
Provided, however, if, upon advice of counsel the
Compensation Committee determines it cannot or if it elects not to
amend the 1990 SOP to provide for extension of the exercise of the
referenced options through July 17, 2000, the Company shall notify
Stauth of such determination and shall nonetheless pay Stauth the
difference between the exercise price and the fair market value of
the Company common stock on the Exercise Date (herein referred to
as the "Spread"). At any time during the Exercise Period, Stauth
may select the day (the "Exercise Date") as of which he shall be
entitled to be paid the Spread by the Company; provided, however,
that prior to 9:00 a.m., central time, on the day following the
Exercise Date, Stauth shall notify the Company of his election to
exercise the stock options by receiving payment of the Spread. In
the event of Stauth's death, such right shall vest in Stauth's
executor or personal representative. The payment of the Spread
shall be made within five (5) days after the notice of election to
receive the Spread.
Likewise, the Compensation Committee, by its approval and
adoption set out below, does hereby accelerate vesting (to the
extent not already vested) of the following nonqualified stock
options heretofore granted to Stauth under the Fleming Companies,
Inc. 1996 Stock Incentive Plan (the "1996 SIP") and permit Stauth
(or his executor or personal representative, as applicable) to
exercise and purchase during the two-year period from July 18, 1998
through July 17, 2000 all or any part of the shares subject to such
stock options:
Number of Options Exercise Price
30,000 $19.7500
30,000 $16.3750
30,000 $17.5000
Notwithstanding anything to the contrary in each of the
nonqualified stock option agreements that Stauth and the Company
have executed representing the stock options described in this
paragraph 3 granted under the 1996 SIP, such agreements are hereby
amended to provide that such nonqualified stock options are
exercisable in whole or in part by Stauth (or his executor or
personal representative) during the two-year period from July 18,
1998 through July 17, 2000. Such option agreements, as herein
modified, shall continue in full force and effect in accordance
with their terms.
4. Restricted Stock Awards. The Compensation
Committee, by its approval and adoption noted below, hereby waives
all qualifying requirements and does hereby accelerate vesting and
distribution to Stauth of 22,500 shares of restricted stock (plus
paid dividends attributable to such shares) awarded to Stauth on
November 1, 1997 under the 1996 SIP which shares vested by time on
January 1, 1998 and 22,500 shares of restricted stock (plus paid
dividends attributable to such shares) awarded to Stauth on
November 1, 1997 under the 1996 SIP which shares vested by
performance on March 31, 1998 (collectively, the "Vested Restricted
Shares"). Likewise, the Compensation Committee, by its approval
and adoption below, waives the qualifying requirements and accel-
erates both vesting and distribution of 45,000 additional shares of
restricted stock (plus paid dividends attributable to such shares)
awarded to Stauth on November 1, 1997 under the 1996 SIP, 22,500
shares of which, but for the severance of the employment relation-
ship between Stauth and the Company, would have vested on January
1, 1999 and 22,500 shares of which would have vested on January 1,
2000, respectively (collectively, the "Restricted Shares"). Other
than the Vested Restricted Shares and the Restricted Shares, all
other restricted shares or awards for which Stauth might otherwise
have been eligible under the 1996 SIP or under any other Fleming
plan shall be forfeited. Distribution of the Vested Restricted
Shares and the Restricted Shares shall be made within ten (10) days
after Stauth signs this Agreement and delivers to the Company the
General Release described in paragraph 7.1.
5. The Past Service Plan. The Compensation Committee,
by its approval and adoption noted below, waives any qualifying
requirements relating to vesting or distribution of the Fleming
Companies, Inc. Executive Past Service Benefit Plan (the "Past
Service Plan") as such requirements apply to the award made to
Stauth on November 1, 1997 of $2,364,000 plus interest at the rate
of 7.5% from November 1, 1997 until paid. This benefit will be
paid in accordance with the election previously made by Stauth
pursuant to the terms of the Past Service Plan and will commence on
November 1, 1999 after Stauth has attained age 55; provided,
however, in the event of a "Change of Control" as defined in the
Past Service Plan, the benefit shall commence on the 1st day of the
month following the "Change of Control." Under the Internal
Revenue Service Code of 1986, as amended (the "IRC"), and the
regulations promulgated thereunder, the Past Service Plan benefit
will be subject to applicable employment taxes (FICA) and Medicare
taxes payable for the calendar year 1998. Stauth has paid the
maximum employment taxes (FICA), and therefore no employment taxes
(FICA) will be due upon the execution of this Agreement. However,
the Company will withhold from the Salary Replacement Amount a sum
equal to 1.45% of Stauth's Past Service Plan benefit, representing
Stauth's Medicare taxes due on the Past Service Plan benefit.
6. Other Benefits.
6.1 The Excess Plan. The Company has determined
that Stauth, upon attaining age 55, will qualify for early
retirement income under the Consolidated Retirement Plan for
Fleming Companies, Inc. and Its Subsidiaries (the "Qualified
Plan"). Conditioned upon Stauth qualifying for early retirement
income under the Qualified Plan, the Company hereby covenants and
agrees that Stauth shall be eligible to receive annual payments
under the Fleming Companies, Inc. Executive Deferred Compensation
Plan (the "Excess Plan") upon the attainment by Stauth of age 55;
provided, however, the Company, through the Compensation Committee,
has agreed and does hereby waive one (1) year of the 3% actuarial
reduction of benefits for early retirement prior to age 62 such
that upon Stauth's attainment of age 55 he would be entitled to
benefits under the Excess Plan as if he were 56. (For example, age
56 benefits of $161,798 per annum would be payable at age 55 and
age 62 benefits of $180,000 would be payable at age 61). Stauth
shall be eligible to commence receiving benefits under the Excess
Plan upon attaining age 55, which benefits shall be paid in
accordance with the foregoing and the Excess Plan and Stauth's
elections as therein provided.
6.2 Life Insurance. The Company shall acquire a
standard rated paid up whole life insurance policy on Stauth's life
in the amount of $500,000 written by Metropolitan Life Insurance
Company, Hartford, Connecticut (the "Policy"). The Company shall
make application therefor as soon as shall be practicable following
the execution of this Agreement. The Company shall pay the
standard rate premium under the Policy and Stauth shall pay any ex-
cess rate over the standard rate. Stauth designates Carol E.
Stauth, trustee, as the primary beneficiary for the first $500,000
of the death benefit under the Policy. The Company shall be the
owner and secondary beneficiary and entitled to all dividends and
any death benefit proceeds under the Policy in excess of $500,000.
Under the Policy, Stauth shall have the right to change the primary
beneficiary upon written notice to the Company and to Metropolitan
Life Insurance Company. Stauth shall be responsible for all income
taxes resulting from the acquisition and maintenance of the Policy
by the Company.
6.3 Medical Insurance Premium Reimbursement. If
Stauth exercises his right to continued coverage under the Fleming
Companies, Inc. Health Choice Medical Plan (the "Medical Plan")
pursuant to COBRA, the Company will pay the monthly premium for
such coverage in the approximate amount of $336 per month for up to
eighteen (18) months commencing July 18, 1998, or until Stauth no
longer qualifies for continued coverage under COBRA due to
eligibility to participate in a group medical plan sponsored by or
available through another employer providing equivalent benefits to
his medical coverage with the Company, whichever is the earlier to
occur. Thereafter, to the extent Stauth is eligible for coverage
as a retiree under the Medical Plan, the Company will pay the cost
of such coverage in the approximate amount of $5,000 per year until
Stauth is eligible for Medicare or similar coverage or until he no
longer qualifies to participate in retiree medical coverage under
the Medical Plan for any reason provided therein.
6.4 Relocation/Home Sale Allowance. The Company
will pay Stauth's relocation expenses and will reimburse brokerage
expenses on the sale of Stauth's residence located at 12501 Bocage
Drive, Oklahoma City, Oklahoma 73142 up to $40,000 in the aggre-
gate. Stauth shall present to the Company's Senior Vice President
and General Counsel vouchers representing payment by Stauth of such
amounts together with such other documentation reasonably required
by such officer and the Company shall pay such reimbursement within
thirty (30) days of receipt.
6.5 Country Club. The Company shall reimburse
Stauth for his monthly dues at the Quail Creek Golf and Country
Club, Oklahoma City, Oklahoma from August 1, 1998 through December
31, 1998 upon his presentation to the Company's Senior Vice
President and General Counsel of satisfactory evidence of such
payment by Stauth.
6.6 Automobile. The Company will transfer title
to the 1996 Cadillac Seville (the "Automobile") Stauth was driving
on July 18, 1998 plus an amount for income taxes owed by Stauth as
a result of the receipt of the Automobile (the "Gross-Up Payment").
The Gross-Up Payment shall be an amount sufficient to cover payment
by Stauth of all federal and state income and payroll taxes
assessed on the value of the Automobile and on the Gross-Up Payment
(including any interest or penalties imposed with respect to such
taxes). The amount of the Gross-Up Payment required to be paid to
Stauth shall be determined by Deloitte & Touche, Oklahoma City,
Oklahoma, which shall provide detailed supporting calculations both
to the Company and to Stauth within fifteen (15) business days from
a request by the Company or Stauth. The Gross-Up Payment deter-
mined under this paragraph 6.6 shall be paid to Stauth within five
(5) days of the later of (i) receipt of such determination and
(ii) transfer of title, but in no event more than thirty (30) days
after the transfer of title. The cost of performing all calcula-
tions with respect to determination of the applicable Gross-Up
Payment shall be paid solely by the Company.
7. Release and Indemnification.
7.1 Stauth's Release of the Company. Stauth
agrees to execute the General Release attached as Exhibit A
contemporaneously with signing this Agreement. The General Release
(Exhibit A) shall except the obligations of the Company contained
in this Agreement. Stauth represents to the Company that between
July 18, 1998 and the date he signs this Agreement and the General
Release, he has not filed nor commenced and has not authorized any
other person to file or commence on his behalf any affidavit,
charge, action or complaint against the Company with any court or
judicial or administrative agency. Stauth further agrees that in
the event he may attempt to revoke, repudiate or rescind the
General Release at any time in the future, he shall immediately
return to the Company all of the payments and benefits received by
him under this Agreement and that return to the Company of such
payments and benefits shall be a contractual prerequisite to any
legal action brought or arbitration sought by Stauth.
7.2 The Company's Release of Stauth. The Company
agrees to execute the General Release attached as Exhibit B contem-
poraneously with signing this Agreement. The General Release
(Exhibit B) shall except the obligations of Stauth as contained in
this Agreement. The Company represents to Stauth that between July
18, 1998 and the date it signs this Agreement and the General
Release, it has not filed nor commenced and has not authorized any
other person to file or commence on its behalf any affidavit,
charge, action or complaint against Stauth with any court or
judicial or administrative agency. Nothing in this paragraph,
however, is intended to modify or abrogate the consequences of
Stauth's breach of this Agreement, as described in paragraph 12.
7.3 Indemnification of Stauth by the Company. The
Company will indemnify Stauth with respect to any threatened,
pending or civil action, suit or proceeding, administrative or
investigative, in which he is or becomes a party by reason of his
status or former status as an officer or director of the Company or
one of its subsidiaries. This commitment of indemnification shall
include expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in
connection with such actions, suits or proceedings; provided,
however, that this indemnification obligation shall be applicable
only in accordance with the Company's bylaws which permit such
indemnification of an officer or a director if the officer or
director acted in good faith and in a manner reasonably believed to
be in, or not opposed to, the best interest of the Company and,
with respect to any criminal action or proceeding, had no reason-
able cause to believe that such conduct was unlawful.
8. Obligations Regarding Pending and Future Litigation.
Stauth agrees to assist the Company and its representatives and
attorneys as reasonably requested with respect to pending and
future litigation, arbitrations or other dispute resolutions. This
shall include, if requested, being available to the Company and its
representatives and attorneys for interviews, depositions and/or
trial or arbitration testimony related to any pending or future
litigation in which Stauth is or has been involved or with respect
to which Stauth has relevant information. The Company will
reimburse Stauth for reasonable attorney's fees of counsel for
Stauth chosen by the Company. The Company shall also reimburse
Stauth for his reasonable travel expenses and costs incurred as
part of his consultation and assistance. In addition, after July
17, 2000, the Company will also pay Stauth a per diem of $1,000 for
each day or portion of more than 50% of a day Stauth, at the
request of the Company, assists the Company in matters as to which
Stauth is not a named defendant or alleged co-conspirator.
9. Noncompetition and Nonsolicitation Obligation.
9.1 Noncompetition Clause. Stauth agrees that for
a period of one (1) year following July 18, 1998, he shall not,
directly or indirectly, own any interest in, operate, control or
participate in, as a partner, director, a holder of more than 5% of
the outstanding voting shares, principal, officer, or agent of,
enter into the employment of, act as a consultant to, or perform
any services for any person, firm, business, or corporation which
is engaged in the food distribution and marketing business in any
state or market area in which the Company operates or supplies
customers; provided, however, this covenant may be waived in
writing by the Interim Chairman of the Board or the Chief Executive
Officer in the sole discretion of either of them to permit Stauth
to act as a consultant in the marketing business.
9.2 Nonsolicitation of Employees. Stauth agrees
that for a period of two (2) years following July 18, 1998, he will
neither directly nor indirectly solicit or attempt to solicit any
employee of the Company to terminate his/her employment, nor
solicit or attempt to solicit any employee of the Company to go to
work for another employer (including Stauth), nor hire any employee
of the Company to work for another employer (including Stauth).
9.3 Acknowledgment of Reasonableness/Agreement to
Modification. The Company and Stauth acknowledge that they have
attempted to specify a reasonable period of time, a reasonable area
and reasonable restrictions to which this covenant not to compete
and covenant of nonsolicitation of employees shall apply. The
Company and Stauth agree that if a court or arbitrator(s) should
subsequently determine that the scope and terms of either the
covenant not to compete or the covenant of nonsolicitation of
employees is greater than reasonably necessary to protect the
Company's interest, the Company will waive those terms which are
found by a court or arbitrator(s) to be greater than reasonably
necessary to protect the Company's interest, and the Company and
Stauth shall request that the court or arbitrator(s) reform this
Agreement specifying a reasonable period of time and such other
reasonable restrictions as the court or arbitrator(s) deem
necessary and enforceable.
10. Other Precluded Employment. Stauth agrees that,
except with the prior written consent of the Company, he will not
at any time hereafter be employed or otherwise act as an "expert
witness" or "consultant" or in any similar capacity in any
litigation, arbitration, regulatory or agency hearing or other
adversarial and investigatory proceeding involving the Company.
11. Property and Information of the Company.
11.1 Return and Restriction on Use of Company
Property. Stauth acknowledges that from time to time in the course
of performing his duties as a director and officer of the Company,
he has had an opportunity to inspect and use certain exclusive
property of the Company, in which he has no right or proprietary
interest. Stauth has returned or will immediately return all
Company property, except as otherwise provided in this Agreement,
including without limitation any of the Company information
described in subparagraph 11.2.
11.2 Restriction on Use of Company Information.
Stauth agrees that he will not at any time hereafter make any
independent use of or disclose to any other person or organization
any of the Company's confidential, private or proprietary informa-
tion. This prohibition shall apply to any information concerning
the Company including without limitation both written and unwritten
information relating to operations; business planning and strategy;
finance; accounting; legal strategies; sales; personnel, salaries
and management; customer names, addresses and contracts; customer
requirements; costs of providing products and service; operating
and maintenance costs; and pricing matters. This prohibition shall
also apply to any trade secrets of the Company, including without
limitation any techniques, methods, processes, data and similar
information.
12. Conditions to Continued Payments and Benefits.
Stauth agrees that the Company's continuing obligations and his
retention of any severance or other payments or benefits to be
provided by the Company under this Agreement and to which he is not
otherwise entitled shall be contingent not only upon his execution
of the General Release described in paragraph 7.1, but also his
ongoing compliance with his obligations described elsewhere in this
Agreement, including without limitation, the obligations specified
in paragraphs 8, 9, 10, 11 and 13. Accordingly, Stauth agrees that
any material breach of his obligations under this Agreement at any
time in the future shall entitle the Company to cease all payments
and benefits otherwise to be made or provided under this Agreement
and shall also entitle the Company to obtain immediate reimburse-
ment from Stauth of any and all such payments and the value of such
benefits as he has previously received hereunder and to which he is
not otherwise entitled.
13. Confidentiality of Agreement. The parties represent
that, except for Stauth's discussions with his spouse, the
Company's discussions with the Compensation Committee, the Board
and certain Fleming associates on a need to know basis, and each of
their discussions with their respective attorneys, accountants or
other professional, confidential consultants, they have not
disclosed any details or specific provisions of the negotiations
with respect to this Agreement, nor its terms with any third
parties at any time prior to the execution hereof. The parties
further agree to maintain such negotiations and the terms of this
Agreement in confidence in the future and not to disclose such
information to third parties at any time, except as required to
obtain tax advice or, as mandated by the rules and regulations of
the Securities Exchange Commission or other government agency, for
purposes of enforcement of this Agreement or pursuant to court
order.
14. Future Comments and Public Statements. The Company
and Stauth agree not to make any comments in the future with
respect to the other which would disparage or be likely to cause
harm to the good name and reputation of the other, including the
subsidiaries, officers, directors and associates of the Company.
The Company and Stauth further agree that any public information
releases or statements relating to Stauth and the Company, except
such public statements and filings as are mandated by the rules and
regulations of the Securities Exchange Commission or other
government agency, shall be prepared through coordination between
them and/or their attorneys and shall be mutually agreeable to both
parties prior to release.
15. Arbitration of Disputes. The parties agree that the
subject matter of this Agreement relates to interstate commerce.
All disputes, claims or controversies between Stauth and the
Company arising out of or related to this Agreement or out of the
parties' prior employment relationship shall be settled by arbi-
tration as provided herein. This agreement to arbitrate shall
survive the termination or rescission of this Agreement. All
arbitration shall be in accordance with the Rules of the American
Arbitration Association and shall be undertaken pursuant to the
Federal Arbitration Act. Arbitration will be held in Oklahoma
City, Oklahoma unless the parties mutually agree to another loca-
tion. The decision of the arbitrator(s) will be enforceable in any
court of competent jurisdiction. In the event the Company is the
prevailing party in such an arbitration, each party shall bear
its/his own costs and attorneys' fees in connection with the
arbitration; if, however, Stauth is the prevailing party in such
arbitration, the Company shall pay his reasonable costs and
attorneys' fees. The parties agree that punitive, liquidated or
indirect damages shall not be awarded by the arbitrator(s).
Nothing in this agreement to arbitrate shall preclude either party
from obtaining injunctive relief from a court of competent
jurisdiction prohibiting any on-going breaches by the other of his
(its) continuing obligations pending arbitration.
16. No Representations. In executing this Agreement and
the General Releases attached as Exhibits A and B, it is understood
and expressly agreed that, except for representations specifically
made in this Agreement, the parties shall rely solely on their own
independent analysis, judgment, belief and knowledge and the advice
of their respective attorneys. The parties represent to one
another that they have not been influenced in any way whatsoever in
executing this Agreement and the attached Exhibits A and B by any
representations made by the other or the other's attorneys or
representatives. The parties and their attorneys expressly except
and assume the risk that their independent analysis and their own
judgments, beliefs and knowledge on which they rely in executing
this Agreement and the General Releases attached as Exhibits A and
B may prove to be inaccurate or different and expressly agree that
the terms of this Agreement shall be in all respects effective and
not subject to termination or rescission by any such inaccuracy or
difference.
17. Successors Bound; Assignability. This Agreement
shall be binding on Stauth and the Company and their respective
heirs, successors and assigns, including without limitation any
corporation or other entity into which the Company may be merged,
reorganized or liquidated, or by which it may be acquired. The
Company's obligations under this Agreement may be assigned without
limitation; however, as the obligations to be performed and the
services to be rendered by Stauth under this Agreement are unique
based upon his skills and qualifications, Stauth's obligations
under this Agreement may not be assigned nor may Stauth's right to
receive various amounts of money be assigned, pledged, mortgaged
nor hypothecated in any manner whatsoever.
18. Taxation. All payments made to Stauth in accordance
with paragraphs 2.1 (Salary Replacement Amount), 2.2 (EVA Target
Bonus), 2.3 (Bonus Bank), 2.4 (Accrued Vacation), 3 (Stock
Options), 4 (Restricted Stock Awards), 5 (The Past Service Plan),
6.1 (The Excess Plan), 6.2 (Life Insurance), 6.3 (Medical Insurance
Premium Reimbursement), 6.4 (Relocation/Home Sale Allowance), 6.5
(Country Club), 6.6 (Automobile) and any other payment required
under this Agreement will be reduced by or Stauth will pay
applicable withholding and employment taxes (FICA) and Medicare
taxes, as assessed under the IRC and the regulations promulgated
thereunder, and the applicable state tax laws. The amount of such
reduction for applicable withholding and employment taxes (FICA)
and Medicare taxes shall be determined by the Company in accordance
with the IRC and the regulations promulgated thereunder and the
applicable state tax laws and the regulations promulgated there-
under as interpreted by the Company in its sole discretion. It is
further agreed by Stauth, in the event it is determined that any
additional FICA or Medicare taxes are due by the Company with
respect to payments which have been or are to be made to Stauth
under this Agreement or any plan, program or agreement referenced
under this Agreement, and if such taxes have not previously been
withheld by the Company, then, Stauth shall reimburse the Company
for such taxes. In the event that Stauth fails to reimburse the
Company for such taxes, within five (5) days from the Company's
request, the Company may offset the amount of such taxes from sums
which are to be paid Stauth under this Agreement or under any plan,
program or agreement referenced in this Agreement.
19. Severability. In the event that any one or more of
the provisions of this Agreement or any word, phrase, clause,
sentence or any portion thereof shall be deemed to be illegal or
unenforceable for any reason, such provision or portion shall be
modified or deleted in such a manner as to make this Agreement, as
modified, legal and enforceable to the fullest extent permitted
under applicable law.
20. Entire Agreement. This Agreement supersedes all
prior agreements or understandings and, together with the General
Releases attached as Exhibits A and B, constitutes the entire
Agreement between the Company and Stauth with regard to the subject
matter hereof. There are no agreements, understandings, specific
restrictions, warranties or representations relating to such
subject matter between the parties (or any of their respective
representatives or agents) other than those set forth herein.
21. Counterparts. This Agreement may be executed in two
or more counterparts, each of which will take effect as an original
and all of which shall evidence one and the same Agreement.
22. Amendment and Modification. This Agreement may only
be amended, modified or terminated prior to the end of its term by
the mutual agreement of the parties. Such agreement by the Company
shall be made by the affirmative vote of a majority of the
Compensation Committee.
23. No Admission of Wrongdoing. Nothing in this
Agreement shall be construed in any way as an admission by the
Company of any act, practice or policy of discrimination or a
breach of contract, in violation of law or otherwise.
24. Notices. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery
to the other party or by telefacsimile transmission, registered or
certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Stauth:
Mr. Robert E. Stauth
12501 Bocage Drive
Oklahoma City, Oklahoma 73142
Fax: (312) 609-5005 (in care of Vedder, Price,
Kaufman & Kammholz)
With a copy to:
Vedder, Price, Kaufman & Kammholz
222 North La Salle Street
Chicago, Illinois 60601-1003
Attention: Robert J. Stucker, Esq.
William F. Walsh, Esq.
Fax: (312) 609-5005
If to the Company:
Fleming Companies, Inc.
6301 Waterford Blvd.
P. O. Box 26647
Oklahoma City, OK 73126
Attention: David R. Almond, Senior Vice President,
General Counsel and Secretary
Fax: (405) 841-8504
With a copy to:
McAfee & Taft A Professional Corporation
Tenth Floor, Two Leadership Square
211 N. Robinson
Oklahoma City, OK 73102-7103
Attention: John M. Mee, Esq.
Fax: (405) 235-0439
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6150
Attention: Michael S. Katzke, Esq.
Fax: (212) 403-2345
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and communica-
tions shall be effective when actually received by the addressee.
25. Governing Law. Except as provided in paragraph 15,
the terms of this Agreement shall be governed by and construed in
accordance with the laws of the State of Oklahoma.
EXECUTED the day and year first above written.
"COMPANY" FLEMING COMPANIES, INC., an
Oklahoma corporation
By WILLIAM J. DOWD
William J. Dowd
President and Chief Operating
Officer
"STAUTH" ROBERT E. STAUTH
Robert E. Stauth
<PAGE>
APPROVAL AND ADOPTION
The foregoing Settlement and Severance Agreement
between Fleming Companies, Inc. and Robert E. Stauth is hereby
approved, ratified and adopted this 28th day of August, 1998.
COMPENSATION AND ORGANIZATION
COMMITTEE
By GUY A. OSBORN
Guy A. Osborn, Chairman
<PAGE>
EXHIBIT A
NOTICE: Various State and Federal laws, including
Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act, the Americans With Disabilities Act and the
Veterans Reemployment Rights Act, prohibit employment discrimina-
tion based on age, sex, race, color, national origin, religion or
disability or veteran status. These laws are enforced through
the Equal Opportunity Employment Commission (EEOC), the United
States Department of Labor and state human rights commissions, or
similar agencies. Before executing this General Release, you
should review it carefully and consult with your lawyer. You
have up to twenty-one (21) days to decide whether you wish to
sign it. Further, you may revoke this General Release within
seven (7) days following execution and this General Release shall
not become effective or enforceable until that revocation period
has expired. Any revocation must be in writing and must be
received by David R. Almond, Senior Vice President, General
Counsel and Secretary, Fleming Companies, Inc., 6301 Waterford
Boulevard, Oklahoma City, Oklahoma 73126, within the seven-day
period following execution of this General Release.
- -----------------------------------------------------------------
GENERAL RELEASE
In consideration of the terms and provisions of the
Settlement and Severance Agreement and other consideration
offered to me by Fleming Companies, Inc. ("Fleming") as described
therein entered into as of August 28, 1998 (the "Agreement"), and
the benefits I will receive thereunder, I, on behalf of myself
and my heirs, successors and assigns, release and discharge
Fleming, its parent, successors, affiliates, subsidiaries,
partners, employees, officers, directors and agents (hereinafter
referred to collectively as the "Company") from all claims,
liabilities, demands and causes of action known or unknown, fixed
or contingent, which I may now have or claim to have against the
Company as a result of my past employment and the termination of
that relationship with the Company or otherwise with respect to
any acts, omissions or events occurring prior to the execution of
this General Release, and do hereby covenant not to file a
lawsuit to assert such claims. This includes but is not limited
to claims arising under Federal, State, or local laws prohibiting
employment discrimination (including the Age Discrimination in
Employment Act), relating to any prior written or oral contracts
pertaining to employment or severance or growing out of any legal
or equitable restrictions on the Company's rights not to continue
an employment relationship with its employees, claims for unem-
ployment insurance benefits from the Oklahoma Employment Security
Commission or other similar agencies in Oklahoma or any other
state, claims under the Oklahoma Worker's Compensation Act or
other similar statutes in Oklahoma or any other state, but not to
include any claims under the Employee Retirement Income Security
Act with regard to vested rights in any of the Company's quali-
fied retirement plans. In addition, I hereby waive any rights
that I may have under the Age Discrimination in Employment Act as
a result of my past employment and the severance of that rela
tionship. This General Release excepts the obligations of the
Company as contained in the Agreement.
I have carefully reviewed and fully understand all the
provisions of the arrangement as described in the Agreement, this
General Release, and the foregoing Notice, which set forth the
entire agreement between me and the Company. I acknowledge that
the Company has given me a 21-day period which began on September
4, 1998, to consider this General Release and the Agreement and
has advised me to seek independent legal advice as to these
matters. I further acknowledge that I have not relied upon any
representation or statement, oral or written, by the Company not
set forth in those materials and documents.
DATED this 4th day of September, 1998.
----------------------------------
Robert E. Stauth
STATE OF OKLAHOMA )
) ss:
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me
this 4th day of September, 1998, by Robert E. Stauth.
--------------------------------
Notary Public
My commission expires:
- ---------------------
[SEAL]
<PAGE>
EXHIBIT B
GENERAL RELEASE
Fleming Companies, Inc. (the "Company"), for itself and
on behalf of its subsidiaries, predecessors, successors, offi-
cers, directors, shareholders, agents, employees, representa-
tives, heirs, successors, assigns, attorneys and insurers, hereby
fully releases, acquits and forever discharges Robert E. Stauth
("Stauth"), his agents, representatives, heirs, successors,
assigns, attorneys and insurers from any and all claims, demands
and causes of action, for damages, or any other relief, in law or
equity, arising out of, attributable to or related to the employ-
ment of Stauth by the Company and for his acting as an officer
and director of the Company with respect to any acts, omissions
or events occurring prior to the execution of this General
Release. This General Release excepts (i) the obligations of
Stauth as contained in that certain Settlement and Severance
Agreement between the Company and Stauth dated as of August 28,
1998, and (ii) Earl Gene Cauley, Jr. v. Robert E. Stauth, et al.,
CIV 96-1679-M and Richard Rosenberg v. Robert E. Stauth, et al.,
CIV 96-1808-M, both pending in the United States District Court
for the Western District of Oklahoma, and any successor or other
derivative case or cases making the same or similar allegations.
DATED this 4th day of September, 1998.
FLEMING COMPANIES, INC.
By
David R. Almond
Senior Vice President,
General Counsel and Secretary
STATE OF OKLAHOMA )
) ss:
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me
this 4th day of September, 1998, by David R. Almond as Senior
Vice President, General Counsel and Secretary of Fleming
Companies, Inc.
---------------------------------
Notary Public
My commission expires:
- ----------------------
[SEAL]
<TABLE>
Fleming Companies, Inc.
Computation of Ratio of Earnings to Fixed Charges
<CAPTION>
-------------------------------------------------------------------------
40 Weeks Ended
Oct. 3, Oct. 4,
(In thousands of dollars) 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C>
Earnings:
Pretax income $ 54,252 $ 56,201
Fixed charges, net 154,353 153,981
Total earnings $208,605 $210,182
Fixed charges:
Interest expense $124,411 $124,129
Portion of rental charges
deemed to be interest 29,614 29,570
Capitalized interest - -
Total fixed charges $154,025 $153,699
Ratio of earnings
to fixed charges 1.35 1.37
---------------------------------------------------------------------------
</TABLE>
"Earnings" consists of income before income taxes and fixed charges
excluding capitalized interest. Capitalized interest amortized during
the respective periods is added back to earnings.
"Fixed charges, net" consists of interest expense, an estimated amount
of rental expense which is deemed to be representative of the interest
factor and amortization of capitalized interest.
The pro forma ratio of earnings to fixed charges is omitted as it is not
applicable.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q FOR THE THREE FISCAL QUARTERS ENDED OCTOBER 3, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> OCT-03-1998
<CASH> 23,539
<SECURITIES> 0
<RECEIVABLES> 442,428
<ALLOWANCES> 21,354
<INVENTORY> 1,026,934
<CURRENT-ASSETS> 1,584,651
<PP&E> 1,652,084
<DEPRECIATION> 723,254
<TOTAL-ASSETS> 4,014,213
<CURRENT-LIABILITIES> 1,230,197
<BONDS> 1,130,440
0
0
<COMMON> 96,325
<OTHER-SE> 1,030,002
<TOTAL-LIABILITY-AND-EQUITY> 4,014,213
<SALES> 11,511,835
<TOTAL-REVENUES> 11,511,835
<CGS> 10,385,064
<TOTAL-COSTS> 11,321,203
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 11,969
<INTEREST-EXPENSE> 124,411
<INCOME-PRETAX> 54,252
<INCOME-TAX> 27,668
<INCOME-CONTINUING> 26,584
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,584
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
