<PAGE>
UNITED STATES
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 June 19, 1994
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 1-8452
-----------------------
THE VONS COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-1623900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
618 Michillinda Avenue, Arcadia, California 91007
(Address of principal executive offices and zip code)
(818) 821-7000
(Registrant's telephone number, including area code)
Not Applicable
(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
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Shares of common stock outstanding at July 22, 1994 - 43,379,041.
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
Item 1: Financial Statements
THE VONS COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
All amounts except share data in millions of dollars and as a percentage of sales
(Unaudited)
<CAPTION>
Twelve Weeks Ended Twenty-Four Weeks Ended
--------------------------------------- ---------------------------------------
June 19, 1994 June 20, 1993 June 19, 1994 June 20, 1993
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales.............. $ 1,160.2 100.0% $ 1,175.3 100.0% $ 2,304.2 100.0% $ 2,369.5 100.0%
----------- ----- ----------- ----- ----------- ----- ----------- -----
Costs and expenses:
Cost of sales,
buying and
occupancy...... 892.7 76.9 878.1 74.7 1,749.9 75.9 1,769.9 74.7
Selling and
administrative
expenses....... 238.7 20.6 246.6 21.0 489.3 21.3 502.0 21.2
Amortization of
excess cost
over net assets
acquired....... 3.5 .3 3.5 .3 7.0 .3 7.0 .3
----------- ----- ----------- ----- ----------- ----- ----------- -----
1,134.9 97.8 1,128.2 96.0 2,246.2 97.5 2,278.9 96.2
----------- ----- ----------- ----- ----------- ----- ----------- -----
Operating income... 25.3 2.2 47.1 4.0 58.0 2.5 90.6 3.8
Interest expense,
net.............. 16.8 1.5 15.2 1.3 32.5 1.4 30.1 1.2
----------- ----- ----------- ----- ----------- ----- ----------- -----
Income before
income tax
provision........ 8.5 .7 31.9 2.7 25.5 1.1 60.5 2.6
Income tax
provision........ 4.0 .3 14.2 1.2 12.0 .5 26.9 1.2
----------- ----- ----------- ----- ----------- ----- ----------- -----
Net income......... 4.5 .4 17.7 1.5 13.5 .6 33.6 1.4
----- ----- ----- -----
----- ----- ----- -----
Retained earnings -
beginning of
period........... 190.2 165.5 181.2 149.6
----------- ----------- ----------- -----------
Retained earnings -
end of period.... $ 194.7 $ 183.2 $ 194.7 $ 183.2
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Income per common
share:
Net income....... $ .10 $ .40 $ .31 $ .77
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average
common shares and
common share
equivalents...... 43,516,000 43,512,000 43,496,000 43,531,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<FN>
See accompanying notes to these condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
THE VONS COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
All amounts in millions of dollars
(Unaudited)
<CAPTION>
June 19, January 2,
1994 1994
-------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................... $ 6.1 $ 8.5
Accounts receivable....................... 46.9 36.3
Inventories............................... 342.8 383.5
Other..................................... 46.0 45.1
-------- -----------
Total current assets.................... 441.8 473.4
Property and equipment, net................. 1,223.2 1,215.6
Excess of cost over net assets acquired..... 505.9 512.9
Other....................................... 61.7 47.6
-------- -----------
TOTAL ASSETS................................ $2,232.6 $ 2,249.5
-------- -----------
-------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of capital lease
obligations and long-term debt.......... $ 8.6 $ 8.6
Accounts payable.......................... 253.5 314.5
Accrued liabilities....................... 232.3 219.6
-------- -----------
Total current liabilities............... 494.4 542.7
Accrued self-insurance and noncurrent
liabilities............................... 105.7 102.3
Deferred income taxes....................... 118.8 111.2
Other noncurrent liabilities................ 84.5 86.4
Senior debt and capital lease obligations... 566.9 559.9
Subordinated debt, net...................... 323.8 322.1
-------- -----------
Total liabilities....................... 1,694.1 1,724.6
-------- -----------
Shareholders' equity:
Common stock.............................. 4.3 4.3
Paid-in capital........................... 339.6 339.5
Retained earnings......................... 194.7 181.2
Notes receivable for stock................ (.1) (.1)
-------- -----------
Total shareholders' equity.............. 538.5 524.9
-------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.. $2,232.6 $ 2,249.5
-------- -----------
-------- -----------
<FN>
See accompanying notes to these condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
THE VONS COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
All amounts in millions of dollars
(Unaudited)
<CAPTION>
Twelve Weeks Ended Twenty-Four Weeks Ended
--------------------- -----------------------
<S> <C> <C> <C> <C>
June 19, June 20, June 19, June 20,
1994 1993 1994 1993
-------- ---------- --------- ----------
Cash flows from operating activities:
Net income......................... $ 4.5 $ 17.7 $ 13.5 $ 33.6
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization
of property and capital
leases....................... 23.6 20.3 46.9 39.5
Amortization of excess cost
over net assets acquired and
other assets................. 3.7 4.7 7.4 9.3
Amortization of debt discount
and deferred financing costs. 1.5 1.4 2.9 2.9
LIFO (credit) charge........... (.5) 1.1 .8 2.9
Deferred income taxes.......... 2.3 8.3 2.5 10.0
Change in assets and
liabilities:
(Increase) decrease in
accounts receivable...... 8.2 1.4 (10.6) 4.0
(Increase) decrease in
inventories at FIFO costs 27.3 19.5 39.9 18.7
(Increase) decrease in
other current assets..... 8.4 6.0 4.2 2.4
(Increase) decrease in
noncurrent assets........ (10.8) (.2) (15.7) (7.8)
Increase (decrease) in
accounts payable......... (10.2) .7 (58.3) (59.7)
Increase (decrease) in
accrued liabilities...... (12.6) (30.5) 12.7 (27.4)
Increase (decrease) in
noncurrent liabilities... 2.7 (.8) 1.5 1.3
-------- ---------- --------- ----------
Net cash provided by operating
activities......................... 48.1 49.6 47.7 29.7
-------- ---------- --------- ----------
Cash flows from investing activities:
Addition of property and equipment. (24.9) (44.8) (56.4) (75.7)
Disposal of property and equipment. 1.1 - 2.2 .3
-------- ---------- --------- ----------
Net cash used for investing
activities......................... (23.8) (44.8) (54.2) (75.4)
-------- ---------- --------- ----------
Cash flows from financing activities:
Net borrowings (payments) on
revolving debt................... (13.5) 6.5 10.5 47.3
Increase (decrease) in net
outstanding drafts............... (8.8) (10.1) (2.7) 1.6
Payments on other debt and capital
lease obligations and other...... (2.0) (1.5) (3.7) (5.1)
-------- ---------- --------- ----------
Net cash provided (used) by financing
activities......................... (24.3) (5.1) 4.1 43.8
-------- ---------- --------- ----------
Net cash increase (decrease)......... - (.3) (2.4) (1.9)
Cash at beginning of period.......... 6.1 6.7 8.5 8.3
-------- ---------- --------- ----------
Cash at end of period................ $ 6.1 $ 6.4 $ 6.1 $ 6.4
-------- ---------- --------- ----------
-------- ---------- --------- ----------
Supplemental disclosures of cash
flow information:
Cash paid during the period for:
Interest......................... $ 23.1 $ 22.2 $ 30.8 $ 28.5
-------- --------- --------- ----------
-------- --------- --------- ----------
Income taxes..................... $ 10.9 $ 17.3 $ 14.5 $ 23.4
-------- --------- --------- ----------
-------- --------- --------- ----------
Supplemental disclosures of non-cash
investing and financing activity:
Capital leases................... $ - $ - $ .3 $ 7.7
-------- --------- --------- ----------
-------- --------- --------- ----------
<FN>
See accompanying notes to these condensed consolidated financial statements.
</TABLE>
<PAGE>
1. Basis of Presentation
The financial data included herein have been prepared by the
Company without audit. In the opinion of management, all adjustments
of a normal recurring nature necessary to present fairly the Company's
consolidated financial position at June 19, 1994 and January 2, 1994
and the consolidated results of operations and cash flows for the
twelve and twenty-four weeks ended June 19, 1994 and June 20, 1993
have been made. Certain reclassifications were made to prior periods'
balances for comparative purposes. This interim information should
be read in conjunction with the consolidated financial statements
nd notes thereto included in the Company's latest annual report filed
on Form 10-K. Due to seasonality and other market conditions, the
results for the twenty-four weeks ended June 19, 1994, should not be
considered as indicative of the results to be expected for a full year.
At June 19, 1994, the Company operated 344 supermarket and food
nd drug combination stores, primarily in Southern California, under the
names Vons, Vons Food and Drug, Pavilions, Tianguis, and EXPO. The
Company also operates a fluid milk processing facility, an ice cream
plant, a bakery, and distribution facilities for meat, grocery, produce
and general merchandise.
2. Earthquake Loss
On January 17, 1994, Southern California was struck by a major
earthquake which resulted in the temporary closure of 45 of the
Company's stores. All of the closed stores reopened within
approximately one week of the earthquake. The Company carries
insurance to protect against earthquake loss. The estimated total cost
due to the earthquake is approximately $25 million which, after insurance
recoveries, results in a pre-tax nonrecurring charge of approximately
$5 million, or $.07 per share. The accompanying condensed consolidated
financial statements include a $10 million receivable for insurance
recoveries and a $5 million selling and administrative charge for
the earthquake insurance deductible which was recorded in first
quarter 1994.
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations (Unaudited)
Results of Operations
On January 13, 1994, the Company introduced the "Vons Value
program." This program emphasizes low prices every day and improved
customer service, and it represents a strategic repositioning of the
Company's market focus. The Company plans to substantially offset the
cost of the program over time through aggressive cost and expense
reductions designed to permanently lower the Company's expense
structure. The new marketing and cost and expense reduction programs
are long-term strategies, the implementation of which will extend
beyond 1994.
During the first half of 1994, the Company reduced the prices of
over 12,200 items, increased the allocation of store labor for customer
checkout, and increased broadcast media advertising to better inform
customers as to the many ways to save money at Vons, including newly
reduced prices, weekly advertised specials and free membership club
savings.
The Northridge earthquake occurred four days following the
introduction of the Vons Value Program. This event substantially
disrupted the initial phase of the new program as both the Company and
the communities it serves were focused on recovering from this
tragic event. As a result, the Company undertook a costly relaunch of
the new program late in first quarter 1994 which continued through
second quarter 1994. By accelerating price reductions planned for
later in the program and offering attractive promotions and advertised
specials to reintroduce the program to consumers, gross margin and
operating income were significantly reduced in second quarter 1994.
The Company believes that during the second half of 1994 it can
achieve the desired sales momentum of the new program and that buying
improvements, changes in promotional and advertising mix and further
expense reductions will substantially offset the effects of the price
reductions in the second half of 1994. The Company expects that third
and fourth quarter earnings will be significantly improved over the
second quarter 1994. However, there can be no assurance that, if the
Company is unsuccessful at improving its sales performance and achieving
necessary cost and expense reductions, the ability of the Company to
improve its short-term financial performance would not be adversely
impacted.
In aggregate, the Company's programs are intended to initially
benefit sales, which in turn will improve the Company's ability to
achieve strong, sustainable earnings growth over the long run.
Twelve Weeks Ended June 19, 1994 Compared with the Twelve Weeks
Ended June 20, 1993.
Sales. Second quarter 1994 sales were $1,160.2 million, a
decrease of $15.1 million, or 1.3%, from second quarter 1993 sales.
Same store sales decreased 3.2% from second quarter 1993 sales.
This represents the third consecutive quarter of an improving trend
in negative same store sales results. Sales reflect reduced prices
as a result of the Vons Value Program, deflation in perishables,
the ongoing impact of the weak economy, competitive new store and
remodel activity and the effect of the Northridge earthquake. Since
June 20, 1993, the Company has opened 14 new stores, closed 16 stores
and completed 30 store remodel projects.
Costs and Expenses. Second quarter 1994 costs and expenses were
$1,134.9 million, an increase of $6.7 million, or 0.6%, over second
quarter 1993. Cost of sales, buying and occupancy expenses as a
percentage of sales increased by 2.2 percentage points to 76.9% in
second quarter 1994. This increase reflects lower prices and increased
promotions associated with the Vons Value Program. During second
quarter 1994, the Company recorded a $.5 million LIFO credit compared
with a $1.1 million LIFO charge in second quarter 1993 reflecting the
Company's expectation of low inflation for the year. Selling and
administrative expenses as a percentage of sales decreased by 0.4
percentage points to 20.6% in second quarter 1994. This decrease
reflects increased store labor expenses during second quarter 1994,
related to the Vons Value Program, which were more than offset by
a decrease in administrative expenses as a result of the reduction
in work force implemented during fourth quarter 1993 and other cost
savings initiatives. Certain cost and expense reductions resulted
from the Company's cost containment and strategic restructuring
program which was implemented in fourth quarter 1993.
Operating Income. Second quarter 1994 operating income was $25.3
million, a decrease of $21.8 million from second quarter 1993.
Operating margin decreased to 2.2% in second quarter 1994 versus 4.0%
in second quarter 1993, primarily due to the decline in sales and gross
margin reduction for price decreases. Operating income before
depreciation and amortization of property, amortization of goodwill and
other assets and LIFO ("FIFO EBITDA") was $52.1 million, or 4.5% of sales,
in second quarter 1994 compared with $73.2 million, or 6.2%, of sales in
second quarter 1993.
Interest Expense. Second quarter 1994 net interest expense was
$16.8 million, an increase of $1.6 million over second quarter 1993.
This increase was primarily due to higher average debt borrowings.
Income Tax Provision. Second quarter 1994 income tax provision
was $4.0 million, or a 47.1% effective tax rate. Second quarter 1993
income tax provision was $14.2 million, or a 44.5% effective tax rate.
The increase in the second quarter 1994 effective tax rate reflects the
1.0% increase in the Federal statutory tax rate and the decrease in
income before income tax provision which was not offset by a comparable
decrease in amortization of excess cost over net assets acquired, the
majority of which is not deductible for tax purposes.
Income. Second quarter 1994 net income was $4.5 million, or $.10
per share, compared with $17.7 million, or $.40 per share, in second
quarter 1993.
Twenty-Four Weeks Ended June 19, 1994 Compared with the Twenty-Four
Weeks Ended June 20, 1993
Sales. Sales for the twenty-four weeks ended June 19, 1994 were
$2,304.2 million, an decrease of $65.3 million, or 2.8%, from the
twenty-four weeks ended June 20, 1993. The 1994 year-to-date same store
sales decreased 4.4% from the 1993 year-to-date sales. Sales reflect
reduced prices as a result of the Vons Value Program, deflation in
perishables, the continuing weak overall economic environment in
Southern California, ongoing competitive new store and remodel activity
and the effect of the Northridge earthquake.
Costs and Expenses. Costs and expenses for the twenty-four weeks
ended June 19, 1994 were $2,246.2 million, a decrease of $32.7 million,
or 1.4%, from the comparable 1993 period. Cost of sales, buying and
occupancy expenses as a percentage of sales were 75.9% for the
twenty-four weeks ended June 19, 1994, an increase of 1.2 percentage
points, compared with the twenty-four weeks ended June 20, 1993.
The increase reflects the impact of lower prices and increased
promotional activities. The LIFO charge was $.8 million for the
twenty-four weeks ended June 19, 1994 compared with $2.9 million for
the comparable 1993 period reflecting the Company's expectation of
low inflation for the year. Selling and administrative expenses as a
percentage of sales were 21.3% in the 1994 period, an increase of 0.1
percentage points over the comparable 1993 period. This increase
reflects a $5.0 million charge related to the insurance deductible
related to the Northridge earthquake. Increased store labor expenses
as part of the Vons Value Program were fully offset by administrative
expense reductions achieved as part of the cost containment and
strategic restructuring program.
Operating Income. Operating income for the twenty-four weeks
ended June 19, 1994 was $58.0 million, a decrease of $32.6 million, or
36.0%, from the twenty-four weeks ended June 20, 1993. Operating margin
decreased to 2.5% in the 1994 twenty-four week period versus 3.8% in
the 1993 twenty-four week period. FIFO EBITDA excluding the earthquake
insurance deductible was $118.1 million, or 5.1% of sales, for the
twenty-four weeks ended June 19, 1994 versus $142.3 million, or 6.0%
of sales, for the twenty-four weeks ended June 20, 1993.
Interest Expense. Net interest expense for the twenty-four weeks
ended June 19, 1994 was $32.5 million, an increase of $2.4 million
over the comparable 1993 period. This increase was primarily due to
higher average debt borrowings.
Income Tax Provision. The income tax provision for the
twenty-four weeks ended June 19, 1994 was $12.0 million, or a 47.1%
effective tax rate. The effective tax rate is higher than the
incremental tax rate of 41.0% due primarily to amortization of excess
cost over net assets acquired, the majority of which is not deductible
for tax purposes.
Income. Net income for the twenty-four weeks ended June 19, 1994
was $13.5 million, or $.31 per share, compared with net income of
$33.6 million, or $.77 per share, for the twenty-four weeks ended
June 20, 1993.
Labor Contract Status
The Company's contract with the International Brotherhood of Teamsters
Union, primarily located within the Los Angeles, Orange and San Diego
Counties expires on September 11, 1994. Although discussions have
begun, it is not possible to predict the outcome of forthcoming
negotiations.
Liquidity and Capital Resources
The Company's primary sources of liquidity are cash flows from
operations and available credit under its Revolving Credit Facility.
Management believes that these sources adequately provide for its
working capital, capital expenditure and debt service needs.
Net cash provided by operating activities was $48.1 million in
second quarter 1994 compared with $49.6 million in second quarter 1993
and $47.7 million for the twenty-four weeks ended June 19, 1994
compared with $29.7 million for the twenty-four weeks ended June 20,
1993. These changes were primarily due to changes in assets and
liabilities generally reflecting the timing of receipts and
disbursements partially offset by a decrease in net income. The
ratio of current assets to current liabilities was 0.89 to 1 at
June 19, 1994 compared with 0.87 to 1 at January 2, 1994.
Net cash used by investing activities was $23.8 million in second
quarter 1994 compared with $44.8 million in second quarter 1993 and
$54.2 million for the twenty-four weeks ended June 19, 1994 compared
with $75.4 million for the twenty-four weeks ended June 20, 1993.
These decreases reflect a reduction in the Company's capital
expenditure program. Full year capital expenditures are expected to
be $168 million, a reduction of $47 million from prior estimates
primarily reflecting delays in new store openings. The Company opened
three stores, closed four stores and completed five store remodel
projects during the twenty-four weeks ended June 19, 1994. Capital
expenditures in 1994 have been and will continue to be funded out
of cash provided by operations, the Revolving Credit Facility
and/or through operating leases, although no assurance can be given
that such sources will be sufficient. The capital expenditure program
has substantial flexibility and is subject to revision based on various
factors; including, but not limited to, business conditions,
changing time constraints, cash flow requirements and competitive
factors. In the near term, if the Company were to reduce substantially
or postpone these programs, there would be no substantial impact on
current operations and it is likely that more cash would be available
for debt servicing. In the long-term, if these programs were
substantially reduced, in the Company's opinion, its operating business and
ultimately its cash flow would be adversely impacted.
Net cash used by financing activities was $24.3 million in second
quarter 1994 compared with $5.1 million in second quarter 1993. Net
cash provided by financing activities was $4.1 million for the
twenty-four weeks ended June 19, 1994 compared with $43.8 million for
the twenty-four weeks ended June 20, 1993. The level of borrowings under
the Company's revolving debt is dependent primarily upon cash flows
from operations and capital expenditure requirements.
At June 19, 1994, the Company's revolving debt borrowings totaled
$228.3 million compared with $301.9 million at June 20, 1993. This
change reflects the impact of the $150 million Term Loan Facility
entered into in fourth quarter 1993 and cash flows from operations
offset by borrowings relating to the capital expenditure program. At
June 19, 1994, the Company had available unused credit of $169.9
million under its Revolving Credit Facility. For the twenty-four weeks
ended June 19, 1994 the weighted average interest cost on revolving
debt was 4.8%, the corresponding bank prime rate at June 19, 1994
was 7.25%.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On May 11, 1994, the Company held its Annual Meeting of
Shareholders in Arcadia, California. At that meeting, the
shareholders elected all three directors nominated by the Board
of Directors. The number of votes cast for, against or
withheld for each elected director were as follows:
<TABLE>
<CAPTION>
Number of Votes Cast
________________________
For Withheld
__________ ________
<S> <C> <C>
Steven A. Burd 38,876,711 199,576
Fritz L. Duda 38,886,777 189,510
Roger E. Stangeland 38,869,184 207,103
</TABLE>
The other directors whose term of office as a director
continued after the meeting are as follows:
William S. Duda
James H. Green, Jr.
Robert I. MacDonnell
Peter A. Magowan
Charles. E. Rickershauser
Elizabeth A. Sanders*
William Y. Tausher
* Ms. Sanders subsequently resigned effective July 12, 1994.
There was no other business brought to the meeting.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Managements Contracts or Compensatory Plans or Arrangements:
10.28 Employment Agreement dated April 26, 1994 between the
Registrant and Lawrence A. Del Santo.
10.29 Employment Agreement dated April 26, 1994 between the
Registrant and Richard E. Goodspeed.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the
quarter ended June 19, 1994.
<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.
THE VONS COMPANIES, INC.
Date: July 25, 1994 /s/ LAWRENCE A. DEL SANTO
-------------------------------
Lawrence A. Del Santo
Vice Chairman and
Chief Executive Officer
Date: July 25, 1994 /s/ PAMELA K. KNOUS
-------------------------------
Pamela K. Knous
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
- ------- ----------- ------------
10.28 Employment Agreement dated April 26, 1994 between
the Registrant and Lawrence A. Del Santo.
10.29 Employment Agreement dated April 26, 1994 between
the Registrant and Richard E. Goodspeed.
<PAGE>
Exhibit 10.28
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into between The Vons
Companies, Inc. (the "Company") and Lawrence A. Del Santo ("Executive"),
effective as of April 26, 1994.
R E C I T A L S
- - - - - - - -
WHEREAS, the Company desires to employ Executive to act as its
Chief Executive Officer and Vice Chairman of its Board of Directors and
desires to be assured of Executive's future association and services in order
to retain Executive's experience, skill and ability, and is willing to engage
Executive's services upon the terms contained herein; and
WHEREAS, the Company and Executive desire to enter into a
contract for the employment of Executive by the Company which provides
compensation and certain other benefits to Executive and assures the
Company of Executive's future services;
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the above premises, the
mutual promises and covenants set forth below, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Company and
Executive hereby agree as follows.
ARTICLE I
EMPLOYMENT
Section 1.1. Employment, Position, Responsibilities, Duties and
----------- --------------------------------------------------
Authority. The Company hereby agrees to employ Executive, and Executive
- ---------
agrees to be so employed, in the capacity of Chief Executive Officer and Vice
Chairman of the Board of Directors. During Executive's employment hereunder,
Executive shall devote all necessary energies, experience, skills, abilities,
knowledge and productive time to the performance of this Agreement and shall
not render to others services which would materially interfere with the
performance of Executive's duties under this Agreement. Executive's
responsibilities shall include those customarily attendant to an executive of
this position, plus any additional responsibilities, duties or authority which
the Board of Directors may designate from time to time.
Section 1.2. Term of Employment. Subject to Sections 2.9 and
----------- ------------------
2.10, Executive's employment is for a period of three (3) years, beginning
April 26, 1994 and ending April 30, 1997.
ARTICLE II
COMPENSATION AND BENEFITS
Section 2.1. Base Salary. Executive's base salary shall be Five
----------- -----------
Hundred Fifty Thousand Dollars ($550,000) per annum, payable in biweekly
installments.
Section 2.2. Performance Bonus. The Company shall establish a
----------- -----------------
bonus plan, based upon performance criteria approved in advance by the
Company's Board of Directors, under which Executive may earn an annual bonus
equal to up to one hundred percent (100%) of Executive's base salary, payable
in the Company's discretion in cash or other compensation.
Section 2.3. Stock Options. Pursuant to "The Vons Companies,
----------- -------------
Inc. 1990 Stock Option and Restricted Stock Plan" (the "Stock Plan"),
Executive shall be granted two hundred thousand (200,000) non-qualified stock
options at fair market value ("FMV Options") and one hundred seventy-five
thousand (175,000) non-qualified stock options at a price of twenty-five
percent (25%) of fair market value (the "Discounted Options"). Except as
provided in Sections 2.9 and 2.10, Executive shall vest in one-third (1/3) of
the options granted hereunder at the end of each full year of employment. As
used herein, "fair market value" shall be the average closing price of the
Company's common stock on the New York Stock Exchange for the ten (10) trading
days prior to the effective date of this Agreement, in accordance with the
Stock Plan. The Company and Executive shall execute any separate agreement(s)
as may be necessary pursuant to the Stock Plan to implement the terms of this
Section. Such agreement(s) shall provide that, upon retirement from
employment, as defined therein, all options then vested shall remain
exercisable for the entire term of the initial option grant.
Section 2.4. Insurance Benefits. Executive shall be entitled to
----------- ------------------
participate in the Company's Personal Choice Flexible Benefit Plan with
respect to insurance benefits generally available to the Company's senior
executives. If any insurance plan provides for a waiting period before
coverage begins, the Company will waive or obtain the waiver of that period
waived and, if it cannot be waived, will reimburse Executive the cost of
continuing insurance coverage from Executive's current employer until the
Company's insurance coverage becomes effective.
Section 2.5. Retirement Plans, Etc. Executive shall participate
----------- ----------------------
in the Company's pension plan, 401(k) plan and 401(k) wraparound plan in
accordance with the terms of those plans. Executive shall not be eligible
for, or participate in, the Company's Supplemental Executive Retirement Plan
or the Company's Severance Plan for Senior Management and Key Employees.
Section 2.6. Individual Retirement Benefits. Subject to
----------- ------------------------------
Section 2.9, beginning in May 1997, the Company shall pay Executive a
monthly retirement benefit of Sixteen Thousand Six Hundred Sixty-Six Dollars
and Sixty-Seven Cents ($16,666.67) for the duration of Executive's own life.
Upon written notice to the Company, Executive may elect to receive an
actuarially equivalent joint and survivor benefit for Executive and his
spouse.
Section 2.7. Relocation Allowance. Executive shall relocate his
----------- --------------------
residence to Southern California, and the Company shall pay all reasonable
expenses incurred by Executive in connection with the relocation, including
shipping costs for the transfer of household goods and automobiles and
Executive's temporary living expenses in Southern California through September
1994.
Section 2.8. Vacations and Holidays. Executive shall be entitled
----------- ----------------------
to such holidays and vacation (a minimum of one (1) month per year) each year
as the Company's other senior executives.
Section 2.9. Early Termination of Employment by Executive or the
----------- --------------------------------------------------
Company. Either Executive or the Company may terminate Executive's employment
- -------
prior to April 30, 1997. In any such event, the Company's sole obligation to
Executive shall be as follows:
(a) If Executive resigns other than for "Good Reason" (as
defined in subsection
(as defined in subsection (d) below), Executive shall be paid any accrued but
unused vacation and any earned but unpaid base salary as of the date of
termination and any benefits to which Executive may be entitled under any
Company benefit plan. Executive shall not be entitled to any other
compensation whatsoever, including any performance bonus under Section 2.2,
any unvested stock options under Section 2.3 or any retirement benefits under
Section
(b) If Executive resigns for "Good Reason" (as defined in
subsection (c) below), or if the Company terminates Executive other than for
"Cause" (as defined in subsection
following, in addition to any accrued but unused vacation, any earned but
unpaid base salary and prorated performance bonus as of the date of
termination and any benefits to which Executive may be entitled under any
Company benefit plan:
(1) salary continuance equal to his base salary (but no
performance bonus) through April 30, 1997, payable on normal payroll
dates and without interest;
(2) continuation of medical and life (but not disability)
insurance benefits at the Company's expense through April 30, 1997;
(3) immediate vesting of all Discounted Options (but no
FMV Options) under Section 2.3; and
(4) retirement benefits in accordance with Section 2.6.
(c) As used in this Agreement, "Good Reason" for resignation
shall mean (i) a substantial change in the nature, or diminution in the status
of, Executive's duties or position; or (ii) resulting from (A) the merger or
consolidation of the Company with an entity that is not a current stockholder
of the Company as of the effective date of this Agreement resulting in the
holders of the Company's voting stock immediately prior to such transaction
holding less than fifty percent (50%) of the total voting stock of the
surviving corporation after such transaction, or (B) any acquisition of stock
by a person or entity that is not a current stockholder as of the effective
date of this Agreement that results in that acquiring person or entity being
the beneficial owner of fifty percent (50%) or more of the Company's voting
stock.
(d) As used in this Agreement, "Cause" for termination shall
mean (i) felony which in the judgment of the Board of Directors of the
Company adversely affects the business or reputation of the Company; (iii)
wanton and knowing disregard of corporate policy; and (iv) willful and
continuous failure, in the judgment of the Board of Directors, to perform
substantially the reasonably assigned duties with the Company after written
notice and reasonable opportunity to perform.
Section 2.10. Termination Due to Death or Disability
------------ --------------------------------------
(a) This Agreement shall terminate immediately upon Executive's
death or disability (as defined in subsection (b) below). Executive or
Executive's legal representatives, beneficiaries or heirs and assigns, as the
case may be, shall receive Executive's base salary (including prorated
performance bonus) through the date of death or disability, any unvested
Discounted Options (but not unvested FMV Options) shall immediately vest as of
that date, and, only in the event of Executive's death, Executive's surviving
spouse shall receive the actuarially equivalent benefit (based on an one
hundred percent (100%) joint and survivor benefit) of the benefit set forth
in Section 2.6 beginning May 1997. Except with respect to any obligations
to Executive or Executive's legal representatives, beneficiaries or heirs
and assigns, as the case maybe, that may exist under the terms of the various
benefit plans, including exercise rights under the Stock Plan, all other
obligations of the Company hereunder shall immediately cease.
(b) As used herein, "disability" shall occur, and this Agreement
shall terminate, as of the date Executive becomes eligible to receive long
term disability benefits under the Company's long-term disability insurance
plan.
Section 2.11. Short-Term Loan for Purchase of Stock. Within
------------ -------------------------------------
thirty (30) days after the effective date of this Agreement, the Company shall
lend Executive at least One Million Dollars ($1,000,000) and up to Two Million
Dollars ($2,000,000), at an interest rate equal to the lowest rate at which
the Company is able to borrow funds during the period the loan is
outstanding, to be used solely for the purchase of Company common stock from
the Company at fair market value (as defined in Section 2.3) as of the
effective date of this Agreement. Executive shall liquidate all of his
common stock holdings in his former employer within one hundred twenty (120)
days of the effective date of this Agreement, or such longer period of time
as may be required under federal securities laws. The loan and interest
shall be repaid in full no later than October
ARTICLE III
COMPANY INFORMATION
Section 3.1. Ownership of Records, Etc. All records, reports,
----------- --------------------------
notes, compilations or other recorded matter, and copies of reproductions
thereof, relating to the Company's operations, activities or business, made
or received by Executive during any past or future period of employment with
the Company are and shall be the property of the Company exclusively, and
Executive shall keep the same at all times in Executive's custody, subject
to the Company's control, and Executive shall surrender the same at the
termination of Executive's employment, if not before,
Section 3.2. Duration of Obligations. Executive's obligations
----------- -----------------------
under this Article shall continue after Executive's employment with the
Company is terminated, regardless of the nature or reason for such
termination. The provisions of this Article shall be binding upon Executive
and Executive's heirs, executors and administrators.
ARTICLE IV
GENERAL PROVISIONS
Section 4.1. Assignment. Executive may not assign or transfer
----------- ----------
any rights hereunder, this Agreement being a contract for Executive's
personal services.
Section 4.2. Sole and Entire Agreement. This Agreement
----------- -------------------------
constitutes the sole and entire existing agreement between the parties, and
completely and correctly expresses all of the rights and obligations of the
parties. All prior agreements, conditions, practices, customs, usages and
obligations are completely superseded and revoked, insofar as any such prior
agreement, condition, practice, custom, usage or obligation might have given
rise to any enforceable right.
Section 4.3. Waivers. The waiver in any particular instance or
----------- -------
series of instances of any term or condition of this Agreement or any breach
hereof by any party shall not constitute a waiver of such term or condition
or of any breach thereof in any other instance.
Section 4.4. Amendment. This Agreement is subject to amendment
----------- ---------
only by subsequent written agreement between, and executed by, the parties
hereto. Commencement or continuation of any custom, practice or usage by the
Company shall not constitute an amendment hereof or otherwise give rise to
enforceable rights or create obligations of the Company.
Section 4.5. Severability. If any one or more provisions,
----------- ------------
clauses, paragraphs, subclauses or subparagraphs contained in this Agreement
shall for any reason be held to be invalid, illegal, void or unenforceable,
the same shall not affect any other provision, clause, paragraph, subclause
or subparagraph of this Agreement, but this Agreement shall be construed as
if such invalid, illegal, void or unenforceable provision, clause, paragraph,
subclause or subparagraph had never been contained herein.
Section 4.6. Indemnification. The Company shall indemnify and
----------- ---------------
hold Executive harmless from any damages or costs, including reasonable
attorney's fees, arising from any claims brought by Executive's former
employer relating to Executive's resignation from that employer or Executive's
employment by the Company. The Company shall reimburse Executive for the
reasonable costs, including reasonable attorney's fees, Executive may incur
in recovering from Executive's former employer any salary, vacation pay,
stock and/or other compensation or benefits in which Executive is vested or
to which Executive is otherwise clearly entitled as of Executive's last day
of employment with such employer, to the extent Executive is not otherwise
compensated for any such costs.
Section 4.7. Attorney's Fees. If any legal action or proceeding
----------- ---------------
is brought to enforce this Agreement, the successful or prevailing party
shall be entitled to recover reasonable attorney's fees and other costs
incurred in such action or proceeding, in addition to any other relief
to which such party may be entitled.
Section 4.8. Time Is of the Essence. Time is of the essence in
----------- ----------------------
this Agreement. Any time limit mentioned herein has been carefully considered
and represents the agreed absolute outside limit of time within which the
applicable right must be exercised. The parties may extend such time limit
only by mutual agreement in writing.
Section 4.9. Duration of Rights. Rights and obligations created
----------- ------------------
by or arising under this Agreement shall terminate automatically upon
termination of this Agreement, except as otherwise expressly provided herein.
Section 4.10. Full Performance Required. The doctrine of
------------ -------------------------
substantial performance has no application hereunder. Each condition and
provision has been carefully considered and represents the agreed minimum
limit of performance giving rise to applicable rights or obligations.
Section 4.11. Captions. Any captions of articles, sections,
------------ --------
subsections or paragraphs of this Agreement are solely for the convenience
of the parties and are not a part of this Agreement or to be used for the
interpretation of this Agreement or any provision hereof.
Section 4.12. Applicable Law. This Agreement shall governed
------------ --------------
by, and shall be construed and enforced in accordance with, the laws of the
state of California.
IN WITNESS WHEREOF, this Agreement has been duly executed as of
the date first above written.
THE VONS COMPANIES, INC.
/s/ LAWRENCE A. DEL SANTO /s/ ROGER E. STANGELAND
- ---------------------------------- By--------------------------------
Lawrence A. Del Santo
Chairman of the Board
Title-----------------------------
<PAGE>
Exhibit 10.29
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into between The Vons
Companies, Inc. (the "Company") and Richard E. Goodspeed ("Executive"),
effective as of April 26, 1994.
R E C I T A L S
- - - - - - - -
WHEREAS, the Company desires to employ Executive to act as its
President and Chief Operating Officer and desires to be assured of Executive's
future association and services in order to retain Executive's experience,
skill and ability, and is willing to engage Executive's services upon the
terms contained herein; and
WHEREAS, the Company and Executive desire to enter into a contract
for the employment of Executive by the Company which provides compensation and
certain other benefits to Executive and assures the Company of Executive's
future services;
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the above premises, the mutual
promises and covenants set forth below, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Company and
Executive hereby agree as follows.
ARTICLE I
EMPLOYMENT
Section 1.1. Employment, Position, Responsibilities, Duties and
----------- --------------------------------------------------
Authority. The Company hereby agrees to employ Executive, and Executive
- ---------
agrees to be so employed, in the capacity of President and Chief Operating
Officer. During Executive's employment hereunder, Executive shall devote all
necessary energies, experience, skills, abilities, knowledge and productive
time to the performance of this Agreement and shall not render to others
services which would materially interfere with the performance of Executive's
duties under this Agreement. Executive's responsibilities shall include those
customarily attendant to an executive of this position, plus any additional
responsibilities, duties or authority which the Board of Directors may
designate from time to time.
Section 1.2. Term of Employment. Subject to Sections 2.9 and
----------- ------------------
2.10, Executive's employment is for a period of three (3) years, beginning
April 26, 1994 and ending April 30, 1997.
ARTICLE II
----------
COMPENSATION AND BENEFITS
Section 2.1. Base Salary. Executive's base salary shall be Four
----------- -----------
Hundred Thousand Dollars ($400,000) per annum, payable in biweekly
installments.
Section 2.2. Performance Bonus. The Company shall establish a
----------- -----------------
bonus plan, based upon performance criteria approved in advance by the
Company's Board of Directors, under which Executive may earn an annual bonus
equal to up to one hundred percent (100%) of Executive's base salary, payable
in the Company's discretion in cash or other compensation.
Section 2.3. Stock Options. Pursuant to "The Vons Companies,
----------- -------------
Inc. 1990 Stock Option and Restricted Stock Plan" (the "Stock Plan"),
Executive shall be granted one hundred seventy-five thousand (175,000) non-
qualified stock options at fair market value ("FMV Options") and ninety-seven
thousand five hundred (97,500) non-qualified stock options at a price of
twenty-five percent (25%) of fair market value (the "Discounted Options").
Except as provided in Sections 2.9 and 2.10, Executive shall vest in one-
third (1/3) of the Discounted Options and in twenty percent (20%) of the FMV
Options granted hereunder at the end of each full year of employment. As used
herein, "fair market value" shall be the average closing price of the
Company's common stock on the New York Stock Exchange for the ten (10) trading
days prior to the effective date of this Agreement, in accordance with the
Stock Plan. The Company and Executive shall execute any separate agreement(s)
as may be necessary pursuant to the Stock Plan to implement the terms of this
Section. Such agreement(s) shall provide that, upon retirement from
employment, as defined therein, all options then vested shall remain
exercisable for the entire term of the initial option grant.
Section 2.4. Insurance Benefits. Executive shall be entitled to
----------- -------------------
participate in the Company's Personal Choice Flexible Benefit Plan with
respect to insurance benefits generally available to the Company's senior
executives. If any insurance plan provides for a waiting period before
coverage begins, the Company will waive or obtain the waiver of that period
waived and, if it cannot be waived, will reimburse Executive the cost of
continuing insurance coverage from Executive's current employer until the
Company's insurance coverage becomes effective.
Section 2.5. Retirement Plans, Etc. Executive shall participate
----------- ---------------------
in the Company's pension plan, 401(k) plan and 401(k) wraparound plan in
accordance with the terms of those plans. Executive shall not be eligible
for, or participate in, the Company's Supplemental Executive Retirement Plan
or the Company's Severance Plan for Senior Management and Key Employees.
Section 2.6. Individual Supplemental Retirement Plan. The
----------- ---------------------------------------
Company shall provide Executive with an individual supplemental retirement
plan that provides for vesting after five (5) years and benefits in accordance
with the schedule attached hereto as Appendix A. The Company and Executive
shall execute a separate agreement implementing the terms of this Section.
Section 2.7. Relocation Allowance. Executive shall relocate his
----------- --------------------
residence to Southern California, and the Company shall provide him with the
following relocation allowance:
(a) The Company shall pay all reasonable expenses incurred by
Executive in connection with the relocation, including (i) sales commissions
incurred by Executive on the sale of Executive's residence; (ii) shipping
costs for the transfer of household goods and automobiles; and
(iii) Executive's temporary living expenses in Southern California through
October 1994. If Executive terminates his employment with the Company for any
reason other than death or disability during the first year following the date
Executive commences employment with the Company, Executive will reimburse the
Company for the sales commission on the sale of Executive's existing
residence.
(b) If Executive is unable to sell his existing residence prior
to purchasing a new residence, the Company shall provide Executive with an
interest-free loan, secured by an appropriate deed of trust on the existing
residence, (i) in an amount not to exceed the original cost, plus
improvements, less current mortgage balance of Executive's current residence;
and (ii) until the existing residence is sold. Such loan shall be repayable
in one (1) lump sum. If the existing residence is not sold by October 31,
1994, the Company shall purchase it for One Million Four Hundred Twenty-Five
Thousand Dollars ($1,425,000).
Section 2.8. Vacations and Holidays. Executive shall be entitled
----------- ----------------------
to such holidays and vacation (a minimum of one (1) month per year) each year
as the Company's other senior executives.
Section 2.9. Early Termination of Employment by Executive or the
----------- ---------------------------------------------------
Company. Either Executive or the Company may terminate Executive's employment
- -------
prior to April 30, 1997. In any such event, the Company's sole obligation to
Executive shall be as follows:
(a) If Executive resigns other than for "Good Reason" (as
defined in subsection (c) below) or is terminated by the Company for "Cause"
(as defined in subsection (d) below), Executive shall be paid any accrued but
unused vacation and any earned but unpaid base salary as of the date of
termination and any benefits to which Executive may be entitled under any
Company benefit plan. Executive shall not be entitled to any other
compensation whatsoever, including any performance bonus under Section 2.2,
any unvested stock options under Section 2.3 or any retirement benefits under
Section 2.6.
(b) If Executive resigns for "Good Reason" (as defined in
subsection (c) below), or if the Company terminates Executive other than for
"Cause" (as defined in subsection (d) below), Executive shall receive the
following, in addition to any accrued but unused vacation, any earned but
unpaid base salary and prorated performance bonus as of the date of
termination and any benefits to which Executive may be entitled under any
Company benefit plan:
(1) salary continuance equal to his base salary (but
no performance bonus) through April 30, 1997, payable on normal payroll
dates and without interest;
(2) continuation of medical and life (but not
disability) insurance benefits at the Company's expense through
April 30, 1997;
(3) immediate vesting of all Discounted Options (but no
FMV Options) under Section 2.3; and
(4) if Executive is not vested in the individual
supplemental retirement plan described in Section 2.6, a monthly benefit
of Eight Thousand Three Hundred Thirty-Three Dollars and Thirty-Four
Cents ($8,333.34) beginning the month after Executive turns sixty-five
(65) years of age and continuing for the duration of Executive's own
life (provided that, upon written notice to the Company, Executive may
elect to convert any such benefit to an actuarially equivalent joint and
survivor benefit for Executive and his spouse).
(c) As used in this Agreement, "Good Reason" for resignation
shall mean (i) a substantial change in the nature, or diminution in the status
of, Executive's duties or position; or (ii) a change in control of the Company
resulting from (A) the merger or consolidation of the Company with an entity
that is not a current stockholder of the Company as of the effective date of
this Agreement resulting in the holders of the Company's voting stock
immediately prior to such transaction holding less than fifty percent (50%) of
the total voting stock of the surviving corporation after such transaction, or
(B) any acquisition of stock by a person or entity that is not a current
stockholder as of the effective date of this Agreement that results in that
acquiring person or entity being the beneficial owner of fifty percent (50%)
or more of the Company's voting stock.
(d) As used in this Agreement, "Cause" for termination shall
mean (i) embezzlement or fraud against the Company; (ii) conviction of a
felony which in the judgment of the Board of Directors of the Company
adversely affects the business or reputation of the Company; (iii) conduct in
wanton and knowing disregard of corporate policy; and (iv) willful and
continuous failure, in the judgment of the Board of Directors, to perform
substantially the reasonably assigned duties with the Company after written
notice and reasonable opportunity to perform.
Section 2.10. Termination Due to Death or Disability
------------ --------------------------------------
(a) This Agreement shall terminate immediately upon Executive's
death or disability (as defined in subsection (b) below). Executive or
Executive's legal representatives, beneficiaries or heirs and assigns, as the
case may be, shall receive Executive's base salary (including prorated
performance bonus) through the date of death or disability, any unvested
Discounted Options (but not unvested FMV Options) shall immediately vest as of
that date, and, only in the event of Executive's death, Executive's surviving
spouse shall receive the actuarially equivalent benefit (based on an one
hundred percent (100%) joint and survivor benefit) of the benefit set forth in
Section 2.9(b)(4) beginning November 2001. Except with respect to any
obligations to Executive or Executive's legal representatives, beneficiaries
or heirs and assigns, as the case maybe, that may exist under the terms of
the various benefit plans, including exercise rights under the Stock Plan, all
other obligations of the Company hereunder shall immediately cease.
(b) As used herein, "disability" shall occur, and this Agreement
shall terminate, as of the date Executive becomes eligible to receive long-
term disability benefits under the Company's long-term disability insurance
plan.
Section 2.11. Short-Term Loan for Purchase of Stock. Within
------------ -------------------------------------
thirty (30) days after the effective date of this Agreement, the Company shall
lend Executive at least Three Hundred Seventy-Five Thousand Dollars ($375,000)
and up to One Million Dollars ($1,000,000), at an interest rate equal to the
lowest rate at which the Company is able to borrow funds during the period the
loan is outstanding, to be used solely for the purchase of Company common
stock from the Company at fair market value (as defined in Section 2.3) as of
the effective date of this Agreement. Executive shall liquidate all of his
common stock holdings in his former employer within one hundred twenty (120)
days of the effective date of this Agreement, or such longer period of time as
may be required under federal securities laws. The loan and interest shall be
repaid in full no later than October 31, 1994.
ARTICLE III
COMPANY INFORMATION
Section 3.1. Ownership of Records, Etc. All records, reports,
----------- --------------------------
notes, compilations or other recorded matter, and copies of reproductions
thereof, relating to the Company's operations, activities or business, made or
received by Executive during any past or future period of employment with the
Company are and shall be the property of the Company exclusively, and
Executive shall keep the same at all times in Executive's custody, subject to
the Company's control, and Executive shall surrender the same at the
termination of Executive's employment, if not before,
Section 3.2. Duration of Obligations. Executive's obligations
----------- -----------------------
under this Article shall continue after Executive's employment with the
Company is terminated, regardless of the nature or reason for such
termination. The provisions of this Article shall be binding upon Executive
and Executive's heirs, executors and administrators.
ARTICLE IV
GENERAL PROVISIONS
Section 4.1. Assignment. Executive may not assign or transfer
----------- ----------
any rights hereunder, this Agreement being a contract for Executive's personal
services.
Section 4.2. Sole and Entire Agreement. This Agreement
----------- -------------------------
constitutes the sole and entire existing agreement between the parties, and
completely and correctly expresses all of the rights and obligations of the
parties. All prior agreements, conditions, practices, customs, usages and
obligations are completely superseded and revoked, insofar as any such prior
agreement, condition, practice, custom, usage or obligation might have given
rise to any enforceable right.
Section 4.3. Waivers. The waiver in any particular instance or
----------- -------
series of instances of any term or condition of this Agreement or any breach
hereof by any party shall not constitute a waiver of such term or condition or
of any breach thereof in any other instance.
Section 4.4. Amendment. This Agreement is subject to amendment
----------- ---------
only by subsequent written agreement between, and executed by, the parties
hereto. Commencement or continuation of any custom, practice or usage by the
Company shall not constitute an amendment hereof or otherwise give rise to
enforceable rights or create obligations of the Company.
Section 4.5. Severability. If any one or more provisions,
----------- ------------
clauses, paragraphs, subclauses or subparagraphs contained in this Agreement
shall for any reason be held to be invalid, illegal, void or unenforceable,
the same shall not affect any other provision, clause, paragraph, subclause or
subparagraph of this Agreement, but this Agreement shall be construed as if
such invalid, illegal, void or unenforceable provision, clause, paragraph,
subclause or subparagraph had never been contained herein.
Section 4.6. Indemnification. The Company shall indemnify and
----------- ---------------
hold Executive harmless from any damages or costs, including attorney's fees,
arising from any claims brought by Executive's former employer relating to
Executive's resignation from that employer or Executive's employment by the
Company. The Company shall reimburse Executive for the reasonable costs,
including reasonable attorney's fees, Executive may incur in recovering from
Executive's former employer any salary, vacation pay, stock and/or other
compensation or benefits in which Executive is vested or to which Executive is
otherwise clearly entitled as of Executive's last day of employment with such
employer, to the extent Executive is not otherwise compensated for any such
costs.
Section 4.7. Attorney's Fees. If any legal action or proceeding
----------- ---------------
is brought to enforce this Agreement, the successful or prevailing party shall
be entitled to recover reasonable attorney's fees and other costs incurred in
such action or proceeding, in addition to any other relief to which such party
may be entitled.
Section 4.8. Time Is of the Essence. Time is of the essence in
----------- ----------------------
this Agreement. Any time limit mentioned herein has been carefully considered
and represents the agreed absolute outside limit of time within which the
applicable right must be exercised. The parties may extend such time limit
only by mutual agreement in writing.
Section 4.9. Duration of Rights. Rights and obligations created
----------- ------------------
by or arising under this Agreement shall terminate automatically upon
termination of this Agreement, except as otherwise expressly provided herein.
Section 4.10. Full Performance Required. The doctrine of
------------ -------------------------
substantial performance no application hereunder. Each condition and
provision has been carefully considered and represents the agreed minimum
limit of performance giving rise to applicable rights or obligations.
Section 4.11. Captions. Any captions of articles, sections,
------------ --------
subsections or paragraphs of this Agreement are solely for the convenience of
the parties and are not a part of this Agreement or to be used for the
interpretation of this Agreement or any provision hereof.
Section 4.12. Applicable Law. This Agreement shall governed by,
------------ --------------
and shall be construed and enforced in accordance with, the laws of the state
of California.
IN WITNESS WHEREOF, this Agreement has been duly executed as of
the date first above written.
THE VONS COMPANIES, INC.
/s/ RICHARD E. GOODSPEED /s/ ROGER E. STANGELAND
- ---------------------------------- By--------------------------------
Richard E. Goodspeed
Chairman of the Board
Title-----------------------------
APPENDIX A
to the
Employment Agreement
entered into between
The Vons Companies, Inc. and Richard E. Goodspeed,
effective as of April 26, 1994
<PAGE>
<PAGE>
<TABLE>
APPENDIX A
<CAPTION>
Vesting of Individual Supplemental
Retirement Plan YEARS OF SERVICE
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Remuneration 5 6 7 8 9 10 11 12 13 14 15
$100,000 $20,000 $22,000 $24,000 $26,000 $28,000 $30,000 $32,000 $34,000 $36,000 $38,000 $40,000
$150,000 $30,000 $33,000 $36,000 $39,000 $42,000 $45,000 $48,000 $51,000 $54,000 $57,000 $60,000
$200,000 $40,000 $44,000 $48,000 $52,000 $56,000 $60,000 $64,000 $68,000 $72,000 $76,000 $80,000
$300,000 $60,000 $66,000 $72,000 $78,000 $84,000 $90,000 $96,000 $102,000 $108,000 $114,000 $120,000
$400,000 $80,000 $88,000 $96,000 $104,000 $112,000 $120,000 $128,000 $136,000 $144,000 $152,000 $160,000
$500,000 $100,000 $110,000 $120,000 $130,000 $140,000 $150,000 $160,000 $170,000 $180,000 $190,000 $200,000
$600,000 $120,000 $132,000 $144,000 $156,000 $168,000 $180,000 $192,000 $204,000 $216,000 $228,000 $240,000
$700,000 $140,000 $154,000 $168,000 $182,000 $196,000 $210,000 $224,000 $238,000 $252,000 $266,000 $280,000
$800,000 $160,000 $176,000 $192,000 $208,000 $224,000 $240,000 $256,000 $272,000 $288,000 $304,000 $320,000
$900,000 $180,000 $198,000 $216,000 $234,000 $252,000 $270,000 $288,000 $306,000 $324,000 $342,000 $360,000
$1,000,000 $200,000 $220,000 $240,000 $260,000 $280,000 $300,000 $320,000 $340,000 $360,000 $380,000 $400,000
$1,250,000 $250,000 $275,000 $300,000 $325,000 $350,000 $375,000 $400,000 $425,000 $450,000 $475,000 $500,000
</TABLE>
