<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 October 8, 1995
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 November 15, 1995 - 43,511,651
<PAGE>
<TABLE>
PART I. 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>
Sixteen Weeks Ended Forty Weeks Ended
--------------------------------------- ---------------------------------------
October 8, 1995 October 9, 1994 October 8, 1995 October 9, 1994
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales.............. $ 1,565.3 100.0% $ 1,516.2 100.0% $ 3,847.3 100.0% $ 3,820.4 100.0%
----------- ----- ----------- ----- ----------- ----- ----------- -----
Costs and expenses:
Cost of sales,
buying and
occupancy...... 1,174.6 75.0 1,142.9 75.4 2,875.5 74.8 2,892.8 75.7
Selling and
administrative
expenses....... 331.6 21.2 317.6 20.9 820.8 21.3 806.9 21.1
Amortization of
excess cost
over net assets
acquired....... 4.7 .3 4.6 .3 11.6 .3 11.6 .3
Restructuring
charge......... - - 19.0 1.3 - - 19.0 .5
----------- ----- ----------- ----- ----------- ----- ----------- -----
1,510.9 96.5 1,484.1 97.9 3,707.9 96.4 3,730.3 97.6
----------- ----- ----------- ----- ----------- ----- ----------- -----
Operating income... 54.4 3.5 32.1 2.1 139.4 3.6 90.1 2.4
Interest expense,
net.............. 20.1 1.3 21.7 1.4 51.9 1.3 54.2 1.4
----------- ----- ----------- ----- ----------- ----- ----------- -----
Income before
income tax
provision........ 34.3 2.2 10.4 .7 87.5 2.3 35.9 1.0
Income tax
provision........ 15.8 1.0 6.4 .4 40.5 1.1 18.4 .5
----------- ----- ----------- ----- ----------- ----- ----------- -----
Net income......... 18.5 1.2 4.0 .3 47.0 1.2 17.5 .5
----- ----- ----- -----
----- ----- ----- -----
Retained earnings -
beginning of
period........... 236.3 194.7 207.8 181.2
----------- ----------- ----------- -----------
Retained earnings -
end of period.... $ 254.8 $ 198.7 $ 254.8 $ 198.7
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Income per common
and common
equivalent share:
Net income..... $ .42 $ .09 $ 1.07 $ .40
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average
common shares and
common share
equivalents...... 43,971,000 43,533,000 43,847,000 43,508,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<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>
October 8, January 1,
1995 1995
----------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................... $ 6.3 $ 9.0
Accounts receivable....................... 31.0 45.4
Inventories............................... 345.2 359.3
Other..................................... 53.8 54.1
----------- ----------
Total current assets.................... 436.3 467.8
Property and equipment, net................. 1,189.3 1,203.0
Excess of cost over net assets acquired..... 486.2 497.8
Other....................................... 59.1 53.4
----------- ----------
TOTAL ASSETS................................ $ 2,170.9 $ 2,222.0
----------- ----------
----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and
capital lease obligations............... $ 23.5 $ 8.7
Accounts payable.......................... 278.6 308.4
Accrued liabilities....................... 271.5 246.8
----------- ----------
Total current liabilities............... 573.6 563.9
Accrued self-insurance...................... 123.9 110.9
Deferred income taxes....................... 116.7 121.9
Other noncurrent liabilities................ 65.9 69.1
Senior debt and capital lease obligations... 384.3 484.2
Subordinated debt, net...................... 305.0 319.6
----------- ----------
Total liabilities....................... 1,569.4 1,669.6
----------- ----------
Shareholders' equity:
Common stock.............................. 4.3 4.3
Paid-in capital........................... 342.5 340.4
Retained earnings......................... 254.8 207.8
Notes receivable for stock................ (.1) (.1)
----------- ----------
Total shareholders' equity.............. 601.5 552.4
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.. $ 2,170.9 $ 2,222.0
----------- ----------
----------- ----------
<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>
Sixteen Weeks Ended Forty Weeks Ended
------------------------- -------------------------
October 8, October 9, October 8, October 9,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 18.5 $ 4.0 $ 47.0 $ 17.5
Adjustments to reconcile net income to cash
provided by operating activities:
Restructuring charge........................... - 19.0 - 19.0
Depreciation and amortization of property
and capital leases........................... 31.1 31.7 77.0 78.6
Amortization of excess cost over net assets
acquired and other assets.................... 4.9 4.9 12.3 12.3
Amortization of debt discount and deferred
financing costs.............................. 2.1 1.9 5.2 4.8
LIFO charge.................................... 3.1 .9 4.7 1.7
Deferred income taxes.......................... (6.0) (2.1) 7.1 .4
Change in assets and liabilities:
(Increase) decrease in accounts receivable. 5.9 2.0 14.4 (8.6)
(Increase) decrease in inventories at FIFO
costs.................................... (26.0) (.2) 9.4 39.7
(Increase) decrease in other current assets (7.7) (2.3) (12.0) 1.9
(Increase) decrease in noncurrent assets... (2.7) 4.2 (6.7) (11.5)
Increase (decrease) in accounts payable.... (3.1) 18.3 3.1 (40.0)
Increase (decrease) in accrued liabilities. 33.7 14.0 24.7 26.7
Increase (decrease) in noncurrent
liabilities.............................. 5.7 (9.1) 11.5 (7.6)
----------- ----------- ----------- -----------
Net cash provided by operating activities............ 59.5 87.2 197.7 134.9
----------- ----------- ----------- -----------
Cash flows from investing activities:
Addition of property, plant and equipment.......... (32.9) (36.4) (73.9) (92.8)
Disposal of property, plant and equipment.......... 5.5 3.8 8.9 6.0
----------- ----------- ----------- -----------
Net cash used for investing activities............... (27.4) (32.6) (65.0) (86.8)
----------- ----------- ----------- -----------
Cash flows from financing activities:
Net payments on revolving debt..................... (37.1) (54.8) (94.0) (44.3)
Increase (decrease) in net outstanding drafts...... 8.8 1.8 (32.9) (.9)
Repurchase of senior subordinated debentures....... (.9) - (2.3) -
Payments on other debt, capital lease obligations
and other........................................ (2.4) (1.5) (6.2) (5.2)
----------- ----------- ----------- -----------
Net cash used by financing activities................ (31.6) (54.5) (135.4) (50.4)
----------- ----------- ----------- -----------
Net cash increase (decrease)......................... .5 .1 (2.7) (2.3)
Cash at beginning of period.......................... 5.8 6.1 9.0 8.5
----------- ----------- ----------- -----------
Cash at end of period................................ $ 6.3 $ 6.2 $ 6.3 $ 6.2
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest......................................... $ 21.3 $ 22.3 $ 51.2 $ 53.1
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Income taxes..................................... $ 20.6 $ 11.2 $ 36.2 $ 25.7
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<FN>
See accompanying notes to these condensed consolidated financial statements.
</TABLE>
<PAGE>
THE VONS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 October 8, 1995 and January 1, 1995 and the
consolidated results of operations and cash flows for the sixteen and
forty weeks ended October 8, 1995 and October 9, 1994, respectively, have
been made. This interim information should be read in conjunction with
the consolidated financial statements and 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 forty weeks ended
October 8, 1995, should not be considered as indicative of the results
to be expected for the full year.
At October 8, 1995, the Company operated 329 supermarket and food
and drug combination stores, primarily in Southern California, under the
names Vons and Pavilions. 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.
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations (Unaudited)
Results of Operations
For the majority of 1994, the focus of the Company's marketing
efforts was communicating the lowering of shelf prices on more than
12,000 items. In 1995, the marketing focus is being placed on Vons
entire customer offering, which combines high quality products and
customer service with competitive prices. This "Vons Is Value"
marketing campaign was introduced in January 1995.
With the closure of the San Diego distribution facility in the third
quarter of 1995, substantially all of the cost containment and strategic
restructuring initiatives have been executed. These initiatives included
the closing of 26 stores and the elimination of 700 administrative and
support positions.
The Company's marketing focus and its commitment to a low cost structure
are long-term strategies, which are initially intended to benefit sales by
funding lower prices, which in turn will improve the Company's ability to
achieve strong, sustainable earnings growth.
The merger of two of the Company's major competitors, Food 4 Less
Supermarkets, Inc. and Ralphs Grocery Company, was completed on June 14, 1995.
This merger has resulted in a change in the composition of the Company's
competitors as certain trade names were eliminated and store format
conversions occurred. The Company does not believe that the merger or its
effect on the already competitive marketplace will have a material impact
on the Company's sales and earnings prospects.
Sixteen Weeks Ended October 8, 1995 Compared with the Sixteen Weeks Ended
October 9, 1994.
Sales. Third quarter 1995 sales were $1,565.3 million, an increase
of $49.1 million, or 3.2%, over third quarter 1994 sales despite
operating seven fewer stores. Same store sales increased 5.3% over third
quarter 1994 sales. This represents the eighth consecutive quarter of
an improving same store sales trend. The increase in sales reflects the
favorable consumer response to the "Vons Is Value" marketing campaign,
slight overall inflation in most product categories and the slowly
improving economic environment in Southern California offset by competitive
new store, remodel and conversion activity. Since October 9, 1994, the
Company has opened 13 new stores, closed 20 stores and completed 32 store
remodel projects.
Costs and Expenses. Costs and expenses were $1,510.9 million for
third quarter 1995, an increase of $26.8 million, or 1.8%, over third
quarter 1994.
Cost of sales and buying and occupancy expenses as a percentage of sales
decreased by 0.4 percentage points to 75.0% in third quarter 1995. This
decrease was due primarily to increased private brand sales, which were
approximately 17 percent of sales for third quarter 1995, and improved
purchasing through the use of category management. The LIFO charge for
the third quarter of 1995 was $3.1 million compared with $.9 million for
third quarter 1994 reflecting the impact of inflation.
Selling and administrative expenses as a percentage of sales increased
by 0.3 percentage points to 21.2% in third quarter 1995. This increase
primarily reflects increased advertising expense and higher service levels
in the stores as well as negotiated union wage rate increases effective
October 1994 which were largely offset by a more efficient mix of store
labor.
In the third quarter 1994, the Company recorded a $19.0 million, or
$.26 per share, restructuring charge. This charge primarily reflected
anticipated expenses associated with a program to accelerate the closing
of underperforming facilities and to eliminate certain administrative and
support positions.
Operating Income. Third quarter 1995 operating income was $54.4
million, or 3.5% of sales compared with operating income of $32.1 million,
or 2.1% of sales, in third quarter 1994. Excluding the $19.0 million
restructuring charge, third quarter 1994 results were $51.1 million, or
3.4% of sales. Operating income before depreciation and amortization of
property, amortization of goodwill and other assets, LIFO charge and
restructuring charge ("FIFO EBITDA") was $93.5 million, or 6.0% of sales,
in third quarter 1995 compared with $88.6 million, or 5.8% of sales, in
third quarter 1994.
Interest Expense. Third quarter 1995 net interest expense was
$20.1 million, a decrease of $1.6 million from third quarter 1994. This
decrease was due primarily to lower average revolving debt borrowings
partially offset by higher weighted average interest cost on revolving
debt.
Income Tax Provision. Third quarter 1995 income tax provision was
$15.8 million, or a 46.1% effective tax rate. Third quarter 1994 income
tax provision was $6.4 million, or a 61.5% effective tax rate, primarily
reflecting the impact of the 1994 restructuring charge. Excluding the 1994
restructuring charge, the effective tax rate was 48% for third quarter 1994.
The decrease in the third quarter 1995 effective tax rate is due to the
increase in income before income tax provision.
Income. Third quarter 1995 net income was $18.5 million, or $.42 per
share, compared with net income of $4.0 million, or $.09 per share, in
third quarter 1994. In addition to improved operating results, this
increase reflects the impact of the third quarter 1994 restructuring charge
of $19.0 million, or $.26 per share.
Forty Weeks Ended October 8, 1995 Compared with the Forty Weeks Ended
October 9, 1994.
Sales. Sales for the forty weeks ended October 8, 1995 were $3,847.3
million, an increase of $26.9 million, or 0.7%, over the forty weeks ended
October 9, 1994. The 1995 year-to-date same store sales increased 3.1% over
the 1994 year-to-date sales. The increase in sales reflects the favorable
consumer response to the "Vons Is Value" marketing campaign, slight overall
inflation in most product categories and the slowly improving economic
environment in Southern California offset by competitive new store, remodel
and conversion activity.
Costs and Expenses. Costs and expenses for the forty weeks ended
October 8, 1995 were $3,707.9 million, a decrease of $22.4 million, or 0.6%,
from the comparable 1994 period.
Cost of sales and buying and occupancy expenses as a percentage of
sales were 74.8% for the forty weeks ended October 8, 1995, a decrease of
0.9 percentage points, compared with the forty weeks ended October 9, 1994.
The impact of lower prices has been more than offset by decreased product
costs achieved through better utilization of category management, more
effective promotional offerings and increased private brand sales.
Selling and administrative expenses as a percentage of sales were
21.3% in the 1995 period, an increase of 0.2 percentage points over
the comparable 1994 period, which included a $5.0 million insurance
deductible charge related to the Northridge earthquake. This increase
reflects increased advertising expenses and higher service levels in
the stores as well as negotiated union wage rate increases which were
largely offset by improvements in sales per labor hour and a more
efficient mix of store labor.
Operating Income. Operating income for the forty weeks ended
October 8, 1995 was $139.4 million, an increase of $49.3 million, or
54.7%, over the forty weeks ended October 9, 1994. Operating margin
increased to 3.6% in the 1995 forty-week period versus 2.4% in the 1994
forty-week period. Excluding the 1994 restructuring charge, results
were $109.1 million, or 2.9% of sales, for the forty weeks ended
October 9, 1994. These increases primarily reflect the increase in
gross margin partially offset by increased selling and administrative
expenses. FIFO EBITDA was $233.4 million, or 6.1% of sales, for the
forty weeks ended October 8, 1995. FIFO EBITDA excluding the earthquake
insurance deductible was $206.7 million, or 5.4% of sales, for the forty
weeks ended October 9, 1994.
Interest Expense. Net interest expense for the forty weeks ended
October 8, 1995 was $51.9 million, a decrease of $2.3 million from the
comparable 1994 period. This decrease was due to lower average revolving
debt borrowings partially offset by higher weighted average interest
cost on revolving debt and the repurchases of higher interest cost
subordinated debt.
Income Tax Provision. The income tax provision for the forty weeks
ended October 8, 1995 was $40.5 million, a 46.3% effective tax rate.
The income tax provision for the forty weeks ended October 9, 1994 was
$18.4 million, a 51.3% effective tax rate. Excluding the restructuring
charge, the effective tax rate for the forty weeks ended October 9, 1994
was 48%. The decrease in the year-to-date 1995 effective tax rate
reflects the increase in income before income tax provision.
Income. Net income for the forty weeks ended October 8, 1995 was
$47.0 million, or $1.07 per share, compared with net income of $17.5
million, or $.40 per share, for the forty weeks ended October 9, 1994.
Net income for the forty weeks ended October 9, 1994 included a $19.0
million, or $.26 per share, restructuring charge.
Labor Contract Status
The Company renegotiated its contract with the Southern California
United Food and Commercial Workers International Unions. The new
contract replaces the previous contract which was scheduled to expire
on October 6, 1996. The new contract will expire on October 3, 1999.
Over the term of the new contract, it is anticipated that labor cost
increases will be consistent with increases experienced by the Company
in recent years.
Liquidity and Capital Resources
The Company's primary sources of liquidity are cash flows from
operations and available credit under its revolving debt. On
February 17, 1995, the Company replaced its $475 million Revolving
Credit Facility and related $150 million Term Loan Facility with a $625
million Revolving Loan Agreement (the "Revolving Loan"). Management
believes that these sources adequately provide for its working capital,
capital expenditure and debt service needs.
Net cash provided by operating activities was $59.5 million in
third quarter 1995 compared with $87.2 million in third quarter 1994
and $197.7 million for the forty weeks ended October 8, 1995 compared
with $134.9 million for the forty weeks ended October 9, 1994. These
changes were due primarily to increases in net income and changes in
assets and liabilities generally reflecting the timing of receipts and
disbursements. The ratio of current assets to current liabilities was
0.76 to 1 at October 8, 1995 compared with 0.83 to 1 at January 1, 1995.
The decrease in the ratio of current assets to current liabilities
reflects the impact of classifying the current portion of the 6-5/8%
Senior Subordinated Debentures.
Net cash used for investing activities was $27.4 million in third
quarter 1995 compared with $32.6 million in third quarter 1994 and $65.0
million for the forty weeks ended October 8, 1995 compared with $86.8
million for the forty weeks ended October 9, 1994. Full-year 1995
capital expenditures are expected to be $145 million, of which $110
million is expected to be cash capital expenditures, and are lower than
anticipated since certain store projects have been delayed until 1996.
Capital expenditures for 1996 are expected to be approximately $205
million, of which $165 million is expected to be cash capital expenditures.
During the forty weeks ended October 8, 1995, the Company opened 12 stores,
closed 17 stores and completed 29 store remodel projects. Capital
expenditures in 1995 have been and will continue to be funded out of
cash provided by operations, revolving debt and/or through operating
leases. 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 $31.6 million in third
quarter 1995 compared with $54.5 million in third quarter 1994 and $135.4
million for the forty weeks ended October 8, 1995 compared with $50.4
million for the forty weeks ended October 9, 1994. The level of borrowings
under the Company's revolving debt is dependent primarily upon cash flows
from operations and capital expenditure requirements.
At October 8, 1995, the Company's revolving debt borrowings totaled
$205.9 million compared with $149.8 million at January 1, 1995. This
change reflects the replacement of the $150 million Term Loan Facility
with revolving debt borrowings and borrowings relating to the capital
expenditure program offset by cash provided from operating activities.
At October 8, 1995, the Company had available unused credit of $418.7
million under its Revolving Loan, an increase of $167.5 million since
January 1, 1995. This increase is due to decreased total borrowings as
well as the issuance, outside of the Revolving Loan, of a $70.4 million
letter of credit which previously had been issued under the Revolving Loan.
For the forty weeks ended October 8, 1995 the weighted average interest
cost on revolving debt was 7.5%, the corresponding bank prime rate at
October 8, 1995 was 8.75%.
<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
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.1.7 Amendment to Revolving Loan Agreement dated
February 17, 1995 by and among the Registrant,
the banks named therein, and Bank of America,
NT & SA and The Chase Manhattan Bank, N.A.
as managing agents, dated August 4, 1995.
27 Financial Data Schedule.
Management Contracts or Compensatory Plans or Arrangements
10.24 Employment Arrangement between the Registrant and
Terry R. Peets dated September 6, 1995.
10.25 Severance Agreement between the Registrant and
Terry R. Peets dated September 6, 1995.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the
quarter ended October 8, 1995.
<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: November 21, 1995 /s/ LAWRENCE A. DEL SANTO
---------------------------------
Lawrence A. Del Santo
Chairman and Chief
Executive Officer
Date: November 21, 1995 /s/ PAMELA K. KNOUS
---------------------------------
Pamela K. Knous
Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
10.1.7 Amendment to Revolving Loan
Agreement dated February 17,
1995 by and among the Registrant,
the banks named therein, and
Bank of America NT & SA and
The Chase Manhattan Bank, N.A.
as managing agents, dated
August 4, 1995.
27 Financial Data Schedule.
10.24 Employment Arrangement between the
Registrant and Terry R. Peets
dated September 6, 1995.
10.25 Severance Agreement between the
Registrant and Terry R. Peets dated
September 6, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Statement of Operations for the forty weeks
ended October 8, 1995, the Consolidated Balance Sheet as of October 8, 1995
and the accompanying notes thereto and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-1995
<PERIOD-END> OCT-08-1995
<CASH> 6,300
<SECURITIES> 0
<RECEIVABLES> 31,000
<ALLOWANCES> 0
<INVENTORY> 345,200
<CURRENT-ASSETS> 436,300
<PP&E> 1,699,200
<DEPRECIATION> 509,900
<TOTAL-ASSETS> 2,170,900
<CURRENT-LIABILITIES> 573,600
<BONDS> 689,300
<COMMON> 4,300
0
0
<OTHER-SE> 597,200
<TOTAL-LIABILITY-AND-EQUITY> 2,170,900
<SALES> 3,847,300
<TOTAL-REVENUES> 3,847,300
<CGS> 2,875,500
<TOTAL-COSTS> 3,707,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51,900
<INCOME-PRETAX> 87,500
<INCOME-TAX> 40,500
<INCOME-CONTINUING> 47,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,000
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
<PAGE>
EXHIBIT 10.17
Amendment No. 1
---------------
Reference is made to that certain Revolving Loan
agreement dated as of February 17, 1995 (the "Loan Agreement")
among The Vons Companies, Inc., Bank of America National Trust
and Savings Association, as Documentation Agent, The Chase
Manhattan Bank, N.A., as Administrative Agent and the Banks
party thereto. Terms defined in the Loan Agreement are used
herein with the same meanings.
Borrower, the Administrative Agent and the Banks
hereby agree as follows:
1. "Applicable Commitment Fee Rate" The definition of
------------------------------
"Applicable Commitment Fee Rate" in Section 1.1 of the Loan
---
Agreement is amended to read as follows:
"Applicable Commitment Fee Rate" means, for
------------------------------
each Pricing Period, the rate set forth below
(expressed in basis points) opposite the
Applicable Pricing Level for that Pricing
Period:
<TABLE>
<CAPTION>
Pricing Level Rate
------------- ----
<C> <C>
I 10.00
II 12.50
III 12.50
IV 15.00
V 20.00
VI 25.00
VII 31.25"
</TABLE>
2. "Applicable Eurodollar Rate Margin" The definition
---------------------------------
of "Applicable Eurodollar Rate Margin" in Section 1.1 of the
---
Loan Agreement is hereby amended to read as follows:
"Applicable Eurodollar Rate Margin"
---------------------------------
means, for each Pricing Period, the
interest rate set forth below
(expressed in basis points) opposite the
Applicable Pricing Level for that Pricing
Period:
<TABLE>
<CAPTION>
Pricing Level Margin
------------- ------
<C> <C>
I 22.50
II 25.00
III 32.50
IV 37.50
V 50.00
- 1 -
VI 62.50
VII 75.00
</TABLE>
3. "Applicable Standby Letter of Credit Fee Rate" The
--------------------------------------------
definition of "Applicable Standby Letter of Credit Fee Rate" in
Section 1.1 of the Loan Agreement is hereby amended to read as
- -----------
follows:
"Applicable Standby Letter of Credit
-----------------------------------
Fee Rate" means, for each Pricing Period,
--------
the rate set forth below (expressed in
basis points) opposite the Applicable
Pricing Level for that Pricing Period:
<TABLE>
<CAPTION>
Pricing Level Rate
------------- ----
<C> <C>
I 12.50
II 15.00
III 22.50
IV 27.50
V 40.00
VI 52.50
VII 65.00
</TABLE>
4. "Applicable Pricing Level" The definition of
------------------------
"Applicable Pricing Level" in Section 1.1 of the Loan Agreement
-----------
is hereby amended to read as follows:
"Applicable Pricing Level" means, for each
------------------------
Pricing Period, the pricing level set forth
below opposite the pricing criteria achieved by
Borrower as of the first day of that Pricing
Period (and, if such pricing criteria are set
forth opposite different pricing levels, then
the pricing level set forth below that is more
favorable to Borrower):
<TABLE>
<CAPTION>
Level Pricing Criteria
----- ----------------------------------
<C> <C> <C>
Interest Senior
Coverage Ratio Debt Rating
-------------- -----------
I Equal to or At least
greater than 5.75 A or A2
II Equal to or A- or A3
greater than 5.25
but less than
5.75 to 1.00
- 2 -
III Equal to or BBB+ or
greater than 4.75 Baa1
but less than
5.25 to 1.00
IV Equal to or BBB or
greater than 4.25 Baa2
to 1.00 but less
than 4.75 to 1.00
V Equal to or BBB- or
greater than 3.75 Baa3
to 1.00 but less
than 4.25 to 1.00
VI Equal to or BB+ or
greater than 3.00 Ba1
to 1.00 but less
than 3.75 to 1.00
VII Less than 3.00 to Below
1.00 BB+ or
Ba1
</TABLE>
5. Counterparts. This Amendment may be executed in
------------
counterparts in accordance with Section 11.7 of the Loan
----
Agreement.
6. Confirmation. In all other respects, the Loan
------------
Agreement is hereby confirmed.
Dated as of August 4 , 1995.
---
THE VONS COMPANIES, INC.
By /S/ Pamela Knous
-------------------------------------------
Its Pamela K. Knous, E.V.P. & C.F.O.
--------------------------------------
[Printed Name and Title]
By /S/ T. J. Wallock
-------------------------------------------
Its Terrence J. Wallock, E.V.P & General Counsel
-------------------------------------
[Printed Name and Title]
- 3 -
THE CHASE MANHATTAN BANK, N.A.,
as Administrative Agent
By /S/ Ellen Gutrog
-------------------------------------------
Its Ellen Gutrog V.P
--------------------------------------
[Printed Name and Title]
THE CHASE MANHATTAN BANK, N.A.,
as a Bank
By /S/ Ellen Gutrog
-------------------------------------------
Its Ellen Gutrog V.P
---------------------------------------
[Printed Name and Title]
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
THE BANK OF NOVA SCOTIA,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 4 -
THE CHASE MANHATTAN BANK, N.A.,
as Administrative Agent
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
THE CHASE MANHATTAN BANK, N.A.,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
By /s/ Gina M. West
-------------------------------------------
Gina M. West
Its Vice President
--------------------------------------
[Printed Name and Title]
THE BANK OF NOVA SCOTIA,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
THE CHASE MANHATTAN BANK, N.A.,
as Administrative Agent
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 4 -
THE CHASE MANHATTAN BANK, N.A.,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
THE BANK OF NOVA SCOTIA,
as a Bank
By /s/ Chris Johnson
-------------------------------------------
Its Sr. Relationship Mgr.
--------------------------------------
[Printed Name and Title]
Chris Johnson
- 4 -
CITICORP USA, INC.,
as a Bank
By /S/ W. P. Stengel
-------------------------------------------
W. P. Stengel
Its Vice President
--------------------------------------
[Printed Name and Title]
NATIONSBANK OF TEXAS, N.A.,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
ABN AMRO BANK N.V.,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
FIRST INTERSTATE BANK OF CALIFORNIA,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 5 -
CITICORP USA, INC.,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
NATIONSBANK OF TEXAS, N.A.,
as a Bank
By /s/ M. M. SHAFROTH
-------------------------------------------
Its Michele M. Shafroth - Senior Vice President
---------------------------------------
[Printed Name and Title]
ABN AMRO BANK N.V.,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
FIRST INTERSTATE BANK OF CALIFORNIA,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 5 -
CITICORP USA, INC.,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
NATIONSBANK OF TEXAS, N.A.,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
ABN AMRO BANK N.V.,
as a Bank
By /s/ ELLEN M. COLEMAN JOHN A MILLER
-------------------------------------------
Ellen M. Coleman
Its Assistant Vice President John A. Miller
--------------------------------------
[Printed Name and Title] Vice President
FIRST INTERSTATE BANK OF CALIFORNIA,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 5 -
CITICORP USA, INC.,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
NATIONSBANK OF TEXAS, N.A.,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
ABN AMRO BANK N.V.,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
FIRST INTERSTATE BANK OF CALIFORNIA,
as a Bank
By /s/ W. J. BAIRD
-------------------------------------------
William J. Baird
Its Senior Vice President
--------------------------------------
[Printed Name and Title]
- 5 -
FIRST NATIONAL BANK OF CHICAGO,
as a Bank
By /s/ L. GENE BEUBE
-------------------------------------------
L. Gene Beube
Its Senior Vice President
--------------------------------------
[Printed Name and Title]
SOCIETE GENERALE,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
UNION BANK,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
BANK OF HAWAII,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 6 -
FIRST NATIONAL BANK OF CHICAGO,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
SOCIETE GENERALE,
as a Bank
By /s/ MAUREEN KELLY
-------------------------------------------
MAUREEN E. KELLY
Its Vice President
--------------------------------------
[Printed Name and Title]
UNION BANK,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
BANK OF HAWAII,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 6 -
FIRST NATIONAL BANK OF CHICAGO,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
SOCIETE GENERALE,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
UNION BANK,
as a Bank
By /s/ ANN M. YASUDA
-------------------------------------------
Its Ann M. Yasuda, Vice President
---------------------------------------
[Printed Name and Title]
BANK OF HAWAII,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 6 -
FIRST NATIONAL BANK OF CHICAGO,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
SOCIETE GENERALE,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
UNION BANK,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
BANK OF HAWAII,
as a Bank
By /s/ MARCY E. FLEMING
-------------------------------------------
Its MARCY E. FLEMING - VICE PRESIDENT
--------------------------------------
[Printed Name and Title]
- 6 -
CHEMICAL BANK,
as a Bank
By /s/ NEIL R. BZLAN
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
CREDIT LYONNAIS LOS ANGELES BRANCH,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
THE INDUSTRIAL BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
PNC BANK, NATIONAL ASSOCIATION,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 7 -
CHEMICAL BANK,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
CREDIT LYONNAIS LOS ANGELES BRANCH,
as a Bank
By /s/ THIERRY VINCENT
-------------------------------------------
Thierry Vincent
Its Vice President
--------------------------------------
[Printed Name and Title]
THE INDUSTRIAL BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
PNC BANK, NATIONAL ASSOCIATION,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Bank
By /s/ THIERRY VINCENT
-------------------------------------------
Thierry Vincent
Authorized Signatory
- 7 -
CHEMICAL BANK,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
CREDIT LYONNAIS LOS ANGELES BRANCH,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
THE INDUSTRIAL BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY,
as a Bank
By /s/ T. AKIYAMA
-------------------------------------------
Its Takahide Akiyama, Joint General Manager
---------------------------------------
[Printed Name and Title]
PNC BANK, NATIONAL ASSOCIATION,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
- 7 -
CHEMICAL BANK,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
CREDIT LYONNAIS LOS ANGELES BRANCH,
as a Bank
By
-------------------------------------------
Its
--------------------------------------
[Printed Name and Title]
THE INDUSTRIAL BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY,
as a Bank
By
-------------------------------------------
Its
---------------------------------------
[Printed Name and Title]
PNC BANK, NATIONAL ASSOCIATION,
as a Bank
By /s/ ANTHONY L. TRUNZO
-------------------------------------------
Anthony L. Trunzo
Its Vice President
--------------------------------------
[Printed Name and Title]
- 7 -
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY,
as a Bank
By /s/ HIROMU KITO
-------------------------------------------
Its Hiromu Kito, Joint General Manager
--------------------------------------
[Printed Name and Title]
- 8 -
<PAGE>
EXIBIT 10.24
[This letter appears on The Vons Companies, Inc. letterhead]
September 6, 1995
Mr. Terry R. Peets
327 Coral Avenue
Balboa Island, CA 92662
Dear Terry:
On behalf of The Vons Companies, Inc., I am pleased to extend
to you an offer of employment as Executive Vice President reporting
to Richard E. Goodspeed, President and Chief Operating Officer.
The terms of this offer are as follows:
1. Base Salary
-----------
You will be paid a base salary at an annual rate of $275,000,
payable every other week.
2. Sign-on Bonus
-------------
You will be given a one-time bonus in the amount of $30,000
for accepting this position and in consideration of the
forfeiture of certain benefits from your former employment.
3. 1995 Bonus Eligibility
----------------------
You will be included in the Company's bonus plan at a target
bonus of 50% of your base salary. Any bonus will be paid
pursuant to the terms of such plan, with your entire annualized
base salary to be included in the calculation for the Company's
1995 fiscal year plan.
4. Stock Option Grant
------------------
Pursuant to The Vons Companies, Inc. 1990 Stock Option and
Restricted Stock Plan (the "Plan"), you will be granted fifty
thousand (50,000) non-qualified stock options at fair market
value as defined in the Plan. You shall vest 25% of the
options at the end of each full year of employment, until fully
vested after year four.
5. Severance Agreement
-------------------
You will be provided a Severance Agreement in the form attached.
6. Pension Plan
------------
You will become a participant in the Vons Pension Plan after one
year of employment.
7. Supplemental Executive Retirement Plan (SERP)
---------------------------------------------
You will become a participant in the Vons SERP. Credited
service for participation will be as set forth on Appendix A
hereto.
8. 401(k) Profit Sharing Plan
--------------------------
You will become a participant in the Vons Personal Choice
Profit Sharing Plan after one year of employment. At that time
you will be provided the opportunity to "roll-over" any
distributions you receive from your present employer's qualified
retirement plan.
9. Executive Physical
------------------
You will become a participant in the Vons Executive Physical
Program which annually provides you with an allowance to
undergo a personal physical examination.
10. Health Care, Life Insurance, and Other Benefits
-----------------------------------------------
You will be eligible for the flexible benefits plan called
"Personal Choice, The Vons Advantage." You have been
provided with the appropriate booklets for your selection
in accordance with the terms of the plan. Coverage begins
on the first day of employment.
11. Long Term Disability
--------------------
At your election you can become a participant in the Vons
Long-Term Disability Plan (LTD). In the event of your
becoming disabled, Vons will continue your salary through
the LTD waiting period.
12. Vacation
--------
You will be eligible for four weeks annual paid vacation.
13. Indemnification
---------------
The Company will indemnify and hold you harmless from any
damages or costs, including attorney's fees, arising from
any claims brought by your former employer relating to your
resignation from the employer or your employment by the
Company. The Company shall reimburse you for the reasonable
costs, including reasonable attorney's fees, you may incur in
recovering from your former employer any salary, vacation pay,
stock and/or other compensation or benefits in which you are
vested or to which you are otherwise clearly entitled as of your
last day of employment with such employer, to the extent you
are not otherwise compensated for any such amounts. In the
event of, and for so long as, you may be restrained from performing
duties for the Company by reason of any court order or other
such legal process, you shall continue to receive salary and benefits
as provided hereunder, subject to the Severance Agreement. You
agree to comply with directions from the Company advising you of your
obligation to not disclose to the Company any proprietary or trade
information of your former employer of which you may be aware and
to otherwise comport yourself in a manner consistent with your
legal obligations not to illegally use any such information.
14. Employment Date
---------------
You will begin employment on September 6, 1995.
Yours very truly,
/S/ Lawrence Del Santo
Lawrence A. Del Santo
LADS/la
ACCEPTED:
/S/ TERRY PEETS 9/6/95
- ------------------------------------------ --------------------
TERRY R. PEETS DATE
<PAGE>
<TABLE>
APPENDIX A
<CAPTION>
<S>
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>
<PAGE>
EXHIBIT 10.25
S E V E R A N C E A G R E E M E N T
--------------------------------------
THIS SEVERANCE AGREEMENT is entered into effective as of this
6th day of September, 1995, by and between the Vons Companies, Inc.,
a Michigan corporation, ("Company") and Terry R. Peets ("Executive").
R E C I T A L S
A. Executive has accepted an offer of employment as Executive
Vice President of the Company contained in a letter from Lawrence A. Del
Santo dated September 6, 1995 (the "Offer Letter").
B. Executive and the Company desire to provide for the payment
of severance benefits to Executive as his exclusive remedy in the event
of termination of employment from the Company, as provided herein.
NOW, THEREFORE, in consideration for Executive agreeing to accept
employment with the Company, the Company and Executive hereby agree as
follows:
1. Either Executive or the Company may terminate Executive's
employment at any time. 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, any unvested stock options or any retirement
benefits except as provided in the Company benefit plans other than
the Vons Companies, Inc. Severance Pay Plan, from which no benefits
will be paid.
(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 any accrued but unused vacation, any earned but unpaid
base salary and prorated performance bonus as of the date of termination,
any benefits to which Executive may be entitled under any Company
benefit plan, and one year of severance payments which shall be paid to
Executive pursuant to the Vons Companies, Inc. Severance Pay Plan, as
in effect as of this date, and in addition shall receive the following:
(1) salary continuance equal to his base
salary (but no performance bonus) through September 5,
1997, payable on normal payroll dates and without
interest, provided, however, that payments hereunder shall
not commence until all severance payments payable to
Executive under the Vons Companies, Inc. Severance Pay
Plan have been exhausted;
(2) continuation of medical and life (but not
disability) insurance benefits at the Company's expense
for as long as salary continuance or severance payments
are made.
(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
relocation of Executive's principal place of employment to any place
more than 50 miles from the office theretofore regularly occupied by
Executive; 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.
(e) If the termination of employment of Executive
shall occur by reason of a disability which qualifies as long-term
disability under the Company's long-term disability plan
("Disability Plan"), Executive shall be entitled to salary
continuance up to the date Executive becomes eligible to receive
such long-term disability benefits under the Disability Plan, but
no salary continuance thereafter.
2. The payments provided for herein shall be Executive's
sole and exclusive remedy in the event of his termination of
employment with the Company, and Executive expressly hereby waives
any other remedy, in law or in equity, which might otherwise be
available to him but for this Agreement.
3. The provisions of this Agreement shall terminate and be
null and void and of no further force or effect in the event of
Executive's death if such death occurs prior to termination of
employment which would trigger payments to be made hereunder.
4. This Agreement is intended to be construed and governed
in accordance with the provisions of the laws of the State of
California.
5. 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.
2
6. 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.
NOW, THEREFORE, the parties hereto have executed this
Agreement effective as of the date set forth in the first paragraph
of this Agreement.
/S/ TERRY PEETS
-----------------------------
Terry R. Peets
THE VONS COMPANIES, INC., a
Michigan corporation,
By /S/ LAWRENCE DEL SANTO
--------------------------
3
