As filed with the Securities and Exchange Commission on July 13, 1998.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMERICAN STORES COMPANY
(Exact name of registrant as specified in its charter)
Delaware 87-0207226
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
299 South Main Street 84111
Salt Lake City, Utah
(Address of Principal Executive Offices) (Zip Code)
AMERICAN STORES COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Full title of the Plan)
KATHLEEN E. MCDERMOTT, ESQ.
CHIEF LEGAL OFFICER AND ASSISTANT SECRETARY
AMERICAN STORES COMPANY
299 SOUTH MAIN STREET, 24TH FLOOR
SALT LAKE CITY, UTAH 84111
(801) 539-0112
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER OBLIGATION OFFERING PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
DEFERRED COMPENSATION
OBLIGATIONS (1) $25,000,000 100% $25,000,000 $7,375
</TABLE>
1. The Deferred Compensation Obligations are unsecured obligations of American
Stores Company to pay deferred compensation in the future in accordance
with the terms of the American Stores Company Supplemental Executive
Retirement Plan.
2. Estimated solely for the purpose of determining the registration fee.
PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS.1
ITEM 1. PLAN INFORMATION.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL
INFORMATION.
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT.
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have previously been filed by American
Stores Company (the "Company") with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), are incorporated by reference herein and shall be deemed to be a
part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1998 (the "1997 Annual Report"), which incorporates by
reference certain portions of the Company's 1997 Annual Report to
Shareholders and the Company's Proxy Statement for its Annual Meeting of
Shareholders held on June 17, 1998.
(b) All reports filed pursuant to Section 13(a) or 15(d) of the 1934
Act since the end of the fiscal year covered by the 1997 Annual Report,
including the Company's quarterly report on Form 10-Q for the quarter ended
May 3, 1998.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 and 15(d) of the 1934 Act prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The American Stores Company Supplemental Executive Retirement Plan (the
"Plan") is a nonqualified deferred compensation plan for employees of American
Stores Company (the "Company") and its subsidiaries who are eligible under
criteria set forth in the Plan. Under the Plan, the Company will provide
participants with the opportunity to defer compensation including salary, bonus
and certain severance payments in accordance with the terms of the Plan.
Amounts deferred pursuant to the Plan will be credited by book entry to the
participants' bookkeeping accounts. The Company plans to set aside funds in a
grantor trust established by the Company and each participant will have the
_____________________
1 This information is not required to be included in, and is not incorporated
by reference in, this Registration Statement.
status of general unsecured creditor of the Company with respect to his or
her bookkeeping account and with respect to the grantor trust. The value of a
participant's bookkeeping account will be based on additional deferrals,
withdrawals and distributions and the performance of the investment options
selected by the participant under the Plan for purposes of accounting (as if
the deferred compensation had been so invested) and not for actual investment.
The Compensation and Stock Option Committee of the Board of Directors of the
Company ("Committee") has the sole discretion to determine the investment
options available under the Plan as the measurement mechanism. A participant
may redesignate amounts credited to his or her deferred compensation account
among the investment options available under the Plan on a daily basis.
The obligations of the Company under the Plan (the "Obligations") will be
unsecured general obligations of the Company to pay in the future the value of
the participant's bookkeeping account adjusted to reflect the performance,
whether positive or negative, of the selected measurement investment options
during the deferral period, in accordance with the terms of the Plan. The
Obligations will rank pari passu with the other unsecured and unsubordinated
indebtedness of the Company from time to time outstanding. This means that
participants will have no greater rights than other creditors to satisfaction
of their claims under the Plan. Each participant shall elect the year or years
in which distribution shall be made and the method of distribution desired.
Distribution of all or any part of a participant's bookkeeping account shall be
made by the Company pursuant to the participant's election, or as soon
thereafter as practicable in accordance with the terms of the Plan. The Plan
also provides for distribution of participants' accounts in the event of a
significant decline in the price of the Company's Common Stock, as adjusted to
eliminate the affect of general market conditions.
A participant's interest in his or her bookkeeping account, and thus his or
her right to the Obligations, generally cannot be assigned, transferred,
garnished, pledged or encumbered. The Obligations are not subject to
redemption, in whole or in part, prior to the individual payment times specified
by each participant, at the option of the Company or through the operation of a
mandatory or optional sinking fund or analogous provision. A participant may
receive a hardship withdrawal prior to the scheduled distribution date only
under exceptional circumstances upon the showing by the participant of an
unforeseeable emergency.
The Company reserves the right to amend, modify or terminate the Plan, or
suspend any of its provisions, at any time and from time to time, except that no
such amendment, modification or termination shall adversely affect the right of
each participant to the amounts credited to or accrued in his or her deferred
compensation account at the time of such amendment, modification or termination.
The Obligations are not convertible into securities of the Company. The
Obligations will not have the benefit of a negative pledge or any other
affirmative or negative covenant on the part of the Company. A trustee will be
appointed for the grantor trust but the trustee will have no authority to take
action with respect to the Obligations other than to make distribution to
participants pursuant to the terms of the Plan when directed to do so by the
Committee.
The registration of the Obligations hereunder and the related delivery of a
prospectus to participants in the Plan shall not constitute an admission by the
Company that the offering of the Obligations is subject to the registration or
other requirements of the Securities Act of 1933, as amended.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Mark N. Schneider, Vice President and Deputy General Counsel of the
Company, who has rendered an opinion on the legality of the securities being
registered, is paid a salary by the Company, is a participant in various
employee benefit plans offered to employees of the Company (including the plan
under which the securities being registered are to be issued) and owns Common
Stock of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware General Corporation Law Section 145 contains provisions permitting
and, in some situations, requiring Delaware corporations, such as the Company,
to provide indemnification to their officers and directors for losses and
litigation expense incurred in connection with their service to the corporation
in those capacities. The Company also maintains a directors' and officers'
liability insurance policy.
Article Nine of the Restated Certificate of Incorporation of the Company
provides the following:
9.01 Elimination of Certain Liability of Directors. A Director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a Director,
except for liability (i) for any breach of the Director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the Director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after approval by the stockholders of this
Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or modification.
9.02 Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a Director or officer
of the Corporation or while serving as a Director or officer of the Corporation
is or was also serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith and such indemnification shall continue as to a person
who has ceased to be a Director or officer, and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right (which may
not be reduced or limited by any repeal or modification of this Section 9.02)
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a Director or officer in his or her capacity as a
Director or officer (and not in any other capacity in which service was or is
rendered by such person while a Director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the company of
an undertaking, by or on behalf of such Director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such Director or
officer is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of Directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of such conduct set forth in
the Delaware General Corporation Law nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested Directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
Section 9.04 of the Plan also provides for the indemnification of each
member of the Compensation and Stock Option Committee of the Company's Board of
Directors, as the administrators of the Plan, arising out of his or her
membership on the Committee.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
Exhibit Number Description of Exhibits
4.1 American Stores Company Supplemental Executive Retirement
Plan
5.1 Opinion of Mark N. Schneider, Vice President and Deputy
General Counsel of the Company, with respect to the legality
of the securities being registered.
5.2 Opinion of Murphy, Smith & Polk, with respect to compliance
requirements of the Employee Retirement Income Security Act
of 1974.
24.1 Consent of Ernst & Young LLP, Independent Auditors
24.2 Consents of Counsel (Contained in Exhibits 5.1 and 5.2)
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the 1934 Act (and, where applicable, each filing of any employee benefit
plan's annual report pursuant to Section 15(d) of the 1934 Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provision, or otherwise, the
registrant has been advised such indemnification is against public policy
as expressed in the 1933 Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court or appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Salt Lake City, State of Utah, on July 13, 1998.
AMERICAN STORES COMPANY
By: /S/ Neal J. Rider
Neal J. Rider
Chief Financial Officer
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of American Stores
Company, a Delaware corporation, do hereby constitute and appoint Victor L. Lund
and Neal J. Rider, and each one of them, the lawful attorneys and agents, with
full power and authority to do any and all acts and things and to execute any
and all instruments which said attorneys and agents, and any one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, and any rules or regulations or
requirements of the Commission in connection with this Registration Statement.
Without limiting the generality of the foregoing power and authority, the powers
granted include the power and authority to sign the names of the undersigned
officers and directors in the capacities indicated below to this Registration
Statement, to any and all amendments, both pre-effective and post-effective, and
supplements to the Registration Statement, and to any and all instruments or
documents filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
Chairman of the Board, Chief July 13, 1998
/S/ Victor L. Lund Executive
Victor L. Lund Officer and Director (Principal
Executive Officer)
Chief Financial Officer July 13, 1998
/S/ Neal J. Rider (Principal Financial and
Neal J. Rider Accounting Officer)
Director July 13, 1998
/S/ Pamela G. Bailey
Pamela G. Bailey
Director July 13, 1998
/S/ Henry I. Bryant
Henry I. Bryant
Director July 13, 1998
/S/ Arden B. Engebretsen
Arden B. Engebretsen
Director July 13, 1998
/S/ James B. Fisher
James B. Fisher
Director July 13, 1998
Fernando R. Gumucio
Director July 13, 1998
/S/ Leon G. Harmon
Leon G. Harmon
Director July 13, 1998
/S/ David L. Maher
David L. Maher
Director July 13, 1998
/S/ John E. Masline
John E. Masline
Director July 13, 1998
/S/ Barbara S. Preiskel
Barbara S. Preiskel
Director July 13, 1998
/S/ J. L. Scott
J. L. Scott
Director July 13, 1998
/S/ Arthur K. Smith
Arthur K. Smith
EXHIBIT INDEX
Exhibit Number Description of Exhibits
4.1 American Stores Company Supplemental Executive Retirement
Plan
5.1 Opinion of Mark N. Schneider, Vice President and Deputy
General Counsel of the Company, with respect to the legality
of the securities being registered.
5.2 Opinion of Murphy, Smith & Polk, with respect to compliance
requirements of the Employee Retirement Income Security Act
of 1974.
24.1 Consent of Ernst & Young LLP, Independent Auditors
24.2 Consents of Counsel (Contained in Exhibits 5.1 and 5.2)
EXHIBIT 4.1
AMERICAN STORES COMPANY
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN
1998 RESTATEMENT
AMERICAN STORES COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1998 RESTATEMENT
The purpose of the American Stores Company Supplemental Executive Retirement
Plan is to permit select members of management and highly compensated employees
to defer current compensation which could not be deferred and contributed to the
Company's Qualified Plan, to receive that portion of the Company's contribution
that would be made to the Qualified Plan but for limitations imposed by the
Internal Revenue Code of 1986, as amended (the "Code") and to defer additional
compensation. SERP was originally adopted effective July 1, 1987 and was twice
amended thereafter. SERP was amended and restated in its entirety, effective
January 1, 1994 and is hereby restated as of July 1, 1998 to incorporate
amendments adopted after January 1, 1994.
AMERICAN STORES COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
TABLE OF CONTENTS
ARTICLE PAGE
I. Title and Effective Date................................. 1
II. Definitions and Construction of the SERP Document ...... 1
III. Eligibility ............................................. 4
IV. Deferral of Compensation ................................ 4
V. Deferral Account and Crediting .......................... 6
VI. Distributions ........................................... 7
VII. Hardship Distributions .................................. 9
VIII. Beneficiary ............................................. 10
IX. Administration of SERP .................................. 10
X. Claims Procedure ........................................ 11
XI. Nature of Company's Obligation .......................... 12
XII. Miscellaneous ........................................... 12
ARTICLE I
TITLE AND EFFECTIVE DATE
1.01 Title. This plan shall be known as the American Stores Company
Supplemental Executive Retirement Plan (hereinafter referred to as "SERP"). It
is intended to be an unfunded plan of deferred compensation maintained for a
select group of management and highly compensated employees within the meaning
of Section 201(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
1.02 Effective Date. SERP was originally effective as of July 1, 1987
and was amended and restated in its entirety, effective as of January 1, 1994.
It is hereby restated to incorporate amendments adopted after January 1, 1994.
ARTICLE II
DEFINITIONS AND CONSTRUCTION OF THE SERP DOCUMENT
All capitalized terms appearing in this Plan shall have meanings set
forth below. Other capitalized terms where indicated shall have the meaning
ascribed to them under the Qualified Plan.
2.01 Beneficiary. "Beneficiary" shall mean the person or persons or
the estate of a Participant entitled to receive any benefits under SERP.
2.02 Bookkeeping Account. "Bookkeeping Account" shall mean the account
established as a bookkeeping record for each Participant who elects to defer
compensation under SERP and which may, at the discretion of the Committee,
include one or more sub-accounts to reflect amounts credited to a Participant
under the various terms of SERP.
2.02A Change in Control. "Change in Control" shall have the same
meaning as "Change in Control" as defined in the American Stores Company
Employee Severance Policy, as amended.
2.03 Committee. "Committee" shall mean the Compensation and Stock
Option Committee of the Board of Directors of American Stores Company which
shall, except as provided herein, manage and administer SERP.
2.04 Company. "Company" shall mean American Stores Company, a Delaware
corporation, and its affiliates.
2.05 Compensation.
(a) "Compensation" shall mean a Participant's straight-time earnings,
overtime, and any bonus or other amounts paid by the Company by reason of
services performed by the Participant (including payments pursuant to
amounts previously deferred under this Plan or any other nonqualified
deferred compensation plan), and wage replacement benefits under Company-
sponsored programs for either occupational or non-occupational disability
benefits, except as provided in (b) (iv) below, before deductions are
authorized by the Participant or required by law to be withheld.
(b) Notwithstanding the foregoing, a Participant's Compensation shall
be determined without taking into account any of the following:
(i) Contributions or payments by the Company for or on account
of an employee under any employee benefit plan (other than payments
pursuant to a nonqualified deferred compensation plan), including but
not limited to the Qualified Plan and any health or welfare plan;
(ii) Compensation that is not subject to employer income tax
withholding under Code Section 3402 (or any successor
thereof), except such Compensation as is provided in paragraph (d)
below;
(iii) Income caused by the exercise of stock options and stock
appreciation rights;
(iv) Income attributable to benefits received under the long-
term disability plan maintained by the Company; and income
attributable to severance from Company employment;
(c) A Participant's Compensation for purposes of this Plan shall be
the Compensation paid to him/her during the relevant portion of the Plan
year, irrespective of when such Compensation is actually earned.
(d) Except as is expressly provided to the contrary herein, a
Participant's Compensation shall include (i) his or her deferrals under
Sections 4.01 and 4.03 hereof and (ii) his or her contributions and any
amount covering employee contributions from the pre-tax health care premium
payment arrangement under the American Stores Company Before Tax Plan or
any similar arrangement sponsored by the Company pursuant to Code Section
125.
2.06 Deferral Agreement. "Deferral Agreement" shall mean the written
form which is submitted to the Named Fiduciary before the relevant Election Date
which includes whether the Executive wishes to defer a portion of his
Compensation and indicates the portion of such Compensation to be deferred and
how and when such amounts, together with earnings, are to be distributed. No
Deferral Agreement shall be effective until executed by the Company.
2.07 Election Date. The "Election Date" shall mean the date
established by SERP as the date before which an Executive must submit a valid
Deferral Agreement to the Committee. The applicable Election Dates are as
follows: (a) 30 days after a newly eligible Executive is first notified of his
right to participate in SERP, or (b) December 15 of any calendar year if (a)
does not apply.
2.08 Executive. "Executive" shall mean any person who currently is
eligible or who formerly was eligible to participate in the Company's Qualified
Plan.
2.09 Named Fiduciary. "Named Fiduciary, "for purposes of the
submission and execution of Deferral Agreements under Article III hereof and the
claims procedure set forth in Article X hereof, shall mean the Secretary of
American Stores Company or its delegate.
2.10 Participant. "Participant" shall mean an Executive who has
deferred a portion of Compensation pursuant to the terms of SERP, and whose
account balance has not yet been distributed in full.
2.11 Plan Year. "Plan Year" shall mean the period from July 1, 1987
through December 31, 1987 and each successive calendar year.
2.12 Qualified Plan. "Qualified Plan" shall mean the American Stores
Retirement Estates, as amended from time to time.
2.13 Separation from Service. "Separation from Service" or similar
expression shall mean the termination of the Participant's employment as a
regular employee of the Company.
2.14 SERP. "SERP" shall mean the American Stores Company Supplemental
Executive Retirement Plan, as described in this instrument, as amended from time
to time.
2.15 Unless the context clearly indicates otherwise, masculine
pronouns shall include the feminine and singular words shall include the plural.
2.16 Titles and headings of the Articles and Sections of SERP are
included for ease of reference only and are not to be used for the purpose of
construing any portion or provision of the SERP document.
ARTICLE III
ELIGIBILITY
3.01 Eligibility for participation in SERP shall be determined by the
Committee annually, in its sole discretion, on an individual basis, but no
Executive shall be selected for participation in SERP unless he qualifies as a
member of a select group of management or as a highly compensated employee of
the Company and is a participant in the Qualified Plan.
3.02 An Executive, after having been selected for participation by the
Committee, shall, as a condition to participation, complete and return to the
Named Fiduciary a duly executed Deferral Agreement on or prior to the applicable
Election date and, if selected for participation by the Committee in any
subsequent Plan Year, shall defer amounts from Compensation in any subsequent
Plan Year by completing and returning to the named Fiduciary a Deferral
Agreement on or prior to the election Date preceding such Plan Year. The Named
Fiduciary shall execute Deferral Agreements on behalf of the Company. Each
Deferral Agreement and Distribution Election shall also specify how and when the
deferred Compensation, corresponding Company contributions for the Plan Year and
earnings thereon shall be distributed.
ARTICLE IV
DEFERRAL OF COMPENSATION
4.01 If the Committee has expressly authorized deferrals for a Plan
Year, each Participant in SERP may have a percentage of his Compensation
received during the Plan Year deferred and credited to the Participant's
Bookkeeping Account in accordance with the terms and conditions of SERP. The
percentage of such salary to be so deferred under this Section 4.01 shall equal
6% of Compensation for a calendar year, less amounts permitted to be deferred
and so deferred as Tax-Deferred Contributions (as such term is defined in the
Qualified Plan) into the Qualified Plan.
4.02 With respect to amounts deferred under Section 4.01, the Company,
if the Committee has expressly authorized Company contributions for a Plan Year,
shall add for crediting to the Participant's Bookkeeping Account an amount equal
to the excess of the amount described in Section 4.02(a) over the amount
described in Section 4.02(b) as follows:
(a) The amount equal to the contribution the Company would make to
the Qualified Plan for the Plan Year, without regard to any limitations
imposed by the Internal Revenue Code of 1986, as amended (the "Code"),
based on the Participant's Compensation for such Plan Year and assuming the
Participant made to the Qualified Plan a contribution equal to the amount
described in Section 4.01 hereof.
(b) The amount equal to the Company's actual contribution to the
Qualified Plan for the Participant for such Plan Year.
This contribution shall typically be actually determined or credited in the Plan
Year following the Plan Year to which it corresponds.
4.03 If the Committee has expressly authorized deferrals under Section
4.01 hereof, each Participant making the maximum deferral under Section 4.01 may
also defer up to (I) an additional 44% of his Compensation other than "Bonus
Compensation" or "Severance Compensation" (ii) an additional 94% of his Bonus
Compensation, and (iii) 100% of his Severance Compensation, to be received in a
calendar year in excess of that deferred under Section 4.01. For purposes of
this Section 4.03, (I) "Bonus Compensation" shall mean amounts paid to a
Participant under the Company's Key Management Annual Incentive Plan and Long
Term Incentive Plan, any successor Plans and any other Company bonus plans or
arrangements, and (ii) "Severance Compensation" shall mean payments received as
a result of the Participant's termination within one year (or such longer period
specified in the Participant's written agreement) after a Change of Control
under any written agreement or policy approved by the Board including but not
limited to (A) the Participant's change of control employment agreement, (B) the
American Stores Company Employee Severance Policy, or (C) the American Stores
Company Termination Allowance Plan.
4.04 Any amounts deferred by a Participant above 6% of the
Participant's Compensation shall not be eligible for any additional Company
contribution.
4.05 An eligible Executive desiring to participate in SERP must submit
his written Deferral Agreement to the Named Fiduciary on or before the
applicable Election Date. Valid Deferral Agreements filed by the applicable
Election Date as provided in Section 2.07 (a) or (b) shall cause Compensation
and Company contributions to be deferred in the Plan Year in respect of which
such Agreement is made which shall be the Plan Year in which the Compensation is
paid. Deferral Agreements entered into under the conditions of 2.07(b) shall
cause Compensation and Company contributions to be deferred beginning January 1
of the next Plan Year. It is contemplated hereunder that the amount or
percentage of Compensation to be deferred under Sections 4.01 and 4.03 and the
amount of the Company's contribution under Section 4.02 shall, in the case of an
Executive who becomes a Participant during a Plan Year and completes a Deferral
Agreement on or prior to an Election Date described in Section 2.06(a) hereof,
be adjusted as necessary in application to the Compensation received by a
Participant during the Plan Year after the applicable Election Date, so that the
aggregate amounts deferred and contributed equal the amounts that would be
deferred and contributed had the Executive commenced participation at the
beginning of the corresponding calendar year and the provisions of Sections
4.01, 4.02, and 4.03 been applied without adjustment.
4.06 A Participant who has not submitted a valid Deferral Agreement to
the Named Fiduciary before the applicable Election Date may not defer any
Compensation (or receive the corresponding Company contribution) for the
applicable Plan Year under SERP.
4.07 Deferral Agreements remain in effect for the Plan Year to which
they apply. A Participant must file a new Deferral Agreement for any subsequent
Plan Year. The terms of any Deferral Agreement may, but need not be, similar to
the terms of any prior Agreement.
ARTICLE V
DEFERRAL ACCOUNT AND CREDITING
5.01 Compensation deferred by a Participant under a written Deferral
Agreement and matching Company contributions plus earnings thereon shall be
credited in a dollar amount to a separate Bookkeeping Account for each
Participant.
5.02
(a) Unless otherwise delegated, the Committee has the sole discretion
to determine the investment options available as the measurement mechanism
for accounts under SERP, the manner and extent to which elections may be
made, the method of valuing the various investment options and the
Bookkeeping Account and the method of crediting the Bookkeeping Account
with, or making other adjustments as a result of dividend equivalents,
interest equivalents or other earnings or return on such Bookkeeping
Accounts.
(b) Unless otherwise determined by the Committee, the "Investment
Options" available shall be the securities listed in Schedule A to the
Supplemental Executive Retirement Trust, as amended from time to time. The
amounts in each Participant's Bookkeeping Account shall be deemed to have
been invested and reinvested in the Investment Options designated by the
Participant. Participants may make exchanges amount the Investment Options
in the same manner and to the same extent as exchanges are made under the
Qualified Plan.
(c) Bookkeeping Accounts and Investment Options shall be valued, and
adjustments made, if necessary, in the same manner as the Qualified Plan.
(d) The Company shall not be required to purchase, hold or dispose of
any securities representing the Investment Options elected by a
Participant. Participants shall not have any voting rights or any other
ownership rights with respect to the Investment Options in which their
account balances are deemed invested.
ARTICLE VI
DISTRIBUTIONS
6.01 Distribution of the value of a Participant's Bookkeeping Account
balance shall be made according to the terms of SERP and as specified in the
Participant's one or more Deferral Agreements and in accordance with the rules
of this Section 6.01.
(a) A Participant or, after the Participant's death, his or her
Beneficiary may vary or modify the terms of the distribution set forth in
any Deferral Agreement and Distribution Election, but any such modification
or variation shall be made pursuant to a written instrument between the
Participant or Beneficiary, as the case may be, and the Company executed
no later than 12 months before the date such modification or variation is
to be effective. Notwithstanding the foregoing, effective May 27, 1998, a
Participant or Beneficiary, as the case may be, may vary or modify the
terms of the distribution set forth in a Deferral Agreement and
Distribution Election with respect to a Change of Control event by written
instrument between the Participant or Beneficiary, as applicable, and the
Company, executed no later than 45 days before the date such modification
or variation is to be effective provided that any such changes in the term
of the distribution shall not be effective with respect to any specific
Change of Control if the first public announcement of steps leading to that
Change of Control occurs during such 45-day period. A "public
announcement" for purposes of this section is an announcement by any person
(including the Company) that an agreement has been signed or of an
intention to commence a tender offer, exchange offer or proxy solicitation
that, when consummated will result in a Change of Control as defined
herein.
(b) Each Deferral Agreement shall, in connection with amounts
deferred under Section 4.01 hereof and Company contributions under Section
4.02 hereof, together with earnings thereon, specify the commencement and
term of distributions in the event of (i) death prior to commencement of
payment, (ii) long-term disability prior to commencement of payment, (iii)
Separation from Service, (iv) attainment of age 59-1/2, whether or not
there has been a Separation from Service, or (v) effective August 1, 1996,
a Change in Control, whether or not there has been a Separation from
Service.
(c) If the Participant does not wish the designations under (b),
above, to apply to deferrals under Section 4.03 hereof, if any, and
earnings thereon, each Deferral Agreement shall also specify when the
distribution of such deferrals and earnings shall commence and over what
period, unless any of the events mentioned under paragraph (b) occurs prior
to the commencement date specified under this paragraph (c) in which case
the designation under paragraph (b) shall govern. A distribution pursuant
to a designation made under this paragraph (c) may commence not earlier
than the beginning of a calendar year which follows the year in which the
deferrals are made. Such designation must apply to the entire amount
deferred under Section 4.03 for such Plan Year and earnings thereon.
(d) All deferral elections shall be made on such forms and in
accordance with the specific terms prescribed by the Committee relating to,
among other things, the available distribution periods and times of
commencement.
(e) In the event of the Participant's death after distribution to him
has already commenced, the distribution to his Beneficiary shall continue
pursuant to the method by which distribution commenced to the Participant.
(f) Special Election - Notwithstanding anything in the Plan to the
contrary, within 30 days of August 1, 1996, each Participant may elect in
writing to receive distribution of the amount of the Participant's entire
vested Bookkeeping Account balance as a lump sum payable within 30 days
after the date of a Change in Control. The Company shall make such
distribution notwithstanding anything in the Plan or any Deferral Agreement
to the contrary.
(g) In the event that the Company certifies in writing that the
closing price on the New York Stock Exchange (or if the Company's common
stock is not then listed on the new York Stock Exchange, on the national
securities exchange or in the over-the-counter market which the common
stock is then principally traded) of a share of common stock of the company
has fallen below $10 (adjusted appropriately (I) for any stock split, stock
dividend, reverse stock split, share combination, reclassification, or
similar transaction occurring form July 21, 1997 and (ii) for any decline
in Standard & Poors ("S&P") 500 Index from July 21, 1997 (but in no event
shall such price be adjusted blow $5 per share (adjusted as provided in
clause (i) above as a result of decline)) and has remained below such level
for 20 consecutive trading days, each Participant (or his beneficiaries, if
applicable) who has an account established under the Plan shall be
promptly paid the amount credited to his Bookkeeping Account. For example,
if the S&P 500 remains at or above 912.94, Plan participants' accounts
would be paid out only if the commons stock price declined to less than
$10.00 per share and remained below $10.00 per share for 20 consecutive
days. If the S&P 500 declines 25 percent below 912.94 and the price per
share common stock declines to less than $7.50 per share for 20 consecutive
trading days, Plan participants' account would be paid out.
6.02 The Participant shall at all times have a nonforfeitable right to
the value of his Bookkeeping Account attributable to his contributions under
Sections 4.01 and 4.03 hereof plus interest thereon.
6.03 The Participant shall have a nonforfeitable interest in any
Company contributions under section 4.02 plus interest thereon as provided under
the terms of the Qualified Plan. Company contributions to SERP shall be treated
as subject to vesting or not subject to vesting to the same extent and in the
same proportion that the Company contribution under Section 4.02(b) hereof is
treated as subject to vesting or not subject to vesting under the terms of the
Qualified Plan.
6.04 All distributions of a Participant's Bookkeeping Account shall be
made in cash only.
6.05 Notwithstanding any other provisions SERP to the contrary, and
except in the event of a Change in Control, if the Committee determines that any
distribution or portion thereof to a Participant or Beneficiary would not be
deductible for federal income tax purposes solely by reason of the limitation
imposed by Code Section 162(m)(or any successor provision thereto), then the
Committee may defer all or any portion of such distribution to the extent
necessary to ensure the total deductibility of such payment. All amounts so
deferred shall remain in the Participant's Bookkeeping Account and be credited
with interest or earnings pursuant to Article V hereof. Amounts so deferred and
interest or earnings thereon shall be distributed to the Participant (or his
Beneficiary) at the earliest possible date, as determined by the Committee in
its sole discretion, on which the deductibility of such amounts is not limited
by Code Section 162(m).
ARTICLE VII
HARDSHIP DISTRIBUTIONS
7.01 At the request of a Participant before or after the Participant's
Separation from Service, or at the request of any of the Participant's
Beneficiaries after the Participant's death, the Committee may, in its sole
discretion, accelerate and pay all or part of the vested value of a
Participant's Bookkeeping Account due under SERP. Accelerated distributions at
the request of the Participant or a Participant's Beneficiaries may be allowed
only in the event of a financial emergency beyond the Participant's or
Beneficiary's control due to unforeseeable circumstances and only if
disallowance of a distribution would create a severe hardship for the
Participant or Beneficiary. An accelerated distribution must be limited to only
that amount necessary to relieve the financial emergency.
ARTICLE VIII
BENEFICIARY
8.01 A Participant shall designate his Beneficiary to receive the
remainder of the Participant's Account Balance under SERP in the event of the
Participant's death prior to the complete distribution of his Account Balance,
by completing the appropriate space in the Deferral Agreement. If more than one
Beneficiary is named, the shares and/or precedence of each Beneficiary shall be
indicated. A Participant shall have the right to change the Beneficiary by
submitting to the Named Fiduciary a Change of Beneficiary form. However, no
change of beneficiary shall be effective until executed by the Named Fiduciary
on behalf of the Company.
8.02 If the Committee has any doubt as to the proper Beneficiary to
receive payments hereunder, the Committee shall have the right to direct the
Company to withhold such payments until the matter is finally adjudicated.
However, any payment made by the Company, in good faith and in accordance with
SERP and the directions of the Committee, shall fully discharge the Company and
Committee from all further obligations with respect to that payment.
8.03 In making any payments to or for the benefit of any minor or an
incompetent Beneficiary, the Committee, in its sole and absolute discretion, may
direct the Company to make a distribution to a legal or natural guardian or
other relative of a minor or court appointed committee of such incompetent.
Alternatively, the Committee may direct the Company to make a payment to any
adult with whom the minor or incompetent temporarily or permanently resides.
The receipt by a guardian, committee, relative or other person shall be a
complete discharge to the Company and Committee. Neither the Committee nor the
Company shall have any responsibility to see to the proper application of any
payments so made.
ARTICLE IX
ADMINISTRATION OF SERP
9.01 All resolutions or other actions taken by the Committee shall be
by vote of a majority of those present at a meeting at which a majority of the
members are present, or in writing by a majority of all the members at the time
in office if they act without a meeting.
9.02 Subject to the terms of SERP, the Committee shall, from time to
time, establish rules, forms and procedures for the administration of SERP.
Except as herein otherwise expressly provided, the Committee shall have the
exclusive right to interpret SERP and to decide any and all matters arising
thereunder or in connection with the administration of SERP and it shall
endeavor to act, whether by general rules or by particular decisions so as not
to discriminate in favor of or against any person. Notwithstanding the
foregoing, the Committee may appoint one or more delegates to carry out its
responsibilities under the preceding sentences. Such delegates may, but need
not, consist of individuals who are participants or who are eligible to
participate in SERP. The decisions, actions and records of the Committee
(including its delegates) shall be conclusive and binding upon the Company and
all persons having or claiming to have any right to interest in and under SERP.
9.03 The members of the Committee and the officers and directors of
the Company shall be entitled to rely on all certificates and reports made by
any duly appointed accountants, and on all opinions given by any duly appointed
legal counsel, which legal counsel may be counsel for the Company.
9.04 The Company shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising out of his
membership on the Committee. Expenses against which a member of the Committee
shall be indemnified hereunder shall include, without limitation, the amount of
any settlement or judgment, costs, counsel fees, and related charges reasonably
incurred in connection with a claim asserted, or a proceeding brought or
settlement thereof. The foregoing right of indemnification shall be in addition
to any other rights to which any such member of the Committee may be entitled as
a matter of law.
ARTICLE X
CLAIMS PROCEDURE
10.01 Benefits shall be paid in accordance with the provisions of
this instrument. The Participant, or a Beneficiary or any other person claiming
through the Participant shall make a written request for benefits under this
agreement. This written claim shall be mailed or delivered to the Named
Fiduciary. Such claim shall be reviewed by the Named Fiduciary.
10.02 If the claim is denied, in full or in part, the Named
Fiduciary shall provide a written notice within ninety (90) days setting forth
the specific reasons for denial, and any additional material or information
necessary to perfect the claim, and an explanation of why such material or
information is necessary, an appropriate information and explanation of the
steps to be taken if a review of the denial is desired.
10.03 If the claim is denied and review by the Committee is
desired, the Participant (or Beneficiary) shall notify the Named Fiduciary in
writing within sixty (60) days (a claim shall be deemed denied if the Named
Fiduciary does not take any action within the aforesaid ninety (90) day period)
after receipt of the written notice of denial. In requesting a review, the
Participant or his Beneficiary may request a review of the SERP document or
other pertinent documents with regard to the employee benefit plan created under
this agreement, may submit any written issues and comments, may request an
extension of time for such written submission of issues and comments, and may
request that a hearing be held, but the decision to hold a hearing shall be
within the sole discretion of the Committee.
10.04 The decision on the review of the denial claim shall be
rendered by the Committee within sixty (60) days after receipt of the request
for review (if a hearing is held) or within sixty (60) days after the hearing if
one is held. The decision shall be written and shall state the specific reasons
for the decision including reference to specific provisions of SERP on which the
decision is based.
ARTICLE XI
NATURE OF COMPANY'S OBLIGATION
11.01 The Company's obligation under SERP shall in every case be
an unfunded and unsecured promise to pay. The Company shall not be obligated
under any circumstances to fund its financial obligations under SERP.
11.02 Any assets which the Company may acquire or set aside to
help cover its financial liabilities are and must remain general assets of the
Company subject to the claims of its creditors. Neither the Company nor SERP
gives the Participant any beneficial ownership interest in any asset of the
Company. All rights of ownership in any such assets are and remain in the
Company.
ARTICLE XII
MISCELLANEOUS
12.01 Any notice which shall be or may be given under SERP or a
Deferral Agreement shall be in writing and shall be mailed by United States
mail, postage prepaid. If notice is to be given to the Company, such notice
shall be addressed to the Company at 299 South Main St., Salt Lake City, Utah
84102, marked for the attention of the Secretary of American Stores Company or
if notice to an Executive, addressed to the address shown on such Executive's
Deferral Agreement or the last known address on the Company's personnel records.
12.02 Any party may, from time to time, change the address to
which notices shall be mailed by giving written notice of such new address.
12.03 SERP shall be binding upon the Company, it assigns, and any
successor company which shall succeed to substantially all of its assets and
business through merger, acquisition or consolidation, and upon an Executive,
his Beneficiary, assigns, heirs, executors and administrators.
12.04 The Committee retains the sole right to terminate SERP or to
make any modifications or amendments to SERP at any time by approving a written
instrument of termination, amendment or modification, as the case may be, which
instrument shall be executed by an officer of the Company. Amendments or
modifications may be retroactive. However, no action hereunder shall reduce the
Bookkeeping Account of any Participant or his Beneficiary, as of the date of
such amendment, modification, or termination.
12.05 Except insofar as prohibited by applicable law, no sale,
transfer, alienation, assignment, pledge, collateralization or attachment of any
benefits under SERP shall be valid or recognized by the Company. Neither the
Participant, his spouse, or designated Beneficiary shall have any power to
hypothecate, mortgage, commute, modify or otherwise encumber in advance of any
of the benefits payable hereunder, nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony maintenance, owed by
the Participant or his Beneficiary, or be transferable by operation of law in
the event of bankruptcy, insolvency, or otherwise. To the extent permitted by
law, the Company may withhold payment of all or part of any amount due hereunder
and apply it to the payment of debts or other amounts owed to the Company
including but not limited to losses arising from theft or acts of dishonesty.
12.06 All reasonable attorney's or other legal fees incurred by
any Participant (or former Participant) to enforce successfully his valid rights
under SERP shall be paid by the Company in addition to sums due under SERP.
12.07 The Committee reserves the right to accelerate the payment
of any benefits payable under SERP at any time without the consent of the
Participant, his estate, his Beneficiary or any other person claiming through
the Participant.
12.08 The Company, at the discretion of the Committee, may make
payment or take such other action as it deems appropriate in response to any
court order directed to the Company or SERP in respect of any person's interest
in SERP. Notwithstanding the foregoing, any court order in the context of a
domestic relations or child support proceeding must specify the amount to be
paid, the identity of the payee or payees, and the commencement time and manner
of payment. Any change to the manner of payment specified in the court order
will require a subsequent court order.
12.09 SERP shall be governed by the laws of the State of Utah.
IN WITNESS WHEREOF, this restated instrument setting forth the terms
and conditions of the AMERICAN STORES COMPANY SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN is executed as of this 1st day of July, 1998.
AMERICAN STORES COMPANY
By: \s\ Scott Bergeson
Scott Bergeson
Senior Vice President, Human Resources
Exhibit 5.1
American Stores Company
299 South Main Street
Salt Lake City, Utah 84111
July 13, 1998
Securities and Exchange Commission
Division of Corporation Finance
Washington, D.C. 20549
Re: Registration Statement on Form S-8
Relating to American Stores Company
Supplemental Executive Retirement Plan
Ladies and Gentlemen:
I am Vice President and Deputy General Counsel of American Stores Company,
a Delaware corporation (the "Company"). This opinion is being delivered to you
in connection with the Registration Statement on Form S-8 (the "Registration
Statement") that is being filed by the Company with respect to the registration
under the Securities Act of 1933, as amended (the "Act"), of the Company's
obligations under the American Stores Company Supplemental Executive Retirement
Plan (the "Plan") to pay in the future the value of the participants'
bookkeeping accounts, as defined in the Plan, adjusted to reflect the
performance, whether positive or negative, of the selected investment options
during the deferral period in accordance with the terms of the Plan (the
"Obligations"). I am a member of the Bar of the state of Utah.
I am generally familiar with the properties and affairs of the Company
including the Certificate of Incorporation, the Bylaws and the Plan. I have
also examined such documents and instruments and have made such further
examinations as I deemed necessary or desirable for the purpose of this opinion.
Based on the foregoing, I am of the opinion that:
(1) The Company is duly incorporated and validly existing as a corporation
under the laws of the State of Delaware.
(2) The Obligations will, when issued in accordance with the terms of the
Plan, be legally issued, fully paid and non-assessable and will be binding
obligations of the Company when the Registration Statement shall have become
effective.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, I do not admit that I am in the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules and regulations promulgated thereunder.
Very truly yours,
/s/ Mark N. Schneider
Mark N. Schneider
Vice President and Deputy General Counsel
Exhibit 5.2
Murphy, Smith & Polk
2 First National Plaza
Chicago, Illinois 60603-1891
July 13, 1998
American Stores Company
299 South Main Street
Salt Lake City, Utah 84111
RE: ERISA STATUS OF AMERICAN STORES COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Gentlemen and Ladies:
You have requested our opinion regarding the status of American Stores
Company Supplemental Executive Retirement Plan (the "SERP" or the "Plan") under
the Employee Retirement Income Security Act of 1974 ("ERISA").1 Specifically
you requested our opinion whether or not the SERP is "subject to the
requirements of ERISA" and, if subject to ERISA, whether or not "the written
documents constituting the [P]lan" are in "compliance ... with the provisions of
ERISA pertaining to such provisions."2 For the reasons given below, it is our
opinion that the SERP is exempt from most of the substantive provisions of ERISA
but is technically "subject to" certain of the "requirements of ERISA," although
only one of the applicable requirements imposes any requirements with respect to
the contents of the "written documents constituting the [P]lan." Accordingly,
since this single documentary requirement is satisfied by the terms of the SERP,
it is our further opinion that "the written documents constituting" the SERP
are in "compliance ... with the provisions of ERISA."
____________________________
1 Pub. L. No. 93-406 (codified in scattered sections of Titles 18, 26 and 29
of the USC).
2 The quoted language is from the applicable provisions of Securities and
Exchange Commission Regulation S-K which are referred to in Item 8 under the
heading Information Required in Registration Statement in the instructions to
Form S-8. 17 C.F.R. S229.601(b)(5)(ii)(A).
In preparing this letter and the views stated herein, we are relying on
matters disclosed in American Stores Company's (the "Company's") Registration
Statement with respect to the SERP (Form S-8) filed with the Securities and
Exchange Commission on July 13, 1998 (the "Registration Statement") and in the
prospectus dated July 13, 1998 (the "Prospectus"), representations of the
Company and upon certain formal and informal discussions with representatives of
the Department of Labor and other governmental officials regarding the
interpretation of the provisions of ERISA applicable to nonqualified deferred
compensation plans.
1. LIMITED APPLICABILITY OF ERISA. The preamble of the SERP recites that
the purpose of the SERP is to permit "select members of management and highly
compensated employees to defer current compensation." This limited purpose is
reenforced by Section 3.01 of the SERP which provides that a committee selects
Executives for SERP eligibility but that "no Executive shall be selected for
participation in SERP unless he qualifies as a member of a select group of
management or as a highly-compensated employee of the Company." We understand
that this restriction on eligibility has been followed in the operation of the
SERP.
The deferrals under the plan are in addition to deferrals from current
compensation under the Company's qualified plans. In fact, no deferrals are
permitted under the SERP unless the SERP participant is already a participant in
the Company's qualified plans and his or her deferrals thereunder have been
limited thereunder. SERP, Preamble & Sections 2.08, 2.12, 3.01, 4.01, 4.02 and
4.03. The initial deferrals under the SERP for any participant must be the
deferral of amounts he or she is unable to defer (or the Company is unable to
defer for the participant under the Company's qualified plans). SERP, Sections
4.01 and 4.02. Only once a SERP participant has agreed to a deferral of these
amounts under the SERP may such a SERP participant elect to make further
deferrals under the SERP. SERP, Section 4.03.
Although an "excess plan" is wholly exempt from ERISA, that designation
refers to plans that solely provide for benefits not available to a participant
under a qualified plan because of the limitations of Section 415 of the Internal
Revenue Code (the "Code"). Compare ERISA S3(36); 29 USC S1002(36) with ERISA
S4(b)(5); 29 USC S1003(b)(5). Unlike an excess plan, it is clear the SERP
permits deferral of amounts that are subject to other limitations (e.g., the
limitations on deferrals which result from the ADP and ACP limitations of Code
SS401(k) and (m), the individual deferral limitations of Code S402(g) and the
limitations resulting from the compensation limitations of Code S401(a)(17)).
Further, once a participant has deferred amounts subject to such other
limitations, the SERP permits other deferrals that are otherwise unrelated to
any qualified plan limitations. SERP, Section 4.03.
By its terms the SERP is limited to employees of the Company who are
members of a "select" group of "management and highly compensated employees."
SERP, Preamble & Section 3.01. Further, the SERP provides that amounts deferred
are not funded. The SERP provides that amounts owed to participants by the
Company are "in every case an unfunded and unsecured promise to pay." SERP,
Section 11.01. Further, any assets which the Company chooses to set aside in
anticipation of the payment of its obligations under the SERP remain "general
assets of the Company subject to the claims of its creditors." SERP, Section
11.02. Based upon these characteristics, it is our opinion that the SERP should
be viewed for purposes of ERISA as an "unfunded" plan maintained by the Company
"primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees," a type of plan commonly referred
to as an unfunded deferred compensation plan for a select group.
As an unfunded deferred compensation plan for a select group, it is our
opinion that the SERP is entirely exempt from the minimum standards of parts 2
and 3 of Title I of ERISA and from the fiduciary standards of part 4 of Tile I
of ERISA. ERISA SS201(2), 301(3) & 401(a)(1); 29 USC SS1051(2), 1081(3) &
1101(a)(1). While not technically exempt from the reporting and disclosure
obligations of part 1 of Title I of ERISA, it is our understanding that the
Company has complied with the simple notification obligation of 29 CFR
S2520.104-23 and has retained SERP plan documents available to the
Department of Labor upon request. By operation of that regulatory provision,
such notification and such document availability serves as permissible
alternative compliance that satisfies the reporting and disclosure obligations
otherwise applicable to the SERP under part 1 of Title I of ERISA. 29 CFR
S2520.104-23 & ERISA S110; 29 USC S1030. Because the SERP is plainly not
intended to be a qualified plan or a defined benefit plan of the type that could
be subject to Titles II and IV of ERISA (ERISA S1001; Codified in various
provisions of Code S401,et seq.; ERISA S4021(a); 29 USC S1321(a)) and Title III
of ERISA merely provides administrative rules not relevant here (ERISA S3001 et
seq.; 29 USC S1201 et seq.), the only provisions of ERISA of practical
significance to the SERP are the provisions of part 5 of Title I of ERISA.
Although part 5 of Title I of ERISA is applicable to the SERP, the primary
impact of those provisions is to assure that federal laws will be applicable to
the determination of benefits thereunder rather than state laws and that the
jurisdictional and other enforcement provisions of ERISA will be applicable as
well the ERISA claims procedures and the prohibitions against interference with
rights. With a single exception (described in Part 2 below), part 5 of Title I
of ERISA does not impose any documentary requirement of the type contemplated by
the opinion requirements of Item 8 under the heading Information Required in
Registration Statement in the instructions to Form S-8 or 17 C.F.R.
S229.601(b)(5)(ii)(A).
2. COMPLIANCE WITH THE DOCUMENTARY REQUIREMENTS OF ERISA. ERISA does
require that there be an ERISA claims procedure with respect to claims for
benefits under the SERP. ERISA S503; 29 USC S1133. The regulations under that
provision clarify that such procedure must be established in writing. 29 CFR
S2560.503-1. Because the SERP is not subject to the summary plan description
("SPD") requirement of part 1 of Title I of ERISA and is not maintained pursuant
to a collective bargaining agreement, the provisions of the regulations
requiring that the written claims procedure be contained in the SPD and
permitting it to be contained in a collective bargaining agreement appear to be
inapplicable. 29 CFR SS2560.503-1(b)(1)(ii) & (b)(2). Therefore, the claims
procedure regulation requirement of a written claims procedure would appear to
require that the claims procedure be contained in the SERP itself.
The SERP contains a provision spelling out in detail the ERISA claims
procedure. SERP, Sections 10.01-10.04. These provisions comply in all material
regards with the claims procedure required by ERISA S503; 29 USC S1133 and the
regulations thereunder. Thus, it is our opinion that the SERP plan document
contains a sufficient description of the claims procedure to satisfy the
documentary requirements applicable to the SERP under the terms of ERISA.
We have reviewed the reference to this opinion in the Registration
Statement and we consent to the reference to this opinion in the Registration
Statement and the inclusion of this opinion as an exhibit thereto.
Very truly Yours,
/s/ Murphy, Smith & Polk
Murphy, Smith & Polk
by: Peter M. Kelly
Exhibit 24.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-00000) pertaining to the American Stores Company Supplemental
Executive Retirement Plan of our report dated March 18, 1998, with respect to
the consolidated financial statements of American Stores Company incorporated by
reference in its Annual Report (Form 10-K) for the year ended January 31, 1998,
filed with the Securities and Exchange Commission.
Ernst & Young LLP
Salt Lake City, Utah
July 10, 1998
