-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ULRJlPjfSqQFTEZH9ORxU+aSEjR3n1HPXG/6VKvsjuzJLxcgHqpefGkBGDw2m2u7 PIr0INNjJ8+AOjXTvsMqfg== 0000909334-98-000084.txt : 19981109 0000909334-98-000084.hdr.sgml : 19981109 ACCESSION NUMBER: 0000909334-98-000084 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19981003 FILED AS OF DATE: 19981106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEMING COMPANIES INC /OK/ CENTRAL INDEX KEY: 0000352949 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & GENERAL LINE [5141] IRS NUMBER: 480222760 STATE OF INCORPORATION: OK FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08140 FILM NUMBER: 98738926 BUSINESS ADDRESS: STREET 1: 6301 WATERFORD BLVD STREET 2: P O BOX 26647 CITY: OKLAHOMA CITY STATE: OK ZIP: 73126 BUSINESS PHONE: 4058407200 MAIL ADDRESS: STREET 1: P O BOX 26647 CITY: OKLAHOMA CITY STATE: OK ZIP: 73216-0647 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 3, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8140 FLEMING COMPANIES, INC. (Exact name of registrant as specified in its charter) OKLAHOMA 48-0222760 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6301 Waterford Boulevard, Box 26647 Oklahoma City, Oklahoma 73126 (Address of principal executive offices) (Zip Code) (405) 840-7200 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was re- quired to file such reports), and (2) has been subject to such filing require- ments for the past 90 days. Yes X No The number of shares outstanding of each of the issuer's classes of common stock, as of October 30, 1998 is as follows: Class Shares Outstanding Common stock, $2.50 par value 38,254,000 INDEX Page Number Part I. FINANCIAL INFORMATION: Item 1. Financial Statements Consolidated Condensed Statements of Operations - 12 Weeks Ended October 3, 1998, and October 4, 1997 Consolidated Condensed Statements of Operations - 40 Weeks Ended October 3, 1998, and October 4, 1997 Consolidated Condensed Balance Sheets - October 3, 1998, and December 27, 1997 Consolidated Condensed Statements of Cash Flows - 40 Weeks Ended October 3, 1998, and October 4, 1997 Notes to Consolidated Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. OTHER INFORMATION: Item 1. Legal Proceedings Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Statements of Operations For the 12 weeks ended October 3, 1998, and October 4, 1997 (In thousands, except per share amounts)
- ------------------------------------------------------------------------------ 1998 1997 - ------------------------------------------------------------------------------ Net sales $3,438,766 $3,453,261 Costs and expenses: Cost of sales 3,108,887 3,131,023 Selling and administrative 297,019 272,826 Interest expense 37,348 39,084 Interest income (8,559) (11,116) Equity investment results 2,669 3,710 Litigation charge 2,215 - - ------------------------------------------------------------------------------ Total costs and expenses 3,439,579 3,435,527 - ------------------------------------------------------------------------------ Earnings (loss) before taxes (813) 17,734 Taxes on income 1,512 8,214 - ------------------------------------------------------------------------------ Earnings (loss) before extraordinary charge (2,325) 9,520 Extraordinary charge from early retirement of debt (net of taxes) - 13,330 - ------------------------------------------------------------------------------ Net loss $ (2,325) $ (3,810) - ------------------------------------------------------------------------------ Earnings (loss) per share: Basic and diluted before extraordinary charge $(.06) $.25 Extraordinary charge - $.35 Basic and diluted net loss $(.06) $(.10) Dividends paid per share $.02 $.02 Weighted average shares outstanding: Basic 38,039 37,804 Diluted 38,039 37,840 - ------------------------------------------------------------------------------
Fleming Companies, Inc. See notes to consolidated condensed financial statements. Consolidated Condensed Statements of Operations For the 40 weeks ended October 3, 1998, and October 4, 1997 (In thousands, except per share amounts)
- ------------------------------------------------------------------------------ 1998 1997 - ------------------------------------------------------------------------------ Net sales $11,511,835 $11,755,946 Costs and expenses: Cost of sales 10,385,064 10,670,361 Selling and administrative 959,389 911,420 Interest expense 124,411 124,129 Interest income (28,172) (36,410) Equity investment results 9,506 11,027 Litigation charge 7,385 19,218 - ------------------------------------------------------------------------------ Total costs and expenses 11,457,583 11,699,745 - ------------------------------------------------------------------------------ Earnings before taxes 54,252 56,201 Taxes on income 27,668 28,602 - ------------------------------------------------------------------------------ Earnings before extraordinary charge 26,584 27,599 Extraordinary charge from early retirement of debt (net of taxes) - 13,330 - ------------------------------------------------------------------------------ Net earnings $ 26,584 $ 14,269 - ------------------------------------------------------------------------------ Earnings per share: Basic and diluted before extraordinary charge $.70 $.73 Extraordinary charge - $.35 Basic and diluted net earnings $.70 $.38 Dividends paid per share $.06 $.06 Weighted average shares outstanding: Basic 37,848 37,803 Diluted 38,058 37,825 - ------------------------------------------------------------------------------
Fleming Companies, Inc. See notes to consolidated condensed financial statements. Consolidated Condensed Balance Sheets (In thousands)
- ------------------------------------------------------------------------------ October 3, December 27, Assets 1998 1997 - ------------------------------------------------------------------------------ Current assets: Cash and cash equivalents $ 23,539 $ 30,316 Receivables 421,074 334,278 Inventories 1,026,934 1,018,666 Other current assets 113,104 111,730 - ------------------------------------------------------------------------------ Total current assets 1,584,651 1,494,990 Investments and notes receivable 132,282 150,221 Investment in direct financing leases 186,612 201,588 Property and equipment 1,652,084 1,598,786 Less accumulated depreciation and amortization (723,254) (648,943) - ------------------------------------------------------------------------------ Net property and equipment 928,830 949,843 Other assets 239,167 164,295 Goodwill 942,671 963,034 - ------------------------------------------------------------------------------ Total assets $4,014,213 $3,923,971 - ------------------------------------------------------------------------------ Liabilities and Shareholders' Equity - ------------------------------------------------------------------------------ Current liabilities: Accounts payable $ 910,847 $ 831,339 Current maturities of long-term debt 41,346 47,608 Current obligations under capital leases 22,693 21,196 Other current liabilities 255,311 254,454 - ------------------------------------------------------------------------------ Total current liabilities 1,230,197 1,154,597 Long-term debt 1,130,440 1,127,311 Long-term obligations under capital leases 363,576 367,068 Deferred income taxes 70,883 61,425 Other liabilities 92,790 123,898 Commitments and contingencies Shareholders' equity: Common stock, $2.50 par value per share 96,325 95,660 Capital in excess of par value 509,322 504,451 Reinvested earnings 561,099 536,792 Accumulated other comprehensive income: Cumulative currency translation adjustment - (4,922) Additional minimum pension liability (37,715) (37,715) - ------------------------------------------------------------------------------ Accumulated other comprehensive income (37,715) (42,637) Less ESOP note (2,704) (4,594) - ------------------------------------------------------------------------------ Total shareholders' equity 1,126,327 1,089,672 - ------------------------------------------------------------------------------ Total liabilities and shareholders' equity $4,014,213 $3,923,971 - ------------------------------------------------------------------------------
Fleming Companies, Inc. See notes to consolidated condensed financial statements. Consolidated Condensed Statements of Cash Flows For the 40 weeks ended October 3, 1998, and October 4, 1997 (In thousands)
- ------------------------------------------------------------------------------ 1998 1997 - ------------------------------------------------------------------------------ Cash flows from operating activities: Net earnings $ 26,584 $ 14,269 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 140,735 139,738 Credit losses 11,969 14,840 Deferred income taxes 9,507 (577) Equity investment results 9,506 11,027 Consolidation and restructuring reserve activity (4,662) (1,987) Cost of early debt retirement - 22,227 Change in assets and liabilities, excluding effect of acquisitions: Receivables (106,791) 1,036 Inventories (6,595) 52,762 Accounts payable 79,508 (133,626) Other assets and liabilities (28,868) (32,197) Other adjustments, net (3,926) (5,480) - ------------------------------------------------------------------------------ Net cash provided by operating activities 126,967 82,032 - ------------------------------------------------------------------------------ Cash flows from investing activities: Collections on notes receivable 34,842 47,829 Notes receivable funded (21,236) (29,725) Purchase of property and equipment (146,275) (82,348) Proceeds from sale of property and equipment 12,708 11,859 Investments in customers (1,007) (1,963) Proceeds from sale of investment 3,483 2,196 Businesses acquired (6,557) (9,572) Proceeds from sale of businesses - 13,093 Other investing activities 5,818 6,255 - ----------------------------------------------------------------------------- Net cash used in investing activities (118,224) (42,376) - ----------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from long-term borrowings 50,000 869,638 Principal payments on long-term debt (53,133) (927,616) Principal payments on capital lease obligations (14,620) (15,362) Sale of common stock under incentive stock and stock ownership plans 4,997 491 Dividends paid (2,296) (2,260) Other financing activities (468) (1,195) - ----------------------------------------------------------------------------- Net cash used in financing activities (15,520) (76,304) - ----------------------------------------------------------------------------- Net decrease in cash and cash equivalents (6,777) (36,648) Cash and cash equivalents, beginning of period 30,316 63,667 - ----------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 23,539 $ 27,019 - ----------------------------------------------------------------------------- Supplemental information: Cash paid for interest $115,146 $119,529 Cash paid for taxes $12,026 $33,361 - -----------------------------------------------------------------------------
Fleming Companies, Inc. See notes to consolidated condensed financial statements. Notes to Consolidated Condensed Financial Statements 1. The consolidated condensed balance sheet as of October 3, 1998, and the consolidated condensed statements of operations and cash flows for the 12-week and 40-week periods ended October 3, 1998, and for the 12-week and 40-week periods ended October 4, 1997, have been prepared by the company, without audit. In the opinion of management, all adjustments necessary to present fairly the company's financial position at October 3, 1998, and the results of operations and cash flows for the periods presented have been made. All such adjustments are of a normal, recurring nature except as disclosed. Both basic and diluted earnings or loss per share are computed based on net earnings or loss divided by weighted average shares as appropriate for each calculation. The preparation of the consolidated condensed financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes included in the company's 1997 annual report on Form 10-K. 3. The LIFO method of inventory valuation is used for determining the cost of most grocery and certain perishable inventories. The excess of current cost of LIFO inventories over their stated value was $41 million at October 3, 1998, and $36 million at December 27, 1997. 4. Sales and operating earnings for the company's food distribution and retail food segments are presented below.
- ----------------------------------------------------------------------------- For the 12 weeks ended Oct. 3, Oct. 4, ($ in millions) 1998 1997 - ------------------------------------------------------------------------------ Sales: Food distribution $3,126 $3,129 Intersegment elimination (495) (451) - ------------------------------------------------------------------------------ Net food distribution 2,631 2,678 Retail food 808 775 - ------------------------------------------------------------------------------ Total sales $3,439 $3,453 - ------------------------------------------------------------------------------ Operating earnings: Food distribution $50 $64 Retail food 11 11 Corporate (29) (26) - ------------------------------------------------------------------------------ Total operating earnings 32 49 Interest expense (37) (39) Interest income 9 12 Equity investment results (3) (4) Litigation charge (2) - - ------------------------------------------------------------------------------ Earnings (loss) before taxes $(1) $18 - ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------ For the 40 weeks ended Oct. 3, Oct. 4, ($ in millions) 1998 1997 - ------------------------------------------------------------------------------ Sales: Food distribution $10,361 $10,594 Intersegment elimination (1,556) (1,467) - ------------------------------------------------------------------------------ Net food distribution 8,805 9,127 Retail food 2,707 2,629 - ------------------------------------------------------------------------------ Total sales $11,512 $11,756 - ------------------------------------------------------------------------------ Operating earnings: Food distribution $204 $215 Retail food 51 60 Corporate (88) (101) - ------------------------------------------------------------------------------ Total operating earnings 167 174 Interest expense (124) (124) Interest income 28 36 Equity investment results (10) (11) Litigation charge (7) (19) - ------------------------------------------------------------------------------ Earnings before taxes $ 54 $ 56 - ------------------------------------------------------------------------------
General corporate expenses are not allocated to food distribution and retail food segments. The transfer pricing between segments is at cost. Operating earnings for 1997 have been restated due to adopting SFAS No. 131 - Disclosures about Segments of an Enterprise and Related Information. 5. The company's comprehensive loss totaled $2.3 million and $3.8 million for the 12 weeks ended October 3, 1998 and October 4, 1997, respectively. Comprehensive income totaled $31.5 million and $14.3 million for the 40 weeks ended October 3, 1998 and October 4, 1997, respectively. Comprehensive income or loss was comprised of reported net income or loss and changes in foreign currency translation adjustments. 6. In accordance with applicable accounting standards, the company records a charge reflecting contingent liabilities (including those associated with litigation matters) when management determines that a material loss is "probable" and either "quantifiable" or "reasonably estimable." Additionally, the company discloses material loss contingencies when the likelihood of a material loss is deemed to be greater than "remote" but less than "probable." Set forth below is information regarding certain material loss contingencies: David's. The company was sued by David's Supermarkets, Inc. ("David's") in 1993 for allegedly overcharging for products. In April 1996, judgment of $211 million was entered against the company; during the second quarter of 1996, the judgment was vacated and a new trial was granted. Although the company denied the allegations, in order to eliminate the uncertainty and expense of protracted litigation the company paid $19.9 million to the plaintiff in April 1997 in exchange for dismissal, with prejudice, of all plaintiff's claims against the company. This settlement resulted in a charge to first quarter 1997 earnings of $19.2 million ($9 million after-tax or $.24 per share). Furr's. Furr's Supermarkets, Inc. ("Furr's"), which purchased approximately $500 million of products from the company in 1997 under a supply contract originally set to expire in 2001, filed suit against the company in February 1997 claiming it was overcharged for products. Fleming denied Furr's allegations. In October 1997, Fleming and Furr's reached an agreement dismissing all litigation between the parties. Pursuant to the settlement agreement, Furr's purchased Fleming's El Paso product supply center, together with related inventory and equipment, in October 1998. Additionally as part of the settlement agreement, Fleming paid Furr's $800,000 per month as a refund of fees and charges until the sale of the product supply center closed and the supply contract was terminated. During the third quarter of 1998, Fleming recorded a charge of $2 million ($1 million after-tax or $.03 per share) relating to this matter; year to date, Fleming recorded charges of $7 million ($4 million after tax and $.10 per share). Fleming does not expect to incur any additional impairment. Randall's. In July 1997, Randall's Food Markets, Inc. ("Randall's") initiated arbitration proceedings against Fleming claiming it had been overcharged for products. In 1997, Randall's purchased approximately $490 million of products from Fleming under an eight-year supply contract entered into in 1993. In July 1998, the arbitration panel resolved the dispute, denied Randall's claim for significant damages and terminated the supply contract between Fleming and Randall's. The company continues to supply Randall's pursuant to an agreement which will permit Randall's to complete its self-distribution plan by August of 1999. Although there is no expected impairment adjustment, downsizing costs are expected but cannot yet be quantified. Class Action Suits. In 1996, the company and certain of its present and former officers and directors were named as defendants in nine purported class action suits filed by certain stockholders and one purported class action suit filed by a noteholder. In April 1997, the court consolidated the stockholder cases as City of Philadelphia, et al. v. Fleming Companies, Inc., et al.; the noteholder case was also consolidated, but only for pre-trial purposes. During the first quarter of 1998, the noteholder case was dismissed, without prejudice, for failure to state a cause of action. The plaintiff has asked the court to reconsider the matter. The complaint filed in the consolidated cases asserts liability for the company's alleged failure to properly account for and disclose the contingent liability created by the David's litigation and by the company's alleged "deceptive business practices." The plaintiffs claim that these alleged failures and practices led to the David's litigation and to other material contingent liabilities, caused the company to change its manner of doing business at great cost and loss of profit, and materially inflated the trading price of the company's common stock. The company denies each of these allegations. The plaintiffs seek undetermined but significant damages. Management is unable to predict the ultimate outcome of this litigation. However, if the district court ruling described below is upheld, Fleming believes the litigation will not have a material adverse effect on the company. In November 1997, the company won a declaratory judgment in the U.S. District Court for the Western District of Oklahoma against certain of its insurance carriers regarding directors and officers insurance policies ("D&O policies") issued to Fleming for the benefit of its officers and directors. On motion for summary judgment, the court ruled that the company's exposure, if any, under the class action suits is covered by certain D&O policies written by the insurance carriers (aggregating $60 million) and that the "larger settlement rule" will be applicable to the case. According to the trial court, under the larger settlement rule a D&O insurer is liable for the entire amount of coverage available under a policy even if there is some overlap in the liability created by the insured individuals and the uninsured corporation. If a corporation's liability is increased by uninsured parties beyond that of the insured individuals, then that portion of the liability is the sole obligation of the corporation. The court also held that allocation is not available to the insurance carriers as an affirmative defense. The insurance carriers have appealed. Century. Century Shopping Center Fund I ("Century Fund I"), which managed the Howell Plaza Shopping Center, commenced an action in November 1988 in the Milwaukee County Circuit Court, State of Wisconsin against a former subsidiary of the company which had operated a supermarket at Howell Plaza. In June 1993, three former tenants of the Howell Plaza Shopping Center filed another case in the same court and in September 1993, the trustee in bankruptcy for Howell Plaza, Inc. (the predecessor to Century Fund I and its successor as the subsidiary's landlord) filed a third case. The allegations of these cases were very similar to the allegations made in the Century Fund I case and the cases were ultimately consolidated. In November 1993, an amended complaint was filed alleging breach of contract, tortious interference with contract, tortious interference to business, defamation, attempted monopolization, conspiracy to monopolize, conspiracy to restrain trade and monopolization. Plaintiffs alleged that a company operated store was wrongfully closed at Howell Plaza and reopened at a nearby competing shopping center. In March 1997, plaintiffs supplied the company with an analysis of damages alleging actual damages, after trebling but excluding any punitive damages, of approximately $18 million. In July 1997, the trial court granted plaintiffs' motion for summary judgment with respect to their breach of contract claim against Fleming (as to liability only, not as to damages). In October 1998, the case was settled and the court entered a judgemnt ordering Fleming's insurance company to pay the full amount of the settlement. The company does not believe the matter will have a material adverse effect on the company. Tru Discount Foods. Fleming brought suit on a note and an open account against its former customer, Tru Discount Foods. The case was referred to arbitration but later the court vacated its referral and restored the case to its docket. This action was appealed by Fleming. In December 1997, the defendant amended its counter claim against the company alleging fraud, overcharges for products and violations of the Oklahoma Deceptive Trade Practices Act. Although Tru Discount Foods has not quantified damages, it has made demand in the amount of $8 million. In October 1998, the appellate court reversed the trial court's vacation order and directed that the matter be sent again to arbitration. Management is unable to predict the ultimate outcome of this matter. However, an unfavorable outcome could have a material adverse effect on the company. Don's United Super (and related cases). On March 18, 1998 the company and two retired executives were named in a suit filed in the United States District Court for the Western District of Missouri by approximately 20 current and former customers of the company (Don's United Super, et al. v. Fleming, et al.). Plaintiffs operate retail grocery stores in the St. Joseph and Kansas City metropolitan areas. Six plaintiffs who were parties to supply contracts containing arbitration clauses were subsequently permitted to withdraw from the case. Previously, two cases had been filed in the same court (R&D Foods, Inc. et al. v. Fleming, et al. and Robandee United Super, Inc. et al. v. Fleming, et al.) by 10 customers, some of whom are plaintiffs in the Don's case. The earlier two cases, which principally seek an accounting of the company's expenditure of certain joint advertising funds, have been consolidated. All causes of action in these cases have been stayed pending the arbitration of the causes of action relating to supply contracts containing arbitration clauses. The Don's suit alleges product overcharges, breach of contract, misrepresentation, fraud, and RICO violations and seeks recovery of actual, punitive and treble damages and a declaration that certain contracts are voidable at the option of the plaintiffs. Damages have not been quantified. However, the time period during which the alleged overcharges took place exceeds 25 years with respect to some plaintiffs, and the company anticipates that the plaintiffs will allege substantial monetary damages. In October 1998, a group of 14 retailers (ten of whom had been or are currently plaintiffs in the Don's case and/or Robandee case whose claims were sent to arbitration or stayed pending arbitration) filed a new action against the company and two former officers, one of whom was a director, in the Western District of Missouri (Coddington Enterprises, Inc. et al. v. Dean Werries, et al.). The plaintiffs assert claims virtually identical to those set forth in the Don's complaint, but have not quantified damages. The company intends to vigorously defend its interests in these related cases. Although management is currently unable to predict the ultimate outcome of this litigation, based upon the plaintiffs' allegations, an unfavorable outcome could have a material adverse effect on the company. Storehouse Markets. In October 1998, the company and one of its associates were named in a suit filed in the United States District for the District of Utah by three current and former customers of the company (Storehouse Markets, Inc., et al. v. Fleming Companies, Inc., et al.). The plaintiffs' allege product overcharges, fraudulent misrepresentation, fraudulent nondisclosure and concealment, breach of contract, breach of duty of good faith and fair dealing and RICO violations and seek recovery of actual, punitive and treble damages and class action status. Damages have not been quantified. However, the company anticipates that the plaintiffs will seek substantial monetary damages. The company intends to vigorously defend its interests in this case but is currently unable to predict the ultimate outcome. Based upon the plaintiffs' allegations, an unfavorable outcome could have a material adverse effect on the company. Y2K. The company utilizes numerous computer systems which were developed employing six digit date structures (i.e., two digits each for the month, day and year). Where date logic requires the year 2000 or beyond, such date structures may produce inaccurate results. Management has implemented a program to comply with year-2000 requirements on a system-by-system basis. Fleming's plan includes extensive systems testing and is expected to be substantially completed by mid-1999. Code for the company's largest and most compre- hensive system, FOODS, has been completely remediated and bench tested and is being reinstalled throughout the company for final testing. Although the company is developing greater levels of confidence regarding its internal systems, ultimate success must still be verified through extensive testing. Failure to ensure that the company's computer systems are year-2000 compliant could have a material adverse effect on the company's operations. Program costs to comply with year-2000 requirements are being expensed as incurred. Total third party expenditures in 1997 through completion in 1999 are not expected to exceed $10 million, none of which is incremental. Through the end of the third quarter of 1998, these third party expenditures totaled over $5 million. Other. The company's facilities and operations are subject to various laws, regulations and judicial and administrative orders concerning protection of the environment and human health, including provisions regarding the transportation, storage, distribution, disposal or discharge of certain materials. In conformity with these provisions, the company has a comprehensive program for testing, removal, replacement or repair of its underground fuel storage tanks and for site remediation where necessary. The company has established reserves that it believes will be sufficient to satisfy the anticipated costs of all known remediation requirements. The company and others have been designated by the U.S. Environmental Protection Agency ("EPA") and by similar state agencies as potentially responsible parties under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") or similar state laws, as applicable, with respect to EPA-designated Superfund sites. While liability under CERCLA for remediation at such sites is generally joint and several with other responsible parties, the company believes that, to the extent it is ultimately determined to be liable for the expense of remediation at any site, such liability will not result in a material adverse effect on its consolidated financial position or results of operations. The company is committed to maintaining the environment and protecting natural resources and human health and to achieving full compliance with all applicable laws, regulations and orders. The company is a party to various other litigation and contingent loss situations arising in the ordinary course of its business including: disputes with customers and former customers; disputes with owners and former owners of financially troubled or failed customers; disputes with employees and former employees regarding labor conditions, wages, workers' compensation matters and alleged discriminatory practices; disputes with insurance carriers; tax assessments and other matters, some of which are for substantial amounts. However, the company does not believe any such action will result in a material adverse effect on the company. 7. Certain indebtedness is guaranteed by all direct and indirect subsidiaries of the company (except for certain inconsequential subsidiaries), all of which are wholly owned. The guarantees are joint and several, full, complete and unconditional. There are no restrictions on the ability of the subsidiary guarantors to transfer funds to the company in the form of cash dividends, loans or advances. Full financial statements for the subsidiary guarantors are not presented herein because management does not believe such information would be material. The following summarized financial information, which includes allocations of material corporate-related expenses, for the combined subsidiary guarantors may not necessarily be indicative of the results of operations or financial position had the subsidiary guarantors been operated as independent entities.
Oct. 3, Oct. 4, (In millions) 1998 1997 ----------------------------------------------------- Current assets $34 $23 Noncurrent assets $70 $53 Current liabilities $12 $16 Noncurrent liabilities $ 7 $ 7 40 weeks ended Oct. 3, Oct. 4, (In millions) 1998 1997 ----------------------------------------------------- Net sales $269 $256 Costs and expenses $277 $256 Net earnings (loss) $ (4) -
8. The accompanying operating statements include the following:
12 weeks -------- (In thousands) 1998 1997 ------------------------------------------------------ Depreciation and amortization (includes amortized costs in interest expense) $42,509 $41,113 Amortized costs in interest expense $1,083 $1,668 40 weeks -------- (In thousands) 1998 1997 -------------------------------------------------------- Depreciation and amortization (includes amortized costs in interest expense) $140,735 $139,738 Amortized costs in interest expense $4,058 $7,165
Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations Results of Operations Management believes that the company's ultimate success will depend on its ability to expand profitable operations while continuing to cut costs. The company has revised its marketing plans and is taking other steps to reverse sales declines. These initiatives include increased marketing emphasis and expanded offerings of Fleming Retail Services, streamlining and expanding Fleming Brands, developing and marketing additional foodservice products and growing retail food operations through remodels, new store development and selective acquisitions. While the company believes considerable progress has been made to date, no assurance can be given that the company will be successful in continuing to cut costs, in reversing sales declines or in increasing higher margin activities. Set forth in the following table is information for the 12-weeks ended October 3, 1998 and October 4, 1997 and the 40-weeks ended October 3, 1998 and October 4, 1997 regarding components of the company's earnings expressed as a percentage of net sales.
- ------------------------------------------------------------------------------ October 3, October 4, For the 12-weeks ended 1998 1997 - ------------------------------------------------------------------------------ Net sales 100.00 % 100.00 % Gross margin 9.59 9.33 Less: Selling and administrative 8.64 7.90 Interest expense 1.09 1.13 Interest income (.25) (.32) Equity investment results .08 .11 Litigation charge .06 - - ----------------------------------------------------------------------------- Total expenses 9.62 8.82 - ----------------------------------------------------------------------------- Earnings (loss) before taxes (.03) .51 Taxes on income .04 .23 - ----------------------------------------------------------------------------- Earnings (loss) before extraordinary charge (.07) .28 Extraordinary charge from early retirement of debt (net of taxes) - .39 - ----------------------------------------------------------------------------- Net loss (.07)% (.11)% - ----------------------------------------------------------------------------- October 3, October 4, For the 40-weeks ended 1998 1997 - ----------------------------------------------------------------------------- Net sales 100.00 % 100.00 % Gross margin 9.79 9.23 Less: Selling and administrative 8.34 7.76 Interest expense 1.08 1.06 Interest income (.24) (.31) Equity investment results .08 .09 Litigation charge .06 .16 - ----------------------------------------------------------------------------- Total expenses 9.32 8.76 - ----------------------------------------------------------------------------- Earnings before taxes .47 .47 Taxes on income .24 .24 - ----------------------------------------------------------------------------- Earnings before extraordinary charge .23 .23 Extraordinary charge from early retirement of debt (net of taxes) - .11 - ----------------------------------------------------------------------------- Net earnings .23 % .12 % - -----------------------------------------------------------------------------
Net sales. Sales for the third quarter (12 weeks) of 1998 decreased by $14 million, or .4%, to $3.4 billion from the same period in 1997. Year to date, sales decreased by $244 million, or 2.1%, to $11.5 billion from the same period in 1997. Several factors, none of which are individually material, adversely affected net sales including: lower sales to continuing customers due to competitive pressures, lower sales at certain company-owned retail stores and the closing or sale of certain other company-owned retail stores, offset in part by new business added primarily in the second quarter. Although the company expects to continue to add new business, the loss of sales for the near term from Furr's (in the fourth quarter of 1998) and Randall's (by August of 1999) move to self-distribution will result in sales comparisons to prior periods being negative for some time. Retail sales generated by the same stores for the third quarter and year-to- date periods in 1998 compared to the same periods in 1997 decreased 2.1% and 3.9%, respectively. The decrease was attributable, in part, to new stores opened by competitors in some markets and aggressive marketing initiatives by certain competitors. Although the same store comparison is a negative 2.1% in the third quarter of 1998, it is an improvement from the negative 5.2% reported in the third quarter of 1997. Fleming measures inflation using data derived from the average cost of a ton of product sold by the company. Food price inflation year-to-date was 1.8% compared to 1.4% for the same period in 1997. Gross margin. Gross margin for the third quarter of 1998 increased by $8 million, or 2%, to $330 million from $322 million for the same period in 1997, and also increased as a percentage of net sales to 9.59% from 9.33% for the same period in 1997. Year to date, gross margin increased by $41 million, or 4%, to $1.13 billion from $1.09 billion for the same period in 1997, and also increased as a percentage of net sales to 9.79% from 9.23% for the same period in 1997. The increase was due, in part, to an overall increase in the retail food segment, which has the better margins of the two segments, and the unfavorable impact of gains from dispositions that occurred in 1997, but not in 1998. Year to date, gross margin also reflects favorable adjustments for closed stores due to better-than-expected lease buyouts. In addition, product handling expenses, consisting of warehouse, transportation and building expenses, were lower as a percentage of net sales in 1998 compared to 1997, reflecting productivity improvements. Selling and administrative expenses. Selling and administrative expenses for the third quarter of 1998 increased by $24 million, or 9%, to $297 million from $273 million for the same period in 1997 and increased as a percentage of net sales to 8.64% for 1998 from 7.90% in 1997. Year to date, selling and administrative expenses increased by $48 million, or 5%, to $959 million from $911 million in 1997 and increased as a percentage of net sales to 8.34% for 1998 from 7.76% in 1997. The increase was partly due to increased operating expense in the retail food segment. Selling expense was higher than the previous year as the company continues to work at reversing recent sales declines. Other non-recurring costs reflected in the third quarter of 1998 were severance expense related to executive retirements and impairment costs related to the sale of the Portland division. A charge for $4 million related to the sale of the El Paso warehouse to Furr's was recorded in the first quarter of 1998. The sale closed on October 19, 1998 and the final accounting will be reflected in the fourth quarter. A $3.7 million facility consolidation reversal was also recorded during the first quarter. As more fully described in the 1997 Annual Report on Form 10-K, the company has a significant amount of credit extended to its customers through various methods. These methods include customary and extended credit terms for inventory purchases and equity investments in and secured and unsecured loans to certain customers. Secured loans generally have terms up to ten years. Credit loss expense is included in selling and administrative expenses and was $4 million for the third quarter of 1998 which was unchanged from the comparable period in 1997. Year to date, credit loss expense was $12 million in 1998 compared to $15 million in 1997. Credit loss expense has consistently improved over the last few years due to tighter credit practices and reduced emphasis on credit extensions to and investments in customers. Although the company plans to continue these ongoing credit practices, it is not expected that the credit loss expense will remain at current low levels. Interest expense. Interest expense was $37 million for the third quarter of 1998 compared to $39 million in the same period in 1997. Year-to-date interest expense of $124 million was unchanged from the same period in 1997. Interest expense was lower for the quarter due to lower average interest rates. Year-to-date interest expense included a reduction of interest accruals relating to the favorable settlement of tax assessments. Without this reduction, interest expense would have been $2 million higher due primarily to higher average balances. The company's derivative agreements have consisted of simple "floating-to- fixed rate" interest rate caps and swaps. For the third quarter of 1998, interest rate hedge agreements contributed $0.8 million of net interest expense compared to $1.4 million in the same period of 1997. Year to date, interest rate hedge agreements contributed $3.2 million of net interest expense compared to $5.9 million of net interest expense in 1997. In 1998, hedge agreements covered a lower amount of floating rate debt versus 1997. Interest income. Interest income for the third quarter of 1998 decreased by approximately $2 million to $9 million from $11 million for the same period in 1997. Year to date, interest income decreased by $8 million to $28 million from $36 million in 1997. The decrease is partly due to the sale of notes receivable in the fourth quarter of 1997 when the company sold $29 million of notes receivable with limited recourse and a reduced amount of notes receivable funded. The decrease is also due to a lower balance of investments in direct financing leases. These items reduced the amount available to produce interest income. Equity investment results. The company's portion of operating losses from equity investments for the third quarter of 1998 decreased by $1 million to $3 million from $4 million in 1997. Year to date, operating losses from equity investments decreased by approximately $1 million to $10 million from $11 million in 1997. The reduction in losses is due to improved results of operations in certain of the underlying investments. Litigation charge. In October 1997, the company began paying Furr's $800,000 per month as part of a settlement agreement. In 1998, the $2 million charge in the third quarter and the $7 million charge year-to-date represent this payment. The payments ceased upon the closing of the sale of the El Paso product supply center to Furr's on October 19, 1998. In the first quarter of 1997, the company expensed $19.2 million in settlement of the David's litigation. See Note 6 in the notes to the consolidated condensed financial statements. Taxes on income. The effective tax rate for 1998 is presently estimated at 51.0% which was used to calculate the 1998 year-to-date income tax amount. The effective tax rate was estimated at 47.5% at the end of the second quarter. The tax expense in the third quarter of 1998 includes additional expense to adjust for the first and second quarter's lower rate. The increase in the estimated year-to-date rates from 47.5% to 51.0% was due to lower earnings expectations in 1998 with basically no change in nondeductible dollar amounts. The year-to-date tax rate used for 1997 was 58.0%. Like the 1998 third quarter, the third quarter of 1997 included adjustments for the first two quarters of 1997 to get to the year-to-date rate of 58.0%. The tax rate was estimated at 53.0% at the end of the second quarter of 1997. The lower rates in 1998 compared to 1997 were primarily due to the favorable settlement of a tax assessment in the second quarter and anticipated higher earnings in 1998 compared to 1997 with basically no change in nondeductible dollar amounts. The presentation of the tax in 1997 is split by reflecting a tax benefit at the statutory rate of 40% for the extraordinary charge and reflecting the balance of the tax amount on the taxes on income line. Litigation and contingencies. From time to time the company faces litigation or other contingent loss situations resulting from owning and operating its assets, conducting its business or complying (or allegedly failing to comply) with federal, state and local laws, rules and regulations which may subject the company to material contingent liabilities. In accordance with applicable accounting standards, the company records as a liability amounts reflecting such exposure when a material loss is deemed by management to be both "probable" and "quantifiable" or "reasonably estimable." Furthermore, the company discloses material loss contingencies in the notes to its financial statements when the likelihood of a material loss has been determined to be greater than "remote" but less than "probable." Such contingent matters are discussed in Note 6 in the notes to the consolidated condensed financial statements. An adverse outcome experienced in one or more of such matters, or an increase in the likelihood of such an outcome, could have a material adverse effect on the company. Also see "Legal Proceedings." Fleming has numerous computer systems which were developed employing six digit date structures (i.e., two digits each for month, day and year). Where date logic requires the year 2000 or beyond, such date structures may produce inaccurate results. Management has implemented a program to comply with year- 2000 requirements on a system-by-system basis including both information technology (IT) and non-IT systems, e.g., microcontrollers. Fleming's plan includes extensive systems testing and is expected to be substantially completed by mid-1999. Code for the company's largest and most comprehensive system, FOODS, has been completely remediated and bench tested and is being reinstalled throughout the company for final testing. Although the company believes contingency plans will not be necessary based on progress to date, contingency plans have been developed for each critical system. The content of the contingency plans varies depending on the system and the assessed probability of failure and such plans are modified periodically based on remediation and testing. The plans are comprised of activities such as reallocating internal resources, obtaining additional outside resources, implementing temporary manual processes or temporarily rolling back the internal clocks. Although the company is developing greater levels of confidence regarding its internal systems, ultimate success must still be verified through extensive testing. Failure to ensure that the company's computer systems are year-2000 compliant could have a material adverse effect on the company's operations. The company is also assessing the status of its vendors' and customers' year-2000 readiness through meetings, discussions, notices and questionnaires. Vendor and customer responses and feedback are encouraging, but not conclusive. Failure of the company's suppliers or its customers to become year-2000 compliant might also have a material adverse impact on the company's operations. Program costs to comply with year-2000 requirements are being expensed as incurred. Total third party expenditures in 1997 through completion in 1999 are not expected to exceed $10 million, none of which is incremental. Through the end of the third quarter of 1998, these third party expenditures totaled over $5 million. To compensate for the dilutive effect on results of operations, the company has delayed other non-critical development and support initiatives. Accordingly, the company expects that annual information technology expenses will not differ significantly from prior years. Other. Several factors negatively affecting earnings in the first 40-weeks of 1998 are likely to continue for the near term. Management believes that these factors include lower sales, operating losses in certain company-owned retail stores and legal fees and expenses related to litigation. The company is continuing the process of strategic planning with the assistance of an outside consulting firm to identify the best strategies for the future. The basic economics of the wholesaling operations are being looked at on a location-by-location basis. This includes examining the current market position of each product supply center and its potential to grow relative to the competitive challenges in its market. Similar overall assessments are being done to the retail operations. Additionally, the total overhead cost structure, both at corporate and in the field, are being looked at to reduce expenses and bring them more in line with sales. The strategic planning process is expected to be finalized and submitted to the Board of Directors for consideration before the end of 1998. If the Board approves the plan, future cash flows of certain business units are likely to be altered such that long-lived asset impairments or dispositions are required. Management is unable to predict the ultimate outcome of the planning process or any related impairments or dispositions, although such impairments or dispositions could be material. Segment information. Sales and operating earnings for the company's food distribution and retail food segments are presented below.
- ----------------------------------------------------------------------------- For the 12 weeks ended Oct. 3, Oct. 4, ($ in millions) 1998 1997 - ----------------------------------------------------------------------------- Sales: Food distribution $2,631 $2,678 Retail food 808 775 - ----------------------------------------------------------------------------- Total sales $3,439 $3,453 - ----------------------------------------------------------------------------- Operating earnings: Food distribution $50 $64 Retail food 11 11 Corporate (29) (26) - ----------------------------------------------------------------------------- Total operating earnings $32 $49 - ----------------------------------------------------------------------------- For the 40 weeks ended Oct. 3, Oct. 4, ($ in millions) 1998 1997 - ----------------------------------------------------------------------------- Sales: Food distribution $ 8,805 $ 9,127 Retail food 2,707 2,629 - ----------------------------------------------------------------------------- Total sales $11,512 $11,756 - ----------------------------------------------------------------------------- Operating earnings: Food distribution $204 $215 Retail food 51 60 Corporate (88) (101) - ----------------------------------------------------------------------------- Total operating earnings $167 $174 - -----------------------------------------------------------------------------
Operating earnings for industry segments consist of net sales less related operating expenses. Operating expenses exclude interest expense, interest income, equity investment results, litigation charge and taxes on income. General corporate expenses are not allocated to food distribution and retail food segments. The transfer pricing between segments is at cost. Operating earnings for 1997 have been restated as of year-end 1997 due to adopting SFAS No. 131 - Disclosures about Segments of an Enterprise and Related Information. Liquidity and Capital Resources Set forth below is certain information regarding the company's capital structure at the end of the third quarter of 1998 and at the end of fiscal 1997:
- ----------------------------------------------------------------------------- Capital Structure (In millions) October 3, 1998 December 27, 1997 - ----------------------------------------------------------------------------- Long-term debt $1,172 43.6% $1,175 44.3% Capital lease obligations 386 14.4 388 14.6 - ----------------------------------------------------------------------------- Total debt 1,558 58.0 1,563 58.9 Shareholders' equity 1,126 42.0 1,090 41.1 - ----------------------------------------------------------------------------- Total capital $2,684 100.0% $2,653 100.0% - -----------------------------------------------------------------------------
Note: The above table includes current maturities of long-term debt and current obligations under capital leases. The total of net cash provided from operations plus net collections on notes receivable plus cash proceeds from the sale of assets and investments plus a reduction in cash balances exceeded net cash required for investing activities and scheduled payments on funded debt and capital leases. As a consequence, long-term debt was $3 million lower at the end of the third quarter of 1998 compared to year-end 1997. Capital lease obligations also decreased $2 million in 1998 because repayments exceeded leases added for new retail stores. The debt-to-capital ratio at third quarter-end 1998 was 58.0%, down from 58.9% at year-end 1997. The company's long-term target ratio is between 50% and 55%. Operating activities generated $127 million of net cash flows for the first three quarters of 1998 compared to $82 million in the same period of 1997. The difference was principally due to changes in working capital and higher deferred taxes, offset by lower cash earnings. Working capital was $354 million at the end of the third quarter of 1998, an increase from $340 million at year-end 1997. The current ratio of 1.29 to 1 was unchanged from year-end 1997. Capital expenditures were $146 million for the first three quarters in 1998 compared to $82 million for the same period in 1997. Total capital expenditures for 1998 (excluding acquisitions, if any) are expected to be approximately $200 million to $210 million. The company intends to increase its retail operations by increasing investments in stores through acquisition, construction and remodeling in the company's existing retail chains. The company's principal sources of liquidity for the first three quarters of 1998 have been cash flows from operating activities, the sale of certain assets and investments and, as needed, borrowings under its credit facility. The company's principal sources of capital, excluding shareholders' equity, are banks and other lenders and lessors. The company's credit agreement and the indentures under which other company debt instruments were issued contain customary covenants associated with similar facilities. The credit agreement currently contains the following more significant financial covenants: maintenance of a fixed charge coverage ratio of at least 1.7 to 1, based on earnings before interest, taxes, depreciation and amortization and net rent expense; maintenance of a ratio of inventory-plus-accounts receivable to funded bank debt (including letters of credit) of at least 1.4 to 1; and a limitation on restricted payments, including dividends. Covenants contained in the company's indentures under which other company debt instruments were issued are generally less restrictive than those of the credit agreement. The company is in compliance with all financial covenants under the credit agreement and its indentures. In addition, the credit facility may be terminated in the event of a defined change of control. Under the company's indentures, noteholders may require the company to repurchase notes in the event of a defined change of control coupled with a defined decline in credit ratings. At the end of the third quarter 1998, borrowings under the credit facility totaled $224 million in term loans and $75 million of revolver borrowings, and $80 million of letters of credit had been issued. Letters of credit are needed primarily for insurance reserves associated with the company's normal risk management activities. To the extent that any of these letters of credit would be drawn, payments would be financed by borrowings under the credit agreement. At the end of the third quarter 1998, the company would have been allowed to borrow an additional $445 million under the revolving credit facility contained in the credit agreement based on the actual borrowings and letters of credit outstanding. Under the company's most restrictive borrowing covenant, which is the fixed charges coverage ratio contained in the credit agreement, $45 million of additional fixed charges could have been incurred. The average interest rate for total debt (including capital lease obligations) before the effect of interest rate hedges was 10.1% for the third quarter of 1998, versus 10.6% for the same period in 1997. Including the effect of interest rate hedges, the average interest rate of debt was 10.4% and 10.8% for the third quarter of 1998 and the same period in 1997, respectively. At the end of the third quarter of 1998, the company employed interest rate swaps covering a total of $250 million of floating rate indebtedness with three counterparty banks possessing investment grade credit ratings. The swaps have an average fixed interest rate of 7.22% and an average remaining term of 1.6 years. Net interest payments made or received under interest rate swaps are included in interest expense. See "-Results of Operations-Interest Expense" above. Dividend payments in the third quarter of 1998 were $.02 per share. The credit agreement and the indentures for the $500 million of senior subordinated notes limit restricted payments, including dividends, to $70 million at the end of the third quarter of 1998 based on a formula tied to net earnings and equity issuances. For the foreseeable future, cash flows from operating activities and the company's ability to borrow under its credit agreement are expected to be the company's principal sources of liquidity and capital. In addition, lease financing may be employed for new stores and certain equipment. Management believes these sources will be adequate to meet working capital needs, capital expenditures (including expenditures for acquisitions, if any) and other capital needs for the next 12 months. Forward-Looking Information This report includes statements that (a) predict or forecast future events or results, (b) depend on future events for their accuracy, or (c) embody assumptions which may prove to have been inaccurate, including the company's ability to reverse sales declines, cut costs and improve earnings; the company's assessment of the probability and materiality of losses associated with litigation and other contingent liabilities; the company's ability to develop and implement year-2000 systems solutions; the company's ability to expand portions of its business or enter new facets of its business which it believes will be more profitable than its food distribution business; and the company's expectations regarding the adequacy of capital and liquidity. These forward-looking statements and the company's business and prospects are subject to a number of factors which could cause actual results to differ materially including the: finalization and implementation of the company's strategic business plan; adverse effects of the changing industry environment and increased competition; continuing sales declines and loss of customers; exposure to litigation and other contingent losses; failure of the company to achieve necessary cost savings; failure of the company, its vendors or its customers to develop and implement year-2000 system solutions; and the negative effects of the company's substantial indebtedness and the limitations imposed by restrictive covenants contained in the company's debt instruments. These and other factors are described in the company's periodic reports available from the Securities and Exchange Commission including the company's 1997 annual report on Form 10-K and the company's 1998 quarterly reports on Form 10-Q. PART II. OTHER INFORMATION Item 1. Legal Proceedings Set forth below is information regarding litigation which became reportable or as to which a material development has occurred since the date of the company's Quarterly Report on Form 10-Q for the fiscal quarter ended October 3, 1998: (1) Century. (See earlier discussions in the 1997 Form 10-K). In October 1998, the case was settled without any material effect on the company. (2) Tobacco Cases. (See earlier discussions in the 1997 Form 10-K and in the first and second quarter 1998 Form 10-Q). Four cases have been dismissed (Joseph Aezen, Najiyya El-Haddi, Carla Boyce and Florence Ferguson) and twelve cases have been dismissed without prejudice (Ella Daly, Janet Anes, Kym Glasser, Welton Lee Upshur, Donald G. Teti, George Thompson, Ronald Folkman, Sandy and Howard Greenfield, Francis Ryziw, Charles Simmons Sr. and Patricia Simmons, Joseph Pennetti and Mable A. Tiscavitch) in the Court of Common Pleas, Philadelphia, Pennsylvania; one case has been dismissed without prejudice in the Court of Common Pleas, Dauphin County, Pennsylvania (Doyle Smith); and one case has been dismissed in East Baton Rouge Parish, Louisiana (Kathy Landry). Additionally, one new case (John H. Harley v. The American Tobacco Company) has been filed in the Court of Common Pleas, Philadelphia County, Pennsylvania. The new case is being defended, and the company is being indemnified, by a substantial defendant. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit Page Number Description Number - ------- ----------- ------ 4.8 First Amendment (dated October 5, 1998) to Credit Agreement dated July 25, 1997 10.30* Form of Amended and Restated Agreement for Fleming Companies, Inc. Executive Past Service Benefit Plan 10.31* Form of Amended and Restated Agreement for Fleming Companies, Inc. Executive Deferred Compensation Plan 10.32* Amended and Restated Supplemental Retirement Income Agreement between William J. Dowd and Fleming Companies, Inc. dated August 18, 1998 10.33* Form of Amended and Restated Restricted Stock Award Agreement under Fleming Companies, Inc. 1996 Stock Incentive Plan 10.34* Form of Amended and Restated Non-Qualified Stock Option Agreement under the Fleming Companies, Inc. 1996 Stock Incentive Plan 10.35* Amendment No. 1 to Fleming Companies, Inc. 1990 Stock Incentive Plan 10.36* First Amendment to Economic Value Added Incentive Bonus Plan for Fleming Companies, Inc. and Its Subsidiaries 10.37* Amendment No. 2 to Economic Value Added Incentive Bonus Plan for Fleming Companies, Inc. and Its Subsidiaries 10.38* Form of Amendment to Certain Employment Agreements 10.39* Form of First Amendment to Restricted Stock Award Agreement for Fleming Companies, Inc. 1996 Stock Incentive Plan 10.40 Settlement and Severance Agreement by and between Fleming Companies, Inc. and Robert E. Stauth dated as of August 28, 1998 12 Computation of Ratio of Earnings to Fixed Charges 27 Financial Data Schedule __________ * Management contract, compensatory plan or arrangement. (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FLEMING COMPANIES, INC. (Registrant) Date: November 5, 1998 KEVIN TWOMEY Kevin Twomey Vice President-Controller (Principal Accounting Officer) EXHIBIT INDEX Exhibit No. Description Method of Filing - ---------- ---------------------------------------------- ---------------- 4.8 First Amendment (dated October 5, 1998) to the Filed Credit Agreement dated July 25, 1997 herewith electronically 10.30* Form of Amended and Restated Agreement for Filed Fleming Companies, Inc. Executive Past Service herewith Benefit Plan electronically 10.31* Form of Amended and Restated Agreement for Filed Fleming Companies, Inc. Executive Deferred herewith Compensation Plan electronically 10.32* Amended and Restated Supplemental Retirement Filed Income Agreement between William J. Dowd and herewith Fleming Companies, Inc. dated August 18, 1998 electronically 10.33* Form of Amended and Restated Restricted Stock Filed Award Agreement under Fleming Companies, Inc. herewith 1996 Stock Incentive Plan electronically 10.34* Form of Amended and Restated Non-Qualified Stock Filed Option Agreement under the Fleming Companies, herewith Inc. 1996 Stock Incentive Plan electronically 10.35* Amendment No. 1 to Fleming Companies, Inc. 1990 Filed Stock Incentive Plan herewith electronically 10.36* First Amendment to Economic Value Added Filed Incentive Bonus Plan for Fleming Companies, Inc. herewith and Its Subsidiaries electronically 10.37* Amendment No. 2 to Economic Value Added Filed Incentive Bonus Plan for Fleming Companies, Inc. herewith and Its Subsidiaries electronically 10.38* Form of Amendment to Certain Employment Agreements Filed herewith electronically 10.39* Form of First Amendment to Restricted Stock Filed Award Agreement for Fleming Companies, Inc. 1996 herewith Stock Incentive Plan 10.40 Settlement and Severance Agreement by and Filed between Fleming Companies, Inc. and Robert E. herewith Stauth dated as of August 28, 1998 electronically 12 Computation of Ratio of Earnings to Fixed Filed Charges herewith electronically 27 Financial Data Schedule Filed herewith electronically _________ * Management contract, compensatory plan or arrangement. EX-4.8 2 FIRST AMENDMENT dated as of October 5, 1998 (this "Amendment"), among FLEMING COMPANIES, INC. (the "Borrower"), the LENDERS party hereto, BANCAMERICA SECURITIES, INC., as Syndication Agent, SOCIETE GENERALE, as Documentation Agent, and THE CHASE MANHATTAN BANK, as Administrative Agent. A. Reference is made to the Credit Agreement dated as of July 25, 1997 (the "Credit Agreement") among the Borrower, the Lenders, the Administrative Agent, the Syndication Agent and the Documentation Agent. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Credit Agreement. B. The Borrower has requested that the Lenders amend certain provisions of the Credit Agreement. The Lenders are willing to do so, subject to the terms and conditions of this Amendment. Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1.01. Amendment to Section 2.11(b). Section 2.11(b) of the Credit Agreement is hereby modified by: (a) deleting from clause (i) thereof the words "and is permitted to be prepaid, repurchased or redeemed under Section 6.03(b)"; and (b) replacing the period at the end of the first sentence thereof with the following: "; provided further, that, notwithstanding the foregoing proviso, in the event that (1) any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Asset Disposition and (2) the property disposed of in such Asset Disposition, together with all other property sold, leased, transferred or disposed of (other than in the ordinary course of business and other than as permitted by last sentence of Section 6.02) during the same fiscal year of the Borrower, contributed more than 20% of EBITDAR for any one of the immediately preceding three fiscal years of the Borrower, the Borrower shall prepay Term Borrowings (or, after the Term Borrowings have been repaid or prepaid in full, either prepay Revolving Loans or prepay, repurchase, retire or redeem the 10 5/8% Senior Notes) in an aggregate amount equal to 100% of the Net Proceeds of such Asset Disposition." SECTION 1.02. Amendment to Section 6.02. Section 6.02 of the Credit Agreement is hereby modified by replacing the reference to "20% of Consolidated Net Income" with a reference to "30% of EBITDAR". SECTION 1.03. Amendment to Section 6.03(b). Section 6.03(b) of the Credit Agreement is hereby modified by replacing clause (iv) thereof with the following: "(iv) Indebtedness referred to in clause (A), (B) or (C) of Section 2.11(b) or Indebtedness of the character described in clauses (vi), (viii), (ix), (x), (xi), (xii), (xiii) and (xiv) of Section 6.03(a) that is not Later Maturing Indebtedness;" SECTION 2. Credit Agreement. Except as specifically stated herein, the Credit Agreement shall continue in full force and effect in accordance with the provisions thereof. As used therein, the terms "Agreement", "herein", "hereunder", "hereto", "hereof" and words of similar import shall, unless the context otherwise requires, refer to the Credit Agreement as modified hereby. SECTION 3. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 4. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original but all of which, when taken together, shall constitute but one instrument. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the date first above written. FLEMING COMPANIES, INC. by JOHN M. THOMPSON Name: John M. Thompson Title: Vice President & Treasurer THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by BARRY K. BERGMAN Name: Barry K. Bergman Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, by THOMAS BARNETT Name: Thomas Barnett Title: Managing Director BANK OF HAWAII, by BRENDA TESTERMAN Name: Brenda Testerman Title: Vice President BANK OF MONTREAL, by L.A. DURNING Name: L.A. Durning Title: Portfolio Manager BANK OF SCOTLAND, by JANET TAFFE Name: Janet Taffe Title: Assistant Vice President BEAR STEARNS INVESTMENT PRODUCTS INC., by HARRY ROSENBERG Name: Harry Rosenberg Title: Authorized Signatory COMERICA BANK, by REGINALD M. GOLDSMITH, III Name: Reginald M. Goldsmith, III Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH, by ROBERT IVOSEVICH Name: Robert Ivosevich Title: Senior Vice President THE DAI-ICHI KANGYO BANK, LTD., by MASAAKI ISHIKURA Name: Masaaki Ishikura Title: Vice President FIRST HAWAIIAN BANK, by CHARLES L. JENKINS Name: Charles L. Jenkins Title: Vice President and Manager THE FUJI BANK, LIMITED, by TEIJI TERAMOTO Name: Teiji Teramoto Title: Vice President & Manager IBJ SCHRODER BANK & TRUST COMPANY, by CHARLES B. FEARS Name: Charles B. Fears Title: Director BANK ONE, OKLAHOMA, NA, by MARK C. DEMOS Name: Mark C. Demos Title: Senior Vice President THE LONG-TERM CREDIT BANK OF JAPAN, LTD., by SADAO MURAOKA Name: Sadao Muraoka Title: Head of Southwest Region MANUFACTURERS AND TRADERS TRUST COMPANY, by R. BUFORD SEARS Name: R. Buford Sears Title: Administrative Vice President THE MITSUBISHI TRUST AND BANKING CORPORATION, CHICAGO BRANCH, by NOBUO TOMINAGA Name: Nobuo Tominaga Title: Chief Manager NATEXIS BANQUE BFCE, by MARK A. HARRINGTON Name: Mark A. Harrington Title: Senior Vice President and Regional Manager by PAUL H. DIOURI Name: Paul H. Diouri Title: Assistant Treasurer NATIONAL BANK OF CANADA, by DOUG CLARK Name: Doug Clark Title: Vice President by RANDALL K. WILHOIT Name: Randall K. Wilhoit Title: Vice President NATIONAL CITY BANK, KENTUCKY, by TODD ETHINGTON Name: Todd Ethington Title: Vice President PARIBAS, by Name: Title: THE SANWA BANK LIMITED, by Name: Title: SENIOR DEBT PORTFOLIO, by Name: Title: SOCIETE GENERALE, SOUTHWEST AGENCY, by RICHARD M. LEWIS Name: Richard M. Lewis Title: Director SUMITOMO BANK OF CALIFORNIA, by SHUJI ITO Name: Shuji Ito Title: Vice President THE SUMITOMO BANK, LIMITED, by Name: Title: THE SUMITOMO TRUST AND BANKING CO., LTD., NEW YORK BRANCH, by STEPHEN STRATICO Name: Stephen Stratico Title: Vice President SUMMIT BANK, by BRUCE A. GRAY Name: Bruce A. Gray Title: Vice President TRANSAMERICA BUSINESS CREDIT CORPORATION, by PERRY VAVOULES Name: Perry Vavoules Title: Senior Vice President VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, by JEFFREY W. MAILLET Name: Jeffrey W. Maillet Title: Senior Vice President & Director VAN KAMPEN CLO I LIMITED, By: Van Kampen American Capital Management, Inc. As Collateral Manager by JEFFREY W. MAILLET Name: Jeffrey W. Maillet Title: Senior Vice President & Director EX-10.30 3 AMENDED AND RESTATED AGREEMENT FOR FLEMING COMPANIES, INC. EXECUTIVE PAST SERVICE BENEFIT PLAN THIS AMENDED AND RESTATED AGREEMENT FOR FLEMING COMPANIES, INC. EXECUTIVE PAST SERVICE BENEFIT PLAN is made as of the 18th day of August, 1998 by and between __________, an individ- ual (herein referred to as the "Participant") and FLEMING COMPANIES, INC. (the "Company") with respect to the following: WHEREAS, the Company has adopted that certain non-qualified deferred compensation plan known as "Fleming Companies, Inc. Executive Past Service Benefit Plan" (the "Plan"); and WHEREAS, the Plan was established by the Company for the purpose of providing supplemental retirement income under a nonqualified plan of deferred compensation for a select group of key management Associates of the Company; and WHEREAS, the Participant was formerly a participant in the Amended and Restated Supplemental Retirement Income Plan of Fleming Companies, Inc. and Its Subsidiaries (the "Prior Plan") which was terminated as to the Participant effective November 1, 1997; and WHEREAS, at the time of the termination of the Prior Plan the Participant had not accrued any benefit nor was he vested in any rights under the Prior Plan; and WHEREAS, the Company in recognition of the Participant's past and future services with the Company selected the Participant for participation in the Plan by establishing for him a Past Service Benefit as provided in that certain Agreement for Fleming Companies, Inc. Executive Past Service Benefit Plan (the "Original Agreement") which will be paid following his termination of employment in accordance with the terms of the Plan; and WHEREAS, the Company and the Participant desire to amend the Original Agreement by execution of this Amended and Restated Agreement for Fleming Companies, Inc. Executive Past Service Benefit Plan (the "Agreement") which shall evidence the Participant's participation in the Plan and his agreement to be bound by the terms and provisions of the Plan and this Agreement and shall serve as an amendment, restatement and continuation of the Original Agreement as amended by this Agreement. NOW, THEREFORE, in consideration of mutual covenants hereinafter contained, the parties hereto agree as follows. All capitalized words used in this Agreement shall have the same meaning ascribed to such terms in the Plan unless specifically denoted otherwise. 1. The Plan and the Amount of Past Service Benefit. A copy of the Plan is attached hereto as Exhibit "A" and is incorpo- rated by reference herein and made a part hereof for all purposes, and when taken with this Agreement shall govern the Participant's rights and those of the Company with respect to the Participant's benefits under the Plan. The Participant has been credited with $__________ in the form of the Past Service Benefit pursuant to the terms of the Plan. The Past Service Benefit will be credited to the Account established for the Participant under the Plan and the Trust related thereto. 2. Manner of Payment of Past Service Benefit. As of the date of this Agreement, the Participant must elect the form under which his Past Service Benefit will be paid in the future following the Participant's termination of employment under the terms of the Plan. Please check the form in which the Participant's Past Service is to be paid in the box provided below: (Please Check and Initial One Box Only) Optional Forms of Payment 1. [ ] Life of Participant Only 2. [ ] 50% Joint Annuitant Survivor Benefit 3. [ ] 75% Joint Annuitant Survivor Benefit 4. [ ] 100% Joint Annuitant Survivor Benefit 5. [ ] 5 Year Period Certain 6. [ ] 10 Year Period Certain 7. [ ] 15 Year Period Certain The actual amounts payable at retirement or death will depend upon the Participant's age and/or the age of his Beneficiary and the form of payment elected by the Participant. Refer to Exhibit "B" for a complete description of the Methods of Payment. Payments to which the Participant is entitled pursuant to the terms of the Plan will commence within 30 days following your termination of employment and will continue to be paid in accordance with the terms of the manner of payment elected by the Participant. With the consent of the Committee, and if requested by the Participant or his Beneficiary in the case of the Participant's death, the Participant or his Beneficiary may request that the Participant's Past Service Benefit be paid in any of the optional forms described above or in a single lump sum payment. See Section 10.1 of the Plan. Provided, in the event that a Participant has elected to receive his Past Service Benefit for the Life of Participant Only (Option 1 above) and such Participant dies prior to the time his benefits commence in accordance with the terms of the Plan, then, the deceased Participant's Beneficiary shall automatically receive a benefit based upon the actuarial equivalent of the Participant's Past Service Benefit, which will be paid as a 50% Joint Annuitant Survivor Benefit (Option 2 above). 3. Amendment or Termination. This Agreement may be amended, altered or terminated by the Company from time to time upon notice to the Participant as provided in paragraph 12 below; provided, however, this Agreement may not be amended, modified or altered or terminated in any manner which adversely affects the Participant without the consent of the Participant. 4. Expenses. The expenses of administering this Agreement shall be borne by the Company and shall not be charged against the Participant's Past Service Benefit. 5. Applicable Law. The provisions of this Agreement shall be construed, administered and enforced according to the laws of the State of Oklahoma. 6. No Assignability. Neither the Participant, his Beneficiary, nor any other person shall acquire any right to or interest in any Past Service Benefit and accruals thereon, otherwise than by actual payment in accordance with the provisions of the Plan and this Agreement, or have any power to transfer, assign, anticipate, pledge, mortgage or otherwise encumber or alienate any rights hereunder in advance of any of the payments to be made pursuant to the Agreement or any portion thereof which is expressly declared to be nonassignable and nontransferable. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. 7. Agreement Does Not Guarantee Continued Employment of Participant. The execution of this Agreement by the Company and the Participant, in no way whatsoever guarantees the continuation of employment of the Participant with the Company. 8. Withholding. The Company and the Participant shall comply with all federal and state laws and regulations respecting the withholding, deposit and payment of any income, employment or other taxes relating to any payments or rights to payments under this Agreement. 9. Designation of Beneficiary. (a) The Participant, hereby designate the following individual as his Beneficiary to receive any Past Service Benefit (including any benefit to be paid to such Beneficiary as the surviving "joint annuitant" pursuant to Section 2 hereof) payable to the Participant under this Agreement or the Plan in the event of the Participant's death: Name Address Relationship ______ ________________________________ _____________ (b) The Participant understands that during his lifetime, the Participant may at any time change the Beneficiary designated herein by delivering to the Committee a new designation of a Beneficiary executed by the Participant and the Committee. 10. Relationship Between Agreement and Plan. This Agreement has been entered into by and between the Company and the Participant in accordance with and pursuant to authority granted to the Committee pursuant to the terms and provisions of the Plan. Except for the definition of the term "Change of Control" which shall be governed by Section 16 of this Agreement and not by Section 9.1 of the Plan, in the event that there develops a conflict between this Agreement and the terms and provisions of the Plan, the terms and provisions of the Plan, as interpreted by the Committee in its sole discretion, shall control and be final and conclusive. 11. Limitation on Payment of Benefits. The payment of the Past Service Benefit as provided in this Agreement shall accrue and be payable to the Participant or his Beneficiary, as the case may be, only at such times and upon the occurrence of such conditions as heretofore described. In no event whatsoever shall the Participant or his Beneficiary have any right, claim, or interest of any kind whatsoever in any future payments of such Past Service Benefit and such payments shall accrue and be payable only on a monthly basis as provided hereinabove. 12. Notices. All notices that are required or may be given pursuant to this Agreement must be in writing and delivered personally, by a recognized courier service, by a recognized overnight delivery service, by facsimile or by registered or certified mail, postage prepaid, to the parties at the following addresses (or to the attention of such other person or such other address as either party may provide to the other party by notice in accordance with this paragraph 12: if to the Company: Fleming Companies, Inc. 6301 Waterford Blvd. Oklahoma City, OK 73126 Attn: Craig A. Grant Senior Vice President - Organizational Strategies and Management Development Facsimile: (405) 840-7226 if to the Participant: ______________________________ ______________________________ ______________________________ 13. Agreement Supersedes All Other Benefits and Release of Claims. Effective as of the date of the execution and delivery of this Agreement, this Agreement shall supersede and replace any and all other agreements entered into by and between the Company or any Subsidiary and the Participant with respect to the providing of supplemental retirement benefits on a nonqualified basis pursuant to the Prior Plan which was terminated by the Company effective November 1, 1997. The Participant agrees that as of the date of termination of the Prior Plan, he was not entitled to any benefit under the Prior Plan and any rights or interest in the Prior Plan were subject to total forfeiture as of November 1, 1997. Further, recognizing that the Participant has been selected by the Committee to participate in this Plan and the Fleming Companies, Inc. Executive Deferred Compensation Plan, both of which may provide substantial benefits to the Participant, the Participant hereby releases the Company, its officer, directors, agents and assigns from any and all obligations under the Prior Plan and agrees that the Participant will not bring any action, claim or demand of any kind whatsoever with respect to any benefits to which the Partici- pant would have otherwise been entitled had the Participant con- tinued participating in the Prior Plan. 14. Benefit Subject to Claims of Creditors. The Participant and his Beneficiary shall not have any interest in any particular assets of the Company, its parent, if applicable, or any Subsidiary by reason of the right to receive a benefit under the Plan or this Agreement, and the Participant and his Beneficiary or any other person shall have only the rights of a general unsecured creditor of the Company, its parent, if applicable, or a Subsidiary with respect to any rights under the Plan or this Agreement. 15. Effective Date. This Agreement shall be effective from and after the day and year first above written. 16. Change of Control. Notwithstanding the language of Section 9.1 of the Plan, for purposes of this Agreement and this Participant, the term "Change of Control" shall have the meaning set forth in this Section 16 and not in Section 9.1 of the Plan. Except for the definition of the term Change of Control, all other provisions of Section 9.1 of the Plan shall be applicable to this Participant. For purposes of this Agreement and this Participant, the term Change of Control shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Ex- change Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, how- ever, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agree- ment, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acqui- sition by any corporation pursuant to a trans- action which complies with clauses (x), (y), and (z) of subsection (iii) of this Section 16; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a direc- tor subsequent to the date hereof whose elec- tion, appointment or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Approval by the shareholders of the Company of a reorganization, share ex- change, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substan- tially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immedi- ately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstand- ing shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transac- tion will own the Company through one or more subsidiaries) in substantially the same pro- portions as their ownership, immediately prior to such Business Combination of the Outstand- ing Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combi- nation, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combi- nation; or (iv) Approval by the shareholders of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then out- standing voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Out- standing Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantial- ly the same proportion as their ownership, immediately prior to such sale or other dispo- sition, of the Outstanding Company Common Stock and Outstanding Company Voting Securi- ties, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indi- rectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstand- ing Company Voting Securities prior to the sale or disposition, and (C) at least a major- ity of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execu- tion of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company. DATED the day and year first above written. FLEMING COMPANIES, INC., an Oklahoma corporation By Craig A. Grant Senior Vice President - Organizational Strategies and Management Development "COMPANY" ___________________________ "PARTICIPANT" EXHIBIT "B" Description of Optional Forms of Payment OPTION 1 - Life of Participant Only: A Past Service Benefit will be paid for the Participant's life only. Upon the Participant's death, all payments of Past Service Benefit shall cease. OPTION 2 - 50% Joint Annuitant Survivor Benefit: A reduced amount of Past Service Benefit will be paid to Participant for the Participant's life, then, at the Participant's death 50% of such amount shall be paid to the Partici- pant's surviving Beneficiary. In the event that the Participant's surviving Beneficiary has predeceas- ed Participant, or should otherwise die after the Participant's death, then no further payments will be paid under OPTION 2 or this Agree- ment. OPTION 3 - 75% Joint Annuitant Survivor Benefit: A reduced amount of Past Service Benefit will be paid to Participant for the Participant's life, then, at the Participant's death 75% of such amount shall be paid to the Partici- pant's surviving Beneficiary. In the event that the Participant's surviving Beneficiary has predeceased Participant, or should other- wise die after the Participant's death, then no further payments will be due under OPTION 3 or this Agreement. OPTION 4 - 100% Joint Annuitant Survivor Benefit: A reduced amount of Past Service Benefit will be paid to Participant for the Participant's life, then, at the Participant's death 100% of such amount shall be paid to the Parti- cipant's surviving Beneficiary. In the event that the Participant's surviving Beneficiary has predecea- sed Participant, or should otherwise die after the Participant's death, then no further payments will be due under OPTION 4 or this Agreement. OPTION 5 - 5 Year Period Certain: A reduced amount of Past Service Benefit will be paid for a period of 5 years certain. After the expira- tion of such 5 year period, payments shall then continue for the Participant's life in the same amount. In the event of the Partic- ipant's death during the 5 year period certain, then, the balance of such payments due only during such 5 year period will be paid to the Participant's surviving Beneficiary. After the expiration of such 5 year period, then all payments shall cease. In the event of the expiration of such 5 year period, and Participant die, then, no fur- ther benefits will be paid under OPTION 5 or this Agreement. OPTION 6 - 10 Year Period Certain: A reduced amount of Past Service Benefit shall be paid for a period of 10 years certain. After the expiration of such 10 year period, payments shall then continue for the Participant's life in the same amount. In the event of the Partic- ipant's death during the 10 year period certain, then, the balance of such payments due only during such 10 year period will be paid to the Participant's surviving Beneficiary. After the expiration of such 10 year period, then all payments shall cease. In the event of the expiration of such 10 year period, and Participant die, then, no fur- ther benefits will be paid under OPTION 6 or this Agreement. OPTION 7 - 15 Year Period Certain: A reduced amount of Past Service Benefit shall be paid for a period of 15 years certain. After the expiration of such 15 year period, payments shall then continue for the Participant's life in the same amount. In the event of the Partic- ipant's death during the 15 year period certain, then, the balance of such payments due only during such 15 year period will be paid to the Participant's surviving Beneficiary. After the expiration of such 15 year period, then all payments shall cease. In the event of the expiration of such 15 year period, and Participant die, then, no fur- ther benefits will be paid under OPTION 7 or this Agreement. EX-10.31 4 AMENDED AND RESTATED AGREEMENT FOR EXECUTIVE DEFERRED COMPENSATION PLAN THIS AMENDED AND RESTATED AGREEMENT FOR FLEMING COMPANIES, INC. EXECUTIVE DEFERRED COMPENSATION PLAN is made as of the 18th day of August, 1998 by and between __________, an indi- vidual (herein referred to as the "Participant") and FLEMING COMPANIES, INC. (the "Company") with respect to the following: WHEREAS, the Company has adopted that certain non-qualified deferred compensation plan known as "Fleming Companies, Inc. Executive Deferred Compensation Plan" (the "Plan") which is an "excess plan" providing for benefits to the Participants in the Plan in excess of the limitations on benefits under qualified plans imposed by Sections 415 and/or 401(a)(17) of the Internal Revenue Code of 1986, as amended; and WHEREAS, the Company and the Participant entered into that certain Agreement For Fleming Companies, Inc. Executive Deferred Compensation Plan (the "Original Agreement") to evidence the Participant's participation in the Plan and his agreement to be bound by the terms and provisions of the Plan and the Original Agreement; and WHEREAS, the Company and the Executive desire to amend the Original Agreement by execution of this Amended and Restated Agreement for Fleming Companies, Inc. Executive Deferred Compensa- tion Plan (the "Agreement") which shall serve as an amendment, restatement and continuation of the Original Agreement, as amended by this Agreement. NOW, THEREFORE, in consideration of mutual covenants hereinafter contained, the parties hereto agree as follows. All capitalized words used in this Agreement shall have the same meaning ascribed to such terms in the Plan unless specifically denoted otherwise. 1. Purpose of Plan. The purpose of the Plan and this Agreement is to provide to the Participant, the opportunity to earn supplemental retirement income as provided in the Plan in order to retain the Participant, as a key management Associate, with the Company. Payment of the Supplemental Normal Retirement Income shall be made to the Participant in consideration of future services rendered by the Participant and shall be paid to the Participant or the Participant's Beneficiary as hereinafter provided. A copy of the Plan is attached hereto as Exhibit "A," and is incorporated by reference herein and made a part hereof for all purposes and when taken with this Agreement, shall govern the Participant's rights and those of the Company with respect to the Participant's benefits under the Plan. 2. Calculation and Manner of Payment of Supplemental Normal Retirement Income. (a) General. The Participant is also a participant in the Qualified Plan sponsored by the Company. Further, the Participant have also earned a benefit in the form of a Normal Retirement Income pursuant to the terms of the Qualified Plan as of the Effective Date or a date subsequent thereto. The Participant's Supplemental Normal Retirement Income will equal the difference between the Participant's Qualified Plan Benefit and the benefit which would otherwise be provided to the Participant under the Qualified Plan without considering the limitations imposed by Internal Revenue Service under Section 415 and/or 401(a)(17) of the Code which limits the amount of compensation which may be consid- ered for calculation of benefits under the Qualified Plan. An example of the calculation of the calculation of a Supplemental Normal Retirement Income under the Plan is described on Exhibit "B" attached hereto. (b) Manner of Payment of Supplemental Normal Retirement Income. As of the date of this Agreement, the Partici- pant must elect the form under which his Supplemental Normal Retirement Income will be paid in the future following the Partici- pant's termination of employment under the terms of the Plan. Please check the form in which the Participant's Supplemental Normal Retirement Income will be paid in the box provided below: (Please Check and Initial One Box Only) Optional Forms of Payment 1. [ ] Life of Participant Only 2. [ ] 50% Joint Annuitant Survivor Benefit 3. [ ] 75% Joint Annuitant Survivor Benefit 4. [ ] 100% Joint Annuitant Survivor Benefit 5. [ ] 5 Year Period Certain 6. [ ] 10 Year Period Certain 7. [ ] 15 Year Period Certain The actual amounts payable at retirement or death will depend upon the Participant's age and/or the age of his Beneficiary and form of payment elected by the Participant. With the consent of the Committee, and if requested by the Participant or his Beneficiary in the case of the Participant's death, the Participant or his Beneficiary may request that the Participant's Supplemental Normal Retirement Income be paid in any of the optional forms described above. See Section 10.1 of the Plan. Further, in the event that a Participant has elected to receive his Supplemental Normal Retirement Income for the "Life of Participant Only" (Option 1) and such Participant dies, before payment of such benefit would other- wise commence in accordance with the terms of the Plan, then, such deceased Participant's Beneficiary shall be automatically paid a "survivor benefit" in the form of a "50% Joint Annuitant Survivor Benefit" (Option 2). Refer to Exhibit "C" for a complete Descrip- tion of Payment. 3. Commencement of Supplemental Retirement Income. Subject to the provisions of Section 9.2 of the Plan with respect to termination following a Change of Control, based upon the manner of payment elected by the Participant for payment of the Partici- pant's Supplemental Normal Retirement Income, payments shall commence as of the Participant's Early Retirement Date, Normal Retirement Date, Disability Retirement Date, Postponed Retirement Date, or date of death, as the case may be, and will continue to be paid in accordance with the form of payment elected by the Partici- pant. 4. Amendment or Termination. This Agreement may be amended, altered or terminated by the Company from time to time upon notice to the Participant as provided in paragraph 13 below; provided, however, this Agreement may not be amended, modified, or altered or terminated in any manner which adversely affects the Participant's Supplemental Normal Retirement Income earned as of the date of amendment or termination, as the case may be, without the consent of the Participant. Further, in such event of termina- tion, the Participant's Supplemental Normal Retirement Income earned as of such date will be paid pursuant to the Plan. 5. Expenses. The expenses of administering this Agreement shall be borne by the Company and shall not be charged against the Participant's Supplemental Normal Retirement Income. 6. Applicable Law. The provisions of this Agreement shall be construed, administered and enforced according to the laws of the State of Oklahoma. 7. No Assignability. Neither the Participant, his Beneficiary, nor any other person shall acquire any right to or interest in any Supplemental Normal Retirement Income and accruals thereon, otherwise than by actual payment in accordance with the provisions of this Agreement, or have any power to transfer, assign, anticipate, pledge, mortgage or otherwise encumber or alienate any rights hereunder in advance of any of the payments to be made pursuant to the Agreement or any portion thereof which is expressly declared to be nonassignable and nontransferable. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. 8. Agreement Does Not Guarantee Continued Employment of Participant. The execution of this Agreement by the Company and the Participant, in no way whatsoever guarantees the continuation of employment of the Participant with the Company. 9. Withholding. The Company and the Participant shall comply with all federal and state laws and regulations respecting the withholding, deposit and payment of any income, employment or other taxes relating to any payments or rights to payments under this Agreement. 10. Designation of Beneficiary. (a) The Participant, as the Participant, hereby designate the following individual as his Beneficiary to receive any Supplemental Death Benefit (including any benefit to be paid to such Beneficiary as the surviving "joint annuitant" pursuant to Section 2(b) hereof) payable to the Participant under this Agreement or the Plan in the event of the Participant's death: Name Address Relationship ___________ ___________________________ _____________ ___________________________ (b) The Participant understand that during his lifetime, the Participant may at any time change the Beneficiary designated herein by delivering to the Committee a new designation of a Beneficiary, executed by the Participant and the Committee. If the Participant desires to change a beneficiary designation, please contact the Senior Vice President, Human Resources for a new beneficiary designation form. 11. Relationship Between Agreement and Plan. This Agreement has been entered into by and between the Company and the Participant in accordance with and pursuant to authority granted to the Committee pursuant to the terms and provisions of the Plan. Except for the definition of the term "Change of Control" which shall be governed by Section 17 of this Agreement and not by Section 9.2 of the Plan, in the event that there develops a conflict between this Agreement and the terms and provisions of the Plan, the terms and provisions of the Plan, as interpreted by the Committee in its sole discretion, shall control and be final and conclusive. 12. Limitation on Payment of Benefits. The payment of the Supplemental Normal Retirement Income as provided in this Agreement shall accrue and be payable to the Participant or his Beneficiary, as the case may be, only at such times and upon the occurrence of such conditions as heretofore described. In no event whatsoever shall the Participant or the Participant's Beneficiary have any right, claim, or interest of any kind whatsoever in any future payments of such Supplemental Normal Retirement Income and such payments shall accrue and be payable only on a monthly basis as provided hereinabove. In no event may the Participant or the Participant's Beneficiary be entitled to receive a lump sum payment or other sum approximating the right to receive any future payments of Supplemental Normal Retirement Income hereunder. 13. Notices. All notices that are required or may be given pursuant to this Agreement must be in writing and delivered personally, by a recognized courier service, by a recognized overnight delivery service, by facsimile or by registered or certified mail, postage prepaid, to the parties at the following addresses (or to the attention of such other person or such other address as either party may provide to the other party by notice in accordance with this paragraph 13: if to the Company: Fleming Companies, Inc. 6301 Waterford Boulevard Oklahoma City OK 73126 Attn: Craig A. Grant Senior Vice President - Organizational Strategies and Management Development Facsimile: (405) 840-7226 if to the Participant: ______________________________ ______________________________ ______________________________ 14. Agreement Supersedes All Other Benefits and Release of Claims. Effective as of the date of the execution and delivery of this Agreement, this Agreement shall supersede and replace any and all other agreements entered into by and between the Company or any Subsidiary and the Participant with respect to the providing of supplemental retirement benefits on a nonqualified basis pursuant to the Prior Plan which was terminated by the Company effective November 1, 1997. The Participant agrees that as of the date of termination of the Prior Plan, the Participant was not entitled to any benefit under the Prior Plan and any rights or interest in the Prior Plan were subject to total forfeiture as of November 1, 1997. Further, recognizing that the Participant has been selected by the Committee to participate in this Plan and the Fleming Companies, Inc. Executive Past Service Benefit Plan, both of which may provide substantial benefits to the Participant, the Participant hereby releases the Company, its officers, directors, agents and assigns from any and all obligations under the Prior Plan and agrees that the Participant will not bring any action, claim or demand of any kind whatsoever with respect to any benefits to which the Partici- pant would have otherwise been entitled had the Participant continued participating in the Prior Plan. 15. Benefit Subject to Claims of Creditors. The Participant and his Beneficiary shall not have any interest in any particular assets of the Company, its parent, if applicable, or any Subsidiary by reason of the right to receive a benefit under the Plan or this Agreement, and the Participant and his Beneficiary or any other person shall have only the rights of a general unsecured creditor of the Company, its parent, if applicable, or a Subsidiary with respect to any rights under the Plan or this Agreement. 16. Effective Date. This Agreement shall be effective from and after the day and year first above written. 17. Change of Control. Notwithstanding the language of Section 9.2 of the Plan, for purposes of this Agreement and this Participant, the term "Change of Control" shall have the meaning set forth in this Section 17 and not in Section 9.2 of the Plan. Except for the definition of the term Change of Control, all other provisions of Section 9.2 of the Plan shall be applicable to this Participant. For purposes of this Agreement and this Participant, the term Change of Control shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Ex- change Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agree- ment, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acqui- sition by any corporation pursuant to a trans- action which complies with clauses (x), (y), and (z) of subsection (iii) of this Section 17; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a direc- tor subsequent to the date hereof whose elec- tion, appointment or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Approval by the shareholders of the Company of a reorganization, share ex- change, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substan- tially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immedi- ately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstand- ing shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transac- tion will own the Company through one or more subsidiaries) in substantially the same pro- portions as their ownership, immediately prior to such Business Combination of the Outstand- ing Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combi- nation, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combi- nation; or (iv) Approval by the shareholders of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then out- standing voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Out- standing Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantial- ly the same proportion as their ownership, immediately prior to such sale or other dispo- sition, of the Outstanding Company Common Stock and Outstanding Company Voting Securi- ties, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indi- rectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstand- ing Company Voting Securities prior to the sale or disposition, and (C) at least a major- ity of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execu- tion of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Compa- ny." DATED the day and year first above written. FLEMING COMPANIES, INC., an Oklahoma corporation By Craig A. Grant Senior Vice President - Organizational Strategies and Management Development "COMPANY" ----------------------------------------- ----------------------------- "PARTICIPANT" EXHIBIT "B" EXAMPLE OF CALCULATION OF SUPPLEMENTAL NORMAL RETIREMENT INCOME ASSUMING RETIREMENT AT AGE 65 $225,000 Retirement Income (Annual)* Using Qualified Plan formula without IRS limitations Less: Qualified Plan Benefit (Annual) $125,000 -------- Supplemental Norman Retirement Income (Annual) payable at 65 $100,000 ======== * This calculation is only an example of how a Supplemental Retirement Income will be calculated, and does not represent the benefit which the Participant would be entitled under the Plan. EXHIBIT "C" Description of Optional Forms of Payment OPTION 1 - Life of Participant Only: A Supplemental Normal Retirement Income will be paid for the Partici- pant's life only. Upon the Partici- pant's death, all payments of Sup- plemental Normal Retirement Income shall cease. OPTION 2 - 50% Joint Annuitant Survivor Benefit: A reduced amount of Supplemental Normal Retirement Income will be paid to the Participant for the Participant's life, then, at the Participant's death 50% of such amount shall be paid to the Partici- pant's surviving Beneficiary. In the event that the Participant's surviving Beneficiary has predeceased the Participant, or should otherwise die after the Participant's death, then no further pay- ments will be paid under OPTION 2 or this Agreement. OPTION 3 - 75% Joint Annuitant Survivor Benefit: A reduced amount of Supplemental Normal Retirement Income will be paid to the Participant for the Participant's life, then, at the Participant's death 75% of such amount shall be paid to the Partici- pant's surviving Beneficiary. In the event that the Participant's surviving Beneficiary has predeceased the Participant, or should otherwise die after the Participant's death, then no further pay- ments will be due under OPTION 3 or this Agreement. OPTION 4 - 100% Joint Annuitant Survivor Benefit: A reduced amount of Supplemental Normal Retirement Income will be paid to the Participant for the Participant's life, then, at the Participant's death 100% of such amount shall be paid to the Parti- cipant's surviving Beneficiary. In the event that the Participant's surviving Beneficiary has predeceased the Participant, or should otherwise die after the Participant's death, then no further pay- ments will be due under OPTION 4 or this Agreement. OPTION 5 - 5 Year Period Certain: A reduced amount of Supplemental Normal Retirement Income will be paid for a period of 5 years cer- tain. After the expiration of such 5 year period, payments shall then continue for the Participant's life in the same amount. In the event of the Participant's death during the 5 year period certain, then, the bal- ance of such payments due only dur- ing such 5 year period will be paid to the Participant's surviving Bene- ficiary. After the expiration of such 5 year period, then all pay- ments shall cease. In the event of the expiration of such 5 year period, and the Participant dies, then, no further benefits will be paid under OPTION 5 or this Agree- ment. OPTION 6 - 10 Year Period Certain: A reduced amount of Supplemental Normal Retirement Income shall be paid for a period of 10 years cer- tain. After the expiration of such 10 year period, payments shall then continue for the Participant's life in the same amount. In the event of the Participant's death during the 10 year period certain, then, the balance of such payments due only during such 10 year period will be paid to the Participant's surviving Beneficiary. After the expiration of such 10 year period, then all payments shall cease. In the event of the expiration of such 10 year period, and the Participant dies, then, no further benefits will be paid under OPTION 6 or this Agree- ment. OPTION 7 - 15 Year Period Certain: A reduced amount of Supplemental Normal Retirement Income shall be paid for a period of 15 years cer- tain. After the expiration of such 15 year period, payments shall then continue for the Participant's life in the same amount. In the event of the Participant's death during the 15 year period certain, then, the balance of such payments due only during such 15 year period will be paid to the Participant's surviving Beneficiary. After the expiration of such 15 year period, then all payments shall cease. In the event of the expiration of such 15 year period, and the Participant dies, then, no further benefits will be paid under OPTION 7 or this Agree- ment. EX-10.32 5 AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT INCOME AGREEMENT THIS AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT INCOME AGREEMENT by and between FLEMING COMPANIES, INC., an Oklahoma corporation (the "Company") and WILLIAM J. DOWD, an individual (the "Executive") dated this 18th day of August, 1998 (the "Agreement"). WITNESSETH: WHEREAS, the Executive has previously executed that certain Offer For Compensation dated July 7, 1995 (the "Offer") which provided the Executive a "supplemental retirement income" (the "Prior Benefit") in addition to other benefits; and WHEREAS, subsequent to the Offer, the Company selected the Executive to be a participant in that certain nonqualified retirement plan entitled "Supplemental Retirement Income Plan of Fleming Companies, Inc. and Its Subsidiaries" (the "Prior Plan"); and WHEREAS, the Company and the Executive never executed an agreement to evidence the participation of the Executive in the Prior Plan; and WHEREAS, the Executive and the Company cancelled that portion of the Offer which provided for the Prior Benefit upon the execution of that certain Supplemental Retirement Income Agreement dated February 25, 1997 (the "Original Agreement") and WHEREAS, the Company provided a "supplemental retirement income" pursuant to the terms of the Original Agreement; and WHEREAS, the Company and the Executive executed that certain First Amendment to the Supplemental Retirement Income Agreement on February 23, 1998 (the "First Amendment"); and WHEREAS, the Company and the Executive desire to further amend the Original Agreement by execution of this Amended and Restated Supplemental Retirement Income Agreement (the "Agreement") which shall serve as an amendment, restatement and continuation of the Original Agreement, as amended by the First Amendment and this Agreement. NOW, THEREFORE, in consideration of the covenants, provisions and other valuable consideration, the receipt of which is hereby acknowledged by the Executive, the parties hereto agree as follows: 1. Supplemental Retirement Income and Cancellation of Prior Benefit. (a) Supplemental Retirement Income. The Executive shall be entitled to receive annual supplemental retirement income (the "Supplemental Retirement Income") upon his termination from the employ of the Company or any subsidiary (the "Subsidiary") of which the Company owns 80% or more of the outstanding voting common stock, provided, he remains continuously employed as of the following applicable dates: Vested Attained Date Annual Supplemental Year of Employment Retirement Income After year 1 7/24/1996 -0- 2 7/24/1997 -0- 3 7/24/1998 -0- 4 7/24/1999 -0- 5 7/24/2000 $81,000 6 7/24/2001 92,570 7 7/24/2002 104,140 8 7/24/2003 115,710 9 7/24/2004 127,280 10 7/24/2005 138,850 11 7/24/2006 150,420 12 7/24/2007 162,000 Further, in the event that the Executive terminates employment between any of the applicable required attained dates of employ- ment, the Executive's Supplemental Retirement Income will be interpolated by subtracting the most recent vested amount of Supplemental Retirement Income from the next vested amount of Supplemental Retirement Income, dividing such difference by 12 and multiplying the quotient by the number of completed whole months of employment between the last attained date of employment and the date of termination of employment of the Executive. For example, if the Executive terminates employment with the Company or a Subsidiary on October 15th, 2000, then, the Execu- tive's Supplemental Retirement Income would equal $82,928.32 calculated as follows: Supplemental Retirement Income at 7/24/2001: $92,570 Supplemental Retirement Income at 7/24/2000 = $81,000 ------- Difference 11,570 Divided by 12 = $964.17 Completed months of service from 7/24/2000-10/15/2000 x 2 Additional Supplemental Retirement Income $1,928.34 Vested Supplemental Retirement Income at 7/24/2000 81,000.00 --------- Total Supplemental Retirement Income $82,928.34 ========== (b) Cancellation of Prior Benefit. In consideration of the Supplemental Retirement Income provided in this Agreement, the Prior Benefit is hereby cancelled and rescinded in all respects. Except to the extent that the Offer has been amended to delete the Prior Benefit, the Offer shall continue in accordance with its terms. 2. Manner of Payment of Supplemental Retirement Income. The Supplemental Retirement Income will be paid to the Executive and his designated beneficiary (the "Beneficiary"), if applicable, in the manner elected below: (Check and initial One Box Only) Methods of Payment Option 1. [ ] Life of Executive Only (Single Life Basis) Option 2. [ ] 50% Joint Annuitant Survivor Benefit Option 3. [ ] 75% Joint Annuitant Survivor Benefit Option 4. [X] 100% Joint Annuitant Survivor Benefit Option 5. [ ] 5 Year Period Certain Option 6. [ ] 10 Year Period Certain Option 7. [ ] 15 Year Period Certain The actual amounts payable to the Executive will depend upon the date that the Executive terminates employment. The Supplemental Retirement Income will be paid at least quarterly as determined by the Compensation and Organization Committee (the "Committee") of the Company. If no election is made, the benefit will automat- ically be paid on a "single life basis" under Option 1, above. Refer to Exhibit "A" for a complete description of the Methods of Payment. Provided, notwithstanding that the Executive has elected the optional form of benefit as provided in this Section 2, at any time prior to the date the payment of the Executive's Supplemental Retirement Income commences, the Executive (or his Beneficiary in the case of death) may make a written request to the Committee that his Supplemental Retirement Income be paid in any of the optional forms of payment described above or in the form of a single lump sum payment, and, if the Committee approves such request consid- ering all relevant facts and circumstances, payment may be made in one of such optional forms of payment or in a lump sum. The deci- sion to make payment in one of the optional forms of payment or in a lump sum shall be made in the Committee's sole discretion and its decision shall be final and conclusive. 3. Termination of Employment. (a) Termination Prior to July 24, 2000. In the event that the Executive terminates employment for any reason prior to July 24, 2000, then, except as provided in Section (b) below, the Executive shall have no rights of any kind whatsoever in the Supplemental Retirement Income (or any other benefit) otherwise paid pursuant to this Agreement. (b) Acceleration of Accrual of Supplemental Retirement Income Upon Change of Control. In the event that there is a "change of control" ("Change of Control") as such term is defined in Section 3(c) of this Agreement, and within three years following such Change of Control, the Executive's employment is terminated for any reason by either the Company or the Executive, the Executive shall be entitled to his Supplemental Retirement Income earned by such Executive as of his date of termination of employment but in no event will the amount be less than the benefit which the Executive would have been entitled to if the Executive remained in the continuous employ of the Company until July 24, 2000 ($81,000 paid annually on a single life basis), with such Supplemental Retirement Income to be paid beginning immediately upon the termination of employment. (c) Change of Control. For purposes of this Agreement, a "Change of Control" shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Ex- change Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, how- ever, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agree- ment, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acqui- sition by any corporation pursuant to a trans- action which complies with clauses (x), (y), and (z) of subsection (iii) of this Section 3(c); or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; pro- vided, however, that any individual becoming a director subsequent to the date hereof whose election, appointment or nomination for elec- tion by the Company's shareholders, was approved by a vote of at least a majority of the directors then com- prising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such indi- vidual whose initial assumption of office occurs as a result of an actual or threatened election con- test with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Approval by the share- holders of the Company of a reorga- nization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Busi- ness Combination, (x) all or sub- stantially all of the individuals and entities who were the beneficial owners, respectively, of the Out- standing Company Common Stock and Outstanding Company Voting Securi- ties immediately prior to such Busi- ness Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (in- cluding, without limitation, a cor- poration which as a result of such transaction will own the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combi- nation) will beneficially own, di- rectly or indirectly, 20% or more of, respectively, the then outstand- ing shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corpora- tion except to the extent that such ownership existed prior to the Busi- ness Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combi- nation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, pro- viding for such Business Combina- tion; or (iv) Approval by the share- holders of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substan- tially all of the assets of the Company, other than to a corpora- tion, with respect to which follow- ing such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of com- mon stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of direc- tors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Out- standing Company Common Stock and Outstanding Company Voting Securi- ties immediately prior to such sale or other disposition in substantial- ly the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securi- ties, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corpora- tion entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or relat- ed trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incum- bent Board at the time of the execu- tion of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company. 4. Restrictions on Alienation of Benefits. No right or benefit under this Agreement shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If the Executive or Beneficiary under this Agreement should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any right to a benefit under this Agreement, then such right or benefit shall, in the discretion of the Committee, be held or applied for the benefit of the Executive or Beneficiary, his spouse, children, or other depen- dents, or any of them, in such manner and in such portion as the Committee, in its sole and absolute discretion, may deem proper. 5. No Trust. No action under this Agreement by the Company, its Board of Directors or the Committee shall be construed as creating a trust, escrow or other secured or segregated fund in favor of the Executive, his Beneficiary, or any other persons otherwise entitled to his Supplemental Retirement Income. The status of the Executive and his Beneficiary with respect to any liabilities assumed by the Company hereunder shall be solely those of unsecured creditors of the Company and/or any Subsidiary. Any asset acquired or held by the Company or any Subsidiary in connection with liabilities assumed by it hereunder, shall not be deemed to be held under any trust, escrow or other secured or segregated fund for the benefit of the Executive or his Benefici- aries or to be security for the performance of the obligations of the Company or any Subsidiary, but shall be, and remain a general, unpledged, unrestricted asset of the Company or any Subsidiary at all times subject to the claims of general creditors of the Company or any Subsidiary. 6. Withholding and Other Employment Taxes. The Company shall comply with all federal and state laws and regulations respecting the withholding, deposit and payment of any income or other taxes relating to any payments made under this Agreement. 7. Claims Procedure. (a) The Committee shall make all determinations as to the right of any person to benefits. If any request for a benefit is wholly or partially denied, the Committee shall notify the person requesting the pension benefits, in writing, of such denial, including in such notification the following information: (b) the specific reason or reasons for such denial; (c) the specific references to the pertinent Agreement provisions upon which the denial is based; (d) a description of any additional material and information which may be needed to clarify the request, including an explanation of why such information is required; and (e) an examination of this Agreement's review procedure with respect to denial of benefits. Provided, that any such notice to be delivered to any Executive or Beneficiary shall be mailed by certified or registered mail and shall be written to the best of the Committee's ability in a manner that may be understood without legal counsel. 8. Review Procedure. The Executive or Beneficiary whose claim has been denied in accordance with Section 7 herein may appeal to the Committee for review of such denial by making a written request therefor within 60 days of receipt of the notifica- tion of such denial. The Executive or Beneficiary may examine documents pertinent to the review and may submit to the Committee written issues and comments. Within 60 days after receipt of the request for review, the Committee shall communicate to the claimant, in writing, its decision, and the communication shall set forth the reason or reasons for the decision and specific reference to those Agreement provisions upon which the decision is based. 9. Records and Reports. The Committee shall exercise such authority and responsibility as it deems appropriate in order to comply with governmental regulations relating to records of the Executive's accounts and benefits which may be paid under the Agreement; and to notify the Executive and Beneficiaries as required. 10. Other Committee Powers and Duties. The Committee shall have such duties and powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following: (a) to construe and interpret the Agreement in its sole and absolute discretion, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder; (b) to prescribe procedures to be followed by the Executive or Beneficiary filing applications for bene- fits; (c) to prepare and distribute, in such manner as the Committee determines to be appropriate, information explaining the Agreement; (d) to receive from the Company and from the Execu- tive and Beneficiaries such information as shall be necessary for the proper administration of the Agreement; (e) to furnish the Company, upon request, such reports with respect to the administration of the Agreement as are reasonable and appropriate; (f) to appoint and employ individuals and any other agents it deems advisable, including legal counsel, to assist in the administration of the Agreement and to render advice with respect to any responsibility of the Committee, or any of its individual members, under the Agreement; (g) to allocate among themselves who shall be responsible for specific duties and to designate fiduci- aries (other than Committee members) to carry out responsibilities under the Agreement; provided that any such allocations shall be reduced to writing, signed by all Committee members, and filed in a permanent Committee minute book; and (h) to maintain continuing review of applicable laws, implementing regulations thereto and suggest changes and modifications to the Company in connection with delegations of responsibility, as appropriate, and amendments to the Agreement. 11. Rules and Decisions. The Committee may adopt such rules as it deems necessary, desirable, or appropriate. When making a determination or calculation, the Committee shall be entitled to rely upon information furnished by a Executive or Beneficiary, the Company or the legal counsel of the Company. 12. Committee Procedures. The Committee may act at a meeting or in writing without a meeting. The Committee shall have a chairman, and appoint a secretary, who may or may not be a Committee member. The secretary shall keep a record of all meetings in a permanent Committee minute book and forward all necessary communications to the Company. The Committee may adopt such bylaws and regulations as it deems desirable for the conduct of its affairs. All decisions of the Committee shall be made by the vote of the majority including actions in writing taken without a meeting. A dissenting Committee member who, within a reasonable time after he has knowledge of any action or failure to act by the majority, registers his dissent in writing delivered to the other Committee members, to the extent permitted by law, shall not be responsible for any such action or failure to act. 13. Assumption of Agreement. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform the Company's and any Subsidiary's obligations under this Agreement in the same manner and to the same extent that the Company or such Subsidiary would be required to perform if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any succes- sion shall be a breach by the Company of its obligations under this Agreement and shall entitle the Executive to payment from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive's employment was terminated immediately following a Change of Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date of termination of employment. 14. Forfeiture of All Benefits. In the event that (i) the Executive is discharged from employment service with the Company for acts of dishonesty, fraud, theft, embezzlement, (ii) upon the conviction by a court of competent jurisdiction of a crime that is deemed to be a felony under the laws of the State of Oklahoma (or any other state) or laws of the United States, or (iii) in the event the Executive commits any other act or acts which are injurious and adversely impacts the Company in any manner whatsoever, then, in such events, the Committee, in its sole discretion, may determine that any benefit which would otherwise be provided to the Executive under the Agreement or the Agreement shall be forfeited in its entirety, and it shall thereafter be deemed as if the Executive never was selected for participation in the Agreement. 15. Minimum Benefit. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company selects and the Executive agrees to be a participant in the Prior Plan or any successor thereto, then, the Supplemental Retirement Income accrued under this Agreement shall be the minimum benefits to be provided to the Executive under such Prior Plan. 16. Miscellaneous. 16.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma, without reference to principles of conflict of laws. 16.2 Headings. The captions of this Agreement are not part of the provisions hereof and shall have no force and effect. 16.3 Taxes. The Executive acknowledges that the payments and benefits to which he is entitled to under this Agreement will be includable in his taxable income. Accordingly, Executive agrees (i) to pay all required income, employment and other taxes attributable to such payments and benefits and (ii) that the Company may be required to withhold all applicable taxes from such payments and benefits. 16.4 Amendment. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective heirs, successors, assigns or the legal representatives, as the case may be. 16.5 Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to Executive: William J. Dowd 18701 Woody Creek Drive Oklahoma City, Oklahoma 73003 If to the Company: Fleming Companies, Inc. 6301 Waterford Boulevard P.O. Box 26647 Oklahoma City, Oklahoma 73126 Attention: Craig A. Grant, Senior Vice President - Organizational Strategies and Management Development or such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communica- tions shall be effective when actually received by the addressee. 16.6 Severability. The invalidity or enforce- ability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agree- ment. 16.7 No Waiver. The Company's or the Executive's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision hereof. 16.8 Entire Agreement. This Agreement contains the entire understanding of the Company and Executive with respect to the subject matter hereof. 16.9 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the Company, Executive, their respective heirs, successors, assigns or legal representatives, as the case may be. IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. EXECUTED the date and year first above written. FLEMING COMPANIES, INC., a corpo- ration By: Craig A. Grant Senior Vice President - Organizational Strategies and Management Development "COMPANY" William J. Dowd "EXECUTIVE" EXHIBIT "A" Description of Methods of Payment METHOD 1 - Life of Participant Only: A Supplemental Retirement Income will be paid for the Executive's life only. Upon the Executive's death, all payments of Supplemen- tal Normal Retirement Income shall cease. METHOD 2 - 50% Joint Annuitant Survivor Benefit: A reduced amount of Supplemental Retirement Income will be paid to the Executive for his life, then, at the Executive's death 50% of such amount shall be paid to the Executive's surviving Bene- ficiary. In the event that the Executive's surviving Beneficiary has predeceased him, or should otherwise die after the Execu- tive's death, then no further payments will be paid under Method 2 or this Agreement. METHOD 3 - 75% Joint Annuitant Survivor Benefit: A reduced amount of Supplemental Retirement Income will be paid to the Executive for his life, then, at the Executive's death 75% of such amount shall be paid to the Executive's surviving Beneficiary. In the event that the Executive's surviving Beneficiary has predeceased him, or should otherwise die after the Execu- tive's death, then no further payments will be due under Method 3 or this Agreement. METHOD 4 - 100% Joint Annuitant Survivor Benefit: A reduced amount of Supplemental Retirement Income will be paid to the Executive for his life, then, at the Executive's death 100% of such amount shall be paid to the Executive's surviving Bene- ficiary. In the event that the Executive's surviving Beneficiary has predeceased him, or should otherwise die after the Execu- tive's death, then no further payments will be due under Method 4 or this Agreement. METHOD 5 - 5 Year Period Certain: A reduced amount of Supplemental Retirement Income will be paid for a period of 5 years certain. After the expiration of such 5 year period, payments shall then continue for the Executive's life in the same amount. In the event of the Executive's death during the 5 year period certain, then, the balance of such payments due only during such 5 year period will be paid to the Executive's surviving Beneficiary. After the expiration of such 5 year period, then all payments shall cease. In the event of the expiration of such 5 year period, and the Executive dies, then, no further benefits will be paid under METHOD 5 or this Agreement. METHOD 6 - 10 Year Period Certain: A reduced amount of Supplemental Retirement Income shall be paid for a period of 10 years certain. After the expiration of such 10 year period, payments shall then continue for the Executive's life in the same amount. In the event of the Executive's death during the 10 year period certain, then, the balance of such payments due only during such 10 year period will be paid to the Executive's surviving Beneficiary. After the expiration of such 10 year period, then all payments shall cease. In the event of the expiration of such 10 year period, and the Executive dies, then, no further benefits will be paid under METHOD 6 or this Agreement. METHOD 7 - 15 Year Period Certain: A reduced amount of Supplemental Retirement Income shall be paid for a period of 15 years certain. After the expiration of such 15 year period, payments shall then continue for the Executive's life in the same amount. In the event of the Executive's death during the 15 year period certain, then, the balance of such payments due only during such 15 year period will be paid to the Executive's surviving Beneficiary. After the expiration of such 15 year period, then all payments shall cease. In the event of the expiration of such 15 year period, and the Executive dies, then, no further benefits will be paid under METHOD 7 or this Agreement. EX-10.33 6 1997 AWARD NO. __ FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN _________________________ AMENDED AND RESTATED RESTRICTED STOCK AWARD AGREEMENT 1996 PLAN Participant Name: _______________ Grant Date: November 1, 1997 Shares Subject to Restricted Stock Award: ______ Expiration Date: December 31, 2000 (Amended and Restated as of August 18, 1998) AMENDED AND RESTATED RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN THIS AMENDED AND RESTATED RESTRICTED STOCK AWARD AGREEMENT entered into as of the 18th day of August, 1998, by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and _______________ (herein referred to as the "Participant"); W I T N E S S E T H: WHEREAS, the Participant is a key management employee of the Company; and WHEREAS, the Company desires to encourage the Participant to remain in the employ of the Company in the future; and WHEREAS, the Company has previously adopted the Fleming Companies, Inc. 1996 Stock Incentive Plan and certain amendments thereto (the "Plan"); and WHEREAS, in consideration of the premises and the mutual promises and covenants herein contained, the Company provided the Participant the opportunity to acquire shares of voting common stock of the Company in exchange for the Participant's performing future services for the Company pursuant to that certain Restricted Stock Award Agreement for the Fleming Companies, Inc. 1996 Stock Incentive Plan dated as of November 1, 1997; and WHEREAS, the Company and the Participant desire to amend the Original Agreement by execution of this Amended and Restated Restricted Stock Award Agreement for the Fleming Companies, Inc. 1996 Stock Incentive Plan (the "Agreement") which shall serve as an amendment, restatement and continuation of the Original Agreement as amended by this Agreement; and WHEREAS, the Company has established a trust entitled "Fleming Companies, Inc. Executive Deferred Compensation Trust" (the "Trust") as a device for assisting the Company to meet its obligations under the Plan and other employee benefit plans sponsored by the Company. NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, the Participant and the Company agree as follows (all capitalized terms used herein, unless otherwise defined, have the meaning ascribed to such terms as set forth in the Plan): 1. The Plan. The Plan, a copy of which is attached hereto as Exhibit "A", is hereby incorporated by reference herein and made a part hereof for all purposes, and when taken with this Agreement shall govern the rights of the Participant and the Company with respect to the Award (as defined below). 2. Grant of Award. The Company hereby grants to the Participant an award (the "Award") of ______ shares of Company common stock, par value $____ (the "Stock"), on the terms and conditions set forth herein and in the Plan. 3. Terms of Award. (a) Vesting. Certificates representing the shares of Stock subject to the Award shall be issued in the name of and delivered to Liberty Bank and Trust Company of Oklahoma City, N.A., the trustee of the Trust (the "Trustee"). Subject to the terms of the Plan, the Participant shall become vested in the number of the shares of Stock within the Award in accordance with the vesting schedule attached hereto as Exhibit "B" and incorporated by reference, provided that such Participant has at all times remained in the full-time and continuous employment of the Company through the date of vesting. Except as provided in the Plan, in the event the Partici- pant terminates employment for any reason whatsoever prior to the vesting of all shares of Stock subject to the Award, then, all remaining shares of Stock which have not yet been vested (including dividends paid and held by the Trustee on such shares) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever. (b) Change of Control Event. Notwithstanding any contrary provisions of this Agreement or the Plan, the Company and the Committee have determined that the Participant shall be deemed vested in all remaining shares of Stock subject to the Award which have not yet vested upon the occurrence of a Change of Control Event as such term is defined in this Section 3(b) and not as defined in Section 2.4 of the Plan. For purposes of this Agreement and this Participant the term "Change of Control Event" shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Ex- change Act")) (a "Person") of bene- ficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securi- ties of the Company entitled to vote generally in the election of direc- tors (the "Outstanding Company Vot- ing Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Trigger- ing Percentage shall be automatical- ly reduced to equal the threshold percentages set pursuant to authori- ty granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisi- tion directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation con- trolled by the Company, or (iv) any acquisition by any corporation pur- suant to a transaction which com- plies with clauses (x), (y), and (z) of subsection (iii) of this Section 3(b); or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becom- ing a director subsequent to the date hereof whose election, appoint- ment or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then com- prising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such indi- vidual whose initial assumption of office occurs as a result of an actual or threatened election con- test with respect to the election or removal of directors or other actual or threatened solicitation of prox- ies or consents by or on behalf of a Person other than the Board; or (iii) Approval by the share- holders of the Company of a reorga- nization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Busi- ness Combination, (x) all or sub- stantially all of the individuals and entities who were the beneficial owners, respectively, of the Out- standing Company Common Stock and Outstanding Company Voting Securi- ties immediately prior to such Busi- ness Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (in- cluding, without limitation, a cor- poration which as a result of such transaction will own the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combi- nation) will beneficially own, di- rectly or indirectly, 20% or more of, respectively, the then outstand- ing shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corpora- tion except to the extent that such ownership existed prior to the Busi- ness Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combi- nation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, pro- viding for such Business Combina- tion; or (iv) Approval by the sharehold- ers of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then out- standing shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corpora- tion entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediate- ly prior to such sale or other dis- position in substantially the same proportion as their ownership, imme- diately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such cor- poration and the combined voting power of the then outstanding voting securities of such corporation enti- tled to vote generally in the elec- tion of directors will be benefi- cially owned, directly or indirect- ly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corpo- ration), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securi- ties prior to the sale or disposi- tion, and (C) at least a majority of the members of the board of direc- tors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company. 4. Legends. The shares of Stock which are the subject of the Award shall be subject to the following legend: "THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND ARE TRANSFERRABLE ONLY IN ACCORDANCE WITH THAT CERTAIN RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN DATED THE 1ST DAY OF NOVEMBER, 1997. ANY ATTEMPTED TRANSFER OF THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF SUCH AGREEMENT SHALL BE NULL AND VOID AND WITHOUT EFFECT. A COPY OF THE AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF FLEMING COMPANIES, INC." 5. Automatic Deferral of Vested Shares and Dividends. The Participant agrees that the grant of the Award under this Agreement is subject to the restrictions herein contained and that all shares of Stock subject to the Award and dividends thereon, if any, made under this Agreement shall be automatically and irrevoca- bly delivered directly to the Trustee and shall not be distributed by the Trustee to the Participant until the Participant terminates employment with the Company or a Subsidiary and all the following conditions have been satisfied: (a) The Participant completes at least two years of employment service with the Company or a Subsidiary; (b) The Participant satisfies the "Rule of 70" where the Participant's age plus completed years of employment service with the Company or a Subsidiary equals 70 or more; and (c) The Participant has attained the age of 55 and has earned at least 10 years of employment service with the Company or a Subsidiary. Provided, for purposes of determining a Participant's years of employment service with the Company or a Subsidiary, such service shall be based upon the 12 month period commencing with the Participant's initial date of hire (or date of rehire) with the Company or a Subsidiary and 12 month anniversaries of such date during which time the Participant remains in the continuous full- time employ of the Company or a Subsidiary. For purposes of calculating the years of employment service with the Company or a Subsidiary under Subsections 5(b) and 5(c) above, service will be considered both before and after the date of the Award. For purposes of calculating the years of employment service with the Company or a Subsidiary under Section 5(a) above, service will be considered as commencing on November 1, 1997. With regard to the calculation of years of employment service with respect to any Participant who is hired and then terminated employment and was subsequently rehired by the Company or a Subsidiary, then, the Committee shall make the determination and calculation as to number of completed years of employment service by disregarding the break in employment service considering such periods of employment service to be cumulative, i.e., counting one or more periods of employment. Provided further, notwithstanding the fact that the Participant has not satisfied the foregoing requirements of this Section 5, in the event that the Participant dies, incurs a Disability, or a Change of Control Event occurs as defined in Section 3(b) of this Agreement, then (i) the Award (all shares of Stock) will be automatically fully vested and nonforfeitable and (ii) such vested shares of Stock and dividends attributable to the Award (all shares of Stock) will be distributed by the Trustee to the Participant (or his Beneficiary in the event of his death) within thirty (30) days following the occurrence of the event which would cause distribu- tion of such vested shares of Stock. Provided further, the Committee will make all decisions, in its sole discretion, with regard to whether the requirements for distribution of any Award have been satisfied, and may, in its sole discretion, waive all or any restrictions with respect to any shares of Stock. 6. No Rights in Stock. The Participant agrees that until such vested shares of Stock are distributed to him, he has no rights or interest in such shares as a shareholder of the Company or otherwise, and that such shares shall be held by the Trustee in accordance with the terms of the Trust and shall be voted by the Trustee. Specifically, the Participant hereby waives the right to require the certificate representing the shares of Stock granted under the Award to be in his name and any right to vote such shares of Stock as provided in Section 7.2(c) of the Plan. Further, the Participant has no interest in the Trust of any kind whatsoever. As a condition precedent to issuing a certificate representing the shares of Stock granted under the Award, the Company require and the Participant agrees to deliver to the Trustee a duly executed irrevocable stock power (in blank) covering such shares representing the certificate which will be utilized by the Trustee in the event the Participant terminates employment with the Company or a Subsidiary prior to the time he becomes vested in such shares of Stock, and will be executed by the Trustee transferring such shares of Stock to the Company. 7. Nontransferability of Award. With respect to all shares of Stock held by the Trust which are subject to this Award, and dividends on such Stock held by the Trust, the Participant shall not have the right to sell, assign, transfer, convey, dispose, pledge, hypothecate, burden, encumber or charge shares of Stock held by the Trustee and dividends or any interest therein in any manner whatsoever. 8. Notices. All notices or other communications relating to the Plan and this Agreement as it relates to the Participant shall be in writing, shall be deemed to have been made if personally delivered in return for a receipt, or if mailed, by regular U.S. mail, postage prepaid, by the Company to the Partici- pant at the following address: ______________________________ ______________________________ ______________________________ or such other address as the Participant may advise the Company in writing. The date of personal delivery shall be the date of giving notice, or if made by mail in the manner prescribed above, notice shall be deemed to have been given three (3) business days after the date of mailing. 9. Binding Effect and Governing Law. This Agreement shall be (i) binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns except as may be limited by the Plan and (ii) governed and construed under the laws of the State of Oklahoma. 10. Withholding. The Company and the Participant shall comply with all federal and state laws and regulations respecting the withholding, deposit and payment of any income, employment or other taxes relating to the Award. 11. Award Subject to Claims or Creditors. The Participant shall not have any interest in any particular assets of the Company, its parent, if applicable, or any Subsidiary by reason of the right to earn an Award under the Plan and this Agreement, and the Participant or any other person shall have only the rights of a general unsecured creditor of the Company, its parent, if applicable, or a Subsidiary with respect to any rights under the Plan or this Agreement. 12. Captions. The captions of specific provisions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provision hereof. 13. Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed an original for all purposes, but all of which taken together shall form but one agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. "COMPANY" FLEMING COMPANIES, INC., an Oklahoma corporation By Craig A. Grant Senior Vice President - Organizational Strategies and Management Development "PARTICIPANT" ______________________, Participant 1996 PLAN EXHIBIT "B" VESTING OF RESTRICTED STOCK Restricted Stock shall vest in accordance with the following terms during the "Award Period" which shall commence November 1, 1997 and shall terminate December 31, 2000 if not sooner vested. Shares not fully vested during the Award Period shall be forfeited by the Participant at the end of the Award Period. A. One-half of the number of shares of Stock in the Award will be subject to vesting based upon the Participant's continuous employment with the Company and/or any of its Subsidiaries through the vesting dates set forth on the following table: Vesting Date Number of Shares Vested _______________ _____ _______________ _____ _______________ _____ B. One-half of the number of shares of Stock in the Award will be subject to vesting based upon the Stock of the Company achieving and maintaining for 20 consecutive trading days from and after October 31, 1997, the following Current Market Values: Current Market Value Number of Shares Vested $_____ _____ $_____ _____ $_____ _____ For purposes of this Agreement, "Current Market Value" shall mean the closing price for shares of Stock as reported on the New York Stock Exchange as reflected in the Wall Street Journal Southwest Edition. EX-10.34 7 FLEMING COMPANIES, INC. ______________________________________________________________________________ AMENDED AND RESTATED NON-QUALIFIED STOCK OPTION AGREEMENT (1996 STOCK INCENTIVE PLAN) ______________________________________________________________________________ Name: _______________ Grant Date: _________________ Option Price: $_____ Exercise Date: _________________ - 25% Shares Granted: _____ _________________ - 50% Expiration Date: _________________ _________________ - 75% _________________ - 100% (Amended and Restated as of August 18, 1998) AMENDED AND RESTATED NON-QUALIFIED STOCK OPTION AGREEMENT UNDER THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN THIS AMENDED AND RESTATED NON-QUALIFIED STOCK OPTION AGREEMENT, made as of this 18th day of August, 1998, at Oklahoma City, Oklahoma by and between ______________ (hereinafter referred to as the "Participant", and Fleming Companies, Inc. (hereinafter referred to as the "Company"): W I T N E S S E T H: WHEREAS, the Participant is a key employee of the Company, its parent or any subsidiary of the Company, and it is important to the Company that the Par- ticipant be encouraged to remain in the employ of the Company, its parent or any subsidiary of the Company; and WHEREAS, in recognition of such facts, the Company has provided to the Participant an opportunity to purchase shares of the common stock of the Com- pany, as hereinafter provided, pursuant to the "Fleming Companies, Inc. 1996 Stock Incentive Plan" (the "Plan") and the Company and the Participant have executed that certain Non-Qualified Stock Option Agreement under the Fleming Companies, Inc. 1996 Stock Incentive Plan dated as of February 24, 1997 (the "Original Agreement"); and WHEREAS, the Company and the Participant desire to amend the Original Agreement by execution of this Amended and Restated Non-Qualified Stock Option Agreement under the Fleming Companies, Inc. 1996 Stock Incentive Plan (the "Option Agreement") which shall serve as an amendment, restatement and con- tinuation of the Original Agreement as amended by this Option Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for good and valuable consideration, the Participant and the Com- pany hereby agree as follows: 1. GRANT OF STOCK OPTION. The Company hereby grants to the Participant a non-qualified stock option (the "Stock Option") as described in Sections 83 and 421 of the Internal Revenue Code of 1986 (the "Code") to purchase all or any part of an aggregate of _____ shares of its common stock (the "Stock") of the Company as set forth below, under and subject to the terms and conditions of this Option Agreement and the Plan, which is incorpo- rated herein by reference and made a part hereof for all purposes. The pur- chase price per share for each share of Stock to be purchased hereunder shall be $_____ (the "Option Price"). 2. TIMES OF EXERCISE OF STOCK OPTION. After, and only after, the conditions of Section 9 hereof have been satisfied, the Participant shall be eligible to exercise that portion of his Stock Option pursuant to the schedule set forth hereinafter. If the Participant's employment with the Company (or its parent or of any one or more of the subsidiaries of the Company) remains full-time and continuous at all times to any of the "Exercise Dates" specified hereafter, then the Participant shall be entitled, subject to the applicable provisions of the Plan and this Option Agreement having been satisfied, to exercise on or after the applicable Exercise Date, on a cumulative basis, the number of shares of Stock determined by multiply- ing the aggregate number of shares set forth in the foregoing Section 1 by the designated percentage set forth hereafter. Percent of Stock Exercise Dates Option Exercisable After _________________ 25% After _________________ 50% After _________________ 75% After _________________ 100% 3. TERM OF STOCK OPTION. Except as specifically provided to the contrary in this Option Agreement or in the Plan, with regard to the death of a Participant, no Stock Option shall be exercisable within six months from nor more than ten years after the date of grant (the "Option Period"). Stock Options shall be exercisable only by the Participant while actively employed by the Company or a subsidiary, except that (i) any such Stock Option granted and which is otherwise exercisable, may be exercised by the personal repre- sentative of a deceased Participant within 12 months after the death of such Participant and (ii) if a Participant terminates his employment with the Company or a subsidiary, such Participant may exercise any Stock Option which is otherwise exercisable at any time within three months of such date of termination. If a Participant should die during the applicable three month period following the date of such Participant's termination, the rights of the personal representative of such deceased Participant as such relate to any Stock Options granted to such deceased Participant shall be governed in accordance with this Section 3(i). 4. NONTRANSFERABILITY OF STOCK OPTIONS. Except as otherwise herein provided, any Stock Option granted shall not be transferable other- wise than by will or the laws of descent and distribution, and the Stock Option may be exercised, during the lifetime of the Participant, only by him. More particularly (but without limiting the generality of the foregoing), the Stock Option may not be assigned, transferred (except as provided above), pledged or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to execution, attachment, or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Stock Option contrary to the provisions hereof shall be null and void and without effect. 5. EMPLOYMENT. So long as the Participant shall continue to be a full- time and continuous employee of the Company, its parent or one or more of the subsidiaries of the Company, any Stock Option granted to him shall not be affected by any change of duties or position. Nothing in the Plan or in this Option Agreement shall confer upon the Participant any right to con- tinue in the employ of the Company, its parent or any of the subsidiaries of the Company, or interfere in any way with the right of the Company, its parent or any of the subsidiaries of the Company to terminate such Participant's employment at any time. 6. SPECIAL RULES WITH RESPECT TO STOCK OPTIONS. With respect to Stock Options granted hereunder, the following special rules shall apply: (a) Acceleration of Otherwise Unexercisable Stock Option on Termination of Employment or Death. The Committee, in its sole discretion, may permit (i) a Participant who terminates employment with the Company or a sub- sidiary or (ii) the personal representative of a deceased Participant, to exercise and purchase (within three months of such date of termination of employment or 12 months in the case of a deceased Participant) all or any part of the shares subject to the Stock Option on the date of the Partici- pant's death or termination, notwithstanding that all installments, if any, with respect to such Stock Option, had not accrued on such date. Provided, such discretionary authority of the Committee may not be exercised with respect to any Stock Option (or portion thereof) if the applicable six month waiting period for exercise had not expired except in the event of the death of the Participant when the personal representative of the deceased Participant may, with the consent of the Committee, exercise such Stock Option notwithstanding the fact that the applicable six month waiting period had not yet expired. (b) Number of Stock Options Granted. Participants may be granted more than one Stock Option. In making any such determination, the Committee shall obtain the advice and recommendation of the officers of the Company, its parent, or a subsidiary of the Company which have supervisory authority over such Participants. Further, the granting of a Stock Option under this Option Agreement shall not affect any outstanding Stock Option previously granted to a Participant under the Plan. (c) Payment of Withholding Taxes. Upon the exercise of any Stock Option as provided herein, no such exercise shall be permitted, nor shall any Stock be issued to any Participant until the Company receives full payment for the Stock purchased which shall include any required state and federal with- holding taxes. Further, upon the exercise of any Stock Option the Partici- pant may direct the Company to retain from the shares of Stock to be issued upon exercise of the Stock Option that number of initial shares of Stock (based on fair market value) that would satisfy the requirements for with- holding any amounts due upon the exercise. 7. METHOD OF EXERCISING STOCK OPTION. (a) Procedures for Exercise. The manner of exercising the Stock Option herein granted shall be by written notice to the Company at least two days before the date the Stock Option, or part thereof, is to be exercised, and in any event prior to the expiration of the Option Period. Such notice shall state the election to exercise the Stock Option and the number of shares of Stock with respect to that portion of the Stock Option being exercised, and shall be signed by the person or persons so exercising the Stock Option. The notice shall be accompanied by payment of the full purchase price of such shares, in which event the Company shall deliver a certificate or certificates representing such shares to the person or persons entitled thereto as soon as practicable after the notices shall be received. (b) Form of Payment. Payment for shares of Stock purchased under this Option Agreement shall be made in full and in cash or check made payable to the Company. Provided, payment for shares of Stock purchased under this Option Agreement may also be made in common stock of the Company or a combination of cash and common stock of the Company. In the event that common stock of the Company is utilized in consideration for the purchase of Stock upon the exercise of a Stock Option, then, such common stock shall be valued at the "fair market value" as defined in Section 2.10 of the Plan. In addition to the foregoing procedure which may be available for the exercise of any Stock Option, the Participant may deliver to the Company a notice of exercise including an irrevocable instruction to the Company to deliver the stock certificate representing the shares subject to a Stock Option to a broker authorized to trade in the common stock of the Company. Upon receipt of such notice, the Company will acknowledge receipt of the executed notice of exercise and forward this notice to the broker. Upon receipt of the copy of the notice which has been acknowledged by the Company, and without waiting for issuance of the actual stock certificate with respect to the exercise of the Stock Option, the broker may sell the Stock (or that portion of the Stock necessary to cover the Option Price and any withholding taxes due, if any). Upon receipt of the stock certificate from the Company, the broker will deliver directly to the Company that portion of the sales proceeds to cover the Option Price and any withholding taxes. Further, the broker may also facilitate a loan to the Participant upon advance receipt of the exercise notice for issuance of the actual stock certificate as an alternative means of financing and facilitating the exercise of any Stock Option. For all purposes of effecting the exercise of a Stock Option, the date on which the Participant gives the notice of exercise to the Company will be the date he becomes bound contractually to take and pay for the shares of Stock underlying the Stock Option. No Stock shall be issued to the Participant until the Company receives full payment for the Stock purchased under the Stock Option which shall include any required state and federal withholding taxes. (c) Further Information. In the event the Stock Option is exercised, pursuant to the foregoing provisions of this Section 7, by any person or persons other than the Participant in the event of the death of the Participant, such notice shall also be accompanied by appropriate proof of the right of such person or persons to exercise the Stock Option. The notice so required shall be given by personal delivery to the Secretary of the Company or by registered or certified mail, addressed to the Company at 6301 Waterford Boulevard, Oklahoma City, Oklahoma 73118, and it shall be deemed to have been given when it is so personally delivered or when it is deposited in the United States mail in an envelope addressed to the Company, as aforesaid, properly stamped for delivery as a registered or certified letter. 8. ACCELERATION OF OPTIONS UPON CHANGE OF CONTROL. Notwithstanding anything to the contrary in the Plan, upon the occurrence of a "Change of Control Event" (as such term is defined in Section 8 of this Option Agreement and not in the Plan), any and all Stock Options will become automatically fully vested and immediately exercisable with such acceleration to occur without the requirement of any further act by either the Company or the Participant. For purposes of this Participant and this Option Agreement, the term "Change of Control Event" shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this Section 8; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, appointment or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Approval by the shareholders of the Company of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) Approval by the shareholders of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company. 9. SECURITIES LAW RESTRICTIONS. Stock Options shall be exercised and Stock issued only upon compliance with the Securities Act of 1933, as amended (the "Act"), and any other applicable securities law, or pursuant to an exemption therefrom. 10. NOTICES. All notices or other communications relating to the Plan and this Option Agreement as it relates to the Participant shall be in writing and shall be mailed (U.S. Mail) by the Company to the Participant at the then cur- rent address as maintained by the Company or such other address as the Partici- pant may advise the Company in writing. IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly executed by its officers thereunto duly authorized, and the Participant has hereunto set his hand and seal, all on the day and year first above written. COMPANY: FLEMING COMPANIES, INC., an Oklahoma corporation By: ______________________________________ Craig A. Grant, Senior Vice President - Organizational Strategies and Management Development PARTICIPANT: _________________________________________ _________________________ EX-10.35 8 AMENDMENT NO. 1 TO FLEMING COMPANIES, INC. 1990 STOCK INCENTIVE PLAN WHEREAS, Fleming Companies, Inc. (the "Company") presently has in existence the 1990 Stock Incentive Plan (the "Plan"); and WHEREAS, Section 9.1 of the Plan contains a definition of the term "change of control"; and WHEREAS, the Company believes that Section 9.1 of the Plan should be amended; and WHEREAS, the Board of Directors of the Company has authorized and approved this Amendment No. 1 to the Plan at a meeting held on August 18, 1998; NOW, THEREFORE, the Plan is hereby amended as follows: Section 9.1. Section 9.1 of the Plan is hereby amended by deleting subsections 9.1(a), 9.1(b), 9.1(c) and 9.1(d) in their entirety and replacing them with the following: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Ex- change Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, how- ever, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agree- ment, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acqui- sition by any corporation pursuant to a trans- action which complies with clauses (x), (y), and (z) of subsection (c) of this Section 9.1; or (b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a direc- tor subsequent to the date hereof whose elec- tion, appointment or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Approval by the shareholders of the Company of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substan- tially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immedi- ately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstand- ing shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transac- tion will own the Company through one or more subsidiaries) in substantially the same pro- portions as their ownership, immediately prior to such Business Combination of the Outstand- ing Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combi- nation, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combi- nation; or (d) Approval by the shareholders of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then out- standing voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Out- standing Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantial- ly the same proportion as their ownership, immediately prior to such sale or other dispo- sition, of the Outstanding Company Common Stock and Outstanding Company Voting Securi- ties, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indi- rectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstand- ing Company Voting Securities prior to the sale or disposition, and (C) at least a major- ity of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execu- tion of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company. Except as provided in this Amendment No. 1, in all other respects the Plan is hereby ratified and confirmed. The effective date of this Amendment No. 1 shall be August 18, 1998. EX-10.36 9 FIRST AMENDMENT TO EVA PLAN ADOPTED FEBRUARY 24, 1997 "In the event bonuses are declared under the EVA Plan for 1997, 1997 will represent year one for all current participants in the plan and the payout percentage for 1997 will be 67% and that the payout percentage for years two through four thereafter will be 50%, 40% and 33%, respectively, and will remain 33% after year four." EX-10.37 10 AMENDMENT NO. 2 TO ECONOMIC VALUE ADDED INCENTIVE BONUS PLAN FOR FLEMING COMPANIES, INC. AND ITS SUBSIDIARIES WHEREAS, Fleming Companies, Inc. (the "Company") presently has in existence the Economic Value Added Incentive Bonus Plan (the "Plan"); and WHEREAS, Section 7.01 of the Plan contains a definition of the term "change of control"; and WHEREAS, the Company believes that Section 7.01 of the Plan should be amended; and WHEREAS, the Board of Directors of the Company has authorized and approved this Amendment No. 2 to the Plan at a meeting held on August 18, 1998; NOW, THEREFORE, the Plan is hereby amended as follows: Section 7.01. Section 7.01 of the Plan is hereby amended by deleting subsections 7.01(a), 7.01(b), 7.01(c) and 7.01(d) in their entirety, and replacing them with the following: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Ex- change Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, how- ever, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agree- ment, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acqui- sition by any corporation pursuant to a trans- action which complies with clauses (x), (y), and (z) of subsection (c) of this Section 7.01; or (b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a direc- tor subsequent to the date hereof whose elec- tion, appointment or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Approval by the shareholders of the Company of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substan- tially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immedi- ately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstand- ing shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transac- tion will own the Company through one or more subsidiaries) in substantially the same pro- portions as their ownership, immediately prior to such Business Combination of the Outstand- ing Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combi- nation, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combi- nation; or (d) Approval by the shareholders of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then out- standing voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Out- standing Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantial- ly the same proportion as their ownership, immediately prior to such sale or other dispo- sition, of the Outstanding Company Common Stock and Outstanding Company Voting Securi- ties, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indi- rectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstand- ing Company Voting Securities prior to the sale or disposition, and (C) at least a major- ity of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execu- tion of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company. Except as provided in this Amendment No. 2, in all other respects the Plan is hereby ratified and confirmed. The effective date of this Amendment No. 2 shall be August 18, 1998. EX-10.38 11 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT dated as of August 18, 1998 (the "Amendment"), is made by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and _____ __________, an individual (the "Executive"). W I T N E S S E T H: WHEREAS, the Company and the Executive entered into that certain Employment Agreement dated as of March 2, 1998 (the "Employment Agreement"); and WHEREAS, the Company and the Executive mutually desire to amend the Employment Agreement, and it is to the mutual benefit of the Company and the Executive to amend the Employment Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein, the Company and the Executive hereby amend the Employment Agreement as follows: 1. The Amendment. Section 2 of the Employment Agreement is amended by deleting it in its entirety and replacing it with the following: 2. For purposes of this Agreement, a "Change of Control" shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this Section 2; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, appointment or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Approval by the shareholders of the Company of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) Approval by the shareholders of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company. 2. The Agreement. The term "Agreement" as used in the Employment Agreement and in this Amendment shall hereafter mean the Employment Agreement as amended by this Amendment. The Employment Agreement, as amended hereby, shall continue in full force and effect in accordance with the terms thereof. 3. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Oklahoma. 4. Counterparts. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more of the counterparts have been signed by each of the parties and delivered to the other parties. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed on the date first written above. FLEMING COMPANIES, INC., an Oklahoma corporation By William J. Dowd, President and Chief Operating Officer "COMPANY" _______________, an individual "EXECUTIVE" EX-10.39 12 FIRST AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT FOR FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN THIS FIRST AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT FOR FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN dated as of August 18, 1998 (the "Amendment"), is made by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and ____ ______________, an individual (the "Participant"). W I T N E S S E T H: WHEREAS, the Company and the Participant entered into that certain Restricted Stock Award Agreement for Fleming Companies, Inc. 1996 Stock Incentive Plan dated as of November 1, 1997 (the "Restricted Stock Agreement"); and WHEREAS, the Company and the Participant mutually desire to amend the Restricted Stock Agreement, and it is to the mutual benefit of the Company and the Participant to amend the Restricted Stock Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein, the Company and the Participant hereby amend the Restricted Stock Agreement as follows: 1. The Amendments. (a) Section 3(b). Section 3(b) of the Restricted Stock Agreement is amended by deleting the words "which have not yet vested upon a Change of Control of the Company, as such term is defined in Section 2.4(a) of the Plan" at the end thereof and replacing them with the following: "which have not yet vested upon the occurrence of a Change of Control Event as such term is defined in Section 2.4 of the Plan." (b) Section 5. Section 5 of the Restricted Stock Agreement is amended by deleting the words "or a Change of Control of the Company occurs as defined in Section 2.4(a) of the Plan" in the third paragraph thereof and replacing them with the following: "or a Change of Control Event occurs as defined in Section 2.4 of the Plan." 2. The Agreement. The term "Agreement" as used in the Restricted Stock Agreement and in this Amendment shall hereafter mean the Restricted Stock Agreement as amended by this Amendment. The Restricted Stock Agreement, as amended hereby, shall continue in full force and effect in accordance with the terms thereof. 3. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Oklahoma. 4. Counterparts. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more of the counterparts have been signed by each of the parties and delivered to the other parties. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed on the date first written above. FLEMING COMPANIES, INC., an Oklahoma corporation By Craig A. Grant Senior Vice President - Organizational Strategies and Management Development "COMPANY" ______________, an individual "Participant" EX-10.40 13 SETTLEMENT AND SEVERANCE AGREEMENT THIS SETTLEMENT AND SEVERANCE AGREEMENT ("Agreement") is entered into as of the 28th day of August, 1998, by and between FLEMING COMPANIES, INC., an Oklahoma corporation (the "Company") and ROBERT E. STAUTH, an individual ("Stauth") with respect to the following: W I T N E S S E T H WHEREAS, Stauth has resigned as Chairman of the Board and Chief Executive Officer and as a member of the Board of Directors of the Company effective July 18, 1998; WHEREAS, the Company desires to provide Stauth certain benefits upon the severance of his employment status with the Company; and WHEREAS, Stauth desires to receive those benefits in exchange for certain promises and other consideration. NOW, THEREFORE, BE IT RESOLVED, that the Company and Stauth, in consideration of the covenants herein set forth, agree as follows: 1. Resignation and Retirement. Stauth agrees to and does hereby voluntarily resign and retire as the Company's Chief Executive Officer. Stauth also agrees to and does hereby volun- tarily resign as Chairman and as a member of the Company's Board of Directors (the "Board") and as a member of any committees of the Company and/or the Board on which he currently serves. Stauth further agrees to and does hereby resign from all other positions which he may currently hold as an officer or member of the board of directors of any of the Company's subsidiaries and as a member of any committees of such subsidiaries or their boards of directors. All such resignations shall be effective July 18, 1998, and Stauth shall sign and deliver to the Company such other documents as may be necessary to effect or reflect resignations as of that date. Stauth will receive his regular base pay and benefits through July 18, 1998. 2. Severance. 2.1 Salary Replacement. The Company will pay Stauth the sum of $1,250,000 (the "Salary Replacement Amount"), which is the equivalent of two times Stauth's current annual base pay. This gross amount will be paid in a lump sum payment within ten (10) days after Stauth signs this Agreement and delivers to the Company the General Release described in paragraph 7.1. In the event of Stauth's death, any unpaid portion of the Salary Replace- ment Amount will be paid in the same manner to his executor or personal representative, as applicable. 2.2 EVA Target Bonus. If the Company determines at the conclusion of 1998 that Stauth would, if his employment had continued through 1998, have been eligible for a bonus (the "EVA Target Bonus") under the Economic Value Added Incentive Bonus Plan for Fleming Companies, Inc. and its Subsidiaries (the "EVA Plan") earned through actual corporate performance during such year, the Company will pay Stauth a gross amount equal to twice what he would have earned had he remained Chief Executive Officer through the balance of 1998 up to, but not to exceed, $1,125,000, which is the equivalent of a maximum of two times Stauth's 1998 EVA Target Bonus. The determination and calculation of the amount, if any, of Stauth's EVA Target Bonus shall be made by the Company in accor- dance with the EVA Plan as interpreted by the Company in its sole discretion. The Company shall be fair and reasonable and shall make its determination for Stauth using the same criteria, including any exclusions of extraordinary charges as has been done in the past, as it uses for all other participants in the EVA Plan. The EVA Target Bonus, if any, will be paid on or about March 15, 1999. In the event of Stauth's death prior to March 15, 1999 (or any later payment date), the EVA Target Bonus, if any, will be paid to his executor or personal representative, as applicable. 2.3 Bonus Bank. Under the EVA Plan a portion of a participant's bonus is retained by the Company for potential future payout and maintained in a bookkeeping account (the "Bonus Bank"). Stauth's Bonus Bank is $225,922 and the Company will make a distribution to Stauth in the gross amount of $225,922 from his Bonus Bank. This payment will be made within ten (10) days after Stauth signs the Agreement and delivers it to the Company with the General Release described in paragraph 7.1. In the event of Stauth's death prior to his receipt of his Bonus Bank, the Bonus Bank will be paid to his executor or personal representative, as applicable. 2.4 Accrued Vacation. The Company will pay Stauth for three (3) weeks' accrued and unused 1998 vacation in the gross amount of $36,058 (the "Vacation Accrual"). The Vacation Accrual will be paid within ten (10) days after Stauth signs this Agreement and delivers to the Company the General Release described in paragraph 7.1. 3. Stock Options. Subject to the provisions of this paragraph, the Compensation and Organization Committee of the Board (the "Compensation Committee") by its approval and adoption of this Agreement, as noted below, does hereby accelerate vesting (to the extent not already vested) of the following nonqualified stock options heretofore granted to Stauth under the Fleming Companies, Inc. 1990 Stock Option Plan (the "1990 SOP") and permit Stauth (or his executor or personal representative, as applicable) to exercise and purchase during the two-year period from July 18, 1998 through July 17, 2000 (the "Exercise Period") all or any part of the shares subject to such stock options: Number of Options Exercise Price 30,000 $24.9375 Provided, however, if, upon advice of counsel the Compensation Committee determines it cannot or if it elects not to amend the 1990 SOP to provide for extension of the exercise of the referenced options through July 17, 2000, the Company shall notify Stauth of such determination and shall nonetheless pay Stauth the difference between the exercise price and the fair market value of the Company common stock on the Exercise Date (herein referred to as the "Spread"). At any time during the Exercise Period, Stauth may select the day (the "Exercise Date") as of which he shall be entitled to be paid the Spread by the Company; provided, however, that prior to 9:00 a.m., central time, on the day following the Exercise Date, Stauth shall notify the Company of his election to exercise the stock options by receiving payment of the Spread. In the event of Stauth's death, such right shall vest in Stauth's executor or personal representative. The payment of the Spread shall be made within five (5) days after the notice of election to receive the Spread. Likewise, the Compensation Committee, by its approval and adoption set out below, does hereby accelerate vesting (to the extent not already vested) of the following nonqualified stock options heretofore granted to Stauth under the Fleming Companies, Inc. 1996 Stock Incentive Plan (the "1996 SIP") and permit Stauth (or his executor or personal representative, as applicable) to exercise and purchase during the two-year period from July 18, 1998 through July 17, 2000 all or any part of the shares subject to such stock options: Number of Options Exercise Price 30,000 $19.7500 30,000 $16.3750 30,000 $17.5000 Notwithstanding anything to the contrary in each of the nonqualified stock option agreements that Stauth and the Company have executed representing the stock options described in this paragraph 3 granted under the 1996 SIP, such agreements are hereby amended to provide that such nonqualified stock options are exercisable in whole or in part by Stauth (or his executor or personal representative) during the two-year period from July 18, 1998 through July 17, 2000. Such option agreements, as herein modified, shall continue in full force and effect in accordance with their terms. 4. Restricted Stock Awards. The Compensation Committee, by its approval and adoption noted below, hereby waives all qualifying requirements and does hereby accelerate vesting and distribution to Stauth of 22,500 shares of restricted stock (plus paid dividends attributable to such shares) awarded to Stauth on November 1, 1997 under the 1996 SIP which shares vested by time on January 1, 1998 and 22,500 shares of restricted stock (plus paid dividends attributable to such shares) awarded to Stauth on November 1, 1997 under the 1996 SIP which shares vested by performance on March 31, 1998 (collectively, the "Vested Restricted Shares"). Likewise, the Compensation Committee, by its approval and adoption below, waives the qualifying requirements and accel- erates both vesting and distribution of 45,000 additional shares of restricted stock (plus paid dividends attributable to such shares) awarded to Stauth on November 1, 1997 under the 1996 SIP, 22,500 shares of which, but for the severance of the employment relation- ship between Stauth and the Company, would have vested on January 1, 1999 and 22,500 shares of which would have vested on January 1, 2000, respectively (collectively, the "Restricted Shares"). Other than the Vested Restricted Shares and the Restricted Shares, all other restricted shares or awards for which Stauth might otherwise have been eligible under the 1996 SIP or under any other Fleming plan shall be forfeited. Distribution of the Vested Restricted Shares and the Restricted Shares shall be made within ten (10) days after Stauth signs this Agreement and delivers to the Company the General Release described in paragraph 7.1. 5. The Past Service Plan. The Compensation Committee, by its approval and adoption noted below, waives any qualifying requirements relating to vesting or distribution of the Fleming Companies, Inc. Executive Past Service Benefit Plan (the "Past Service Plan") as such requirements apply to the award made to Stauth on November 1, 1997 of $2,364,000 plus interest at the rate of 7.5% from November 1, 1997 until paid. This benefit will be paid in accordance with the election previously made by Stauth pursuant to the terms of the Past Service Plan and will commence on November 1, 1999 after Stauth has attained age 55; provided, however, in the event of a "Change of Control" as defined in the Past Service Plan, the benefit shall commence on the 1st day of the month following the "Change of Control." Under the Internal Revenue Service Code of 1986, as amended (the "IRC"), and the regulations promulgated thereunder, the Past Service Plan benefit will be subject to applicable employment taxes (FICA) and Medicare taxes payable for the calendar year 1998. Stauth has paid the maximum employment taxes (FICA), and therefore no employment taxes (FICA) will be due upon the execution of this Agreement. However, the Company will withhold from the Salary Replacement Amount a sum equal to 1.45% of Stauth's Past Service Plan benefit, representing Stauth's Medicare taxes due on the Past Service Plan benefit. 6. Other Benefits. 6.1 The Excess Plan. The Company has determined that Stauth, upon attaining age 55, will qualify for early retirement income under the Consolidated Retirement Plan for Fleming Companies, Inc. and Its Subsidiaries (the "Qualified Plan"). Conditioned upon Stauth qualifying for early retirement income under the Qualified Plan, the Company hereby covenants and agrees that Stauth shall be eligible to receive annual payments under the Fleming Companies, Inc. Executive Deferred Compensation Plan (the "Excess Plan") upon the attainment by Stauth of age 55; provided, however, the Company, through the Compensation Committee, has agreed and does hereby waive one (1) year of the 3% actuarial reduction of benefits for early retirement prior to age 62 such that upon Stauth's attainment of age 55 he would be entitled to benefits under the Excess Plan as if he were 56. (For example, age 56 benefits of $161,798 per annum would be payable at age 55 and age 62 benefits of $180,000 would be payable at age 61). Stauth shall be eligible to commence receiving benefits under the Excess Plan upon attaining age 55, which benefits shall be paid in accordance with the foregoing and the Excess Plan and Stauth's elections as therein provided. 6.2 Life Insurance. The Company shall acquire a standard rated paid up whole life insurance policy on Stauth's life in the amount of $500,000 written by Metropolitan Life Insurance Company, Hartford, Connecticut (the "Policy"). The Company shall make application therefor as soon as shall be practicable following the execution of this Agreement. The Company shall pay the standard rate premium under the Policy and Stauth shall pay any ex- cess rate over the standard rate. Stauth designates Carol E. Stauth, trustee, as the primary beneficiary for the first $500,000 of the death benefit under the Policy. The Company shall be the owner and secondary beneficiary and entitled to all dividends and any death benefit proceeds under the Policy in excess of $500,000. Under the Policy, Stauth shall have the right to change the primary beneficiary upon written notice to the Company and to Metropolitan Life Insurance Company. Stauth shall be responsible for all income taxes resulting from the acquisition and maintenance of the Policy by the Company. 6.3 Medical Insurance Premium Reimbursement. If Stauth exercises his right to continued coverage under the Fleming Companies, Inc. Health Choice Medical Plan (the "Medical Plan") pursuant to COBRA, the Company will pay the monthly premium for such coverage in the approximate amount of $336 per month for up to eighteen (18) months commencing July 18, 1998, or until Stauth no longer qualifies for continued coverage under COBRA due to eligibility to participate in a group medical plan sponsored by or available through another employer providing equivalent benefits to his medical coverage with the Company, whichever is the earlier to occur. Thereafter, to the extent Stauth is eligible for coverage as a retiree under the Medical Plan, the Company will pay the cost of such coverage in the approximate amount of $5,000 per year until Stauth is eligible for Medicare or similar coverage or until he no longer qualifies to participate in retiree medical coverage under the Medical Plan for any reason provided therein. 6.4 Relocation/Home Sale Allowance. The Company will pay Stauth's relocation expenses and will reimburse brokerage expenses on the sale of Stauth's residence located at 12501 Bocage Drive, Oklahoma City, Oklahoma 73142 up to $40,000 in the aggre- gate. Stauth shall present to the Company's Senior Vice President and General Counsel vouchers representing payment by Stauth of such amounts together with such other documentation reasonably required by such officer and the Company shall pay such reimbursement within thirty (30) days of receipt. 6.5 Country Club. The Company shall reimburse Stauth for his monthly dues at the Quail Creek Golf and Country Club, Oklahoma City, Oklahoma from August 1, 1998 through December 31, 1998 upon his presentation to the Company's Senior Vice President and General Counsel of satisfactory evidence of such payment by Stauth. 6.6 Automobile. The Company will transfer title to the 1996 Cadillac Seville (the "Automobile") Stauth was driving on July 18, 1998 plus an amount for income taxes owed by Stauth as a result of the receipt of the Automobile (the "Gross-Up Payment"). The Gross-Up Payment shall be an amount sufficient to cover payment by Stauth of all federal and state income and payroll taxes assessed on the value of the Automobile and on the Gross-Up Payment (including any interest or penalties imposed with respect to such taxes). The amount of the Gross-Up Payment required to be paid to Stauth shall be determined by Deloitte & Touche, Oklahoma City, Oklahoma, which shall provide detailed supporting calculations both to the Company and to Stauth within fifteen (15) business days from a request by the Company or Stauth. The Gross-Up Payment deter- mined under this paragraph 6.6 shall be paid to Stauth within five (5) days of the later of (i) receipt of such determination and (ii) transfer of title, but in no event more than thirty (30) days after the transfer of title. The cost of performing all calcula- tions with respect to determination of the applicable Gross-Up Payment shall be paid solely by the Company. 7. Release and Indemnification. 7.1 Stauth's Release of the Company. Stauth agrees to execute the General Release attached as Exhibit A contemporaneously with signing this Agreement. The General Release (Exhibit A) shall except the obligations of the Company contained in this Agreement. Stauth represents to the Company that between July 18, 1998 and the date he signs this Agreement and the General Release, he has not filed nor commenced and has not authorized any other person to file or commence on his behalf any affidavit, charge, action or complaint against the Company with any court or judicial or administrative agency. Stauth further agrees that in the event he may attempt to revoke, repudiate or rescind the General Release at any time in the future, he shall immediately return to the Company all of the payments and benefits received by him under this Agreement and that return to the Company of such payments and benefits shall be a contractual prerequisite to any legal action brought or arbitration sought by Stauth. 7.2 The Company's Release of Stauth. The Company agrees to execute the General Release attached as Exhibit B contem- poraneously with signing this Agreement. The General Release (Exhibit B) shall except the obligations of Stauth as contained in this Agreement. The Company represents to Stauth that between July 18, 1998 and the date it signs this Agreement and the General Release, it has not filed nor commenced and has not authorized any other person to file or commence on its behalf any affidavit, charge, action or complaint against Stauth with any court or judicial or administrative agency. Nothing in this paragraph, however, is intended to modify or abrogate the consequences of Stauth's breach of this Agreement, as described in paragraph 12. 7.3 Indemnification of Stauth by the Company. The Company will indemnify Stauth with respect to any threatened, pending or civil action, suit or proceeding, administrative or investigative, in which he is or becomes a party by reason of his status or former status as an officer or director of the Company or one of its subsidiaries. This commitment of indemnification shall include expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such actions, suits or proceedings; provided, however, that this indemnification obligation shall be applicable only in accordance with the Company's bylaws which permit such indemnification of an officer or a director if the officer or director acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interest of the Company and, with respect to any criminal action or proceeding, had no reason- able cause to believe that such conduct was unlawful. 8. Obligations Regarding Pending and Future Litigation. Stauth agrees to assist the Company and its representatives and attorneys as reasonably requested with respect to pending and future litigation, arbitrations or other dispute resolutions. This shall include, if requested, being available to the Company and its representatives and attorneys for interviews, depositions and/or trial or arbitration testimony related to any pending or future litigation in which Stauth is or has been involved or with respect to which Stauth has relevant information. The Company will reimburse Stauth for reasonable attorney's fees of counsel for Stauth chosen by the Company. The Company shall also reimburse Stauth for his reasonable travel expenses and costs incurred as part of his consultation and assistance. In addition, after July 17, 2000, the Company will also pay Stauth a per diem of $1,000 for each day or portion of more than 50% of a day Stauth, at the request of the Company, assists the Company in matters as to which Stauth is not a named defendant or alleged co-conspirator. 9. Noncompetition and Nonsolicitation Obligation. 9.1 Noncompetition Clause. Stauth agrees that for a period of one (1) year following July 18, 1998, he shall not, directly or indirectly, own any interest in, operate, control or participate in, as a partner, director, a holder of more than 5% of the outstanding voting shares, principal, officer, or agent of, enter into the employment of, act as a consultant to, or perform any services for any person, firm, business, or corporation which is engaged in the food distribution and marketing business in any state or market area in which the Company operates or supplies customers; provided, however, this covenant may be waived in writing by the Interim Chairman of the Board or the Chief Executive Officer in the sole discretion of either of them to permit Stauth to act as a consultant in the marketing business. 9.2 Nonsolicitation of Employees. Stauth agrees that for a period of two (2) years following July 18, 1998, he will neither directly nor indirectly solicit or attempt to solicit any employee of the Company to terminate his/her employment, nor solicit or attempt to solicit any employee of the Company to go to work for another employer (including Stauth), nor hire any employee of the Company to work for another employer (including Stauth). 9.3 Acknowledgment of Reasonableness/Agreement to Modification. The Company and Stauth acknowledge that they have attempted to specify a reasonable period of time, a reasonable area and reasonable restrictions to which this covenant not to compete and covenant of nonsolicitation of employees shall apply. The Company and Stauth agree that if a court or arbitrator(s) should subsequently determine that the scope and terms of either the covenant not to compete or the covenant of nonsolicitation of employees is greater than reasonably necessary to protect the Company's interest, the Company will waive those terms which are found by a court or arbitrator(s) to be greater than reasonably necessary to protect the Company's interest, and the Company and Stauth shall request that the court or arbitrator(s) reform this Agreement specifying a reasonable period of time and such other reasonable restrictions as the court or arbitrator(s) deem necessary and enforceable. 10. Other Precluded Employment. Stauth agrees that, except with the prior written consent of the Company, he will not at any time hereafter be employed or otherwise act as an "expert witness" or "consultant" or in any similar capacity in any litigation, arbitration, regulatory or agency hearing or other adversarial and investigatory proceeding involving the Company. 11. Property and Information of the Company. 11.1 Return and Restriction on Use of Company Property. Stauth acknowledges that from time to time in the course of performing his duties as a director and officer of the Company, he has had an opportunity to inspect and use certain exclusive property of the Company, in which he has no right or proprietary interest. Stauth has returned or will immediately return all Company property, except as otherwise provided in this Agreement, including without limitation any of the Company information described in subparagraph 11.2. 11.2 Restriction on Use of Company Information. Stauth agrees that he will not at any time hereafter make any independent use of or disclose to any other person or organization any of the Company's confidential, private or proprietary informa- tion. This prohibition shall apply to any information concerning the Company including without limitation both written and unwritten information relating to operations; business planning and strategy; finance; accounting; legal strategies; sales; personnel, salaries and management; customer names, addresses and contracts; customer requirements; costs of providing products and service; operating and maintenance costs; and pricing matters. This prohibition shall also apply to any trade secrets of the Company, including without limitation any techniques, methods, processes, data and similar information. 12. Conditions to Continued Payments and Benefits. Stauth agrees that the Company's continuing obligations and his retention of any severance or other payments or benefits to be provided by the Company under this Agreement and to which he is not otherwise entitled shall be contingent not only upon his execution of the General Release described in paragraph 7.1, but also his ongoing compliance with his obligations described elsewhere in this Agreement, including without limitation, the obligations specified in paragraphs 8, 9, 10, 11 and 13. Accordingly, Stauth agrees that any material breach of his obligations under this Agreement at any time in the future shall entitle the Company to cease all payments and benefits otherwise to be made or provided under this Agreement and shall also entitle the Company to obtain immediate reimburse- ment from Stauth of any and all such payments and the value of such benefits as he has previously received hereunder and to which he is not otherwise entitled. 13. Confidentiality of Agreement. The parties represent that, except for Stauth's discussions with his spouse, the Company's discussions with the Compensation Committee, the Board and certain Fleming associates on a need to know basis, and each of their discussions with their respective attorneys, accountants or other professional, confidential consultants, they have not disclosed any details or specific provisions of the negotiations with respect to this Agreement, nor its terms with any third parties at any time prior to the execution hereof. The parties further agree to maintain such negotiations and the terms of this Agreement in confidence in the future and not to disclose such information to third parties at any time, except as required to obtain tax advice or, as mandated by the rules and regulations of the Securities Exchange Commission or other government agency, for purposes of enforcement of this Agreement or pursuant to court order. 14. Future Comments and Public Statements. The Company and Stauth agree not to make any comments in the future with respect to the other which would disparage or be likely to cause harm to the good name and reputation of the other, including the subsidiaries, officers, directors and associates of the Company. The Company and Stauth further agree that any public information releases or statements relating to Stauth and the Company, except such public statements and filings as are mandated by the rules and regulations of the Securities Exchange Commission or other government agency, shall be prepared through coordination between them and/or their attorneys and shall be mutually agreeable to both parties prior to release. 15. Arbitration of Disputes. The parties agree that the subject matter of this Agreement relates to interstate commerce. All disputes, claims or controversies between Stauth and the Company arising out of or related to this Agreement or out of the parties' prior employment relationship shall be settled by arbi- tration as provided herein. This agreement to arbitrate shall survive the termination or rescission of this Agreement. All arbitration shall be in accordance with the Rules of the American Arbitration Association and shall be undertaken pursuant to the Federal Arbitration Act. Arbitration will be held in Oklahoma City, Oklahoma unless the parties mutually agree to another loca- tion. The decision of the arbitrator(s) will be enforceable in any court of competent jurisdiction. In the event the Company is the prevailing party in such an arbitration, each party shall bear its/his own costs and attorneys' fees in connection with the arbitration; if, however, Stauth is the prevailing party in such arbitration, the Company shall pay his reasonable costs and attorneys' fees. The parties agree that punitive, liquidated or indirect damages shall not be awarded by the arbitrator(s). Nothing in this agreement to arbitrate shall preclude either party from obtaining injunctive relief from a court of competent jurisdiction prohibiting any on-going breaches by the other of his (its) continuing obligations pending arbitration. 16. No Representations. In executing this Agreement and the General Releases attached as Exhibits A and B, it is understood and expressly agreed that, except for representations specifically made in this Agreement, the parties shall rely solely on their own independent analysis, judgment, belief and knowledge and the advice of their respective attorneys. The parties represent to one another that they have not been influenced in any way whatsoever in executing this Agreement and the attached Exhibits A and B by any representations made by the other or the other's attorneys or representatives. The parties and their attorneys expressly except and assume the risk that their independent analysis and their own judgments, beliefs and knowledge on which they rely in executing this Agreement and the General Releases attached as Exhibits A and B may prove to be inaccurate or different and expressly agree that the terms of this Agreement shall be in all respects effective and not subject to termination or rescission by any such inaccuracy or difference. 17. Successors Bound; Assignability. This Agreement shall be binding on Stauth and the Company and their respective heirs, successors and assigns, including without limitation any corporation or other entity into which the Company may be merged, reorganized or liquidated, or by which it may be acquired. The Company's obligations under this Agreement may be assigned without limitation; however, as the obligations to be performed and the services to be rendered by Stauth under this Agreement are unique based upon his skills and qualifications, Stauth's obligations under this Agreement may not be assigned nor may Stauth's right to receive various amounts of money be assigned, pledged, mortgaged nor hypothecated in any manner whatsoever. 18. Taxation. All payments made to Stauth in accordance with paragraphs 2.1 (Salary Replacement Amount), 2.2 (EVA Target Bonus), 2.3 (Bonus Bank), 2.4 (Accrued Vacation), 3 (Stock Options), 4 (Restricted Stock Awards), 5 (The Past Service Plan), 6.1 (The Excess Plan), 6.2 (Life Insurance), 6.3 (Medical Insurance Premium Reimbursement), 6.4 (Relocation/Home Sale Allowance), 6.5 (Country Club), 6.6 (Automobile) and any other payment required under this Agreement will be reduced by or Stauth will pay applicable withholding and employment taxes (FICA) and Medicare taxes, as assessed under the IRC and the regulations promulgated thereunder, and the applicable state tax laws. The amount of such reduction for applicable withholding and employment taxes (FICA) and Medicare taxes shall be determined by the Company in accordance with the IRC and the regulations promulgated thereunder and the applicable state tax laws and the regulations promulgated there- under as interpreted by the Company in its sole discretion. It is further agreed by Stauth, in the event it is determined that any additional FICA or Medicare taxes are due by the Company with respect to payments which have been or are to be made to Stauth under this Agreement or any plan, program or agreement referenced under this Agreement, and if such taxes have not previously been withheld by the Company, then, Stauth shall reimburse the Company for such taxes. In the event that Stauth fails to reimburse the Company for such taxes, within five (5) days from the Company's request, the Company may offset the amount of such taxes from sums which are to be paid Stauth under this Agreement or under any plan, program or agreement referenced in this Agreement. 19. Severability. In the event that any one or more of the provisions of this Agreement or any word, phrase, clause, sentence or any portion thereof shall be deemed to be illegal or unenforceable for any reason, such provision or portion shall be modified or deleted in such a manner as to make this Agreement, as modified, legal and enforceable to the fullest extent permitted under applicable law. 20. Entire Agreement. This Agreement supersedes all prior agreements or understandings and, together with the General Releases attached as Exhibits A and B, constitutes the entire Agreement between the Company and Stauth with regard to the subject matter hereof. There are no agreements, understandings, specific restrictions, warranties or representations relating to such subject matter between the parties (or any of their respective representatives or agents) other than those set forth herein. 21. Counterparts. This Agreement may be executed in two or more counterparts, each of which will take effect as an original and all of which shall evidence one and the same Agreement. 22. Amendment and Modification. This Agreement may only be amended, modified or terminated prior to the end of its term by the mutual agreement of the parties. Such agreement by the Company shall be made by the affirmative vote of a majority of the Compensation Committee. 23. No Admission of Wrongdoing. Nothing in this Agreement shall be construed in any way as an admission by the Company of any act, practice or policy of discrimination or a breach of contract, in violation of law or otherwise. 24. Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by telefacsimile transmission, registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to Stauth: Mr. Robert E. Stauth 12501 Bocage Drive Oklahoma City, Oklahoma 73142 Fax: (312) 609-5005 (in care of Vedder, Price, Kaufman & Kammholz) With a copy to: Vedder, Price, Kaufman & Kammholz 222 North La Salle Street Chicago, Illinois 60601-1003 Attention: Robert J. Stucker, Esq. William F. Walsh, Esq. Fax: (312) 609-5005 If to the Company: Fleming Companies, Inc. 6301 Waterford Blvd. P. O. Box 26647 Oklahoma City, OK 73126 Attention: David R. Almond, Senior Vice President, General Counsel and Secretary Fax: (405) 841-8504 With a copy to: McAfee & Taft A Professional Corporation Tenth Floor, Two Leadership Square 211 N. Robinson Oklahoma City, OK 73102-7103 Attention: John M. Mee, Esq. Fax: (405) 235-0439 and Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019-6150 Attention: Michael S. Katzke, Esq. Fax: (212) 403-2345 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communica- tions shall be effective when actually received by the addressee. 25. Governing Law. Except as provided in paragraph 15, the terms of this Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma. EXECUTED the day and year first above written. "COMPANY" FLEMING COMPANIES, INC., an Oklahoma corporation By WILLIAM J. DOWD William J. Dowd President and Chief Operating Officer "STAUTH" ROBERT E. STAUTH Robert E. Stauth APPROVAL AND ADOPTION The foregoing Settlement and Severance Agreement between Fleming Companies, Inc. and Robert E. Stauth is hereby approved, ratified and adopted this 28th day of August, 1998. COMPENSATION AND ORGANIZATION COMMITTEE By GUY A. OSBORN Guy A. Osborn, Chairman EXHIBIT A NOTICE: Various State and Federal laws, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans With Disabilities Act and the Veterans Reemployment Rights Act, prohibit employment discrimina- tion based on age, sex, race, color, national origin, religion or disability or veteran status. These laws are enforced through the Equal Opportunity Employment Commission (EEOC), the United States Department of Labor and state human rights commissions, or similar agencies. Before executing this General Release, you should review it carefully and consult with your lawyer. You have up to twenty-one (21) days to decide whether you wish to sign it. Further, you may revoke this General Release within seven (7) days following execution and this General Release shall not become effective or enforceable until that revocation period has expired. Any revocation must be in writing and must be received by David R. Almond, Senior Vice President, General Counsel and Secretary, Fleming Companies, Inc., 6301 Waterford Boulevard, Oklahoma City, Oklahoma 73126, within the seven-day period following execution of this General Release. - ----------------------------------------------------------------- GENERAL RELEASE In consideration of the terms and provisions of the Settlement and Severance Agreement and other consideration offered to me by Fleming Companies, Inc. ("Fleming") as described therein entered into as of August 28, 1998 (the "Agreement"), and the benefits I will receive thereunder, I, on behalf of myself and my heirs, successors and assigns, release and discharge Fleming, its parent, successors, affiliates, subsidiaries, partners, employees, officers, directors and agents (hereinafter referred to collectively as the "Company") from all claims, liabilities, demands and causes of action known or unknown, fixed or contingent, which I may now have or claim to have against the Company as a result of my past employment and the termination of that relationship with the Company or otherwise with respect to any acts, omissions or events occurring prior to the execution of this General Release, and do hereby covenant not to file a lawsuit to assert such claims. This includes but is not limited to claims arising under Federal, State, or local laws prohibiting employment discrimination (including the Age Discrimination in Employment Act), relating to any prior written or oral contracts pertaining to employment or severance or growing out of any legal or equitable restrictions on the Company's rights not to continue an employment relationship with its employees, claims for unem- ployment insurance benefits from the Oklahoma Employment Security Commission or other similar agencies in Oklahoma or any other state, claims under the Oklahoma Worker's Compensation Act or other similar statutes in Oklahoma or any other state, but not to include any claims under the Employee Retirement Income Security Act with regard to vested rights in any of the Company's quali- fied retirement plans. In addition, I hereby waive any rights that I may have under the Age Discrimination in Employment Act as a result of my past employment and the severance of that rela tionship. This General Release excepts the obligations of the Company as contained in the Agreement. I have carefully reviewed and fully understand all the provisions of the arrangement as described in the Agreement, this General Release, and the foregoing Notice, which set forth the entire agreement between me and the Company. I acknowledge that the Company has given me a 21-day period which began on September 4, 1998, to consider this General Release and the Agreement and has advised me to seek independent legal advice as to these matters. I further acknowledge that I have not relied upon any representation or statement, oral or written, by the Company not set forth in those materials and documents. DATED this 4th day of September, 1998. ---------------------------------- Robert E. Stauth STATE OF OKLAHOMA ) ) ss: COUNTY OF OKLAHOMA ) The foregoing instrument was acknowledged before me this 4th day of September, 1998, by Robert E. Stauth. -------------------------------- Notary Public My commission expires: - --------------------- [SEAL] EXHIBIT B GENERAL RELEASE Fleming Companies, Inc. (the "Company"), for itself and on behalf of its subsidiaries, predecessors, successors, offi- cers, directors, shareholders, agents, employees, representa- tives, heirs, successors, assigns, attorneys and insurers, hereby fully releases, acquits and forever discharges Robert E. Stauth ("Stauth"), his agents, representatives, heirs, successors, assigns, attorneys and insurers from any and all claims, demands and causes of action, for damages, or any other relief, in law or equity, arising out of, attributable to or related to the employ- ment of Stauth by the Company and for his acting as an officer and director of the Company with respect to any acts, omissions or events occurring prior to the execution of this General Release. This General Release excepts (i) the obligations of Stauth as contained in that certain Settlement and Severance Agreement between the Company and Stauth dated as of August 28, 1998, and (ii) Earl Gene Cauley, Jr. v. Robert E. Stauth, et al., CIV 96-1679-M and Richard Rosenberg v. Robert E. Stauth, et al., CIV 96-1808-M, both pending in the United States District Court for the Western District of Oklahoma, and any successor or other derivative case or cases making the same or similar allegations. DATED this 4th day of September, 1998. FLEMING COMPANIES, INC. By David R. Almond Senior Vice President, General Counsel and Secretary STATE OF OKLAHOMA ) ) ss: COUNTY OF OKLAHOMA ) The foregoing instrument was acknowledged before me this 4th day of September, 1998, by David R. Almond as Senior Vice President, General Counsel and Secretary of Fleming Companies, Inc. --------------------------------- Notary Public My commission expires: - ---------------------- [SEAL] EX-12 14 Fleming Companies, Inc. Computation of Ratio of Earnings to Fixed Charges
------------------------------------------------------------------------- 40 Weeks Ended Oct. 3, Oct. 4, (In thousands of dollars) 1998 1997 - --------------------------------------------------------------------------- Earnings: Pretax income $ 54,252 $ 56,201 Fixed charges, net 154,353 153,981 Total earnings $208,605 $210,182 Fixed charges: Interest expense $124,411 $124,129 Portion of rental charges deemed to be interest 29,614 29,570 Capitalized interest - - Total fixed charges $154,025 $153,699 Ratio of earnings to fixed charges 1.35 1.37 ---------------------------------------------------------------------------
"Earnings" consists of income before income taxes and fixed charges excluding capitalized interest. Capitalized interest amortized during the respective periods is added back to earnings. "Fixed charges, net" consists of interest expense, an estimated amount of rental expense which is deemed to be representative of the interest factor and amortization of capitalized interest. The pro forma ratio of earnings to fixed charges is omitted as it is not applicable. EX-27 15
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE THREE FISCAL QUARTERS ENDED OCTOBER 3, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 9-MOS DEC-26-1998 DEC-28-1997 OCT-03-1998 23,539 0 442,428 21,354 1,026,934 1,584,651 1,652,084 723,254 4,014,213 1,230,197 1,130,440 0 0 96,325 1,030,002 4,014,213 11,511,835 11,511,835 10,385,064 11,321,203 0 11,969 124,411 54,252 27,668 26,584 0 0 0 26,584 .70 .70
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