-----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, ASVQaqh3i7A0QaI0xNjd9zRgPrqUuOEdnAYSqcWk423WliNSCrm0BTgtkKxptUqa O6M9HuqVEa+fdGW+IBCngQ== 0000715633-95-000014.txt : 19951122 0000715633-95-000014.hdr.sgml : 19951122 ACCESSION NUMBER: 0000715633-95-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951008 FILED AS OF DATE: 19951121 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VONS COMPANIES INC CENTRAL INDEX KEY: 0000715633 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 381623900 STATE OF INCORPORATION: MI FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08452 FILM NUMBER: 95595357 BUSINESS ADDRESS: STREET 1: 618 MICHILLINDA AVE CITY: ARCADIA STATE: CA ZIP: 91007 BUSINESS PHONE: 8188217000 MAIL ADDRESS: STREET 1: 618 MICHILLINDA AVENUE CITY: ARCADIA STATE: CA ZIP: 91007 FORMER COMPANY: FORMER CONFORMED NAME: ALLIED SUPERMARKETS INC /MI//NEW/ DATE OF NAME CHANGE: 19870805 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ----------------------- FORM 10-Q (Mark one) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 8, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------- ------- Commission File Number 1-8452 ----------------------- THE VONS COMPANIES, INC. (Exact name of registrant as specified in its charter) Michigan 38-1623900 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 618 Michillinda Avenue, Arcadia, California 91007 (Address of principal executive offices and zip code) (818) 821-7000 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) ----------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Shares of common stock outstanding at November 15, 1995 - 43,511,651 PART I. FINANCIAL INFORMATION Item 1: Financial Statements THE VONS COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS All amounts except share data in millions of dollars and as a percentage of sales (Unaudited)
Sixteen Weeks Ended Forty Weeks Ended --------------------------------------- --------------------------------------- October 8, 1995 October 9, 1994 October 8, 1995 October 9, 1994 ------------------ ------------------ ------------------ ------------------ Sales.............. $ 1,565.3 100.0% $ 1,516.2 100.0% $ 3,847.3 100.0% $ 3,820.4 100.0% ----------- ----- ----------- ----- ----------- ----- ----------- ----- Costs and expenses: Cost of sales, buying and occupancy...... 1,174.6 75.0 1,142.9 75.4 2,875.5 74.8 2,892.8 75.7 Selling and administrative expenses....... 331.6 21.2 317.6 20.9 820.8 21.3 806.9 21.1 Amortization of excess cost over net assets acquired....... 4.7 .3 4.6 .3 11.6 .3 11.6 .3 Restructuring charge......... - - 19.0 1.3 - - 19.0 .5 ----------- ----- ----------- ----- ----------- ----- ----------- ----- 1,510.9 96.5 1,484.1 97.9 3,707.9 96.4 3,730.3 97.6 ----------- ----- ----------- ----- ----------- ----- ----------- ----- Operating income... 54.4 3.5 32.1 2.1 139.4 3.6 90.1 2.4 Interest expense, net.............. 20.1 1.3 21.7 1.4 51.9 1.3 54.2 1.4 ----------- ----- ----------- ----- ----------- ----- ----------- ----- Income before income tax provision........ 34.3 2.2 10.4 .7 87.5 2.3 35.9 1.0 Income tax provision........ 15.8 1.0 6.4 .4 40.5 1.1 18.4 .5 ----------- ----- ----------- ----- ----------- ----- ----------- ----- Net income......... 18.5 1.2 4.0 .3 47.0 1.2 17.5 .5 ----- ----- ----- ----- ----- ----- ----- ----- Retained earnings - beginning of period........... 236.3 194.7 207.8 181.2 ----------- ----------- ----------- ----------- Retained earnings - end of period.... $ 254.8 $ 198.7 $ 254.8 $ 198.7 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income per common and common equivalent share: Net income..... $ .42 $ .09 $ 1.07 $ .40 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average common shares and common share equivalents...... 43,971,000 43,533,000 43,847,000 43,508,000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- See accompanying notes to these condensed consolidated financial statements.
THE VONS COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS All amounts in millions of dollars (Unaudited)
October 8, January 1, 1995 1995 ----------- ---------- ASSETS Current assets: Cash...................................... $ 6.3 $ 9.0 Accounts receivable....................... 31.0 45.4 Inventories............................... 345.2 359.3 Other..................................... 53.8 54.1 ----------- ---------- Total current assets.................... 436.3 467.8 Property and equipment, net................. 1,189.3 1,203.0 Excess of cost over net assets acquired..... 486.2 497.8 Other....................................... 59.1 53.4 ----------- ---------- TOTAL ASSETS................................ $ 2,170.9 $ 2,222.0 ----------- ---------- ----------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt and capital lease obligations............... $ 23.5 $ 8.7 Accounts payable.......................... 278.6 308.4 Accrued liabilities....................... 271.5 246.8 ----------- ---------- Total current liabilities............... 573.6 563.9 Accrued self-insurance...................... 123.9 110.9 Deferred income taxes....................... 116.7 121.9 Other noncurrent liabilities................ 65.9 69.1 Senior debt and capital lease obligations... 384.3 484.2 Subordinated debt, net...................... 305.0 319.6 ----------- ---------- Total liabilities....................... 1,569.4 1,669.6 ----------- ---------- Shareholders' equity: Common stock.............................. 4.3 4.3 Paid-in capital........................... 342.5 340.4 Retained earnings......................... 254.8 207.8 Notes receivable for stock................ (.1) (.1) ----------- ---------- Total shareholders' equity.............. 601.5 552.4 ----------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.. $ 2,170.9 $ 2,222.0 ----------- ---------- ----------- ---------- See accompanying notes to these condensed consolidated financial statements.
THE VONS COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS All amounts in millions of dollars (Unaudited)
Sixteen Weeks Ended Forty Weeks Ended ------------------------- ------------------------- October 8, October 9, October 8, October 9, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Cash flows from operating activities: Net income......................................... $ 18.5 $ 4.0 $ 47.0 $ 17.5 Adjustments to reconcile net income to cash provided by operating activities: Restructuring charge........................... - 19.0 - 19.0 Depreciation and amortization of property and capital leases........................... 31.1 31.7 77.0 78.6 Amortization of excess cost over net assets acquired and other assets.................... 4.9 4.9 12.3 12.3 Amortization of debt discount and deferred financing costs.............................. 2.1 1.9 5.2 4.8 LIFO charge.................................... 3.1 .9 4.7 1.7 Deferred income taxes.......................... (6.0) (2.1) 7.1 .4 Change in assets and liabilities: (Increase) decrease in accounts receivable. 5.9 2.0 14.4 (8.6) (Increase) decrease in inventories at FIFO costs.................................... (26.0) (.2) 9.4 39.7 (Increase) decrease in other current assets (7.7) (2.3) (12.0) 1.9 (Increase) decrease in noncurrent assets... (2.7) 4.2 (6.7) (11.5) Increase (decrease) in accounts payable.... (3.1) 18.3 3.1 (40.0) Increase (decrease) in accrued liabilities. 33.7 14.0 24.7 26.7 Increase (decrease) in noncurrent liabilities.............................. 5.7 (9.1) 11.5 (7.6) ----------- ----------- ----------- ----------- Net cash provided by operating activities............ 59.5 87.2 197.7 134.9 ----------- ----------- ----------- ----------- Cash flows from investing activities: Addition of property, plant and equipment.......... (32.9) (36.4) (73.9) (92.8) Disposal of property, plant and equipment.......... 5.5 3.8 8.9 6.0 ----------- ----------- ----------- ----------- Net cash used for investing activities............... (27.4) (32.6) (65.0) (86.8) ----------- ----------- ----------- ----------- Cash flows from financing activities: Net payments on revolving debt..................... (37.1) (54.8) (94.0) (44.3) Increase (decrease) in net outstanding drafts...... 8.8 1.8 (32.9) (.9) Repurchase of senior subordinated debentures....... (.9) - (2.3) - Payments on other debt, capital lease obligations and other........................................ (2.4) (1.5) (6.2) (5.2) ----------- ----------- ----------- ----------- Net cash used by financing activities................ (31.6) (54.5) (135.4) (50.4) ----------- ----------- ----------- ----------- Net cash increase (decrease)......................... .5 .1 (2.7) (2.3) Cash at beginning of period.......................... 5.8 6.1 9.0 8.5 ----------- ----------- ----------- ----------- Cash at end of period................................ $ 6.3 $ 6.2 $ 6.3 $ 6.2 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Supplemental disclosures of cash flow information: Cash paid during the period for: Interest......................................... $ 21.3 $ 22.3 $ 51.2 $ 53.1 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income taxes..................................... $ 20.6 $ 11.2 $ 36.2 $ 25.7 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- See accompanying notes to these condensed consolidated financial statements.
THE VONS COMPANIES, INC. AND SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The financial data included herein have been prepared by the Company without audit. In the opinion of management, all adjustments of a normal recurring nature necessary to present fairly the Company's consolidated financial position at October 8, 1995 and January 1, 1995 and the consolidated results of operations and cash flows for the sixteen and forty weeks ended October 8, 1995 and October 9, 1994, respectively, have been made. This interim information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest annual report filed on Form 10-K. Due to seasonality and other market conditions, the results for the forty weeks ended October 8, 1995, should not be considered as indicative of the results to be expected for the full year. At October 8, 1995, the Company operated 329 supermarket and food and drug combination stores, primarily in Southern California, under the names Vons and Pavilions. The Company also operates a fluid milk processing facility, an ice cream plant, a bakery, and distribution facilities for meat, grocery, produce and general merchandise. Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) Results of Operations For the majority of 1994, the focus of the Company's marketing efforts was communicating the lowering of shelf prices on more than 12,000 items. In 1995, the marketing focus is being placed on Vons entire customer offering, which combines high quality products and customer service with competitive prices. This "Vons Is Value" marketing campaign was introduced in January 1995. With the closure of the San Diego distribution facility in the third quarter of 1995, substantially all of the cost containment and strategic restructuring initiatives have been executed. These initiatives included the closing of 26 stores and the elimination of 700 administrative and support positions. The Company's marketing focus and its commitment to a low cost structure are long-term strategies, which are initially intended to benefit sales by funding lower prices, which in turn will improve the Company's ability to achieve strong, sustainable earnings growth. The merger of two of the Company's major competitors, Food 4 Less Supermarkets, Inc. and Ralphs Grocery Company, was completed on June 14, 1995. This merger has resulted in a change in the composition of the Company's competitors as certain trade names were eliminated and store format conversions occurred. The Company does not believe that the merger or its effect on the already competitive marketplace will have a material impact on the Company's sales and earnings prospects. Sixteen Weeks Ended October 8, 1995 Compared with the Sixteen Weeks Ended October 9, 1994. Sales. Third quarter 1995 sales were $1,565.3 million, an increase of $49.1 million, or 3.2%, over third quarter 1994 sales despite operating seven fewer stores. Same store sales increased 5.3% over third quarter 1994 sales. This represents the eighth consecutive quarter of an improving same store sales trend. The increase in sales reflects the favorable consumer response to the "Vons Is Value" marketing campaign, slight overall inflation in most product categories and the slowly improving economic environment in Southern California offset by competitive new store, remodel and conversion activity. Since October 9, 1994, the Company has opened 13 new stores, closed 20 stores and completed 32 store remodel projects. Costs and Expenses. Costs and expenses were $1,510.9 million for third quarter 1995, an increase of $26.8 million, or 1.8%, over third quarter 1994. Cost of sales and buying and occupancy expenses as a percentage of sales decreased by 0.4 percentage points to 75.0% in third quarter 1995. This decrease was due primarily to increased private brand sales, which were approximately 17 percent of sales for third quarter 1995, and improved purchasing through the use of category management. The LIFO charge for the third quarter of 1995 was $3.1 million compared with $.9 million for third quarter 1994 reflecting the impact of inflation. Selling and administrative expenses as a percentage of sales increased by 0.3 percentage points to 21.2% in third quarter 1995. This increase primarily reflects increased advertising expense and higher service levels in the stores as well as negotiated union wage rate increases effective October 1994 which were largely offset by a more efficient mix of store labor. In the third quarter 1994, the Company recorded a $19.0 million, or $.26 per share, restructuring charge. This charge primarily reflected anticipated expenses associated with a program to accelerate the closing of underperforming facilities and to eliminate certain administrative and support positions. Operating Income. Third quarter 1995 operating income was $54.4 million, or 3.5% of sales compared with operating income of $32.1 million, or 2.1% of sales, in third quarter 1994. Excluding the $19.0 million restructuring charge, third quarter 1994 results were $51.1 million, or 3.4% of sales. Operating income before depreciation and amortization of property, amortization of goodwill and other assets, LIFO charge and restructuring charge ("FIFO EBITDA") was $93.5 million, or 6.0% of sales, in third quarter 1995 compared with $88.6 million, or 5.8% of sales, in third quarter 1994. Interest Expense. Third quarter 1995 net interest expense was $20.1 million, a decrease of $1.6 million from third quarter 1994. This decrease was due primarily to lower average revolving debt borrowings partially offset by higher weighted average interest cost on revolving debt. Income Tax Provision. Third quarter 1995 income tax provision was $15.8 million, or a 46.1% effective tax rate. Third quarter 1994 income tax provision was $6.4 million, or a 61.5% effective tax rate, primarily reflecting the impact of the 1994 restructuring charge. Excluding the 1994 restructuring charge, the effective tax rate was 48% for third quarter 1994. The decrease in the third quarter 1995 effective tax rate is due to the increase in income before income tax provision. Income. Third quarter 1995 net income was $18.5 million, or $.42 per share, compared with net income of $4.0 million, or $.09 per share, in third quarter 1994. In addition to improved operating results, this increase reflects the impact of the third quarter 1994 restructuring charge of $19.0 million, or $.26 per share. Forty Weeks Ended October 8, 1995 Compared with the Forty Weeks Ended October 9, 1994. Sales. Sales for the forty weeks ended October 8, 1995 were $3,847.3 million, an increase of $26.9 million, or 0.7%, over the forty weeks ended October 9, 1994. The 1995 year-to-date same store sales increased 3.1% over the 1994 year-to-date sales. The increase in sales reflects the favorable consumer response to the "Vons Is Value" marketing campaign, slight overall inflation in most product categories and the slowly improving economic environment in Southern California offset by competitive new store, remodel and conversion activity. Costs and Expenses. Costs and expenses for the forty weeks ended October 8, 1995 were $3,707.9 million, a decrease of $22.4 million, or 0.6%, from the comparable 1994 period. Cost of sales and buying and occupancy expenses as a percentage of sales were 74.8% for the forty weeks ended October 8, 1995, a decrease of 0.9 percentage points, compared with the forty weeks ended October 9, 1994. The impact of lower prices has been more than offset by decreased product costs achieved through better utilization of category management, more effective promotional offerings and increased private brand sales. Selling and administrative expenses as a percentage of sales were 21.3% in the 1995 period, an increase of 0.2 percentage points over the comparable 1994 period, which included a $5.0 million insurance deductible charge related to the Northridge earthquake. This increase reflects increased advertising expenses and higher service levels in the stores as well as negotiated union wage rate increases which were largely offset by improvements in sales per labor hour and a more efficient mix of store labor. Operating Income. Operating income for the forty weeks ended October 8, 1995 was $139.4 million, an increase of $49.3 million, or 54.7%, over the forty weeks ended October 9, 1994. Operating margin increased to 3.6% in the 1995 forty-week period versus 2.4% in the 1994 forty-week period. Excluding the 1994 restructuring charge, results were $109.1 million, or 2.9% of sales, for the forty weeks ended October 9, 1994. These increases primarily reflect the increase in gross margin partially offset by increased selling and administrative expenses. FIFO EBITDA was $233.4 million, or 6.1% of sales, for the forty weeks ended October 8, 1995. FIFO EBITDA excluding the earthquake insurance deductible was $206.7 million, or 5.4% of sales, for the forty weeks ended October 9, 1994. Interest Expense. Net interest expense for the forty weeks ended October 8, 1995 was $51.9 million, a decrease of $2.3 million from the comparable 1994 period. This decrease was due to lower average revolving debt borrowings partially offset by higher weighted average interest cost on revolving debt and the repurchases of higher interest cost subordinated debt. Income Tax Provision. The income tax provision for the forty weeks ended October 8, 1995 was $40.5 million, a 46.3% effective tax rate. The income tax provision for the forty weeks ended October 9, 1994 was $18.4 million, a 51.3% effective tax rate. Excluding the restructuring charge, the effective tax rate for the forty weeks ended October 9, 1994 was 48%. The decrease in the year-to-date 1995 effective tax rate reflects the increase in income before income tax provision. Income. Net income for the forty weeks ended October 8, 1995 was $47.0 million, or $1.07 per share, compared with net income of $17.5 million, or $.40 per share, for the forty weeks ended October 9, 1994. Net income for the forty weeks ended October 9, 1994 included a $19.0 million, or $.26 per share, restructuring charge. Labor Contract Status The Company renegotiated its contract with the Southern California United Food and Commercial Workers International Unions. The new contract replaces the previous contract which was scheduled to expire on October 6, 1996. The new contract will expire on October 3, 1999. Over the term of the new contract, it is anticipated that labor cost increases will be consistent with increases experienced by the Company in recent years. Liquidity and Capital Resources The Company's primary sources of liquidity are cash flows from operations and available credit under its revolving debt. On February 17, 1995, the Company replaced its $475 million Revolving Credit Facility and related $150 million Term Loan Facility with a $625 million Revolving Loan Agreement (the "Revolving Loan"). Management believes that these sources adequately provide for its working capital, capital expenditure and debt service needs. Net cash provided by operating activities was $59.5 million in third quarter 1995 compared with $87.2 million in third quarter 1994 and $197.7 million for the forty weeks ended October 8, 1995 compared with $134.9 million for the forty weeks ended October 9, 1994. These changes were due primarily to increases in net income and changes in assets and liabilities generally reflecting the timing of receipts and disbursements. The ratio of current assets to current liabilities was 0.76 to 1 at October 8, 1995 compared with 0.83 to 1 at January 1, 1995. The decrease in the ratio of current assets to current liabilities reflects the impact of classifying the current portion of the 6-5/8% Senior Subordinated Debentures. Net cash used for investing activities was $27.4 million in third quarter 1995 compared with $32.6 million in third quarter 1994 and $65.0 million for the forty weeks ended October 8, 1995 compared with $86.8 million for the forty weeks ended October 9, 1994. Full-year 1995 capital expenditures are expected to be $145 million, of which $110 million is expected to be cash capital expenditures, and are lower than anticipated since certain store projects have been delayed until 1996. Capital expenditures for 1996 are expected to be approximately $205 million, of which $165 million is expected to be cash capital expenditures. During the forty weeks ended October 8, 1995, the Company opened 12 stores, closed 17 stores and completed 29 store remodel projects. Capital expenditures in 1995 have been and will continue to be funded out of cash provided by operations, revolving debt and/or through operating leases. The capital expenditure program has substantial flexibility and is subject to revision based on various factors; including, but not limited to, business conditions, changing time constraints, cash flow requirements and competitive factors. In the near term, if the Company were to reduce substantially or postpone these programs, there would be no substantial impact on current operations and it is likely that more cash would be available for debt servicing. In the long-term, if these programs were substantially reduced, in the Company's opinion, its operating business and ultimately its cash flow would be adversely impacted. Net cash used by financing activities was $31.6 million in third quarter 1995 compared with $54.5 million in third quarter 1994 and $135.4 million for the forty weeks ended October 8, 1995 compared with $50.4 million for the forty weeks ended October 9, 1994. The level of borrowings under the Company's revolving debt is dependent primarily upon cash flows from operations and capital expenditure requirements. At October 8, 1995, the Company's revolving debt borrowings totaled $205.9 million compared with $149.8 million at January 1, 1995. This change reflects the replacement of the $150 million Term Loan Facility with revolving debt borrowings and borrowings relating to the capital expenditure program offset by cash provided from operating activities. At October 8, 1995, the Company had available unused credit of $418.7 million under its Revolving Loan, an increase of $167.5 million since January 1, 1995. This increase is due to decreased total borrowings as well as the issuance, outside of the Revolving Loan, of a $70.4 million letter of credit which previously had been issued under the Revolving Loan. For the forty weeks ended October 8, 1995 the weighted average interest cost on revolving debt was 7.5%, the corresponding bank prime rate at October 8, 1995 was 8.75%. PART II. OTHER INFORMATION Item 1. Legal Proceedings Not applicable. Item 2. Changes in Securities Not applicable. Item 3. Defaults upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 10.1.7 Amendment to Revolving Loan Agreement dated February 17, 1995 by and among the Registrant, the banks named therein, and Bank of America, NT & SA and The Chase Manhattan Bank, N.A. as managing agents, dated August 4, 1995. 27 Financial Data Schedule. Management Contracts or Compensatory Plans or Arrangements 10.24 Employment Arrangement between the Registrant and Terry R. Peets dated September 6, 1995. 10.25 Severance Agreement between the Registrant and Terry R. Peets dated September 6, 1995. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended October 8, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE VONS COMPANIES, INC. Date: November 21, 1995 /s/ LAWRENCE A. DEL SANTO --------------------------------- Lawrence A. Del Santo Chairman and Chief Executive Officer Date: November 21, 1995 /s/ PAMELA K. KNOUS --------------------------------- Pamela K. Knous Executive Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit No. Description - ------- ----------- 10.1.7 Amendment to Revolving Loan Agreement dated February 17, 1995 by and among the Registrant, the banks named therein, and Bank of America NT & SA and The Chase Manhattan Bank, N.A. as managing agents, dated August 4, 1995. 27 Financial Data Schedule. 10.24 Employment Arrangement between the Registrant and Terry R. Peets dated September 6, 1995. 10.25 Severance Agreement between the Registrant and Terry R. Peets dated September 6, 1995. EX-27 2
5 This schedule contains summary financial information extracted from the Company's Consolidated Statement of Operations for the forty weeks ended October 8, 1995, the Consolidated Balance Sheet as of October 8, 1995 and the accompanying notes thereto and is qualified in its entirety by reference to such financial statements. 9-MOS JAN-01-1995 OCT-08-1995 6,300 0 31,000 0 345,200 436,300 1,699,200 509,900 2,170,900 573,600 689,300 4,300 0 0 597,200 2,170,900 3,847,300 3,847,300 2,875,500 3,707,900 0 0 51,900 87,500 40,500 47,000 0 0 0 47,000 1.07 1.07
EX-1 3 EXHIBIT 10.17 Amendment No. 1 --------------- Reference is made to that certain Revolving Loan agreement dated as of February 17, 1995 (the "Loan Agreement") among The Vons Companies, Inc., Bank of America National Trust and Savings Association, as Documentation Agent, The Chase Manhattan Bank, N.A., as Administrative Agent and the Banks party thereto. Terms defined in the Loan Agreement are used herein with the same meanings. Borrower, the Administrative Agent and the Banks hereby agree as follows: 1. "Applicable Commitment Fee Rate" The definition of ------------------------------ "Applicable Commitment Fee Rate" in Section 1.1 of the Loan --- Agreement is amended to read as follows: "Applicable Commitment Fee Rate" means, for ------------------------------ each Pricing Period, the rate set forth below (expressed in basis points) opposite the Applicable Pricing Level for that Pricing Period:
Pricing Level Rate ------------- ---- I 10.00 II 12.50 III 12.50 IV 15.00 V 20.00 VI 25.00 VII 31.25"
2. "Applicable Eurodollar Rate Margin" The definition --------------------------------- of "Applicable Eurodollar Rate Margin" in Section 1.1 of the --- Loan Agreement is hereby amended to read as follows: "Applicable Eurodollar Rate Margin" --------------------------------- means, for each Pricing Period, the interest rate set forth below (expressed in basis points) opposite the Applicable Pricing Level for that Pricing Period:
Pricing Level Margin ------------- ------ I 22.50 II 25.00 III 32.50 IV 37.50 V 50.00 - 1 - VI 62.50 VII 75.00
3. "Applicable Standby Letter of Credit Fee Rate" The -------------------------------------------- definition of "Applicable Standby Letter of Credit Fee Rate" in Section 1.1 of the Loan Agreement is hereby amended to read as - ----------- follows: "Applicable Standby Letter of Credit ----------------------------------- Fee Rate" means, for each Pricing Period, -------- the rate set forth below (expressed in basis points) opposite the Applicable Pricing Level for that Pricing Period:
Pricing Level Rate ------------- ---- I 12.50 II 15.00 III 22.50 IV 27.50 V 40.00 VI 52.50 VII 65.00
4. "Applicable Pricing Level" The definition of ------------------------ "Applicable Pricing Level" in Section 1.1 of the Loan Agreement ----------- is hereby amended to read as follows: "Applicable Pricing Level" means, for each ------------------------ Pricing Period, the pricing level set forth below opposite the pricing criteria achieved by Borrower as of the first day of that Pricing Period (and, if such pricing criteria are set forth opposite different pricing levels, then the pricing level set forth below that is more favorable to Borrower):
Level Pricing Criteria ----- ---------------------------------- Interest Senior Coverage Ratio Debt Rating -------------- ----------- I Equal to or At least greater than 5.75 A or A2 II Equal to or A- or A3 greater than 5.25 but less than 5.75 to 1.00 - 2 - III Equal to or BBB+ or greater than 4.75 Baa1 but less than 5.25 to 1.00 IV Equal to or BBB or greater than 4.25 Baa2 to 1.00 but less than 4.75 to 1.00 V Equal to or BBB- or greater than 3.75 Baa3 to 1.00 but less than 4.25 to 1.00 VI Equal to or BB+ or greater than 3.00 Ba1 to 1.00 but less than 3.75 to 1.00 VII Less than 3.00 to Below 1.00 BB+ or Ba1
5. Counterparts. This Amendment may be executed in ------------ counterparts in accordance with Section 11.7 of the Loan ---- Agreement. 6. Confirmation. In all other respects, the Loan ------------ Agreement is hereby confirmed. Dated as of August 4 , 1995. --- THE VONS COMPANIES, INC. By /S/ Pamela Knous ------------------------------------------- Its Pamela K. Knous, E.V.P. & C.F.O. -------------------------------------- [Printed Name and Title] By /S/ T. J. Wallock ------------------------------------------- Its Terrence J. Wallock, E.V.P & General Counsel ------------------------------------- [Printed Name and Title] - 3 - THE CHASE MANHATTAN BANK, N.A., as Administrative Agent By /S/ Ellen Gutrog ------------------------------------------- Its Ellen Gutrog V.P -------------------------------------- [Printed Name and Title] THE CHASE MANHATTAN BANK, N.A., as a Bank By /S/ Ellen Gutrog ------------------------------------------- Its Ellen Gutrog V.P --------------------------------------- [Printed Name and Title] BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] THE BANK OF NOVA SCOTIA, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 4 - THE CHASE MANHATTAN BANK, N.A., as Administrative Agent By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] THE CHASE MANHATTAN BANK, N.A., as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank By /s/ Gina M. West ------------------------------------------- Gina M. West Its Vice President -------------------------------------- [Printed Name and Title] THE BANK OF NOVA SCOTIA, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] THE CHASE MANHATTAN BANK, N.A., as Administrative Agent By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 4 - THE CHASE MANHATTAN BANK, N.A., as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] THE BANK OF NOVA SCOTIA, as a Bank By /s/ Chris Johnson ------------------------------------------- Its Sr. Relationship Mgr. -------------------------------------- [Printed Name and Title] Chris Johnson - 4 - CITICORP USA, INC., as a Bank By /S/ W. P. Stengel ------------------------------------------- W. P. Stengel Its Vice President -------------------------------------- [Printed Name and Title] NATIONSBANK OF TEXAS, N.A., as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] ABN AMRO BANK N.V., as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] FIRST INTERSTATE BANK OF CALIFORNIA, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 5 - CITICORP USA, INC., as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] NATIONSBANK OF TEXAS, N.A., as a Bank By /s/ M. M. SHAFROTH ------------------------------------------- Its Michele M. Shafroth - Senior Vice President --------------------------------------- [Printed Name and Title] ABN AMRO BANK N.V., as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] FIRST INTERSTATE BANK OF CALIFORNIA, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 5 - CITICORP USA, INC., as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] NATIONSBANK OF TEXAS, N.A., as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] ABN AMRO BANK N.V., as a Bank By /s/ ELLEN M. COLEMAN JOHN A MILLER ------------------------------------------- Ellen M. Coleman Its Assistant Vice President John A. Miller -------------------------------------- [Printed Name and Title] Vice President FIRST INTERSTATE BANK OF CALIFORNIA, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 5 - CITICORP USA, INC., as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] NATIONSBANK OF TEXAS, N.A., as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] ABN AMRO BANK N.V., as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] FIRST INTERSTATE BANK OF CALIFORNIA, as a Bank By /s/ W. J. BAIRD ------------------------------------------- William J. Baird Its Senior Vice President -------------------------------------- [Printed Name and Title] - 5 - FIRST NATIONAL BANK OF CHICAGO, as a Bank By /s/ L. GENE BEUBE ------------------------------------------- L. Gene Beube Its Senior Vice President -------------------------------------- [Printed Name and Title] SOCIETE GENERALE, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] UNION BANK, as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] BANK OF HAWAII, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 6 - FIRST NATIONAL BANK OF CHICAGO, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] SOCIETE GENERALE, as a Bank By /s/ MAUREEN KELLY ------------------------------------------- MAUREEN E. KELLY Its Vice President -------------------------------------- [Printed Name and Title] UNION BANK, as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] BANK OF HAWAII, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 6 - FIRST NATIONAL BANK OF CHICAGO, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] SOCIETE GENERALE, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] UNION BANK, as a Bank By /s/ ANN M. YASUDA ------------------------------------------- Its Ann M. Yasuda, Vice President --------------------------------------- [Printed Name and Title] BANK OF HAWAII, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 6 - FIRST NATIONAL BANK OF CHICAGO, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] SOCIETE GENERALE, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] UNION BANK, as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] BANK OF HAWAII, as a Bank By /s/ MARCY E. FLEMING ------------------------------------------- Its MARCY E. FLEMING - VICE PRESIDENT -------------------------------------- [Printed Name and Title] - 6 - CHEMICAL BANK, as a Bank By /s/ NEIL R. BZLAN ------------------------------------------- Its -------------------------------------- [Printed Name and Title] CREDIT LYONNAIS LOS ANGELES BRANCH, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] THE INDUSTRIAL BANK OF JAPAN, LTD., LOS ANGELES AGENCY, as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] PNC BANK, NATIONAL ASSOCIATION, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 7 - CHEMICAL BANK, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] CREDIT LYONNAIS LOS ANGELES BRANCH, as a Bank By /s/ THIERRY VINCENT ------------------------------------------- Thierry Vincent Its Vice President -------------------------------------- [Printed Name and Title] THE INDUSTRIAL BANK OF JAPAN, LTD., LOS ANGELES AGENCY, as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] PNC BANK, NATIONAL ASSOCIATION, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] CREDIT LYONNAIS CAYMAN ISLAND BRANCH, as a Bank By /s/ THIERRY VINCENT ------------------------------------------- Thierry Vincent Authorized Signatory - 7 - CHEMICAL BANK, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] CREDIT LYONNAIS LOS ANGELES BRANCH, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] THE INDUSTRIAL BANK OF JAPAN, LTD., LOS ANGELES AGENCY, as a Bank By /s/ T. AKIYAMA ------------------------------------------- Its Takahide Akiyama, Joint General Manager --------------------------------------- [Printed Name and Title] PNC BANK, NATIONAL ASSOCIATION, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] - 7 - CHEMICAL BANK, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] CREDIT LYONNAIS LOS ANGELES BRANCH, as a Bank By ------------------------------------------- Its -------------------------------------- [Printed Name and Title] THE INDUSTRIAL BANK OF JAPAN, LTD., LOS ANGELES AGENCY, as a Bank By ------------------------------------------- Its --------------------------------------- [Printed Name and Title] PNC BANK, NATIONAL ASSOCIATION, as a Bank By /s/ ANTHONY L. TRUNZO ------------------------------------------- Anthony L. Trunzo Its Vice President -------------------------------------- [Printed Name and Title] - 7 - THE TOKAI BANK, LTD. LOS ANGELES AGENCY, as a Bank By /s/ HIROMU KITO ------------------------------------------- Its Hiromu Kito, Joint General Manager -------------------------------------- [Printed Name and Title] - 8 - EX-3 4 EXIBIT 10.24 [This letter appears on The Vons Companies, Inc. letterhead] September 6, 1995 Mr. Terry R. Peets 327 Coral Avenue Balboa Island, CA 92662 Dear Terry: On behalf of The Vons Companies, Inc., I am pleased to extend to you an offer of employment as Executive Vice President reporting to Richard E. Goodspeed, President and Chief Operating Officer. The terms of this offer are as follows: 1. Base Salary ----------- You will be paid a base salary at an annual rate of $275,000, payable every other week. 2. Sign-on Bonus ------------- You will be given a one-time bonus in the amount of $30,000 for accepting this position and in consideration of the forfeiture of certain benefits from your former employment. 3. 1995 Bonus Eligibility ---------------------- You will be included in the Company's bonus plan at a target bonus of 50% of your base salary. Any bonus will be paid pursuant to the terms of such plan, with your entire annualized base salary to be included in the calculation for the Company's 1995 fiscal year plan. 4. Stock Option Grant ------------------ Pursuant to The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan (the "Plan"), you will be granted fifty thousand (50,000) non-qualified stock options at fair market value as defined in the Plan. You shall vest 25% of the options at the end of each full year of employment, until fully vested after year four. 5. Severance Agreement ------------------- You will be provided a Severance Agreement in the form attached. 6. Pension Plan ------------ You will become a participant in the Vons Pension Plan after one year of employment. 7. Supplemental Executive Retirement Plan (SERP) --------------------------------------------- You will become a participant in the Vons SERP. Credited service for participation will be as set forth on Appendix A hereto. 8. 401(k) Profit Sharing Plan -------------------------- You will become a participant in the Vons Personal Choice Profit Sharing Plan after one year of employment. At that time you will be provided the opportunity to "roll-over" any distributions you receive from your present employer's qualified retirement plan. 9. Executive Physical ------------------ You will become a participant in the Vons Executive Physical Program which annually provides you with an allowance to undergo a personal physical examination. 10. Health Care, Life Insurance, and Other Benefits ----------------------------------------------- You will be eligible for the flexible benefits plan called "Personal Choice, The Vons Advantage." You have been provided with the appropriate booklets for your selection in accordance with the terms of the plan. Coverage begins on the first day of employment. 11. Long Term Disability -------------------- At your election you can become a participant in the Vons Long-Term Disability Plan (LTD). In the event of your becoming disabled, Vons will continue your salary through the LTD waiting period. 12. Vacation -------- You will be eligible for four weeks annual paid vacation. 13. Indemnification --------------- The Company will indemnify and hold you harmless from any damages or costs, including attorney's fees, arising from any claims brought by your former employer relating to your resignation from the employer or your employment by the Company. The Company shall reimburse you for the reasonable costs, including reasonable attorney's fees, you may incur in recovering from your former employer any salary, vacation pay, stock and/or other compensation or benefits in which you are vested or to which you are otherwise clearly entitled as of your last day of employment with such employer, to the extent you are not otherwise compensated for any such amounts. In the event of, and for so long as, you may be restrained from performing duties for the Company by reason of any court order or other such legal process, you shall continue to receive salary and benefits as provided hereunder, subject to the Severance Agreement. You agree to comply with directions from the Company advising you of your obligation to not disclose to the Company any proprietary or trade information of your former employer of which you may be aware and to otherwise comport yourself in a manner consistent with your legal obligations not to illegally use any such information. 14. Employment Date --------------- You will begin employment on September 6, 1995. Yours very truly, /S/ Lawrence Del Santo Lawrence A. Del Santo LADS/la ACCEPTED: /S/ TERRY PEETS 9/6/95 - ------------------------------------------ -------------------- TERRY R. PEETS DATE APPENDIX A
Vesting of Individual Supplemental Retirement Plan YEARS OF SERVICE Remuneration 5 6 7 8 9 10 11 12 13 14 15 $100,000 $20,000 $22,000 $24,000 $26,000 $28,000 $30,000 $32,000 $34,000 $36,000 $38,000 $40,000 $150,000 $30,000 $33,000 $36,000 $39,000 $42,000 $45,000 $48,000 $51,000 $54,000 $57,000 $60,000 $200,000 $40,000 $44,000 $48,000 $52,000 $56,000 $60,000 $64,000 $68,000 $72,000 $76,000 $80,000 $300,000 $60,000 $66,000 $72,000 $78,000 $84,000 $90,000 $96,000 $102,000 $108,000 $114,000 $120,000 $400,000 $80,000 $88,000 $96,000 $104,000 $112,000 $120,000 $128,000 $136,000 $144,000 $152,000 $160,000 $500,000 $100,000 $110,000 $120,000 $130,000 $140,000 $150,000 $160,000 $170,000 $180,000 $190,000 $200,000 $600,000 $120,000 $132,000 $144,000 $156,000 $168,000 $180,000 $192,000 $204,000 $216,000 $228,000 $240,000 $700,000 $140,000 $154,000 $168,000 $182,000 $196,000 $210,000 $224,000 $238,000 $252,000 $266,000 $280,000 $800,000 $160,000 $176,000 $192,000 $208,000 $224,000 $240,000 $256,000 $272,000 $288,000 $304,000 $320,000 $900,000 $180,000 $198,000 $216,000 $234,000 $252,000 $270,000 $288,000 $306,000 $324,000 $342,000 $360,000 $1,000,000 $200,000 $220,000 $240,000 $260,000 $280,000 $300,000 $320,000 $340,000 $360,000 $380,000 $400,000 $1,250,000 $250,000 $275,000 $300,000 $325,000 $350,000 $375,000 $400,000 $425,000 $450,000 $475,000 $500,000
EX-2 5 EXHIBIT 10.25 S E V E R A N C E A G R E E M E N T -------------------------------------- THIS SEVERANCE AGREEMENT is entered into effective as of this 6th day of September, 1995, by and between the Vons Companies, Inc., a Michigan corporation, ("Company") and Terry R. Peets ("Executive"). R E C I T A L S A. Executive has accepted an offer of employment as Executive Vice President of the Company contained in a letter from Lawrence A. Del Santo dated September 6, 1995 (the "Offer Letter"). B. Executive and the Company desire to provide for the payment of severance benefits to Executive as his exclusive remedy in the event of termination of employment from the Company, as provided herein. NOW, THEREFORE, in consideration for Executive agreeing to accept employment with the Company, the Company and Executive hereby agree as follows: 1. Either Executive or the Company may terminate Executive's employment at any time. In any such event, the Company's sole obligation to Executive shall be as follows: (a) If Executive resigns other than for "Good Reason" (as defined in subsection (c) below) or is terminated by the Company for "Cause" (as defined in subsection (d) below), Executive shall be paid any accrued but unused vacation and any earned but unpaid base salary as of the date of termination and any benefits to which Executive may be entitled under any Company benefit plan. Executive Shall not be entitled to any other compensation whatsoever, including any performance bonus, any unvested stock options or any retirement benefits except as provided in the Company benefit plans other than the Vons Companies, Inc. Severance Pay Plan, from which no benefits will be paid. (b) If Executive resigns for "Good Reason" (as defined in subsection (c) below), or if the Company terminates Executive other than for "Cause" (as defined in subsection (d) below), Executive shall receive any accrued but unused vacation, any earned but unpaid base salary and prorated performance bonus as of the date of termination, any benefits to which Executive may be entitled under any Company benefit plan, and one year of severance payments which shall be paid to Executive pursuant to the Vons Companies, Inc. Severance Pay Plan, as in effect as of this date, and in addition shall receive the following: (1) salary continuance equal to his base salary (but no performance bonus) through September 5, 1997, payable on normal payroll dates and without interest, provided, however, that payments hereunder shall not commence until all severance payments payable to Executive under the Vons Companies, Inc. Severance Pay Plan have been exhausted; (2) continuation of medical and life (but not disability) insurance benefits at the Company's expense for as long as salary continuance or severance payments are made. (c) As used in this Agreement, "Good Reason" for resignation shall mean (i) a substantial change in the nature, or diminution in the status of, Executive's duties or position or relocation of Executive's principal place of employment to any place more than 50 miles from the office theretofore regularly occupied by Executive; or (ii) a change in control of the Company resulting from (a) the merger or consolidation of the Company with an entity that is not a current stockholder of the Company as of the effective date of this Agreement resulting in the holders of the Company's voting stock immediately prior to such transaction holding less than fifty percent (50%) of the total voting stock of the surviving corporation after such transaction, or (b) any acquisition of stock by a person or entity that is not a current stockholder as of the effective date of this Agreement that results in that acquiring person or entity being the beneficial owner of fifty percent (50%) or more of the Company's voting stock. (d) As used in this Agreement, "Cause" for termination shall mean (i) embezzlement or fraud against the Company; (ii) conviction of a felony which in the judgment of the Board of Directors of the Company adversely affects the business or reputation of the Company; (iii) conduct in wanton and knowing disregard of corporate policy; and (iv) willful and continuous failure, in the judgment of the Board of Directors, to perform substantially the reasonably assigned duties with the Company after written notice and reasonable opportunity to perform. (e) If the termination of employment of Executive shall occur by reason of a disability which qualifies as long-term disability under the Company's long-term disability plan ("Disability Plan"), Executive shall be entitled to salary continuance up to the date Executive becomes eligible to receive such long-term disability benefits under the Disability Plan, but no salary continuance thereafter. 2. The payments provided for herein shall be Executive's sole and exclusive remedy in the event of his termination of employment with the Company, and Executive expressly hereby waives any other remedy, in law or in equity, which might otherwise be available to him but for this Agreement. 3. The provisions of this Agreement shall terminate and be null and void and of no further force or effect in the event of Executive's death if such death occurs prior to termination of employment which would trigger payments to be made hereunder. 4. This Agreement is intended to be construed and governed in accordance with the provisions of the laws of the State of California. 5. If any legal action or proceeding is brought to enforce this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorney's fees and other costs incurred in such action or proceeding, in addition to any other relief to which such party may be entitled. 2 6. This Agreement is subject to amendment only by subsequent written agreement between, and executed by, the parties hereto. Commencement or continuation of any custom, practice or usage by the Company shall not constitute an amendment hereof or otherwise give rise to enforceable rights or create obligations of the Company. NOW, THEREFORE, the parties hereto have executed this Agreement effective as of the date set forth in the first paragraph of this Agreement. /S/ TERRY PEETS ----------------------------- Terry R. Peets THE VONS COMPANIES, INC., a Michigan corporation, By /S/ LAWRENCE DEL SANTO -------------------------- 3 -----END PRIVACY-ENHANCED MESSAGE-----