10-Q

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 (16 weeks) ended June 15, 2002.

[_]    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 1-5418

SUPERVALU INC.

(Exact name of registrant as specified in its Charter)

DELAWARE	41-0617000
(State or other jurisdiction of	(I.R.S. Employer identification No.)
incorporation or organization)
11840 VALLEY VIEW ROAD,
EDEN PRAIRIE, MINNESOTA	55344
(Address of principal executive offices)	(Zip Code)

(952) 828-4000

(Registrant’s telephone number, including area code)

N/A

(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    ¨

The number of shares outstanding of each of the issuer’s classes of Common Stock as of July 12, 2002 is as follows:

Title of Each Class	Shares Outstanding
Common Shares	133,739,933

PART I – FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

SUPERVALU INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

	First quarter (16 weeks) ended
	June 15, 2002		% of sales		June 16, 2001		% of sales
Net sales	$	5,849,231	100.00	%	$	6,931,568	100.00	%
Costs and expenses
Cost of sales		5,092,275	87.06			6,164,652	88.94
Selling and administrative expenses		582,682	9.96			600,440	8.66
Amortization of goodwill		—				14,865	0.21
Interest
Interest expense		58,052	0.99			62,657	0.90
Interest income		6,217	0.10			6,430	0.09
Interest expense, net		51,835	0.89			56,227	0.81
Total costs and expenses		5,726,792	97.91			6,836,184	98.62
Earnings before income taxes		122,439	2.09			95,384	1.38
Provision for income taxes
Current		39,718				35,367
Deferred		5,566				3,049
Income tax expense		45,284	0.77			38,416	0.56
Net earnings	$	77,155	1.32	%	$	56,968	0.82	%
Weighted average number of common shares outstanding
Diluted		136,139				132,576
Basic		133,812				132,493
Net earnings per common share—diluted	$	0.57			$	0.43
Net earnings per common share—basic	$	0.58			$	0.43
Dividends per common share	$	.1400			$	.1375

All data subject to year-end audit.

See notes to consolidated financial statements.

2

SUPERVALU INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF NET SALES AND EARNINGS

(In thousands, except percent data)

	First Quarter (16 weeks) ended
	June 15, 2002			June 16, 2001
Net Sales
Retail food	$	2,812,221		$	2,820,199
% of total		48.1	%		40.7	%
Food distribution		3,037,010			4,111,369
% of total		51.9	%		59.3	%
Total net sales	$	5,849,231		$	6,931,568
		100.0	%		100.0	%
Earnings
Retail food	$	129,145		$	87,640
% of sales		4.6	%		3.1	%
Food distribution		57,173			75,787
% of sales		1.9	%		1.8	%
Subtotal		186,318			163,427
% of sales		3.2	%		2.4	%
General corporate expenses		(12,044	)		(11,816	)
Total operating earnings		174,274			151,611
% of sales		3.0	%		2.2	%
Interest expense		(58,052	)		(62,657	)
Interest income		6,217			6,430
Earnings before income taxes		122,439			95,384
Provision for income taxes		(45,284	)		(38,416	)
Net earnings	$	77,155		$	56,968

All data subject to year-end audit.

See notes to consolidated financial statements.

3

SUPERVALU INC. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	First Quarter		Fiscal Year End
	June 15, 2002		February 23, 2002
Assets
Current Assets
Cash and cash equivalents	$	346,848	$	12,171
Receivables, net		455,519		447,243
Inventories, net		1,075,096		1,038,050
Other current assets		80,929		78,030
Total current assets		1,958,392		1,575,494
Long-term notes receivable, net		135,924		137,326
Property, plant and equipment, net		2,215,412		2,208,633
Goodwill		1,576,584		1,531,312
Other assets		351,495		343,484
Total assets	$	6,237,807	$	5,796,249
Liabilities and Stockholders’ Equity
Current Liabilities
Notes payable	$	—	$	27,465
Accounts payable		1,129,985		1,013,140
Current debt and obligations under capital leases		530,123		356,408
Other current liabilities		274,914		293,498
Total current liabilities		1,935,022		1,690,511
Long-term debt and obligations under capital leases		1,996,911		1,875,873
Other liabilities and deferred income taxes		334,283		330,727
Commitments and contingencies
Total stockholders’ equity		1,971,591		1,899,138
Total liabilities and stockholders’ equity	$	6,237,807	$	5,796,249

All data subject to year-end audit.

See notes to consolidated financial statements.

4

SUPERVALU INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

	Common Stock						Treasury Stock
	Shares	Amount		Capital in Excess of Par Value			Shares		Amount			Accumulated Other Comprehensive Loss			Retained Earnings			Total
BALANCES AT FEBRUARY 24, 2001	150,670	$	150,670	$	128,492		(18,296	)	$	(342,100	)	$	—		$	1,846,087		$	1,783,149
Net earnings			—							—						198,326			198,326
Sales of common stock under option plans			—		(2,103	)	1,401			28,005			—			—			25,902
Cash dividends declared on common stock—$.5575 per share			—				—						—			(74,429	)		(74,429	)
Compensation under employee incentive plans	—		—		(4,945	)	576			10,293			—			—			5,348
Other comprehensive loss			—										(7,075	)		—			(7,075	)
Purchase of shares for treasury			—				(1,462	)		(32,083	)		—			—			(32,083	)
BALANCES AT FEBRUARY 23, 2002	150,670	$	150,670	$	121,444		(17,781	)	$	(335,885	)	$	(7,075	)	$	1,969,984		$	1,899,138
Net earnings			—				—			—			—			77,155			77,155
Sales of common stock under option plans			—		(4,207	)	2,074			44,935			—			—			40,728
Cash dividends declared on common stock—$.1400 per share			—		—								—			(18,902	)		(18,902	)
Compensation under employee incentive plans			—		1,816		170			3,519			—						5,335
Other comprehensive loss			—							—			105			—			105
Purchase of shares for treasury	—		—				(1,085	)		(31,968	)		—			—			(31,968	)
BALANCES AT JUNE 15, 2002	150,670	$	150,670	$	119,053		(16,622	)	$	(319,399	)	$	(6,970	)	$	2,028,237		$	1,971,591

All data subject to year-end audit.

See notes to consolidated financial statements.

5

SUPERVALU INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year-to-date (16 weeks ended)
	June 15, 2002			June 16, 2001
Net cash provided by operating activities	$	198,172		$	217,956
Cash flows from investing activities
Additions to long-term notes receivable		(6,154	)		(16,799	)
Proceeds received on long-term notes receivable		6,150			11,137
Proceeds from sale of assets		9,878			22,303
Purchases of property, plant and equipment		(138,018	)		(67,416	)
Other investing activities		2,816			(24,507	)
Net cash used in investing activities		(125,328	)		(75,282	)
Cash flows from financing activities
Net increase in checks outstanding, net of deposits		26,901			30,947
Net reduction of short-term notes payable		(27,465	)		(105,452	)
Proceeds from issuance of long-term debt		296,535			10,000
Repayment of long-term debt		(4,116	)		(5,576	)
Net proceeds from the sale of common stock under option plans		29,960			(154	)
Dividends paid		(18,724	)		(36,525	)
Payment for purchase of treasury stock		(31,968	)		—
Other financing activities		(9,290	)		(6,239	)
Net cash provided by (used in) financing activities		261,833			(112,999	)
Net increase in cash and cash equivalents		334,677			29,675
Cash and cash equivalents at beginning of year		12,171			10,396
Cash and cash equivalents at the end of first quarter	$	346,848		$	40,071
Supplemental Information:
Pretax LIFO	$	975		$	2,341
Pretax depreciation and amortization	$	86,907		$	103,021

All data subject to year-end audit.

See notes to consolidated financial statements.

6

SUPERVALU INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GENERAL

Accounting Policies

The summary of significant accounting policies is included in the notes to consolidated financial statements set forth in the Annual Report on Form 10-K of SUPERVALU INC. (“SUPERVALU” or the “Company”) for its fiscal year ended February 23, 2002 (“fiscal 2002”).

Statement of Registrant

The data presented herein is unaudited but, in the opinion of management, includes all adjustments necessary for a fair presentation of the condensed consolidated financial position of the Company and its subsidiaries at June 15, 2002 and June 16, 2001, and the results of the Company’s operations and condensed cash flows for the periods then ended. These interim results are not necessarily indicative of the results of the fiscal years as a whole.

ADOPTION OF NEW ACCOUNTING STANDARDS

Goodwill and Other Intangible Assets

In June 2001, the Financial Accounting Standards Board (FASB) approved Statement of Financial Accounting Standard (SFAS) No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires companies to cease amortizing goodwill and test at least annually for impairment. For SUPERVALU, amortization of goodwill ceased on February 24, 2002, at which time it was tested for impairment. Each of the Company’s reporting units were tested for impairment by comparing the fair value of the respective reporting unit with its carrying value as of February 24, 2002. Fair value was determined primarily based on valuation studies performed by the Company which considered the discounted cash flow method consistent with the Company’s valuation guidelines. As a result of impairment tests performed, SUPERVALU recorded no impairment loss.

The following schedule reconciles net earnings and earnings per common share to adjusted net earnings and adjusted earnings per common share, respectively, to exclude amortization expense related to goodwill for the first quarter ended June 16, 2001, that is no longer being amortized upon the adoption of SFAS No. 142:

	June 15, 2002		June 16, 2001
	(16 weeks)		(16 weeks)
Reported net earnings	$	77,155	$	56,968
Goodwill amortization		—		14,865
Adjusted net earnings	$	77,155	$	71,833
Diluted earnings per common share:
Reported net earnings	$	.57	$	.43
Goodwill amortization		—		.11
Adjusted net earnings	$	.57	$	.54
Basic earnings per common share:
Reported net earnings	$	.58	$	.43
Goodwill amortization		—		.11
Adjusted net earnings	$	.58	$	.54

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In August 2001, the FASB issued SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” The Company adopted the provisions of SFAS No. 144 effective February 24, 2002. As a result of impairment tests performed, SUPERVALU recorded no impairment loss.

RESTRUCTURE AND OTHER CHARGES

In the fourth quarter of fiscal 2002, the Company identified additional efforts that will allow it to extend its distribution efficiency program begun early in fiscal 2001 and adjusted prior years’ restructure reserves for changes in estimates primarily related to real estate as a result of a softening real estate market. The additional distribution efficiency initiatives identified in fiscal 2002 primarily related to personnel reductions in transportation and administrative functions. The total pre-tax restructure charges were $46.3 million, of which $16.3 million is related to additional efficiency efforts, $17.8 million is related to changes in estimates for the fiscal 2001 restructure reserves and $12.2 million is related to changes in estimates for the fiscal 2000 restructure reserves.

Included in the $16.3 million of restructure charges for fiscal 2002 is $13.1 million related to severance and employee related costs and $3.2 million related to lease cancellation fees. These actions include a net reduction of approximately 800 employees throughout the organization. Management began the initiatives in fiscal 2003 and expects the majority of these actions to be completed by the end of fiscal 2003.

Details of the fiscal 2002 restructure activity for fiscal 2003 follow:

	Balance February 23, 2002		Fiscal 2003 Usage		Balance June 15, 2002
	(In thousands, except for employees)
Administrative realignment	$	8,000	$	131	$	7,869
Transportation efficiency initiatives		8,300		2,523		5,777
Total restructure and other charges	$	16,300	$	2,654	$	13,646
Employees		800		150		650

The reserves at the end of the first quarter of fiscal 2003 for fiscal 2002 restructure charges were $13.6 million, including $10.5 million for employee related costs and $3.1 million for lease cancellation fees.

In the fourth quarter of fiscal 2001, the Company recorded pre-tax restructure charges of $171.3 million including $89.7 million for asset impairment charges, $52.1 million for lease subsidies, lease cancellation fees, future payments on exited leased facilities and guarantee obligations and $39.8 million for severance and employee related costs, offset by a reduction in the fiscal 2000 restructure reserve of $10.3 million for lease subsidies and future payments on exited lease facilities. As a result of changes in estimates in fiscal 2002, the fiscal 2001 charges were increased by $17.8 million, including $19.1 million for increased lease liabilities in exiting the non-core retail markets and the disposal of non-core assets, offset by a net decrease of $1.3 million in restructure reserves for the consolidation of distribution centers.

Details of the fiscal 2001 restructure activity for fiscal 2003 follow:

	Balance February 23, 2002		Fiscal 2003 Usage		Balance June 15, 2002
	(In thousands, except for employees)
Consolidation of distribution centers	$	26,062	$	5,405	$	20,657
Exit of non-core retail markets		22,141		7,282		14,859
Disposal of non-core assets and other administrative reductions		7,748		1,768		5,980
Total restructure and other charges	$	55,951	$	14,455	$	41,496
Employees		750		400		350

The reserves at the end of the first quarter of fiscal 2003 for fiscal 2001 restructure charges were $41.5 million, including $35.5 million for lease subsidies, lease terminations and future payments on exited lease facilities and $6.0 million for employee related costs.

8

In fiscal 2000, the Company recorded pre-tax restructure and other charges of $103.6 million as a result of an extensive review to reduce costs and enhance efficiencies. The restructure charges included costs for facility consolidation, non-core store disposal, and rationalization of redundant and certain decentralized administrative functions. The original amount was reduced by $10.3 million in fiscal 2001, primarily for a change in estimate for the closure of a remaining facility. The amount was subsequently increased $12.2 million in fiscal 2002, primarily due to the softening real estate market.

Details of the fiscal 2000 restructuring activity for fiscal 2003 follow:

	Balance February 23, 2002		Fiscal 2003 Usage		Balance June 15, 2002
	(In thousands)
Facility consolidation	$	13,238	$	1,555	$	11,683
Non-core store disposal		4,611		561		4,050
Infrastructure realignment		142		142		—
Total restructure and other charges	$	17,991	$	2,258	$	15,733

The reserves at the end of first quarter of fiscal 2003 for fiscal 2000 restructure charges were $15.7 million, including $13.1 million for future payments on exited leased facilities and $2.6 million for unpaid employee benefits.

FINANCIAL INSTRUMENTS

In fiscal 2003, the Company entered into swap agreements in the notional amount of $225 million that exchange a fixed rate payment obligation for a floating rate payment obligation. The swaps have been designated as a fair value hedge on long-term fixed rate debt of the Company and are reflected in other assets in the consolidated balance sheets. At June 15, 2002, the hedge was highly effective. Changes in the fair value of the swaps and debt are reflected in the consolidated statements of earnings and through June 15, 2002, the net impact was zero.

On February 25, 2001, the effective date of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, the Company’s existing interest rate swap agreements were recorded at fair value in the Company’s consolidated balance sheets. On July 6, 2001, the swaps were terminated and the remaining fair market value adjustments, which are offsetting, are being amortized over the original term of the hedge.

The Company has only limited involvement with derivative financial instruments and uses them only to manage well-defined interest rate risks. The Company does not use financial instruments or derivatives for any trading or other speculative purposes.

COMMITMENTS AND CONTINGENCIES

In July 2002, several class action lawsuits were filed against the Company in the United States District Court for the District of Minnesota on behalf of purchasers of the Company’s securities between July 29, 1999 and June 26, 2002. The complaints allege that the Company and certain of its officers and directors violated Federal securities laws by issuing materially false and misleading statements relating to its financial performance. The Company believes that the lawsuits are without merit and intends to vigorously defend the actions. No damages have been specified in the complaints. The Company is unable to evaluate the claims at this early stage of the proceedings.

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

RESULTS OF OPERATIONS

In the first quarter of fiscal 2003, the Company achieved net sales of $5.8 billion compared to $6.9 billion in the first quarter of fiscal 2002. Net earnings for first quarter of fiscal 2003 were $77.2 million, and diluted earnings per share were $0.57. In the first quarter of fiscal 2002, net earnings were $57.0 million, and diluted earnings per share were $0.43. Net earnings for the first quarter of fiscal 2003 reflect the adoption of SFAS No. 142. The effect of the adoption of SFAS No. 142 was to increase earnings per share for the first quarter of fiscal 2003 by $0.11, reflecting the non-amortization of goodwill.

9

Net Sales

Net sales for the first quarter of fiscal 2003 of $5.8 billion decreased 15.9 percent from $6.9 billion last year. Retail food sales for the first quarter of fiscal 2003 were flat compared to the first quarter of last year, while food distribution sales decreased 26.1 percent compared to last year. Excluding the impact of retail operations exited in the first quarter of last year, total retail sales for the first quarter of fiscal 2003 increased approximately 4.0 percent. Same-store retail sales for the first quarter of fiscal 2003 were negative 1.1 percent, impacted by approximately 120 basis points in planned cannibalization within key expansion markets and a slower than anticipated recovery in the U.S. economy. Food distribution sales for the first quarter of fiscal 2003 decreased from last year reflecting customer losses, primarily the exit of the Kmart supply contract which terminated June 30, 2001. In addition, distribution sales decreased as a result of the impact of restructure activities.

Store activity over the past year, including licensed units, resulted in 151 net new stores opened, including the acquired 53 Deal$-Nothing Over a Dollar general merchandise stores, for a total of 1,330 stores at quarter end, an increase in square footage of approximately 8 percent over last year.

Gross Profit

Gross profit as a percentage of net sales increased to 12.9 percent for the first quarter of fiscal 2003 from 11.1 percent last year. The increase is primarily due to the growing proportion of the Company’s retail food business, which operates at a higher gross profit margin as a percentage of net sales than does the food distribution business and improved merchandising execution in the retail food business.

Selling and Administrative Expenses

Selling and administrative expenses were 10.0 percent of net sales for the first quarter of fiscal 2003, compared to 8.7 percent of net sales for the first quarter of last year. The increase in selling and administrative expenses as a percent of net sales is primarily due to the growing proportion of the Company’s retail food business, which operates at a higher selling and administrative expense as a percentage of net sales than does the food distribution business, lower overall expense leverage for retail resulting from the soft sales environment and increased labor and employee benefit costs.

Operating Earnings

The Company’s earnings before interest and taxes (EBIT) were $174.3 million for the first quarter of fiscal 2003 compared to $151.6 million for the first quarter of last year, a 15.0 percent increase. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 2.6 percent to $261.2 million, or 4.5 percent of net sales, for the first quarter of fiscal 2003 from $254.6 million, or 3.7 percent of net sales last year.

Retail food EBIT increased 47.4 percent to $129.1 million, or 4.6 percent of net sales, for the first quarter of fiscal 2003 from last year’s EBIT of $87.6 million, or 3.1 percent of net sales. Retail food EBITDA increased 26.3 percent to $175.4 million, or 6.2 percent of net sales, for the first quarter of fiscal 2003 from last year’s EBITDA of $138.9 million, or 4.9 percent of net sales. The increases reflect improved merchandising execution in retail and new store growth. Retail EBIT also reflects the favorable impact of the discontinuation of goodwill amortization effective February 24, 2002. Food distribution EBIT decreased 24.5 percent to $57.2 million, or 1.9 percent of net sales, for the first quarter of fiscal 2003 from last year’s EBIT of $75.8 million, or 1.8 percent of net sales. Food distribution EBITDA decreased 23.4 percent to $97.1 million, or 3.2% of net sales, for the first quarter of fiscal 2003 from last year’s EBITDA of $126.7 million, or 3.1% of net sales. Despite the sales decline, distribution EBIT and EBITDA, as a percent of net sales, were almost flat for the first quarter of fiscal 2003 compared to last year as logistics costs were reduced based on lower sales levels. The slight increase from last year in distribution EBIT as a percent of net sales also reflects the impact of the discontinuation of goodwill amortization effective February 24, 2002.

Net Interest Expense

Interest expense decreased to $58.1 million for the first quarter of fiscal 2003, compared with $62.7 million last year, reflecting lower average borrowing levels. Interest income remained relatively flat at $6.2 million for the first quarter of fiscal 2003 compared with last year.

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Income Taxes

The effective tax rate was 37.0 percent for the first quarter of fiscal 2003 compared with 40.3 percent last year. The decrease in the effective tax rate was primarily due to the discontinuation of goodwill amortization as of February 24, 2002, which was not deductible for income tax purposes.

Net Earnings

Net earnings were $77.2 million or $.57 per diluted share for the first quarter of fiscal 2003, compared with net earnings of $57.0 million or $.43 per diluted share last year.

Weighted average diluted shares increased to 136.1 million for the first quarter of fiscal 2003, compared with last year’s diluted shares of 132.6 million, reflecting the dilutive impact of stock options and common stock issued under options plans, offset in part by shares repurchased under the treasury stock program.

LIQUIDITY AND CAPITAL RESOURCES

Net cash from operations was $198.2 million for the first quarter of fiscal 2003, compared with $218.0 million last year. The decrease in cash from operations in the first quarter of fiscal 2003 was primarily attributable to a decrease in net working capital.

Cash used in investing activities was $125.3 million for the first quarter of fiscal 2003, compared with $75.3 million last year. In the first quarter of fiscal 2003, cash used in investing activities was primarily attributable to capital spending to fund retail store expansion, including the acquisition of Deal$-Nothing Over a Dollar stores, and remodeling and technology enhancements.

Cash provided by financing activities was $261.8 million for the first quarter of fiscal 2003, compared with cash used in financing activities of $113.0 million last year. In the first quarter of fiscal 2003, cash provided by financing activities primarily related to the $300 million 10-year 7 ½% bond offering completed in May 2002. On June 17, 2002, SUPERVALU used $173 million of the proceeds from its $300 million bond issuance to redeem its outstanding 9.75% senior notes due 2004 at the redemption price of 102.4375% of the principal amount of the senior notes, plus any accrued and unpaid interest. The Company also plans to retire a $300 million bond that matures in November of 2002 using proceeds from its convertible notes issued in November of last year.

Management expects that the Company will continue to replenish operating assets with internally generated funds. There can be no assurance, however, that the Company’s business will continue to generate cash flow at current levels. The Company will continue to obtain short-term financing from its revolving credit agreement with various financial institutions, as well as through its accounts receivable securitization program. Long-term financing will be maintained through existing and new debt issuances. The Company’s short-term and long-term financing abilities are believed to be adequate as a supplement to internally generated cash flows to fund its capital expenditures and acquisitions as opportunities arise. Maturities of debt issued will depend on management’s views with respect to the relative attractiveness of interest rates at the time of issuance and other debt maturities.

In April 2002, the Company finalized a new three-year, unsecured $650 million revolving credit agreement with rates tied to LIBOR plus 0.650 to 1.400 percent, based on the Company’s credit ratings. The agreement contains various financial covenants including ratios for fixed charge interest coverage, asset coverage and debt leverage, in addition to a minimum net worth covenant. This credit facility replaced the Company’s $300 million and $400 million credit facilities, which had expiration dates in August and October of 2002, respectively. As of June 15, 2002, the Company had no outstanding borrowings under the credit facility or the accounts receivable securitization program. Letters of credit outstanding under the credit facility were $129.0 million and the unused available credit under the facility was $521.0 million. As of June 15, 2002, $200 million was also available under the accounts receivable securitization program. The Company is in the process of renewing its accounts receivable securitization program which expires in August of 2002.

In November 2001, the Company sold zero-coupon convertible debentures due 2031. In the event SUPERVALU’s stock price reaches the convertible debentures’ conversion trigger price of $33.96 in the second quarter of fiscal 2003, the Company would be required to include an additional 7.8 million shares in its diluted shares outstanding calculation for the second quarter.

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NEW ACCOUNTING STANDARDS

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company plans to adopt the provisions of SFAS No. 143 in the first quarter of fiscal 2004. The Company is currently analyzing the effect SFAS No. 143 will have on its consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, “Recission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (SFAS No. 145). SFAS No. 145 allows only those gains and losses on the extinguishment of debt that meet the criteria of extraordinary items to be treated as such in the financial statements. SFAS No. 145 also requires sales-leaseback accounting for certain lease modifications that have economic effects that are similar to lease-back transactions. The Company plans to adopt the provisions of SFAS No. 145 in the first quarter of fiscal 2004. The Company does not expect the adoption of SFAS No. 145 to have a material impact on its consolidated financial statements.

Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

Any statements in this report regarding SUPERVALU’s outlook for its businesses and their respective markets, such as projections of future performance, statements of management’s plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on management’s assumptions and beliefs. Such statements may be identified by such words or phrases as “will likely result,” “are expected to,” “will continue,” “outlook,” “is anticipated,” “estimate,” “project,” “management believes” or similar expressions. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such forward-looking statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, SUPERVALU claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

The following is a summary of certain factors, the results of which could cause SUPERVALU’s future results to differ materially from those expressed or implied in any forward-looking statements contained in this report:

Ÿ competitive practices in the retail food and food distribution industries,

Ÿ the nature and extent of the consolidation of the retail food and food distribution industries,

Ÿ our ability to attract and retain customers for our food distribution business and to control food distribution costs,

Ÿ our ability to grow through acquisitions and assimilate acquired entities,

Ÿ general economic or political conditions that affect consumer buying habits generally or acts of terror directed at the food industry that affect consumer behavior,

Ÿ potential work disruptions from labor disputes or national emergencies,

Ÿ the timing and implementation of certain restructure activities we have announced, including our consolidation of certain distribution facilities and our disposition of under-performing stores and non-operating properties,

Ÿ the availability of favorable credit and trade terms, and

Ÿ other risk factors inherent in the retail food and food distribution industries.

These risks and uncertainties are set forth in further detail in Exhibit 99(i) to this report. Any forward-looking statement speaks only as of the date on which such statement is made, and SUPERVALU undertakes no obligation to update such statement to reflect events or circumstances arising after such date.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in market risk for the Company in the period covered by this report.

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PART II – OTHER INFORMATION

Item 1.    Legal Proceedings

In June 2002, the Company announced that it had identified an understatement of cost of goods sold resulting from intentional inventory misstatements by a former employee in its pharmacy division. The effect of the correction of the misstatements was to reduce previously reported net income $7.2 million, $9.1 million and $1.3 million and net earnings per share – diluted by $0.05, $0.07, and $0.01 for fiscal 2002, 2001, and 2000 respectively. The consolidated financial statements as of and for the years ended February 23, 2002, February 24, 2001 and February 26, 2000 and notes thereto included in amended Annual Reports on Form 10-K have been restated to include the effects of the corrections of these misstatements.

Following the announcement of the Company’s restatement, several class action lawsuits were filed in July 2002 against the Company in the United States District Court for the District of Minnesota on behalf of purchasers of the Company’s securities between July 29, 1999 and June 26, 2002. The complaints allege that the Company and certain of its officers and directors violated Federal securities laws by issuing materially false and misleading statements relating to its financial performance. The Company believes that the lawsuits are without merit and intends to vigorously defend the actions. No damages have been specified in the complaints. The Company is unable to evaluate the claims at this early stage of the proceedings.

Item 2.    Changes in Securities and Use of Proceeds

None

Item 3.    Defaults Upon Senior Securities

None

Item 4.    Submission of Matters to a Vote of Security Holders

The Registrant held its Annual Meeting of Stockholders on May 30, 2002 at which the stockholders took the following actions:

(i) elected Edwin C. Gage, Garnett L. Keith, Jr., and Richard L. Knowlton to the Board of Directors for terms expiring in 2005. The votes cast for and withheld with respect to each such Director were as follows:

	Votes For	Votes Withheld
Edwin C. Gage	113,003,398	5,848,553
Garnett L. Keith, Jr.	115,625,483	3,226,468
Richard L. Knowlton	115,624,011	3,209,940

The Directors whose terms continued after the meeting are as follows: Lawrence A. Del Santo, Susan E. Engel, William A. Hodder, Charles M. Lillis, Jeffrey Noodle, Harriet K. Perlmutter, and Steven S. Rogers.

(ii) approved by a vote of 107,852,744 for, 9,084,556 against, and 1,914,651 abstaining, an amendment to SUPERVALU’s Restated Certificate of Incorporation increasing the authorized common stock of SUPERVALU from 200 million shares to 400 million shares.

(iii) approved by a vote of 101,660,708 for, 14,910,818 against, and 2,280,425 abstaining, the SUPERVALU INC. 2002 Stock Plan.

(iv) approved by a vote of 104,089,979 for, 12,297,906 against, and 2,464,066 abstaining, the SUPERVALU INC. Long-Term Incentive Plan.

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(v) Ratified by a vote of 115,396,056 for, 1,601,921 against, and 1,853,974 abstaining, the appointment of KPMG LLP as independent auditors of the Registrant for the fiscal year ending February 22, 2003.

Item 5.    Other Information

None

Item 6.    Exhibits and Reports on Form 8-K.

(a) Exhibits filed with this Form 10-Q:

(3.1)   Restated Certificate of Incorporation.

(10.1) SUPERVALU INC. 2002 Stock Plan*

(10.2) SUPERVALU INC. Long-Term Incentive Plan*

(10.3) Amended and Restated SUPERVALU INC. Grantor Trust dated as of May 1, 2002*

(11)     Computation of Earnings Per Common Share.

(12)     Ratio of Earnings to Fixed Charges.

(99)(i) Cautionary Statements pursuant to the Securities Litigation Reform Act.

* Indicates management contracts, compensatory plans or arrangements required to be filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

Exhibits to this Form 10-Q incorporated by reference.

(4) Form of Credit Agreement, dated as of April 23, 2002, among the Registrant, the Lenders named therein, the JPMORGAN Chase Bank, as Agent, and Bank One, NA, as Syndication Agent, is incorporated by reference to Exhibit 4.11 to the Registrant’s Current Report on Form 8-K dated April 23, 2002.

Reports on Form 8-K:

(i) On April 23, 2002, the Registrant filed a report on Form 8-K reporting under Item 5 “Other Events”, that it had entered into a new revolving credit agreement with various financial institutions that provides for an unsecured credit facility in the amount of $650 million.

(ii) On May 15, 2002, the Registrant filed a report on Form 8-K reporting under Item 5 “Other Events”, that it had agreed to sell $300 million principal amount of its 7 ½% Notes due 2012.

(iii) On June 25, 2002, the Registrant filed a report on Form 8-K reporting under Item 5 “Other Events and Regulation FD Disclosure” announcing a charge to earnings resulting from inventory misstatements by a former employee.

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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.

	SUPERVALU INC. (Registrant)
Dated: July 30, 2002	By:	/s/ Pamela K. Knous
		Pamela K. Knous Executive Vice President, Chief Financial Officer (principal financial and accounting officer)

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EXHIBIT INDEX

Exhibit
(3.1)	Restated Certificate of Incorporation.
(4)	Form of Credit Agreement, dated as of April 23, 2002, among the Registrant, the Lenders named therein, the JPMORGAN Chase Bank, as Agent, and Bank One, NA, as Syndication Agent*
(10.1)	SUPERVALU INC. 2002 Stock Plan
(10.2)	SUPERVALU INC. Long-Term Incentive Plan
(10.3)	Amended and Restated SUPERVALU INC. Grantor Trust dated as of May 1, 2002
(11)	Computation of Earnings Per Common Share
(12)	Ratio of Earnings to Fixed Charges
(99)(i)	Cautionary Statements pursuant to the Securities Litigation Reform Act

* Incorporated by reference to Exhibit 4.11 to the Registrant’s Current Report on Form 8-K dated April 23, 2002.

16

EX-3.1

                                                                     EXHIBIT 3.1


                            CERTIFICATE OF AMENDMENT

                                       OF

                      RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                                 SUPERVALU INC.

                                    * * * * *


     SUPERVALU INC., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware,

     DOES HEREBY CERTIFY:

     FIRST: That at a meeting of the Board of Directors of SUPERVALU INC.
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:

     RESOLVED, That the Restated Certificate of Incorporation of this
     corporation be amended by changing the Fourth Article thereof so that, as
     amended said Article shall be and read as follows:

          "That the total number of shares which this Corporation is authorized
     to issue is 401,000,000 shares, of which 400,000,000 shares of the par
     value $1.00 per share are designated Common Stock and 1,000,000 shares of
     no par value are designated Preferred Stock (herein referred to as
     "Preferred Stock"). Shares of any class of stock of the Corporation may be
     issued for such consideration and for such corporate purposes as the Board
     of Directors may from time to time determine."



     SECOND: That thereafter, pursuant to resolution of its Board of Directors,
an annual meeting of the stockholders of said corporation was duly called and
held upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware, at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.

     THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.


     IN WITNESS WHEREOF, said SUPERVALU INC. has caused this certificate to be
signed by David L. Boehnen, its Executive Vice President, this first day of
July, 2002.



                                       By: /s/ David L. Boehnen
                                           -------------------------------------
                                           David L. Boehnen
                                           Executive Vice President

ATTEST:

By: /s/ John P. Breedlove
    ------------------------------
    John P. Breedlove
    Corporate Secretary

EX-10.1

EXHIBIT 10.1

SUPERVALU INC

2002 STOCK PLAN

Section 1.    Purpose.

The purpose of the Plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining key management personnel for the Company and its Affiliates as well as non-employee directors for the Company, capable of assuring the future success of the Company and its Affiliates; to offer such individuals incentives to put forth maximum efforts for the success of the Company’s business; and, to afford such individuals an opportunity to acquire a proprietary interest in the Company.

Section 2.    Definitions.

As used in the Plan, the following terms shall have the meanings set forth below:

(a) “Affiliate” shall mean (i) any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee.

(b) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, or Other Stock-Based Award granted under the Plan.

(c) “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing any Award granted under the Plan. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee.

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

(e) “Committee” shall mean a committee of the Board of Directors of the Company designated by such Board to administer the Plan. The Committee shall be comprised of not less than such number of directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3 and an “outside director” within the meaning of Section 162(m) of the Code. The Company expects to have the Plan administered in accordance with the requirements for the award of “qualified performance-based compensation” within the meaning of Section 162(m) of the Code.

(f) “Company” shall mean SUPERVALU INC., a Delaware corporation, and any successor corporation.

(g) “Eligible Person” shall mean any employee, officer, consultant or independent contractor providing services to the Company or any Affiliate, who the Committee determines to be an Eligible Person, or any director of the Company who is not an employee of the Company or an Affiliate.

(h) “Fair Market Value” shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. Notwithstanding the foregoing, unless otherwise determined by the Committee, the Fair Market Value of Shares on a given date for

1

purposes of the Plan shall be the average of the opening and closing sale price of the Shares as reported on the New York Stock Exchange on such date or, if such Exchange is not open for trading on such date, on the day closest to such date when such Exchange is open for trading.

(i) “Incentive Stock Option” shall mean an option to purchase Shares that is granted under Section 6(a) of the Plan and intended to meet the requirements of Section 422 of the Code or any successor provision.

(j) “Non-Qualified Stock Option” shall mean an option to purchase Shares that is granted under Section 6(a) of the Plan and is not intended to be an Incentive Stock Option.

(k) “Option” shall mean an option to purchase Shares that is granted under Section 6(a) of the Plan as an Incentive Stock Option or a Non-Qualified Stock Option, and shall include Restoration Options.

(l)    “Other Stock-Based Award” shall mean any right granted under Section 6(e) of the Plan.

(m) “Participant” shall mean an Eligible Person that is granted an Award under the Plan.

(n) “Performance Award” shall mean any right granted under Section 6(d) of the Plan.

(o) “Person” shall mean any individual, corporation, partnership, association or trust.

(p) “Plan” shall mean this SUPERVALU INC. 2002 Stock Plan, as amended from time to time.

(q) “Restoration Option” shall mean any Option granted under Section 6(a)(iv) of the Plan.

(r) “Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan.

(s) “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future date.

(t) “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation.

(u) “Share” shall mean a share of the common stock of the Company, par value $1.00 per share, or such other security or property as may become subject to an Award pursuant to an adjustment made under Section 4(c) of the Plan.

(v) “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan.

Section 3.    Administration.

(a) Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and applicable law, the Committee shall have full power and authority to: (i) designate Eligible Persons and Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights or other matters are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement; (v) amend the terms and conditions of any Award or Award Agreement and accelerate the

2

vesting or exercisability of Options, or the lapse of restrictions relating to Restricted Stock, Restricted Stock Units or other Awards; provided however, that no suchamendment shall amend the exercise price of any Option or Stock Appreciation Rights previously granted, except for any adjustment made under Section 4(c) of the Plan, without the approval of the Company’s stockholders; (vi) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended; (vii) determine whether, to what extent and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the Committee; (viii) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (ix) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Eligible Person or Participant, any holder or beneficiary of any Award and any employee of the Company or any Affiliate.

(b) Delegation. The Committee may delegate its powers and duties under the Plan to one or more directors or officers of the Company, or to a committee of directors or officers, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion; provided, however, that the Committee shall not delegate its powers and duties under the Plan (i) with regard to officers or directors of the Company or any Affiliate who are subject to Section 16 of the Securities Exchange Act of 1934, (ii) in such a manner as would cause the Plan not to comply with the requirements of Section 162(m) of the Code or (iii) in such a manner as would contravene Section 157 of the Delaware General Corporation Law.

(c) Power and Authority of the Board of Directors. Notwithstanding anything to the contrary contained herein, the Board of Directors may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan.

Section 4.    Shares Available for Awards.

(a) Shares Available. Subject to adjustment as provided in Section 4(c), the aggregate number of Shares that may be issued under all Awards under the Plan shall be 4,000,000. Shares to be issued under the Plan may be either Shares reacquired and held in the treasury or authorized but unissued Shares. If any Shares covered by an Award or to which an Award relates are not purchased or are forfeited, or if an Award otherwise terminates or is settled without delivery of any Shares, then the number of Shares counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, termination or settlement, shall again be available for granting Awards under the Plan. Any shares tendered in payment of the exercise price of an Option granted under the Plan or an option granted under any other stock plan of the Company shall be credited to the number of Shares available for grant under the Plan.

(b) Accounting for Awards. For purposes of this Section 4, if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan.

(c) Adjustments. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization,

3

stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) which thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards and (iii) the purchase or exercise price with respect to any Award; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number.

(d) Award Limitations Under the Plan. No Eligible Person, who is an employee of the Company at the time of grant, may be granted any Option, Stock Appreciation Right or Other Stock-Based Award (the value of which is based solely on an increase in the value of the Shares after the date of grant) for more than 500,000 Shares (subject to adjustment as provided for in Section 4(c)), taking into account all such awards granted by the Company pursuant to any of its stock compensation plans, in any calendar year period beginning with the period commencing January 1, 2002. The foregoing annual limitation specifically includes the grant of any Awards representing “qualified performance-based compensation” within the meaning of Section 162(m) of the Code.

Section 5.    Eligibility.

Any Eligible Person, including any Eligible Person who is an officer or director of the Company or any Affiliate, shall be eligible to be designated a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term as used herein includes, without limitation, officers and directors who are also employees) and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision.

Section 6.    Awards.

(a) Options. The Committee is hereby authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:

(i) Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee; provided, however, that such purchase price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option and shall not be adjusted thereafter except as provided for in Section 4(c) of the Plan.

(ii) Option Term. The term of each Option shall be fixed by the Committee.

(iii) Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms (including, without limitation, cash, Shares, promissory notes, other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price) in which, payment of the exercise price with respect thereto may be made or deemed to have been made.

4

(iv) Restoration Options. The Committee may grant Restoration Options, separately or together with another Option, pursuant to which, subject to the terms and conditions established by the Committee and any applicable requirements of law, the Participant would be granted a new Option when the payment of the exercise price of the option to which such Restoration Option relates is made by the delivery of Shares pursuant to the relevant provisions of the plan or agreement relating to such option, which new Option would be an Option to purchase the number of Shares not exceeding the sum of (A) the number of Shares so provided as consideration upon the exercise of the previously granted option to which such Restoration Option relates, (B) the number of Shares, if any, tendered or withheld as payment of the amount required to be withheld under applicable tax laws in connection with the exercise of the option to which such Restoration Option relates, and (C) the number of previously owned Shares, if any, tendered as payment for additional tax obligations of the Participant in connection with the exercise of the option to which such Restoration Option relates pursuant to the relevant provisions of the plan or agreement relating to such option. Restoration Options may be granted with respect to options previously granted under the Plan or any other stock option plan of the Company, and may be granted in connection with any option granted under the Plan or any other stock option plan of the Company at the time of such grant. Such Restoration Options shall have a per share exercise price equal to the Fair Market Value of one Share as of the date of grant of the new Option. Any Restoration Option shall be subject to availability of sufficient Shares for grant under the Plan. Shares surrendered as part or all of the exercise price of the Option to which it relates that have been owned by the optionee less than six months will not be counted for purposes of determining the number of Shares that may be purchased pursuant to a Restoration Option.

(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine, at any time during a specified period before or after the date of exercise) over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.

(c) Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units to Participants with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:

(i) Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate.

(ii) Stock Certificates. Any Restricted Stock granted under the Plan shall, at the option of the Company, be evidenced by book entry Shares held in the Participant’s name on the records of the Company’s transfer agent or by issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. Such book entry Shares or certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate

5

legend referring to the terms, conditions and restrictions applicable to such Restricted Stock. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted.

(iii) Forfeiture; Delivery of Shares. Except as otherwise determined by the Committee, upon termination of employment (as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units at such time subject to restriction shall be forfeited and reacquired by the Company; provided, however, that the Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock Units. Any Share representing Restricted Stock that is no longer subject to restrictions shall be delivered to the holder thereof promptly after the applicable restrictions lapse or are waived. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holders of the Restricted Stock Units.

(d) Performance Awards. The Committee is hereby authorized to grant Performance Awards to Participants subject to the terms of the Plan and any applicable Award Agreement. A Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of such performance goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan and any applicable Award Agreement, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee.

(e) Other Stock-Based Awards. The Committee is hereby authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan; provided, however, that such grants must comply with applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(e) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms (including without limitation, cash, Shares, promissory notes, other securities, other Awards or other property or any combination thereof) as the Committee shall determine, the value of which consideration, as established by the Committee, shall not be less than 100% of the Fair Market Value of such Shares or other securities as of the date such purchase right is granted.

(f)    General.

(i) Consideration for Awards. Awards may be granted for no cash consideration or for other consideration as may be determined by the Committee or required by applicable law.

(ii) Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any plan of the Company or any Affiliate other than the Plan. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any such other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

6

(iii) Forms of Payment under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash, Shares, promissory notes, other securities, other Awards or other property or any combination thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments.

(iv) Limits on Transfer of Awards. No Award and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution; provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, transfer Non-Qualified Stock Options or designate a beneficiary or beneficiaries to exercise the rights of the Participant and receive any property distributable with respect to any Award upon the death of the Participant. Each Award or right under any such Award shall be exercisable during the Participant’s lifetime only by the Participant (except as otherwise provided in an Award Agreement or amendment thereto relating to a Non-Qualified Stock Option pursuant to terms determined by the Committee) or, if permissible under applicable law, by the Participant’s guardian or legal representative. No Award or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.

(v) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee.

(vi) Restrictions; Securities Exchange Listing. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders or other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be placed on the certificates for such shares or other securities to reflect such restrictions. If the Shares or other securities are traded on a securities exchange, the Company shall not be required to deliver any Shares or other securities covered by an Award unless and until such Shares or other securities have been admitted for trading on such securities exchange.

Section 7.    Amendment and Termination; Adjustments.

(a) Amendments to the Plan. The Board of Directors of the Company may amend, alter, suspend, discontinue or terminate the Plan; provided, however, that, notwithstanding any other provision of the Plan or any Award Agreement, without the approval of the stockholders of the Company, no such amendment, alteration, suspension, discontinuation or termination shall be made that, absent such approval:

(i) would violate the rules or regulations of the New York Stock Exchange, any other securities exchange or the National Association of Securities Dealers, Inc. that are applicable to the Company; or

(ii) would cause the Company to be unable, under the Code, to grant Incentive Stock Options under the Plan; or

(iii) would amend the exercise price of any Option or Stock Appreciation Rights previously granted, except for any adjustment made under Section 4(c) of the Plan; or

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(iv) would allow exercise price of any Option or the grant price of any Stock Appreciation Right to be less than 100% of the Fair Market Value one Share on the date such Option or Stock Appreciation Right is granted.

(b) Amendments to Awards. Subject to the provisions of the Plan, the Committee may waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively. The Committee may not amend, alter, suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, in any manner that adversely affects any Award, without the consent of the Participant or holder or beneficiary thereof, except as otherwise herein provided or in an Award Agreement.

(c) Correction of Defects, Omissions and Inconsistencies. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry the Plan into effect.

Section 8.    Income Tax Withholding and Payment.

In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. In order to assist a Participant in paying all or a portion of the federal and state taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (i) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes or (ii) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes. In addition to the amounts required to be withheld to pay applicable taxes, subject to such terms and conditions as the Committee shall determine in its sole and absolute discretion, the Committee may permit the Participant to elect to deliver to the Company Shares (other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award) with a Fair Market Value equal to the amount of such additional federal and/or state income taxes imposed on the Participant in connection with the exercise of the Award. All elections, if any, must be made on or before the date that the amount of tax to be withheld is determined.

Section 9.    General Provisions.

(a) No Rights to Awards. No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants.

(b) Award Agreements. No Participant will have rights under an Award granted to such Participant unless and until an Award Agreement shall have been duly executed on behalf of the Company and returned to the Company executed by the Participant.

(c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.

(d) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate such employment at any time, with or without cause. In

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addition, the Company or an Affiliate may at any time dismiss a Participant from employment free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

(e) Governing Law. The validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award, shall be determined in accordance with the laws of the State of Delaware.

(f) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect.

(g) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

(h) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

(i) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

Section 10.    Effective Date of the Plan.

The Plan shall be effective as of April 10, 2002, subject to approval by the stockholders of the Company within one year thereafter.

Section 11.    Term of the Plan.

Unless the Plan shall have been discontinued or terminated as provided in Section 7(a), the Plan shall terminate on April 9, 2012. No Award shall be granted after the termination of the Plan. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond the termination of the Plan, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board of Directors of the Company to amend the Plan, shall extend beyond the termination of the Plan.

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EX-10.2

EXHIBIT 10.2

SUPERVALU INC.

LONG-TERM INCENTIVE PLAN

SECTION I.    ESTABLISHMENT

On February 13, 2002, the Board of Directors of SUPERVALU INC. (the “Company”), upon recommendation by the Executive Personnel and Compensation Committee (the “Committee”), approved an incentive plan for executives as described herein, which plan shall be known as the “SUPERVALU INC. Long-Term Incentive Plan” (the “Plan”). The Plan shall be submitted for approval by the stockholders of the Company at the 2002 Annual Meeting of Stockholders. The Plan shall be effective as of February 13, 2002, subject to its approval by the stockholders of the Company, and no shares shall be issued pursuant to the Plan until after the Plan has been approved by the stockholders of the Company.

SECTION II.    PURPOSE

The purpose of the Plan is to advance the interests of the Company and its stockholders by attracting and retaining key employees, and by stimulating the efforts of such employees to contribute to the continued success and progress of the business. The Plan is further intended to provide such employees with an opportunity to increase their ownership of the Company’s common stock with the increased personal interest in the long-term success of the business that such stock ownership can produce.

SECTION III.    ADMINISTRATION

3.1 Composition of the Committee. The Plan shall be administered by the Committee, which shall consist of members appointed from time to time by the Board of Directors and shall be comprised of not less than such number of directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor rule or regulation (“Rule 16b-3”). All members of the Committee shall be members of the Board of Directors of the Company who are “Non-Employee Directors” within the meaning of Rule 16b-3. To the extent required by Section 162(m) of the Internal Revenue Code of 1986, as amended (such statute, as it may be amended from time to time and all proposed, temporary or final Treasury Regulations promulgated thereunder shall be referred to as the “Code”), the Committee administering the Plan shall be composed solely of “outside directors” within the meaning of Section 162(m) of the Code.

3.2 Power and Authority of the Committee. The Committee shall have full power and authority, subject to all the applicable provisions of the Plan and applicable law, to (a) establish, amend, suspend or waive such rules and regulations and appoint such agents as it deems necessary or advisable for the proper administration of the Plan, (b) construe, interpret and administer the Plan and any instrument or agreement relating to, or Award (as defined below in Section 4.2) made under, the Plan, and (c) make all other determinations and take all other actions necessary or advisable for the administration of the Plan. Unless otherwise expressly provided in the Plan, each determination made and each action taken by the Committee pursuant to the Plan or any instrument or agreement relating to, or Award made under, the Plan shall be (x) within the sole discretion of the Committee, (y) may be made at any time and (z) shall be final, binding and conclusive for all purposes on all persons, including, but not limited to, holders of Awards, and their legal representatives and beneficiaries, and employees of the Company or of any “Affiliate” of the Company. For purposes of the Plan and any instrument or agreement relating to, or Award made under, the Plan, the term “Affiliate” shall mean any

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entity that, directly or indirectly through one or more intermediaries, is controlled by the Company and any entity in which the Company has a significant equity interest, in each case as determined by the Committee in its sole discretion.

3.3 Delegation. The Committee may delegate its powers and duties under the Plan to one or more officers of the Company or any Affiliate or a committee of such officers, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion; provided, however, that the Committee shall not delegate its power (i) to amend the Plan as provided in Section XI hereof (ii) with respect to any Performance Based Awards pursuant to Section 6.7 of the Plan, (iii) to make determinations regarding officers or directors of the Company or any Affiliate who are subject to Section 16 of the Exchange Act, and (iv) in such a manner as would contravene Section 157 of the Delaware General Corporation Law.

SECTION IV.    ELIGIBILITY AND PARTICIPATION

4.1 Eligibility. The Plan is unfunded and is maintained by the Company for a select group of management or highly compensated employees. In order to be eligible to participate in the Plan, an employee of the Company or of its Affiliates must be selected by the Committee. In determining the employees who will participate in the Plan, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of the Company and such other factors as the Committee, in its sole discretion, shall deem relevant. A director of the Company or of an Affiliate who is not also an employee of the Company or an Affiliate shall not be eligible to participate in the Plan.

4.2 Participation. The Committee shall determine the employees to be granted an award opportunity (the “Award”), the amount of each Award, the time or times when Awards will be made, the period of time over which such Awards are intended to be earned, and all other terms and conditions of each Award. The provisions of the Awards need not be the same with respect to any recipient of an Award (the “Participant”) or with respect to different Participants. The Committee’s decision to approve an Award to an employee in any year shall not require the Committee to approve a similar Award or any Award at all to that employee or any other employee or person at any future date. The Company and the Committee shall not have any obligation for uniformity of treatment of any person, including, but not limited to, Participants and their legal representatives and beneficiaries and employees of the Company or of any Affiliate of the Company.

4.3 Award Agreement. Any employee selected for participation by the Committee shall, as a condition of participation, execute and return to the Committee a written agreement setting forth the terms and conditions of the Award (the “Award Agreement”). A separate Award Agreement will be entered into between the Company and each Participant for each Award.

4.4 Employment. In the absence of any specific agreement to the contrary, no Award to a Participant under the Plan shall affect any right of the Company, or of any Affiliate of the Company, to terminate, with or without cause, the Participant’s employment at any time.

SECTION V.    SHARES SUBJECT TO THE PLAN

5.1 Shares Subject to Plan. Subject to adjustment as provided in Section 5.3 hereof, the maximum number of shares or units equivalent to shares with respect to which Awards may be granted under the Plan shall not exceed in the aggregate 800,000 shares (the “Shares”) of the Company’s common stock, par value $1.00 per Share (the “Common Stock”). The payment of cash dividends or dividend equivalents in conjunction with an Award shall not be counted against the Shares available for grant. Shares to be issued pursuant to the Plan shall be made available from treasury, from authorized but

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unissued shares of Common Stock, or from shares reacquired by the Company, including shares purchased in the open market. For purposes of this Section V, the maximum number of Shares to which an Award relates shall be counted on the date such Award was made against the aggregate number of Shares available for grant under the Plan.

5.2 Reacquired Shares. If any Shares to which an Award relates are forfeited, or if an Award is otherwise canceled or terminated or expires without delivery of the maximum number of Shares (or cash for the maximum number of Shares) to which such Award relates, then the number of Shares with respect to such Award, to the extent of any such forfeiture, cancellation, termination or expiration, shall again be available for grant under the Plan.

5.3 Adjustments Upon Changes In Capitalization. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Common Stock, other securities or other property), stock split, reverse stock split, reorganization, recapitalization, merger, consolidation, combination, split-up, spin-off, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event affects the Common Stock such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee may make such adjustments, if any, as it may deem appropriate in the aggregate number of and class of Shares (or other securities or other property) issuable pursuant to Section 5.1 and pursuant to any outstanding Award under the Plan. The Committee’s determination of such adjustments shall be final, binding and conclusive.

SECTION VI. AWARDS

6.1 General. The Committee shall determine the Award or Awards to be made to each Participant, and each Award shall be subject to the terms and conditions of the Plan and the applicable Award Agreement. An Award may be made in the form of Shares or in the form of units equivalent to Shares (the “Stock Units”). Awards may be granted singly or in combination, or in addition to, in tandem with or in substitution for any grants or rights under any employee or compensation plan of the Company or of any Affiliate. All or part of an Award may be subject to conditions and forfeiture provisions established by the Committee, and set forth in the Award Agreement, which may include, but are not limited to, continuous service with the Company or an Affiliate, achievement of specific business objectives, and other measurement of individual, business unit or Company performance.

6.2 Award of Shares. If an Award is granted in the form of Shares, such Award shall, at the option of the Company, be evidenced by book entry Shares held in the Participant’s name on the records of the Company’s transfer agent or by the issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. Such book entry Shares or certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award to indicate restriction on transferability (“Restricted Stock”) until the Participant has met designated performance and/or length of employment requirements, if any, and the determination of the number of Shares, if any, that are to be forfeited pursuant to the terms of the Award is made. Until such time as all restrictions are removed, Restricted Stock shall not be transferable.

6.3 Award of Stock Units. If an Award is granted in the form of Stock Units, no certificates shall be issued with respect to such Stock Units, but the Company shall maintain a bookkeeping account in the name of the Participant to which the Stock Units shall relate. Each Stock Unit shall represent the right to receive a payment of one Share, or cash of equivalent value to the “fair market value” of the Company’s Common Stock at the time payment is made, or a continuing Stock Unit, or other Awards,

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or a combination thereof, with such restrictions and conditions as the Committee may determine in its sole discretion, including, but not limited to, the restriction of such Shares as Restricted Stock. For purposes of the Plan, “fair market value” shall be determined by such methods or procedures as may be established from time to time by the Committee in its sole discretion.

6.4 Voting Rights, Dividends and Dividend Equivalents. The Committee, in its sole discretion, may provide that Awards of Shares may contain voting rights and may earn dividends and that any Award may earn dividend equivalents. Such dividends or dividend equivalents may be paid currently or may be credited to an account established by the Committee under the Plan in the name of the Participant. Any crediting of dividend or dividend equivalents may be subject to such restrictions and conditions as the Committee may establish in its sole discretion, including reinvestment in additional Shares or Share equivalents.

6.5 Payment of Awards. Payment of Awards may be made at such times, with such restrictions and conditions, and in such forms (cash, stock, including Restricted Stock, Stock Units, other Awards, or combinations thereof) as the Committee in its sole discretion may determine at the time of grant of the Awards.

6.6 Securities Matters. No Shares shall be issued under the Plan prior to such time as counsel to the Company shall have determined that the issuance and delivery of such Shares will not violate any federal or state securities or other laws. Participants may be required by the Company, as a condition to the grant of an Award or the issuance of Shares under the Plan, to agree in writing that all Shares to be acquired pursuant to the Plan shall be held for his or her own account without a view to any further distribution thereof, that the certificates for the Shares shall bear an appropriate legend to that effect, and that such Shares will not be transferred or disposed of except in compliance with applicable federal and state laws. The Company may, in its sole discretion, defer the effectiveness of any Award or the payment of any Award under the Plan in order to allow the issuance of Shares pursuant thereto to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933, as amended, of any Shares to be issued under the Plan or to effect similar compliance under any state law. If Shares are traded on a securities exchange, the Company shall not be required to deliver to the Participant certificates representing any Shares unless and until such Shares have been admitted for trading on such securities exchange.

6.7 Qualified Performance-Based Compensation. From time to time, the Committee may designate an Award granted pursuant to the Plan as an award of “qualified performance-based compensation” within the meaning of Section 162(m) of the Code (hereinafter referred to as a “Performance-Based Award(s)”). Notwithstanding any other provision of the Plan to the contrary, the following additional requirements shall apply to all Performance-Based Awards made to any Participant under the Plan:

(a) Any Performance Based Award shall be null and void and have no effect whatsoever unless the Plan shall be approved by the stockholders of the Company at the 2002 Annual Meeting of stockholders.

(b) For purposes of Section 162(m) of the Code, the only employees eligible to receive Performance-Based Awards shall be the employee’s identified in Section 4.1 hereof.

(c) The right to obtain Restricted Stock or the right to have a Stock Unit become payable in any fashion pursuant to a Performance-Based Award shall be determined solely on account of the attainment of one or more preestablished, objective performance goals for a performance period selected by the Committee at the time of the grant of the Performance-Based Award. Such goals shall

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be based solely on one or more of the following business criteria, which may apply to the individual in question, an identifiable business unit or the Company as a whole: stock price, market share, sales, earnings per share, return ratios, cumulative total return to shareholders, consolidated pre-tax earnings, net revenues, net earnings, operating income, earnings before interest and taxes, and cash flow, for the applicable performance period based on absolute Company or business unit performance and/or performance as compared to a pre-selected peer group of companies or external financial index and subject to such other special rules and conditions as the Committee may establish at any time ending on or before the 90th day of the applicable performance period. The foregoing shall constitute the sole business criteria upon which the performance goals under this Plan shall be based.

(d) The maximum number of Shares, whether or not in the form of Restricted Stock, which may be issued to any Participant pursuant to any Performance-Based Award in any calendar year period beginning with the period commencing January 1, 2002, shall not exceed 100,000 shares (subject to adjustment as provided for in Section 5.3).

(e) Not later than 90 days after the beginning of each performance period selected by the Committee for a Performance-Based Award, the Committee shall:

(i) designate all Participants for such performance period; and

(ii) establish the objective performance factors for each Participant for that performance period on the basis of one or more of the business criteria set forth herein.

(f) Following the close of each performance period and prior to payment of any amount to any Participant under a Performance-Based Award, the Committee must certify in writing as to the attainment of all factors (including the performance factors for a Participant) upon which any payments to a Participant for that performance period are to be based.

(g) Each of the foregoing provisions and all of the other terms and conditions of the Plan as it applies to any Performance-Based Award shall be interpreted in such a fashion so as to qualify all compensation paid thereunder as “qualified performance-based compensation” within the meaning of Section 162(m) of the Code.

SECTION VII.    TERMINATION OF EMPLOYMENT

Each Award Agreement shall include provisions governing the disposition of an Award in the event of the retirement, disability, death or other termination of a Participant’s employment with the Company or an Affiliate.

SECTION VIII.    CHANGE IN CONTROL

Notwithstanding any other provision in the Plan to the contrary, at the time of the grant of an Award, the Committee may determine to include provisions in such Award providing that upon the occurrence of a “Change in Control,” (i) all outstanding Awards (including Restricted Stock and Stock Units) shall immediately become fully vested (which, in the case of any Award which is subject to the achievement of designated performance objectives during a designated performance period, shall mean vested as if all such performance objectives had been achieved at the 100% award level at the end of such performance period) and (ii) all restrictions, conditions and limitations on all Awards (including Restricted Stock and Stock Units) which are outstanding at the time of such “Change in Control” or become outstanding by virtue of the operation of clause (i) hereof shall immediately lapse, provided that the provisions of clauses (i) and (ii) may be subject to such restrictions, conditions and limitations as the Committee may determine at the time of grant of the Award as set forth in the Award Agreement relating thereto.

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For purposes of the Plan, “Change in Control” shall mean any of the following events:

1. 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”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection 1, the following acquisitions shall not constitute a Change in Control; (A) any acquisition directly from the Company or (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or

2. The consummation of any merger or other business combination of the Company, sale or lease of the Company’s assets or combination of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which the shareholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own at least 60% of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser or lessee of the Company’s assets; or (C) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions; or

3. Within any 24 month period, the persons who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board of Directors of the Company or the board of directors of a successor to the Company. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board of Directors of the Company by, or on the recommendation of or with the approval of, at least three-fourths of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change in Control or engage in a proxy or other control contest); or

4. Such other event or transaction as the Board of Directors of the Company shall determine constitutes a Change in Control.

SECTION IX.    NON-TRANSFERABILITY

Except as otherwise determined by the Committee or set forth in the applicable Award Agreement, no Restricted Stock or Stock Unit, and no right under such Restricted Stock or Stock Unit, shall be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of during the time in which the requirement of continued employment or attainment of performance objectives has not been achieved. Each right under any Award shall be exercisable during the Participant’s lifetime only by the Participant or, if permissible under applicable law, by the Participant’s legal representatives.

SECTION X.    TAXES

In order to comply with all applicable federal or state income, social security, payroll, withholding or other tax laws or regulations, the Company may take such action, and may require a Participant to take such action, as it deems appropriate to ensure that all applicable federal or state income, social security, payroll, withholding or other taxes, which are the sole and absolute responsibility of the Participant, are withheld or collected from such Participant. In order to assist a Participant in paying all or part of the federal and state taxes to be withheld or collected upon receipt or payment of (or the lapse of restrictions relating to) an Award, the Committee, in its sole discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax

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obligation by (a) electing to have the Company withhold a portion of the shares of Common Stock otherwise to be delivered upon receipt or payment of (or the lapse of restrictions relating to) such Award with a fair market value equal to the amount of such taxes or (b) delivering to the Company shares of Common Stock other than the shares issuable upon receipt or payment of (or the lapse of restrictions relating to) such Award with a fair market value equal to the amount of such taxes.

SECTION XI.    AMENDMENT AND TERMINATION

11.1 Term of Plan. Unless the Plan shall have been discontinued or terminated as provided in Section 11.2 hereof, the Plan shall terminate on the last day of the Company’s fiscal year ending in 2008. No Awards may be granted after such termination, but termination of the Plan shall not alter or impair any rights or obligations under any Award theretofore granted, without the consent of the Participant or holder or beneficiary thereof, except as otherwise provided in the Plan or the Award Agreement.

11.2 Amendments to Plan. Except to the extent prohibited by applicable law and unless otherwise expressly provided in the Plan, the Committee may amend, alter, suspend, discontinue or terminate the Plan; provided, however, that notwithstanding any other provision of the Plan or any Award Agreement, without the approval of the stockholders of the Company, no such amendment, alteration, suspension, discontinuation or termination shall be made that, absent such approval:

(a) would cause Performance-Based Awards not to qualify as “qualified performance-based compensation” within the meaning of Section 162(m) of the Code; or

(b) would violate the rules or regulations of any securities exchange that are applicable to the Company.

11.3 Amendments to Awards. Except to the extent prohibited by applicable law and unless otherwise expressly provided in the Plan or an Award Agreement, the Committee may waive any condition of, or rights of the Company under, any outstanding Award, prospectively or retroactively. The Committee may not amend, alter, suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, in any manner that adversely affects any Award, without the consent of the Participant or holder or beneficiary thereof, except as otherwise provided in the Plan or the Award Agreement.

11.4 Correction of Defects, Omissions and Inconsistencies. Except to the extent prohibited by applicable law and unless otherwise expressly provided in the Plan or an Award Agreement, the Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan, any Award or any Award Agreement in the manner and to the extent it shall deem desirable to carry the Plan into effect.

SECTION XII.    MISCELLANEOUS

12.1 Governing Law. The Plan and any Award Agreement shall be governed by and construed in accordance with the internal laws, and not the laws of conflicts, of the State of Delaware.

12.2 Severability. If any provision of the Plan, any Award or any Award Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan, any Award or any Award Agreement under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan, the Award or the Award Agreement, such provision shall be stricken as to such jurisdiction, and the remainder of the Plan, any such Award or any such Award Agreement shall remain in full force and effect.

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12.3 No Trust or Fund Created. Neither the Plan nor any Award or Award Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or of any Affiliate.

12.4 Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

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EX-10.3

                                                                    EXHIBIT 10.3


                AMENDED AND RESTATED SUPERVALU INC. GRANTOR TRUST

     THIS TRUST AGREEMENT, made as of the 1st day of May, 2002 (the "Trust
Agreement"), between SUPERVALU INC., a corporation organized and existing under
the laws of the State of Delaware (the "Company") and WELLS FARGO BANK
MINNESOTA, N.A., having its principal offices in Minneapolis, Minnesota (the
"Trustee").

                              W I T N E S S E T H:
                              --------------------

     WHEREAS, the Trust Agreement was originally entered into as of November 4,
1988 by and between Super Valu Stores, Inc., the predecessor to the Company, and
the Trustee (the "Original Trust Agreement");

     WHEREAS, Section 10 of the Original Trust Agreement permitted the Original
Trust Agreement to be amended prior to the time any that an "Additional
Contribution" (as defined therein) was made, and in accordance with the terms of
such Section 10 the Original Trust Agreement was amended and restated as of
August 3, 1998;

     WHEREAS, pursuant to the terms of the Original Trust Agreement, as so
amended and restated, Hewitt Associates (the "Consulting Firm") was selected to
act as the advisor to the Trustee;

     WHEREAS, pursuant to the Original Trust Agreement, as so amended and
restated, a trust known as the "Amended and Restated SUPERVALU INC. Grantor
Trust" was established (such trust, as heretofore held pursuant to the Original
Trust Agreement, as so amended and restated, and as now held pursuant to the
terms and conditions of this Trust Agreement is hereinafter referred to as the
"Trust" and shall be known as the "Amended and Restated SUPERVALU INC. Grantor
Trust");

     WHEREAS, the Company wishes to amend and restate the Original Trust
Agreement, as so amended and restated, to cause the Trust's terms to conform
with certain changes, including the right of early withdrawal, made to the
Company's deferred compensation plans, contracts and agreements listed on
Exhibit A hereto, as the same may be amended from time to time (such plans,
contracts and agreements being hereinafter referred to individually as a
"Compensation Agreement" or collectively as the "Compensation Agreements"),
between the Company and certain of its key management personnel or members of
its Board of Directors who participate in, or are signatories to one or more of
the Compensation Agreements (such key management personnel and members of the
Company's Board of Directors being hereinafter referred to individually as a
"Participant" or collectively as the "Participants");

     WHEREAS, the Company has contributed to the Trust the assets that are and
shall be held therein, subject to the claims of the Company's creditors in the
event that the Company shall become Insolvent, as hereinafter defined, until
paid to the Participants or their beneficiaries in such manner and at such times
as specified in the subject Compensation Agreements;



     WHEREAS, it is the intention of the Company to make contributions to the
Trust from time to time to provide the Company with a source of funds to assist
the Company in meeting its obligations under the Compensation Agreements; and

     WHEREAS, Section 10(a) of the Original Trust Agreement, as so amended and
restated, permits the Original Trust Agreement to be further amended at any time
prior to a "Change of Control" (as defined therein) by a written instrument
executed by the Trustee and the Company, and as of the date hereof there has
been no such Change of Control.

     NOW, THEREFORE, in consideration of the premises, the parties hereto do
hereby further amend and restate the Original Trust Agreement, as previously
amended and restated, and agree that the Trust shall be comprised, held and
disposed of as follows:

                                   SECTION 1
                                   TRUST FUND

     1.1 The Company has heretofore and does hereby establish with the Trustee a
Trust consisting of such sums of money and such property acceptable to the
Trustee as shall from time to time be paid or delivered to the Trustee and the
earnings and profits thereon. All such money and property and the earnings and
profits thereon, all investments made therewith and proceeds thereof, less the
payments or other distributions which, at the time of reference, shall have been
made by the Trustee, as authorized herein, are sometimes referred to herein as
the "Trust Assets" and shall be held by the Trustee, IN TRUST, in accordance
with the provisions of this Trust Agreement. The Trustee shall hold, manage and
invest the Trust Assets and otherwise administer the Trust pursuant to the terms
of this Trust Agreement.

     1.2 The Trust shall be irrevocable.

     1.3 The Trust is intended to be a grantor trust, of which the Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), and
the Trust and this Trust Agreement shall be construed accordingly.

     1.4 The Trust Assets shall be held separate and apart from other funds of
the Company and shall be used exclusively to satisfy obligations to Participants
under the Compensation Agreements and for the uses and purposes of general
creditors of the Company as herein set forth. The Participants and their
beneficiaries shall have no preferred claim on, or any beneficial ownership
interest in, any of the Trust Assets. Any rights created under the Compensation
Agreements and under this Trust Agreement shall be mere unsecured contractual
rights of the Participants against the Company. Any Trust Assets will be subject
to the claims of the Company's general creditors under federal and state law in
the event of that the Company is Insolvent, as defined in Section 6.1 hereof.

     1.5 The Consulting Firm acting as advisor to the Trustee shall be Hewitt



Associates, or such successor firm of consulting actuaries as the Company shall
select prior to a Change of Control (as defined in Section 3.1 hereof), or, if
after a Change of Control, such successor firm of consulting actuaries as the
Trustee shall select. By their execution of this Trust Agreement, the Trustee
hereby agrees to and ratifies the designation by the Company of Hewitt
Associates as the Consulting Firm hereunder.

                                   SECTION 2
                                  CONTRIBUTIONS

     2.1 The Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property acceptable to the
Trustee to be added to the principal of the Trust and thereafter held,
administered and disposed of by the Trustee as provided in this Trust Agreement.
Neither the Trustee nor any Participant or beneficiary of a Participant shall
have any right to compel such additional deposits.

     2.2 The Company shall make its contributions to the Trust in accordance
with appropriate corporate action and the Trustee shall have no responsibility
with respect thereto, except to add such contributions to the principal of the
Trust.

     2.3 As soon as practicable following a Change of Control (as defined in
Section 3.1 hereof), the Consulting Firm shall calculate the maximum aggregate
amount due or potentially due in the event of a termination of employment or
otherwise, pursuant to the terms of each Compensation Agreement without regard
to any reduction required under such Compensation Agreement to avoid such
payment being nondeductible to the Company pursuant to Section 280G of the Code
(the aggregate of such amounts for all the Compensation Agreements is
hereinafter referred to as the "Maximum Amount Payable"). The Consulting Firm
shall promptly furnish such calculation to the Company and the Company shall
have the obligation to make additional contributions to the Trust, within three
(3) business days of the receipt of such calculation, in an amount equal to the
excess (the "Excess"), if any, of the Maximum Amount Payable, plus an amount
equal to the estimated total Trust expenses over the life of the Trust (as
estimated by the Trustee), over the then fair market value of the Trust Assets;
provided, however, that, if a letter of credit shall have been provided to the
Trust for all or any part of such amount, the Company may direct the Trustee to
draw down such letter of credit in any amount and may credit such amounts drawn
down against amounts then due as additional contributions or as estimated
expenses. If at any later time following a Change of Control a valuation of the
Trust Assets occurs pursuant to this Trust Agreement and it is determined by the
Consulting Firm that an Excess shall exist, the Company shall promptly
contribute such amount to the Trust as is necessary to eliminate the Excess,
provided that, if a letter of credit shall have been provided to the Trust for
all or any part of such amount, the Company may direct the Trustee to draw down
such letter of credit held by the Trust in any amount and may credit such amount
drawn down against the amount so to be contributed.

     2.4 Any provision of Section 2.3 hereof to the contrary notwithstanding, in
the event of a Potential Change of Control (as defined in Section 3.2 hereof),
the Company shall have the obligation to make additional contributions to the
Trust in an amount equal to the Excess or direct the Trustee to draw down a
letter of credit held by the Trust in such amount. If a Change of Control shall
not have occurred within ninety (90) days of a contribution made




pursuant to this Section 2.4 and the Board of Directors of the Company adopts a
resolution to the effect that, for purposes of this Trust Agreement, a Change of
Control is not imminent, any amounts contributed to the Trust pursuant to this
Section 2.4, together with any earnings thereon, shall be paid by the Trustee to
the Company upon receipt by the Trustee of a copy of such resolution or a
Secretary's certificate thereof, and such other assurances as the Trustee may
reasonably request.

     2.5 The Company shall make all required contributions to the Trust in cash
or other property, except as provided in Section 2.7 hereof. Alternatively, the
Company may at any time provide the Trustee with an irrevocable and
unconditional letter of credit sufficient for the Trustee to draw down an amount
equal to all or any part of the required contributions. Following a Change of
Control or a Potential Change in Control, in the event that such a letter of
credit has been provided, then the Trustee may draw down on such letter of
credit at such times as the Trustee deems such a drawdown necessary to meet the
Company's obligations pursuant to the Compensation Agreements or this Trust
Agreement. All contributions so received (including any cash received on the
drawdown of a letter of credit), together with the income therefrom and any
increment thereon, shall be held, managed and administered by the Trustee as a
single commingled Trust pursuant to the terms of this Trust Agreement without
distinction between principal and income. Neither the Trustee nor the Consulting
Firm shall have any duty to require any contributions to be made to the Trust by
the Company or to determine that a Change of Control or Potential Change of
Control has occurred.

     2.6 Any provision of this Section 2 to the contrary notwithstanding, the
Trustee shall return to the Company, as soon as feasible following the close of
each calendar year, the excess, if any, of (i) the then aggregate fair market
value of the Trust Assets over (ii) 150% of the Maximum Amount Payable, as
determined by the Consulting Firm.

     2.7 In the event that prior to a Change of Control the Company's
liabilities under any of the Compensation Agreements are funded by the Company
in whole or in part through contracts of insurance which are maintained by the
Company expressly for the purpose of funding the Company's liabilities under
such Compensation Agreement and of which the Company is the named beneficiary,
then, in lieu of an amount of cash equal to the portion of the maximum amount
due pursuant to the Compensation Agreement which is funded by such contract of
insurance (as calculated by the Consulting Firm without regard to any reduction
required under such Compensation Agreement to avoid any such payment being
nondeductible to the Company pursuant to Section 280G of the Code), the Company
may transfer and contribute such contracts of insurance to the Trust (if
permitted to do so under the terms of such contracts of insurance, the Company's
other contracts and agreements, and applicable law), along with an amount in
cash sufficient (as determined by the Consulting Firm) to pay all premiums and
charges then owing or reasonably expected to become due in respect of such
contracts of insurance. In the event any such contract of insurance shall lapse,
expire or terminate, or the amount of cash contributed to the Trust to pay
future premiums or expenses on any contract shall be insufficient, the Company
shall promptly contribute to the Trust an additional amount in cash equal to the
maximum amount due pursuant to the Compensation Agreement funded by such
contract of insurance (as calculated by the Consulting Firm without regard to
any reduction required under such Compensation Agreement to avoid any such




payment being nondeductible to the Company pursuant to Section 280G of the Code)
reduced by contributions previously made in respect of such Compensation
Agreement (other than for the payment of premiums on such contract of
insurance).


                                   SECTION 3
                                CHANGE OF CONTROL

     3.1 For purposes of this Trust Agreement, a "Change of Control" shall mean:

          (a) the acquisition by any individual, entity or group (within the
     meaning of Section 13(d) or Section 14(d)(2) of the Securities Exchange Act
     of 1934, as amended (the "Exchange Act")) of beneficial ownership (within
     the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
     more of either (i) the then outstanding shares of common stock of the
     Company or (ii) the combined voting power of the then outstanding voting
     securities of the Company entitled to vote generally in the election of
     directors; provided, however, that for purposes of this subsection (a), the
     following acquisitions shall not constitute a Change of Control: (A) any
     acquisition directly from the Company or (B) any acquisition by an employee
     benefit plan (or related trust) sponsored or maintained by the Company or
     any corporation controlled by the Company; or

          (b) the consummation of any merger or other business combination of
     the Company, sale or lease of the Company's assets or combination of the
     foregoing transactions (the "Transactions"), other than a Transaction
     immediately following which the shareholders of the Company and any trustee
     or fiduciary of any Company employee benefit plan immediately prior to the
     Transaction own at least 60% of the voting power, directly or indirectly,
     of (i) the surviving corporation in any such merger or other business
     combination; (ii) the purchaser or lessee of the Company's assets; or (iii)
     both the surviving corporation and the purchaser or lessee in the event of
     any combination of Transactions; or

          (c) within any 24-month period, the persons who were directors
     immediately before the beginning of such period (the "Incumbent Directors")
     shall cease (for any reason other than death) to constitute at least a
     majority of the Board of Directors of the Company or the board of directors
     of a successor to the Company. For this purpose, any director who was not a
     director at the beginning of such period shall be deemed to be an Incumbent
     Director if such director was elected to the Board by, or on the
     recommendation of or with the approval of, at least three-fourths of the
     directors who then qualified as Incumbent Directors (so long as such
     director was not nominated by a person who has expressed an intent to
     effect a Change of Control or engage in a proxy or other control contest);
     or

          (d) such other event or transaction as the Board of Directors of the
     Company shall determine constitutes a Change of Control.

     3.2 For purposes of this Trust Agreement, a "Potential Change of Control"
shall be deemed to have occurred if:


          (a) any third person commences a tender or exchange offer for 20% or
     more of the then outstanding shares of common stock of the Company or of
     the combined voting



     power of the Company's then outstanding voting securities (other than a
     tender or exchange offer which, if consummated, would not result in a
     Change of Control); or

          (b) the Company enters into an agreement, the consummation of which
     would result in the occurrence of a Change of Control; or

          (c) any person (including the Company) publicly announces an intention
     to take or to consider taking actions which if consummated would constitute
     a Change of Control; or

          (d) the Board of Directors of the Company adopts a resolution to the
     effect that, for purposes of this Trust Agreement, a Change of Control is
     imminent.

     3.3 The Company shall have a duty to inform the Trustee whenever, to the
knowledge of the Company, a Change of Control or Potential Change of Control has
occurred. If any two Participants notify the Trustee in writing that a Change of
Control has occurred then, unless, in the opinion of nationally recognized
counsel to the Company (which opinion may be based on representations of fact so
long as such counsel does not know that such representations are untrue) such a
Change of Control has not occurred, a Change of Control will be deemed to have
occurred for purposes of this Trust Agreement. The Trustee shall notify the
Company promptly upon receipt of any notification from a Participant that a
Change of Control has occurred.

                                   SECTION 4
                ACCOUNTING BY THE TRUSTEE AND THE CONSULTING FIRM

     4.1 The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
done, including such specific records as shall be agreed upon in writing between
the Company and the Trustee. Within sixty (60) days following the close of each
calendar year and within sixty (60) days after the removal or resignation of the
Trustee, the Trustee shall deliver to the Company and the Consulting Firm a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by the Trustee, including a description of all securities
and investments purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being shown separately),
showing all cash, securities and other property held in the Trust at the end or
such year or as of the date of such removal or resignation, as the case may be,
and the book and fair market value of any such asset. The Consulting Firm shall
send a copy of such written account to each Participant at the address provided
by the Company.

     4.2 As soon as practicable following a Change of Control or Potential
Change of Control of the Company, the Consulting Firm shall establish and
maintain a memorandum account for each Participant and with respect to each
Compensation Agreement applicable to the Participant or with respect to which
the Participant is a participant (each, a "Participant's Account" and
collectively, the "Participants' Accounts"). As soon as practicable following a
Change of Control, the Consulting Firm shall calculate the amount which would be
due to each



Participant pursuant to each Compensation Agreement applicable to such
Participant or pursuant to which the Participant is a participant upon
satisfaction of the conditions (including any termination of employment
triggering severance or other benefits under a Compensation Agreement) under
such Compensation Agreement which give rise to the obligation of the Company to
pay such amount to the Participant (the "Agreement Payments"). The Consulting
Firm shall credit each Participant's Account with the Agreement Payments and
shall debit the Participant's Account with any amounts paid to the Participant
by the Trustee or by the Company with respect to a Compensation Agreement.

     4.3 Except for the records dealing with the investments comprising the
Trust Assets, which shall be maintained by the Trustee as provided in Section
4.1 hereof, the Consulting Firm shall maintain all the Participant and
Compensation Agreement records contemplated by this Trust Agreement, including
the maintenance of the data necessary to determine, from time to time, the
benefits of Participants or their beneficiaries under the respective
Compensation Agreements. The Consulting Firm shall also prepare and distribute
statements of the Participants' Accounts when requested by the Company or a
Participant and shall perform such other duties and responsibilities as the
Trustee determines is necessary or advisable to achieve the objectives of this
Trust Agreement, and the Trustee shall be entitled to rely fully upon the
information provided by the Consulting Firm.

     4.4 The Company shall furnish the Consulting Firm with copies of each
Compensation Agreement, any and all amendments thereto, and any resolutions of
the Board of Directors of the Company relevant thereto. The Company will
promptly provide the Consulting Firm with a copy of any notice of termination
required pursuant to the terms of any Compensation Agreement with respect to any
Participant and will also promptly provide the Consulting Firm with any and all
additional information reasonably requested by the Consulting Firm or that the
Company believes would be useful to enable the Consulting Firm to determine the
amount of and to effect the Agreement Payments payable to or with respect to
each Participant under the Compensation Agreements, including any benefits
payable after the Participant's death and the recipient of same, and the Company
will promptly update such information as it changes. The Company will use its
best efforts to cause each Participant to provide the Consulting Firm with all
information that it may reasonably request in order to determine the amount of
the Agreement Payments to or with respect to the Participant. The Trustee shall
notify the Consulting Firm of any payment made from the Trust to any Participant
or a Participant's beneficiaries pursuant to the terms of any Compensation
Agreement and the Company shall notify the Consulting Firm of any other payment
made pursuant to the terms of any Compensation Agreement, in each case, so that
the Consulting Firm may debit the Participant's Account accordingly.

     4.5 All accounts, books and records maintained pursuant to this Section 4
shall be opened to inspection and audit at all reasonable times by the Company
and on an annual basis, after receipt of the written account described in
Section 4.1 hereof, by the Participants; provided, however, that no Participant
shall have access to information about another Participant's Account other than
in the normal course of performing his duties as an employee of the Company.



     4.6 The fair market value of the Trust Assets shall be determined by the
Trustee whenever required pursuant to this Trust Agreement, but in any event not
less than quarterly. The Trustee may base such determination upon such sources
of information as it may deem reliable including, but not limited to,
information reported in (a) newspapers of general circulation, (b) standard
financial periodicals or publications, (c) statistical and valuation services,
and (d) the records of securities exchanges or brokerage firms deemed by the
Trustee to be reliable, or any combination thereof. The Trustee shall promptly
inform the Consulting Firm of any such valuation.

     4.7 The Trustee shall have the right to apply at any time to a court of
competent jurisdiction for judicial settlement of any account of the Trustee not
previously settled as herein provided or for the determination of any question
of construction or for instructions. In any such action or proceeding it shall
be necessary to join as parties only the Trustee and the Company (although the
Trustee may also join such other parties as it may deem appropriate), and any
judgment or decree entered therein shall be conclusive.

                                   SECTION 5
                          PAYMENTS TO THE PARTICIPANTS

     5.1 The Trustee shall make payments to the Participants from the Trust
Assets, if and to the extent such Trust Assets are available for distribution,
in accordance with the provisions of this Trust Agreement, provided that the
Company is not Insolvent (as defined in Section 6.1 hereof) at the time any such
payment is required to be made.

     5.2 Within two (2) business days after its receipt of a Notice of
Qualification (as hereinafter defined) (a "Notice") from a Participant or from
the Participant's beneficiary or beneficiaries (collectively with the
Participant referred to as "Participant"), the Consulting Firm shall forward a
copy of such Notice to the Company, and, within five (5) business days after
receipt of the Notice, shall make a reasonable good faith determination as to
whether the Participant is entitled to benefits under the applicable
Compensation Agreement(s) and, if so, the amount thereof. Within three (3)
business days after such determination, the Consulting Firm shall furnish a copy
of the Notice, with its approval or modification of the information therein, (i)
to the Participant if the Notice has been determined to be incorrect, or (ii) to
the Trustee if the Notice has been determined to be correct, in each case with a
copy thereof to the Company. Whenever the Consultant notifies a Participant that
a Notice in incorrect, stating the reasons therefore, the Consultant shall have
no obligation to take further action with respect thereto until the Participant
responds, accepting such modified Notice or contesting same. If a modified
Notice is accepted, such Notice shall be deemed a correct Notice, and the
Consultant shall proceed to furnish a copy thereof to the Company and to the
Trustee within three (3) business days of its receipt of same. If a modified
Notice is disputed by the Participant, the Consultant shall furnish a copy
thereof to the Company and to the Trustee along with an explanation of the
nature of the dispute, but no further action shall be taken under this Agreement
pursuant to such disputed Notice until the dispute is resolved and the Notice is
accepted, with or without further modification. For purposes of this Trust
Agreement, a "Notice of Qualification" means a written statement by a
Participant that states that pursuant to the terms of the Compensation Agreement
applicable to such Participant or pursuant to which such



Participant is a participant or beneficiary, the Participant is entitled to
payment thereunder.

     5.3 Whenever the Consulting Firm furnishes the Trustee with a correct
Notice, the Trustee shall within four (4) business days after receiving the
Notice provide the Consulting Firm and the Company with information from the
most recent fair market valuation concerning the current fair market value of
the Trust Assets. Within three (3) business days after its receipt from the
Trustee of the information concerning the fair market value of the Trust Assets,
the Consulting Firm shall notify the Company of the extent, if any, that the
aggregate of the then credit balances of all Participants' Accounts exceeds the
then fair market value of the Trust Assets. The Company, within five (5)
business days of its receipt from the Consulting Firm of a Notice, shall advise
the Consulting Firm whether it will pay the Participant directly, and if so how
much it will pay directly.

     5.4 Within seven (7) business days after its receipt from the Trustee of
the information concerning the fair market value of Trust Assets, the Consulting
Firm shall direct the Trustee to pay to the Participant the amount the
Consulting Firm has determined to be due and payable from the Trust (i.e.,
taking into account the amount, if any, being paid by the Company); provided,
however, that if the aggregate of the then credit balances in all Participants'
Accounts exceeds the then fair market value of the Trust Assets, the Consulting
Firm shall direct the Trustee to pay to the Participant the lesser of the amount
the Consulting Firm has determined to be due and payable to the Participant from
the Trust or such portion of the credit balance in the Participant's Account
which is equal to (a) the full credit balance in the Participant's Account
multiplied by (b) a fraction (i) the numerator of which is the then fair market
value of the Trust Assets and (ii) the denominator of which is the aggregate of
the then credit balances of all Participants' Accounts. At the same time, the
Consulting Firm shall furnish to the Trustee, with respect to each Participant
to whom payments are authorized, a certification that shall include the amount
of such benefits, the manner of payment and the name, address and social
security number of the recipient; such certification shall be updated annually
and upon receipt by the Consulting Firm of a notice of a benefit change under
any Compensation Agreement from the Company. The Consulting Firm shall also
furnish a copies of all such certifications to the Company and to the
Participant to whom the certification relates.

     5.5 Within three (3) business days following its receipt of such
certification and appropriate federal, state and local tax withholding
information, the Trustee shall commence cash distributions from the Trust to the
person or persons so indicated and the Consulting Firm shall debit the
appropriate Participant's Account accordingly. The Consulting Firm shall also
give written notice to the Trustee when a Participant's Account balance has been
reduced to a certain minimum agreed to by the Trustee and the Consulting Firm
under procedures which will enable the Trustee to cease payment when such
Participant's Account balance has been reduced to zero. The Trustee shall pay to
the Company the amount of any taxes withheld by the Trustee from payments made
by it, and the Company shall have full responsibility for the payment of all
withholding taxes to the appropriate taxing authority and the furnishing to each
Participant or beneficiary of a Participant the appropriate tax information form
evidencing such payment and the amount thereof.


     5.6 Any other provision of this Trust Agreement to the contrary
notwithstanding,



all payments pursuant to this Section 5 may be made without the approval or
direction of the Company, shall be made despite any direction to the contrary by
the Company and shall be made upon the direction of the Consulting Firm.

     5.7 If the Trust Assets are not sufficient to make all payments to
Participants required to be made pursuant to the terms of the Compensation
Agreements, the Company shall pay to each Participant the balance of each such
payment as it falls due. If such payments are not made by the Company, and the
Trust later contains sufficient Trust Assets to make such payments, they shall
be made from the Trust Assets, together with interest at the rate determined
pursuant to Section 1274(d) of the Code (the "Applicable Rate"), as part of the
payment otherwise due in accordance with this Section 5.

     5.8 Nothing provided in this Trust Agreement shall relieve the Company of
its liabilities to pay the retirement benefits and deferred compensation
liabilities provided under the Compensation Agreements except to the extent such
liabilities are met by application of Trust Assets. It is the intention of the
Company to have the Trust Assets satisfy in whole or in part the Company's legal
liability under the Compensation Agreements and to have the balance of the Trust
Assets, if any, revert to the Company only after its legal liability under the
Compensation Agreements has been met. The Company, therefore, agrees that all
income, deductions and credits in respect of the Trust Assets belong to the
Company as owner of the Trust for income tax purposes and will be included on
the Company's income tax returns.

     5.9 Upon the satisfaction of all liabilities of the Company to Participants
under the Compensation Agreements, the Consulting Firm shall prepare a
certification to the Trustee and to the Company and the Trustee shall thereupon
hold or distribute the Trust Assets in accordance with the written instructions
of the Company. At no time except to the extent used to satisfy claims of the
Company's creditors in the event that the Company becomes Insolvent, as defined
in Section 6.1 hereof, or the satisfaction of all liabilities of the Company
under the Compensation Agreements, shall any part of the Trust Assets revert to
the Company.

                                   SECTION 6
                  TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO
                  TRUST BENEFICIARIES WHEN COMPANY IS INSOLVENT

     6.1 The Company shall be considered to be "Insolvent" for purposes of this
Trust Agreement if (a) the Company is unable to pay its debts as they become due
or (b) the Company is subject to a pending proceeding as a debtor under the
United States Bankruptcy Code or the bankruptcy laws of any state.

     6.2 At all times during the continuance of the Trust, the principal and
income of the Trust shall be subject to the general creditors of the Company
under federal and state law as hereinafter provided. The Board of Directors and
the chief executive officer of the Company shall have the duty to inform the
Trustee in writing of the Company's Insolvency. If a person claiming to be a
creditor of the Company alleges in writing to the Trustee that the Company has
become Insolvent, the Trustee shall independently determine, within thirty (30)
days after receipt of such written allegation, whether the Company is Insolvent
and, pending such determination, the Trustee shall discontinue payments to the
Participants, shall hold the Trust Assets for the



potential benefit of the Company's general creditors, and shall resume payments
to the Participants in accordance with Section 5 hereof only after the Trustee
has determined that the Company is not Insolvent (or is no longer Insolvent, if
the Trustee initially determines that Company to be Insolvent). If the Trustee,
after the expiration of such thirty (30) days, in good faith and with the advice
of such advisors as may be retained by the Trustee pursuant to Section 7 hereof,
is unable to determine whether the Company is Insolvent, the Trustee (a) shall
so notify the Company and the Consulting Firm in writing (and the Consulting
Firm shall promptly notify the Participants at the addresses supplied by the
Company) and any of the Trustee, the Company or any of the Participants may
apply to any court of competent jurisdiction for a determination, for purposes
of the Trust, as to whether or not the Company is Insolvent, and (b) the Trustee
shall thereupon hold the Trust Assets pursuant to the terms of this Trust
Agreement pending the determination of such court. Unless the Trustee has actual
knowledge, or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, the Trustee shall have no duty
to inquire whether the Company is Insolvent. The Trustee may in all events rely
on such evidence concerning the Company's Insolvency as may be furnished to the
Trustee and that provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency. Nothing in this Trust Agreement
shall in any way diminish any rights of a Participant to pursue his rights as a
general creditor of the Company with respect to the Compensation Agreements or
otherwise.

     6.3 If the Trustee discontinues payments from the Trust to any Participant
pursuant to Section 6.2 hereof and subsequently resumes such payments, the first
payment following such discontinuance shall, subject to Sections 5.1, 5.2, 5.3
and 5.4 hereof, include the aggregate amount of all payments which would have
been made to the Participant (together with interest at the Applicable Rate on
the amount delayed) during the period of such discontinuance, less the aggregate
amount of payments made to each such Participant by the Company in lieu of the
payments provided for hereunder during any period of discontinuance, as
certified to the Trustee by the Consulting Firm.

                                   SECTION 7
                          RESPONSIBILITY OF THE TRUSTEE

     7.1 The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character with like aims; provided, however, that the
Trustee shall incur no liability to anyone for any action taken pursuant to a
direction, request, or approval given by the Company or any Participant (or any
beneficiary of a Participant) contemplated by and complying with the terms of
this Trust Agreement.

     7.2 Subject to investment guidelines agreed to in writing from time to time
by the Company and the Trustee, the Trustee shall have power and authority to
invest and reinvest the Trust Assets, and in all events is authorized and
empowered to do all other acts necessary or desirable for the proper
administration of the Trust Assets, as the absolute owner thereof, including,
but not limited to, authorization and power:

          (a) To invest and reinvest in any property, real, personal or mixed,
     wherever



     situated and whether or not productive of income or consisting of wasting
     assets, including without limitation, common and preferred stocks, bonds,
     notes, debentures (including convertible stocks and securities but not
     including any stock or security of the Trustee, the Company or any
     affiliate thereof), futures, option and forward contracts, leaseholds,
     mortgages, certificates of deposit or demand or time deposits (including
     any such deposits with the Trustee), shares of investment companies and
     mutual funds, interests in partnerships and trusts, insurance policies and
     annuity contracts, and oil, mineral or gas properties, royalties, interests
     or rights, without being limited to the classes of property in which
     trustees are authorized to invest by any law or any rule of court of any
     state and without regard to the proportion any such property may bear to
     the entire amount of the Trust Assets; provided, however, that the Trustee
     is authorized to receive and hold any stock or security of the Company or
     any affiliate thereof which is contributed by the Company to the Trust and
     the Trustee shall not sell any such stock or security unless (i) the
     Company so directs or (ii) such sale is necessary in order to meet the
     liquidity needs of the Trust;

          (b) To invest and reinvest all or any portion of the Trust Assets
     collectively through the medium of any common, collective or commingled
     trust fund that may be established and maintained by the Trustee, subject
     to the instrument or instruments establishing such trust fund or funds and
     with the terms of such instrument or instruments, as from time to time
     amended, being incorporated into this Trust Agreement, to the extent of the
     equitable share of the Trust funds in any such common collective or
     commingled trust fund;

          (c) To retain any property at any time received by the Trustee;

          (d) Subject to subsection (a) above, to sell or exchange any property
     held by it at public or private sale, for cash or on credit, to grant and
     exercise options for the purchase or exchange thereof, to exercise all
     conversion or subscription rights pertaining to any such property and to
     enter into any covenant or agreement to purchase any property in the
     future;

          (e) To participate in any plan of reorganization, consolidation,
     merger, combination, liquidation or other similar plan relating to property
     held by it and to consent to or oppose any such plan or any action
     thereunder or any contract, lease, mortgage, purchase, sale or other action
     by any person;

          (f) To deposit any property held by it with any protective,
     reorganization or similar committee, to delegate discretionary power
     thereto, and to pay part of the expenses and compensation thereof and any
     assessments levied with respect to any such property so deposited;

          (g) To extend the time of payment of any obligation held by it;

          (h) To hold uninvested any moneys received by it, without liability
     for interest thereon, until such moneys shall be invested, reinvested or
     disbursed;

          (i) To exercise all voting or other rights with respect to any
     property held by it and to grant proxies, discretionary or otherwise;



          (j) For the purposes of the Trust, to borrow money from others, to
     issue its promissory note or notes therefor, and to secure the repayment
     thereof by pledging any property held by it;

          (k) For the purposes of the Trust, to loan to the Company the proceeds
     of any borrowing against any insurance policy held as an asset of the
     Trust;

          (l) To manage, administer, operate, insure, repair, improve, develop,
     preserve, mortgage, lease or otherwise deal with, for any period, any real
     property or any oil, mineral or gas properties, royalties, interests or
     rights held by it directly or through any corporation, either alone or by
     joining with others, using other Trust assets for any such purposes, to
     modify, extend, renew, waive or otherwise adjust any provision of any such
     mortgage or lease and to make provision for amortization of the investment
     in or depreciation of the value of such property;

          (m) To employ suitable agents and counsel, who may be counsel to the
     Company or the Trustee and to pay their reasonable expenses and
     compensation from the Trust to the extent not paid by the Company;

          (n) To cause any property held by it to be registered and held in the
     name of one or more nominees, with or without the addition of words
     indicating that such securities are held in a fiduciary capacity, and to
     hold securities in bearer form;

          (o) To settle, compromise or submit to arbitration any claims, debts
     or damages due or owing to or from the Trust, respectively, to commence or
     defend suits or legal proceedings to protect any interest of the Trust, and
     to represent the Trust in all suits or legal proceedings in any court or
     before any other body or tribunal; provided, however, that the Trustee
     shall not be required to take any such action unless it shall have been
     indemnified by the Company to its reasonable satisfaction against liability
     or expenses it might incur therefrom;

          (p) To organize under the laws of any state a corporation or trust for
     the purpose of acquiring and holding title to any property which it is
     authorized to acquire hereunder and to exercise with respect thereto any or
     all of the powers set forth herein; and

          (q) Generally, to do all acts, whether or not expressly authorized,
     that the Trustee may deem necessary or desirable for the protection of the
     Trust Assets.

Notwithstanding the foregoing, the Trustee shall upon the written direction of
the Company invest all or part of the Trust Assets in a commercial annuity or
insurance contract, or any other investment, selected by the Company and the
Trustee shall have no responsibility for any such investment other than as owner
and custodian thereof.

     7.3 The Company may at any time direct the Trustee to segregate a portion
of the Trust Assets in a separate investment account or accounts and may appoint
one or more investment managers to direct the investment and reinvestment of
each such investment account or accounts. In such event, the Company shall
notify the Trustee of the appointment of each such investment manager.
Thereafter, the Trustee shall make every sale or investment with



respect to such investment account as directed in writing by the investment
manager provided such sales or investments are limited to reasonable investable
assets acceptable to the Trustee. It shall be the duty of the Trustee to act
strictly in accordance with each direction. The Trustee shall be under no duty
to question any such direction of the investment manager, to review any
securities or other property held in any such investment account or accounts
acquired by it pursuant to such directions or to make any recommendations to the
investment managers with respect to such securities or other property.
Notwithstanding the foregoing, the Trustee, without obtaining prior approval or
direction from an investment manager, shall invest cash balances held by it from
time to time in short term cash equivalents including, but not limited to,
through the medium of any short term common, collective or commingled trust fund
established and maintained by the Trustee subject to the instrument establishing
such trust fund, U.S. Treasury Bills, commercial paper (including such forms of
commercial paper as may be available through the Trustee's Trust Department),
certificates of deposit, and similar type securities, with a maturity not to
exceed fifteen months; and, furthermore, sell such short term investments as may
be necessary to carry out the instructions of an investment manager regarding
more permanent type investment and directed distributions. The Trustee shall not
be liable or responsible for any loss resulting to the Trust by reason of any
sale or purchase of an investment directed by an investment manager nor by
reason of the failure to take any action with respect to any investment which
was acquired pursuant to any such direction in the absence of further directions
of such investment manager, or solely as a result of the performance by the
Trustee or its officers, employees or agents, of any custodial, reporting,
recording or bookkeeping functions with respect to any such investment account,
except to the extent that such performance constituted gross negligence or
willful misconduct on the part of the Trustee. Notwithstanding anything in this
Trust Agreement to the contrary, the Trustee shall be indemnified and saved
harmless by the Company from and against any and all personal liability to which
the Trustee may be subjected by carrying out any directions of an investment
manager issued pursuant hereto or for failure to act in the absence of
directions of the investment manager including all expenses reasonably incurred
in its defense in the event the Company fails to provide such defense; provided,
however, the Trustee shall not be so indemnified if it participates knowingly
in, or knowingly undertakes to conceal, an act or omission of an investment
manager, having actual knowledge that such act or omission is a breach of a
fiduciary duty; provided further, however, that the Trustee shall not be deemed
to have knowingly participated in or knowingly undertaken to conceal an act or
omission of an investment manager with knowledge that such act or omission was a
breach of fiduciary duty by merely complying with directions of an investment
manager or for failure to act in the absence of directions of an investment
manager. The Trustee may rely upon any order, certificate, notice, direction or
other documentary confirmation purporting to have been issued by the investment
manager which the Trustee believes to be genuine and to have been issued by the
investment manager. The Trustee shall not be charged with knowledge of the
termination of the appointment of any investment manager until it receives
written notice thereof from the Company.

     7.4 No person dealing with the Trustee shall be under any obligation to see
to the proper application of any money paid or property delivered to the Trustee
or to inquire into the Trustee's authority as to any transaction.

     7.5 The Trustee shall distribute cash or property from the Trust in
accordance



with Section 5 hereof. The Trustee may make any distribution required hereunder
by mailing its check for the specified amount, or delivering the specified
property, to the person to whom such distribution or payment is to be made, at
such address as may have been last furnished to the Trustee, or if no such
address shall have been so furnished, to such person in care of the Company.

                                   SECTION 8
                          COMPENSATION AND EXPENSES OF
                       THE TRUSTEE AND THE CONSULTING FIRM

     8.1 The Trustee and the Consulting Firm shall each be entitled to receive
such reasonable compensation for their services as shall be agreed upon by the
Company and the Trustee or the Consulting Firm, as the case may be. The Trustee
and the Consulting Firm shall each also be entitled to receive their reasonable
expenses incurred with respect to the administration of the Trust, including
reasonable counsel fees and fees incurred by the Trustee and the Consulting Firm
in connection therewith. Such compensation and expenses shall be payable by the
Company and, if not so paid, shall be paid by the Trustee from the Trust Assets.
In the event that any Trust Assets are used to pay compensation and expenses to
the Trustee or the Consulting Firm pursuant to the preceding sentence of this
Section 8.1, the Company shall promptly contribute to the Trust any such amount
or direct the Trustee to draw down on a letter of credit held by the Trust in
such amount.

                                   SECTION 9
                     RESIGNATION, REMOVAL AND REPLACEMENT OF
                       THE TRUSTEE AND THE CONSULTING FIRM

     9.1 The Trustee may resign at any time by delivering written notice thereof
to the Company; provided, however, that no such resignation shall take effect
until the earlier of (i) sixty (60) days from the date of delivery of such
notice to the Company or (ii) the appointment of a successor trustee. The
Consulting Firm shall deliver a copy of any such notice to each Participant and
beneficiary at the address supplied by the Company.

     9.2 The Trustee may be removed at any time by the Company, pursuant to a
resolution of the Board of Directors of the Company, upon delivery to the
Trustee of a certified copy of such resolution and sixty (60) days' written
notice, unless such notice period is waived in whole or in part by the Trustee,
of (i) such removal and (ii) the appointment of a successor trustee.

     9.3 Upon the resignation or removal of the Trustee, a successor trustee
shall be appointed by the Company; provided, however, that appointment of a
successor trustee at any time after a Change of Control shall not be effective
unless such appointment is consented to by not less than 75% of the Participants
in interest. Such successor trustee shall be a bank or trust company which is
established under the laws of the United States or a State within the United
States having equity capitalization of at least $500 million and which is not
related, directly or indirectly, to the Company. Such appointment shall take
effect upon the delivery to the Trustee of (a) a written appointment of such
successor trustee, duly executed by the Company, and (b) a written acceptance
duly executed by such successor trustee. Any successor trustee shall have all
the rights, powers and duties granted the Trustee hereunder.



     9.4 If, within sixty (60) days of the delivery of the Trustee's written
notice of resignation, a successor trustee shall not have been appointed, the
Trustee may apply to any court of competent jurisdiction for the appointment of
a successor trustee the costs of which shall be paid by the Company, and if not
so paid, shall be paid from the Trust Assets. Upon the resignation or removal of
the Trustee and the appointment of a successor trustee, and after the acceptance
and approval of the Trustee's accounting of the Trust Assets, the Trustee shall
transfer and deliver to such successor the records of the Trust and the Trust
Assets, reserving such funds as the resigning or removed Trustee reasonably
deems necessary to cover its unpaid bills and expenses, and closing costs. Under
no circumstances shall the Trustee transfer or deliver the Trust Assets to any
successor which is not a bank or trust company as defined in Section 9.3
hereinabove.

     9.5 Upon qualification of a successor Trustee, all right, title and
interest of the resigning or removed Trustee in the Trust Assets and all rights
and privileges under this Trust Agreement theretofore vested in such resigning
Trustee shall vest in the successor Trustee where applicable, and thereupon all
future liability of said resigning or removed Trustee shall terminate; provided,
however, that the resigning or removed Trustee shall execute, acknowledge and
deliver all documents and written instruments which are necessary to transfer
and convey the right, title and interest to and in the Trust Assets, and all
rights and privileges to the successor Trustee. The Company shall provide the
Trustee with a certification by an authorized officer of the successor bank or
trust company that the successor trustee meets the requirements of Section 9.3
and the Trustee shall be entitled to rely fully upon such certification.

     9.6 Hewitt Associates and any successor Consulting Firm appointed hereunder
may resign at any time by delivering sixty (60) days advance written notice to
the Company and to the Trustee, in which event, if a Change of Control shall not
then have occurred, the Company shall appoint a new Consulting Firm, or, if a
Change of Control shall then have occurred, the Trustee shall appoint a new
Consulting Firm; provided, however, that any Consulting Firm appointed by the
Trustee following a Change of Control shall be independent of the Company. Such
appointment shall in either case take effect upon the delivery to the Trustee of
(a) a written appointment of such successor Consulting Firm, duly executed by
the Company or the Trustee, as the case may be, and (b) a written acceptance
duly executed by such successor Consulting Firm. Any successor Consulting Firm
shall have all the rights, powers and duties granted the Consulting Firm
hereunder.

     9.7 Hewitt Associates and any successor Consulting Firm hereunder may be
removed at any time by the Company if a Change of Control shall not then have
occurred, or by the Trustee if a Change of Control shall then have occurred,
upon thirty (30) days' written notice, unless such notice period is waived in
whole or in part by the Consulting Firm, by delivery to the Consulting Firm of a
notice of (i) such removal and (ii) the appointment of a successor Consulting
Firm. In the event Hewitt Associates is removed, it shall cooperate with the
Trustee in the orderly transition of records pertaining to the Participant
Accounts.



                                   SECTION 10
                        AMENDMENT OF TRUST AGREEMENT AND
                            TERMINATION OF THE TRUST

     10.1 This Trust Agreement may be amended, in whole or in part, at any time
and from time to time, by the Company, pursuant to a resolution of the Board of
Directors thereof by delivery to the Trustee and the Consulting Firm of a
certified copy of such resolution and a written instrument duly executed and
acknowledged in the same form as this Trust Agreement, except that the duties
and responsibilities of the Trustee and the Consulting Firm shall not be
increased without the Trustee's or the Consulting Firm's written consent.

     10.2 The Trust may be terminated prior to the time that payment of all
benefits under the Compensation Agreements have been paid only with the written
approval of the Participants and beneficiaries entitled to such benefits. Absent
such written approval, the Trust shall be irrevocable and may not be terminated
until such time as the Trustee has received a certification from the Consulting
Firm that all liabilities have been satisfied with respect to all Participants
and their beneficiaries under all Compensation Agreements; provided, however,
that if any payment made from the Trust or to be made pursuant to any of the
Compensation Agreements is being contested, litigated or disputed, the Trust
shall remain irrevocable and the Trust may not be terminated until such contest,
litigation or dispute is resolved. Following the later of (a) the Trustee's
receipt of such certification from the Consulting Firm or (b) the resolution of
all contests, litigation or disputes discussed in the prior sentence of this
Section 10.2, the Trust shall terminate.

     10.3 Upon the termination of the Trust in accordance with Section 10.2, the
Trustee shall as soon as practicable, but in any event within ninety (90) days
of the date of such termination, distribute the Trust Assets to the Company.
Upon completing such distribution, the Trustee shall be relieved and discharged.
The powers of the Trustee shall continue as long as any part of the Trust Assets
remains in its possession.

                                   SECTION 11
                            PROTECTION OF THE TRUSTEE

     11.1 The Company shall indemnify and hold harmless the Trustee for any
liability or expenses, including without limitation reasonable attorneys' fees,
incurred by the Trustee with respect to holding, managing, investing or
otherwise administering the Trust Assets or carrying out its duties hereunder,
except to the extent that such liabilities or expenses arise from actions
constituting negligence or willful misconduct by the Trustee under this Trust
Agreement.

     11.2 The Company shall indemnify and hold the Trustee harmless for any
liability, loss, suit or expense (including attorneys' fees) in connection with
or arising out of actions or omissions of the Consulting Firm (including any
direction to or failure to direct the Trustee).

     11.3 It is herein recognized that Hewitt Associates, the Consulting Firm
hereunder, is an independent consultant providing employee benefit plan services
for the Company generally, including actuarial and recordkeeping services for
certain Company employee benefit plans, and that the Trustee shall have no
responsibility hereunder for the continued retention of such Consulting Firm
and/or any responsibility assigned to said




Consulting Firm or its performance thereof. It is not intended that the
Consulting Firm act in a fiduciary capacity under this Trust Agreement or the
Compensation Agreements.

     11.4 The Trustee shall not be either individually or severally liable for
any taxes of any kind levied or assessed under the existing or future laws
against the Trust Assets. The Trustee shall withhold from each payment to any
Participant or beneficiary any federal, state or local withholding taxes which
are from time to time required to be deducted under applicable laws, as directed
by the Consulting Firm. To the extent that any taxes levied or assessed upon the
Trust are not paid by the Company, the Trustee shall pay such taxes out of Trust
Assets.

                                   SECTION 12
                                  COMMUNICATION

     12.1 Communications to the Company shall be addressed to it at:

                         SUPERVALU INC.
                         P.O. Box 990
                         Minneapolis, Minnesota  55440
                         Attention:  Mr. Robert Shebeck

with a copy to the Corporate Secretary.

     12.2 Communications to the Trustee shall be addressed to it at:

                         Wells Fargo Bank Minnesota, N.A.
                         75 South 5th Street
                         Minneapolis, Minnesota  55402
                         Attention: Lucinda Frenz

     12.3 Communications to the Consulting Firm shall be addressed to it at:

                         Hewitt Associates
                         45 South Seventh Street
                         Minneapolis, MN 55402
                         Attention:  Mark Spangrud

                                   SECTION 13
                           SEVERABILITY AND ALIENATION

     13.1 Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of such prohibition without invalidating or in any
other way limiting the remaining provisions hereof.



     13.2 The rights, benefits and payments of a Participant from the Trust
Assets may not be anticipated, assigned (either at law or in equity), alienated
or subject to attachment, garnishment, levy, execution or other legal or
equitable process except as required by law. Any attempt by a Participant to
anticipate, alienate, assign, sell, transfer, pledge, encumber or charge the
same shall be void. The Trust Assets shall not in any manner be subject to the
debts, contracts, liabilities, engagements or torts of any Participant and
payments hereunder shall not be considered an asset of the Participant in the
event of his insolvency or bankruptcy. Notwithstanding the foregoing, the Trust
Assets shall at all times remain subject to claims of creditors of the Company
in the event the Company is adjudicated to be bankrupt or insolvent as provided
herein and Participants shall have no claims to the Trust Assets superior to
that of any other unsecured creditors in such event.

                                   SECTION 14
                                  GOVERNING LAW

     14.1 This Trust Agreement shall be construed and interpreted under, and the
Trust hereby created shall be governed by, the laws of the State of Delaware
without reference to principles of conflicts of law, insofar as such laws do not
contravene any applicable federal laws, rules or regulations.

                                   SECTION 15
                                  MISCELLANEOUS

     15.1 If at any time there is no person authorized to act under this Trust
Agreement on behalf of the Company, the Board of Directors of the Company shall
have the authority to act hereunder.

     15.2 All reasonable expenses and fees of the Company for the administration
of the Trust and services in relation thereto for actuarial, legal and
accounting and other similar expenses, including any costs with respect to the
creation of the Trust or amendment of the Trust Agreement, shall be paid by the
Company and, if not so paid, may be paid by the Trustee from the Trust Assets to
the extent the Trustee shall determine such expenses and fees to be reasonable.

     15.3 Participation in the Trust shall not give any Participant any right to
be retained as an employee of the Company nor any rights other than those
specifically enumerated herein or in any Compensation Agreement applicable to
any Participant or pursuant to which such Participant is a participant or
beneficiary.

     15.4 This Trust Agreement shall inure to the benefit of and be binding upon
the parties hereto and their successors and assigns. In addition, this Trust
Agreement shall also inure to the benefit of the Participants and the Company's
general creditors under federal and state law.

     15.5 In the event that a Participant shall be deceased prior to the time
payment is due the Participant, and if there is no other person then entitled to
such payment, then payment shall be made if due to the estate of the deceased
Participant in accordance with the terms of the



applicable Compensation Agreement.

     15.6 Headings in this Trust Agreement are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.

     15.7 Neither the gender nor the number (singular or plural) of any word
shall be construed to exclude another gender or number when a different gender
or number would be appropriate.

     15.8 This Trust Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which shall together
constitute only one Trust Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed and their respective corporate seals to be hereto affixed this
10th day of May, 2002.

                                       SUPERVALU INC.

                                       By: /s/ Ronald C.Tortelli
                                           -------------------------------------
                                       Name: Ronald C. Tortelli
                                       Title: Senior Vice President


                                       WELLS FARGO BANK MINNESOTA, N.A.

                                       By: /s/ Lucinda Frenz
                                           -------------------------------------
                                       Name: Lucinda Frenz
                                       Title: Vice President



                                    Exhibit A
                                    ---------

1.   Super Valu Stores, Inc. Executive Post-Retirement Survivor Benefit Program,
     as amended to date and as the same may be amended from time to time.

2.   Super Valu Stores, Inc. Deferred Compensation Plan, as amended to date and
     as the same may be amended from time to time.

3.   Super Valu Stores, Inc. Executive Deferred Compensation Plan I, as amended
     to date and as the same may be amended from time to time.

4.   Super Valu Stores, Inc. Excess Benefits Plan, as amended to date and as the
     same may be amended from time to time.

5.   Super Valu Stores, Inc. Directors Retirement Program adopted effective July
     1, 1982, as amended to date and as the same may be amended from time to
     time.

6.   Super Valu Stores, Inc. Executive Deferred Compensation Plan II, as amended
     to date and as the same may be amended from time to time.

7.   Super Valu Stores, Inc. Excess Benefits Plan (1989 Restatement), as amended
     to date and as the same may be amended from time to time.

8.   Super Valu Stores, Inc. Nonqualified Supplemental Executive Retirement
     Plan, as amended to date and as the same may be amended from time to time.

9.   Change of Control Severance Agreements entered into between SUPERVALU INC.
     and certain of its executives.

10.  Split Dollar Life Insurance Agreement dated July 6, 1988, between SUPERVALU
     INC., Michael W. Wright, and Phillip H. Martin and Thomas O. Moe, as
     Trustees of the Michael W. Wright 1997 GST Family Trust under Irrevocable
     Trust Agreement dated December 9, 1997, with Michael W. Wright, as Donor,
     and not individually.

11.  Form of individual Non-Qualified Deferred Compensation Agreements between
     SUPERVALU INC. and certain former employees of Randall Stores, Inc. listed
     on Schedule I hereto.

EX-11

                                                                      EXHIBIT 11

SUPERVALU INC. and Subsidiaries
Computation of Earnings Per Common Share
(unaudited)



                                                                                    First Quarter Ended
- --------------------------------------------------------------------------------------------------------------

(In thousands, except per share amounts)                                        June 15, 2002    June 16, 2001
- --------------------------------------------------------------------------------------------------------------
                                                                                           
Earnings per share - basic
  Earnings available to common shareholders                                        $ 77,155        $ 56,968

  Weighted average common shares outstanding                                        133,812         132,493
  Earnings per share - basic                                                       $    .58        $    .43


Earnings per share - diluted
  Earnings available to common shareholders                                        $ 77,155        $ 56,968

  Weighted average common shares outstanding                                        133,812         132,493
  Dilutive impact of options outstanding                                              2,327              83
                                                                                   --------        --------
  Weighted average common shares and potential
       dilutive shares outstanding                                                  136,139         132,576
  Earnings per share - dilutive                                                    $    .57        $    .43
                                                                                   --------        --------
- ------------------------------------------------------------------------------------------------------------



Basic earnings per share is calculated using income available to common
shareholders divided by the weighted average of common shares outstanding during
the period. Diluted earnings per share is similar to basic earnings per share
except that the weighted average of common shares outstanding is increased to
include the number of additional common shares that would have been outstanding
if the dilutive potential common shares, such as options, had been issued.

EX-12

                                                                      EXHIBIT 12

SUPERVALU INC. and Subsidiaries
Ratio of Earnings to Fixed Charges
(unaudited)



- ------------------------------------------------------------------------------------------------------------
                          First     Fiscal Year    Fiscal Year    Fiscal Year    Fiscal Year    Fiscal Year
                         Quarter        End            End            End            End            End
- ------------------------------------------------------------------------------------------------------------
(in thousands, except    June 15,   February 23,   February 24,   February 26,   February 27,   February 28,
ratios)                   2002          2002           2001           2000           1999           1998
- ------------------------------------------------------------------------------------------------------------
                                                                              
Earnings before
income taxes             $122,439     $331,998       $139,590      $445,393       $316,261        $384,780
- ------------------------------------------------------------------------------------------------------------
Less undistributed
earnings of less than
fifty percent owned
affiliates:                (5,428)     (13,450)        (9,429)       (6,605)        (5,943)         (7,388)
- ------------------------------------------------------------------------------------------------------------
Earnings before
income taxes              117,011      318,548        130,161       438,788        310,318         377,392
- ------------------------------------------------------------------------------------------------------------
Interest expense           58,052      194,294        212,898       154,482        124,111         133,619
- ------------------------------------------------------------------------------------------------------------
Interest on operating
leases                     13,623       35,971         29,047        23,838         18,574          18,010
                         --------     --------       --------      --------       --------        --------
- ------------------------------------------------------------------------------------------------------------
                         $188,686     $548,813       $372,106      $617,108       $453,003        $529,021
- ------------------------------------------------------------------------------------------------------------
Total fixed charges        71,675      230,265        241,945       178,320        142,685         151,629
- ------------------------------------------------------------------------------------------------------------
Ratio of earnings to
fixed charges                2.63         2.38           1.54          3.46           3.17            3.49
- ------------------------------------------------------------------------------------------------------------

EX-99.1

                                                                    EXHIBIT 99.1


        Cautionary Statements for Purposes of the Safe Harbor Provisions
                     of the Securities Litigation Reform Act

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 (the "Act"), SUPERVALU INC. (the "Company") is
filing the cautionary statements set forth below, identifying important factors
that could cause the Company's actual results to differ materially from those
projected in forward-looking statements made by, or on behalf of the Company.
When used in this Quarterly Report on Form 10-Q and in future communications,
and in oral statements made by or with the approval of an authorized executive
officer, the words or phrases "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "project", "believe" or similar
expressions are intended to identify forward-looking statements within the
meaning of the Act. The following cautionary statements are for use as a
reference to a readily available written document in connection with
forward-looking statements as defined in the Act. These factors are in addition
to any other cautionary statements, written or oral, which may be made or
referred to in connection with any such forward-looking statement.

Retail Food Business Risks

The Company's retail food segment faces risks which may prevent the Company from
maintaining or increasing retail sales and earnings including: competition from
other retail chains, supercenters, non-traditional competitors and emerging
alternative formats; operating risks of retail operations; potential work
disruptions from labor disputes or national emergencies; general economic or
political conditions that affect consumer buying habits generally or acts of
terror directed at the food industry that affect consumer behavior; and the
adverse impact from the entry of other retail chains, supercenters and
non-traditional or emerging competitors into markets where the Company has a
retail concentration.

Food Distribution Business Risks

The Company's sales and earnings in its food distribution operations are
dependent on (i) the Company's ability to attract new customers and retain
existing customers; (ii) the success of its customers in competing with other
retail chains, supercenters, and non-traditional competitors and emerging
alternative formats; (iii) general economic or political conditions that affect
consumer buying habits generally or acts of terror directed at the food industry
that affect consumer behavior; and (iv) its ability to control costs. While the
Company believes that its efforts will enable it to attain its goals, certain
factors could adversely impact the Company's results, including: declines in
sales to its independent retailer customer base due to competition and other
factors; consolidations of retailers or competitors; increased self-distribution
by chain retailers; increases in operating costs; increased in credit risk
associated with open accounts and financing activities with independent
retailers; potential work disruptions from labor disputes or national
emergencies; and the entry of new or non-traditional distribution systems into
the industry.

Risks of Expansion and Acquisitions

The Company intends to continue to grow its retail and distribution businesses
through new store openings, new affiliations and in part through acquisitions.
Expansion is subject to a number of risks, including the adequacy of the
Company's capital resources; the location of suitable store or distribution
center sites and the negotiation of acceptable lease terms; and the ability to
hire and train employees. In addition, acquisitions involve a number of special
risks, including: making acquisitions at acceptable rates of return; the
diversion of management's attention to assimilation of the operations and
integration of personnel of the acquired business; possible costs and other
risks of integrating or adapting operation systems; and potential adverse
short-term effects on the Company's operating results.

Liquidity

Management expects that the Company will continue to replenish operating assets
with internally generated funds unless additional funds are necessary to
complete acquisitions. If capital spending significantly exceeds anticipated
capital needs, additional funding could be required from other sources. In
addition, acquisitions could affect the Company's borrowing costs and future
financial flexibility.



Litigation

The Company has reported that several class action lawsuits were filed against
it in July 2002 alleging that certain of its officers and directors violated
Federal securities laws by issuing materially false and misleading statements
relating to its financial performance. See Part II, Item 1 "Legal Proceedings",
of this report for more information regarding this matter. The costs and other
effects of those proceedings and other legal and administrative cases and
proceedings, and settlements, are impossible to predict with certainty.

The foregoing should not be construed as exhaustive and the Company disclaims
any obligation to subsequently revise any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.


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