1994 Amended and Restated Stock Option and Incentive Plan for Key Employees - Safeway Inc.
1994 AMENDED AND RESTATED
STOCK OPTION AND INCENTIVE PLAN FOR
KEY EMPLOYEES OF SAFEWAY INC.
Safeway Inc., a corporation organized under the laws of the State of
Delaware (and the successor to Safeway Stores, Incorporated) hereby adopts this
1994 Amended and Restated Stock Option and Incentive Plan for Key Employees of
Safeway Inc. The Plan was originally adopted in 1986 and was amended and
restated on July 18, 1990. The Plan was further amended effective October 10,
1991 and December 13, 1991. The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its key Employees who
have been or will be given responsibility for the management or administration
of the Company's business affairs, by assisting them to become owners of
capital stock of the Company and thus to benefit directly from its growth,
development and financial success.
(2) To enable the Company to obtain and retain the services of the
type of professional, technical and managerial employees considered essential
to the long-range success of the Company by providing and offering them an
opportunity to become owners of capital stock of the Company under options,
including options that are intended to qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code of 1986, as amended.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
Section 1.1 - Award Limit
(a) With respect to executive officers of the Company and with
respect to Employees (other than executive officers of the Company) solely for
their year of hire, "Award Limit" shall mean 500,000 shares of Common Stock or,
as the context may require, Options to acquire 500,000 shares of Common Stock.
(b) With respect to Employees other than executive officers of the
Company for each year after their year of hire, "Award Limit" shall mean
200,000 shares of Common Stock or, as the context may require, Options to
acquire 200,000 shares of Common Stock.
Section 1.2 - Board
"Board" shall mean the Board of Directors of the Company.
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Section 1.3 - Bonus Plan
"Bonus Plan" shall mean collectively The Operating Performance Bonus
Plan for Executive Officers of Safeway Inc. and the Operating Performance Bonus
Plan for Key Employees of Safeway, Inc.
Section 1.4 - Bonus Stock
"Bonus Stock" shall mean Common Stock awarded pursuant to Article VI
of this Plan.
Section 1.5 - Bonus Stockholder
"Bonus Stockholder" shall mean an Executive to whom Bonus Stock has
been awarded under this Plan.
Section 1.6 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.7 - Committee
"Committee" shall mean the Stock Option Committee of the Board,
appointed as provided in Section 8.1.
Section 1.8 - Common Stock
"Common Stock" shall mean the Common Stock, par value $.01 per share,
of the Company.
Section 1.9 - Company
"Company" shall mean Safeway Inc.
Section 1.10 - Consultant
"Consultant" shall mean any person who is not an Employee and who
renders services to the Company, or any entity which is then a Parent
Corporation or a Subsidiary, as a consultant or as an adviser, whether as an
independent contractor or an employee of an employer, and whether such person
renders such services at the time this Plan is adopted or renders such services
subsequent to the adoption of this Plan.
Section 1.11 - Director
"Director" shall mean a member of the Board.
Section 1.12 - Disability
"Disability" shall have the meaning set forth in Section 22(e)(3) of
the Code.
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Section 1.13 - Employee
"Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 340l(c) of the
Code) of the Company, or of any entity which is then a Parent Corporation or a
Subsidiary, whether such employee is so employed at the time this Plan is
adopted or becomes so employed subsequent to the adoption of this Plan.
Section 1.14 - Executive
"Executive" shall mean any Employee eligible for a bonus award under
the Bonus Plan.
Section 1.15 - Fair Market Value
"Fair Market Value" of a share of Common Stock as of any given date
shall mean: (i) the closing price of the Common Stock on the New York Stock
Exchange on such date or, if shares were not traded on such date, then on the
next preceding trading day during which a sale occurred; or (ii) if such stock
is not traded on an exchange but is quoted on NASDAQ or a successor quotation
system, (1) the last sales price (if the stock is then listed as a National
Market Issue under the NASD National Market System) or (2) the mean between the
closing representative bid and asked prices (in all other cases) for the stock
on such date as reported by NASDAQ or such successor quotation system; or (iii)
if such stock is not publicly traded on an exchange and not quoted on NASDAQ or
a successor quotation system, the mean between the closing bid and asked prices
for the stock, on such date, as determined in good faith by the Committee; or
(iv) if the Company's stock is not publicly traded, the fair market value
established by the Committee acting in good faith. In determining the Fair
Market Value of the Company's Common Stock under subsection (i) of this Section
1.16, the Committee may rely on the closing price as reported in the New York
Stock Exchange composite transactions published in the Western Edition of the
Wall Street Journal.
Section 1.16 - Incentive Stock Option
"Incentive Stock Option" shall mean an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option by
the Committee.
Section 1.17 - Non-Qualified Option
"Non-Qualified Option" shall mean an Option which is not an Incentive
Stock Option.
Section 1.18 - Officer
"Officer" shall mean an officer of the Company, any Parent Corporation
or any Subsidiary.
Section 1.19 - Option
"Option" shall mean an option to purchase Common Stock of the Company,
granted under the Plan. "Options" includes both Incentive Stock Options and
Non-Qualified Options.
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Section 1.20 - Optionee
"Optionee" shall mean an Employee to whom an Option is granted under
the Plan.
Section 1.21 - Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken chain
of corporations ending with the Company if each of the corporations other than
the Company then owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
Section 1.22 - Plan
"Plan" shall mean this 1994 Amended and Restated Stock Option and
Incentive Plan for Key Employees of Safeway Inc.
Section 1.23 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.24 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.25 - Subsidiary
(a) Except as provided in subsection (b) below, with respect to
Incentive Stock Options and with respect to Nonqualified Stock Options granted
before January 31, 1994, "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(b) With respect to Bonus Stock, Nonqualified Stock Options granted on
or after January 31, 1994 and, if the Committee shall so determine in its
absolute discretion, with respect to Non-Qualified Stock Options granted before
such date which are designated by the Committee and with respect to Incentive
Stock Options granted at any time which are designated by the Committee,
"Subsidiary" shall mean (i) any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain and (ii) any other entity in which the Company
has a substantial ownership interest and which has been so designated by the
Committee in its absolute discretion; provided, however, that if the Committee
so designates an Incentive Stock Option, to the extent required by Section 422
of the Code and the then applicable regulations and revenue rulings, such
Incentive Stock Option shall thereafter be deemed to be a Nonqualified Stock
Option.
Section 1.26 - Termination of Employment
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"Termination of Employment" shall mean the time when the employee-employer
relationship between the Optionee or Bonus Stockholder and the Company, a
Parent Corporation or a Subsidiary is terminated for any reason, with or
without cause, including, but not by way of limitation, a termination by
resignation, discharge, death or retirement, but, except with respect to
Incentive Stock Options as required by Section 422(a)(2) of the Code and the
then applicable regulations and revenue rulings under said Section, excluding
terminations where there is a simultaneous reemployment by the Company, a
Parent Corporation or a Subsidiary; provided, however, that with respect to
Bonus Stock, Nonqualified Stock Options granted on or after January 31, 1994
and, if the Committee shall so determine in its absolute discretion, with
respect to Non-Qualified Stock Options granted before such date which are
designated by the Committee and with respect to Incentive Stock Options granted
at any time which are designated by the Committee, when such termination is
simultaneously accompanied by commencement of an engagement of the Optionee or
Bonus Stockholder as a Consultant to the Company, a Parent Corporation or a
Subsidiary, no Termination of Employment shall then occur and Termination of
Employment with respect to such Optionee or Bonus Stockholder shall then mean
Termination of Service with respect to such employment; provided, however, that
if the Committee so designates an Incentive Stock Option, to the extent
required by Section 422 of the Code and the then applicable regulations and
revenue rulings, such Incentive Stock Option shall thereafter be deemed to be a
Nonqualified Stock Option. The Committee, in its absolute discretion, shall
determine the effect of all other matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence shall constitute a Termination of Employment if, and to the
extent that, such leave of absence interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section.
Section 1.27 - Termination of Service
"Termination of Service" shall mean the time when the engagement of
Optionee or Bonus Stockholder as a Consultant to the Company, a Parent
Corporation or a Subsidiary is terminated for any reason, with or without
cause, including without limitation, resignation, discharge, death or
retirement; provided that, except with respect to Incentive Stock Options as
required by Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section, when such termination is simultaneously
accompanied by commencement of employment with the Company, a Parent
Corporation or a Subsidiary, no Termination of Service shall then occur and
Termination of Service with respect to such Optionee or Bonus Stockholder shall
thereafter mean Termination of Employment with respect to such employment. The
Committee, in its absolute discretion, shall determine all questions relating
to Termination of Service.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
(a) The shares of stock subject to Options and awarded as Bonus Stock
shall be shares of the Company's Common Stock. The aggregate number of such
shares which may be issued upon exercise of Options or as Bonus Stock shall not
exceed 18,000,000 (8,000,000 of which were authorized under
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the original Plan (prior to first amendment and restatement of the Plan on July
18, 1990), 6,000,000 of which were authorized by the first amendment and
restatement of the Plan on July 18, 1990 and 4,000,000 of which were authorized
by the Plan as amended on October 10, 1991.
(b) No individual shall receive Options for more than the Award Limit
during any calendar year. To the extent required by Section 162(m) of the
Code, options which are canceled continue to be counted against the Award Limit
and if, after grant of an Option, the price of shares subject to such Option is
reduced, the transaction is treated as a cancellation of the Option and a grant
of a new Option and both the Option deemed to be canceled and the Option deemed
to be granted are counted against the Award Limit.
Section 2.2 - Unexercised Options
If any Option expires or is cancelled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned hereunder, subject to the limitations of Section 2.1.
Section 2.3 - Changes in Common Stock
In the event that the outstanding shares of Common Stock of the
Company are hereafter changed into or exchanged for a different number or kind
of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend, combination of shares or
otherwise, appropriate adjustments shall be made by the Committee in the number
and kind of shares for the purchase of which Options may be granted and in the
number and kind of shares of Bonus Stock which may be awarded, including
adjustments of the limitations in Section 2.1 on the maximum number and kind of
shares which may be issued on exercise of Options and of the Award Limit set
forth in Section 1.1.
ARTICLE III
GRANTING OF OPTIONS
Section 3.1 - Eligibility
Any key Employee of the Company or of any corporation which is then a
Parent Corporation or a Subsidiary shall be eligible to be granted Options,
except as provided in Section 3.2.
Section 3.2 - Qualification of Incentive Stock Options
No Incentive Stock Option shall be granted unless such Option, when
granted, qualifies as an "incentive stock option" under Section 422 of the
Code.
Section 3.3 - Granting of Options
(a) The Committee shall from time to time, in its absolute discretion:
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(i) Determine which Employees are key Employees and select
from among the key Employees (including those to whom Options have
been previously granted under the Plan) such of them as in its opinion
should be granted Options; and
(ii) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to such selected key
Employees, and determine whether such Options are to be Incentive
Stock Options or Non-Qualified Options; and
(iii) Determine the terms and conditions of such Options,
consistent with the Plan, including, but not limited to such terms and
conditions as may be required in order for such Options to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of
the Code.
Notwithstanding the above, the Committee may delegate certain powers
relating to the granting of Options as it deems appropriate to executive
officers of the Company including the power to determine the number of shares
to be subject to Options (subject to a maximum amount set by the Committee),
whether such Options are to be Incentive Stock Options or Non-Qualified Options
and to determine the terms and conditions of such Options; provided, however,
that the Committee shall not delegate any powers that are required to be
exercised by the Committee under Section 16(b) of the Securities Exchange Act
of 1934, as amended, or any rules promulgated thereunder, or Section 162(m) of
the Code, or any regulations or rules issued thereunder.
(b) Upon the selection of an Employee to be granted an Option, the
Committee shall instruct the Secretary to issue such Option and may impose such
conditions on the grant of such Option as it deems appropriate. Without
limiting the generality of the preceding sentence, the Committee may, in its
absolute discretion and on such terms as it deems appropriate, require as a
condition on the grant of an Option to an Employee that the Employee surrender
for cancellation some or all of the unexercised Options which have been
previously granted to him. An Option the grant of which is conditioned upon
such surrender may have an option price lower (or higher) than the option price
of the surrendered Option, may cover the same (or a lesser or greater) number
of shares as the surrendered Option, may contain such other terms as the
Committee deems appropriate and shall be exercisable in accordance with its
terms, without regard to the number of shares, price, option period or any
other term or condition of the surrendered Option.
ARTICLE IV
TERMS OF OPTIONS
Section 4.1 - Option Agreement
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized Officer of the
Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with the Plan, including, but not limited to, such
terms and conditions as may be required in order for such Options to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the
Code. Stock Option Agreements evidencing Incentive Stock Options shall contain
such terms and conditions as may be necessary to qualify such Options as
"incentive stock options" under Section 422 of the Code.
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Section 4.2 - Option Price
The price of the shares subject to each Option shall be set by the
Committee; provided, however, that (i) the price per share of a Non-Qualified
Option shall be not less than the lesser of 100% of the Fair Market Value of
such shares on the date such Option is granted or the average of the Fair
Market Values of such shares on the five most recent trading days prior to the
date that such Option is granted, and (ii) the price per share of an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of such
shares on the date such Option is granted; provided, further, that, in the case
of an Incentive Stock Option granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company, any Subsidiary or any
Parent Corporation, the price per share shall not be less than 110% of the Fair
Market Value of such shares on the date such Option is granted.
Section 4.3 - Commencement of Exercisability
(a) Subject to the provisions of Sections 4.3(b), 4.3(c) and 9.3,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the Committee shall provide in the terms of each
individual Option; provided, however, that no Option shall be exercisable by
any Optionee who is then subject to Section 16 of the Exchange Act within the
period ending six months after the date the Option is granted and provided,
further, that by a resolution adopted after an Option is granted the Committee
may, on such terms and conditions as it may determine to be appropriate and
subject to Sections 4.3(b), 4.3(c) and 9.3, accelerate the time at which such
Option or any portion thereof may be exercised.
(b) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
(c) Notwithstanding any other provision of this Plan, in the case of
an Incentive Stock Option, the aggregate Fair Market Value (determined at the
time the Incentive Stock Option is granted) of the shares of the Company's
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code) are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other incentive stock option
plans of the Company, any Subsidiary and any Parent Corporation) shall not
exceed $100,000.
Section 4.4 - Expiration of Options
(a) No Option may be exercised to any extent by anyone after the
first to occur of the following events:
(i) In the case of an Incentive Stock Option, (1) the
expiration of ten years from the date the Option was granted or (2) in
the case of an Optionee owning (within the meaning of Section 424(d)
of the Code), at the time the Incentive Stock Option was granted, more
than 10% of the total combined voting power of all classes of stock of
the Company, any Subsidiary or any Parent Corporation, the expiration
of five years from the date the Incentive Stock Option was granted; or
(ii) In the case of a Non-Qualified Option, the expiration of
fifteen years and one day from the date the Option was granted; or
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(iii) The expiration of three months from the date of the
Optionee's Termination of Employment for any reason other than such
Optionee's death, Disability, or retirement; or
(iv) The expiration of one year from the date of the
Optionee's Termination of Employment by reason of the Optionee's
death, Disability or retirement on or after age 55 in accordance with
the Company's retirement policies, as then in effect; or
(v) The engagement by the Employee in willful misconduct
which injures the Company, any Parent Corporation or any of its
Subsidiaries.
(b) Subject to the provisions of Section 4.4(a), the Committee shall
provide, in the terms of each individual Option, when such Option expires and
becomes unexercisable; and (without limiting the generality of the foregoing)
the Committee may provide in the terms of individual Options that said Options
expire immediately upon a Termination of Employment for any reason.
Section 4.5 - Consideration
In consideration of the granting of the Option, the Optionee shall
agree, in the written Stock Option Agreement, to remain in the employ of the
Company, a Parent Corporation or a Subsidiary for a period of at least one year
after the Option is granted. Nothing in this Plan or in any Stock Option
Agreement hereunder shall confer upon any Optionee any right to continue in the
employ of the Company, any Parent Corporation or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company, its Parent
Corporations and its Subsidiaries, which are hereby expressly reserved, to
discharge any Optionee at any time for any reason whatsoever, with or without
cause.
Section 4.6 - Adjustments in Outstanding Options
In the event that the outstanding shares of the stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend, combination of shares or otherwise, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares as to
which all outstanding Options, or portions thereof then unexercised, shall be
exercisable, to the end that after such event the Optionee's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in an outstanding Option shall be made without change in the total
price applicable to the Option or the unexercised portion of the Option (except
for any change in the aggregate price resulting from rounding-off of share
quantities or prices) and with any necessary corresponding adjustment in Option
price per share; provided, however, that, in the case of Incentive Stock
Options, each such adjustment shall be made in such manner as not to constitute
a "modification" within the meaning of Section 424(h)(3) of the Code. Any such
adjustment made by the Committee shall be final and binding upon all Optionees,
the Company and all other interested persons.
Section 4.7 - Merger, Consolidation, Acquisition, Liquidation or Dissolution
Notwithstanding the provisions of Section 4.6, in its absolute
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide by the terms of any Option that such Option cannot be
exercised after the merger or consolidation of the Company with or into another
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corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock or the liquidation or dissolution of the Company; and
if the Committee so provides, it may, in its absolute discretion and on such
terms and conditions as it deems appropriate, also provide, either by the terms
of such Option or by a resolution adopted prior to the occurrence of such
merger, consolidation, acquisition, liquidation or dissolution, that, for some
period of time prior to such event, such Option shall be exercisable as to all
shares covered thereby, notwithstanding anything to the contrary in Section
4.3(a), Section 4.3(b) and/or any installment provisions of such Option.
ARTICLE V
EXERCISE OF OPTIONS
Section 5.1 - Person Eligible to Exercise
During the lifetime of the Optionee, only he may exercise an Option
granted to him, or any portion thereof. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under Section 4.4 or Section 4.7, be exercised by his
personal representative or by any person empowered to do so under the deceased
Optionee's will or under the then applicable laws of descent and distribution.
Section 5.2 - Partial Exercise
At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
Section 4.4 or Section 4.7, such Option or portion thereof may be exercised in
whole or in part; provided, however, that the Company shall not be required to
issue fractional shares and the Committee may, by the terms of the Option,
require any partial exercise to be with respect to a specified minimum number
of shares.
Section 5.3 - Manner of Exercise
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under Section 4.4 or Section 4.7:
(a) Notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that such Option
or portion is exercised, such notice complying with all applicable
rules established by the Committee; and
(b) (i) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is thereby exercised;
or
(ii) Subject to the Committee's consent, shares of Common
Stock owned by the Optionee duly endorsed for transfer to the
Company with a Fair Market Value on the date of delivery equal
to the aggregate Option price of the shares with respect to
which such Option or portion is thereby exercised; or
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(iii) Subject to the Committee's consent, full payment in any
other form approved by the Committee, consistent with
applicable law and the Plan; or
(iv) Any combination of the consideration provided in the
foregoing subsections (i), (ii) and (iii); and
(c) On or prior to the date the same is required to be withheld:
(i) Full payment (in cash or by check) of any amount that
must be withheld by the Company for federal, state and/or
local tax purposes; or
(ii) Subject to the Committee's consent, full payment by
delivery to the Company of shares of the Common Stock owned by
the Optionee duly endorsed for transfer to the Company by the
Optionee or other person then entitled to exercise such Option
or portion with an aggregate Fair Market Value equal to the
amount that must be withheld by the Company for federal, state
and/or local tax purposes; or
(iii) Subject to the Committee's consent, full payment by
retention by the Company of shares of Common Stock to be
issued pursuant to such Option exercise with an aggregate Fair
Market Value equal to the amount that must be withheld by the
Company for federal, state and/or local tax purposes; or
(iv) Any combination of payments provided for in the
foregoing subsections (i), (ii) or (iii);
provided that if and to the extent required by Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended
("Rule 16b-3"), an election to make full payment by the means
described in Section 5.3(c)(ii) or 5.3(c)(iii) shall be made more than
six months after grant of the Option and either (x) made and the
Option exercised only during the period beginning of the third
business day following the date of release of quarterly or annual
summary statements of sales and earnings of the Company and ending on
the twelfth business day following such date, or (y) irrevocably made
more than six months prior to the date the amount of tax to be
withheld is determined in the case of Sections 5.3(c)(ii) and
5.3(iii); and
(d) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance
with all applicable provisions of the Securities Act and any other
federal or state securities laws or regulations. The Committee may,
in its absolute discretion, also take whatever additional actions it
deems appropriate to effect such compliance including, without
limitation, placing legends on share certificates and issuing
stop-transfer orders to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other than
the Optionee, appropriate proof of the right of such person or persons
to exercise the Option or portion thereof.
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Section 5.4 - Conditions to Issuance of Stock Certificates
The shares of stock issuable and deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the
Company. The Company shall not be required to issue or deliver any certificate
or certificates for shares of stock purchased upon the exercise of any Option
or portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall, in its
absolute discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local
law in connection with the exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to
time for reasons of administrative convenience.
Section 5.5 - Rights as Stockholders
The holders of Options shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
Section 5.6 - Transfer Restrictions
The Committee, in its absolute discretion, may impose such
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate. Any such restriction shall be set forth
in the respective Stock Option Agreement and may be referred to on the
certificates evidencing such shares. The Committee may require the Employee to
give the Company prompt notice of any disposition of shares of stock, acquired
by exercise of an Incentive Stock Option, within two years from the date of
granting such Option or one year after the transfer of such shares to such
Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Incentive Stock Option refer to such requirement to
give prompt notice of disposition.
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ARTICLE VI
AWARD OF BONUS STOCK
Section 6.1 - Award of Bonus Stock
Stock bonuses awarded to any Executive under the Bonus Plan shall be
awarded as Bonus Stock pursuant to this Article VI.
Section 6.2 - Value of Bonus Stock
Each share of Bonus Stock shall be valued at 100% of the Fair Market
Value of a share of Common Stock on the date such Bonus Stock is awarded.
Section 6.3 - Terms of Bonus Stock
The Committee shall from time to time, in its absolute discretion,
determine the terms and conditions applicable to such Bonus Stock, consistent
with this Plan.
Section 6.4 - Issuance of Bonus Stock
Upon the determination of the number of shares of Bonus Stock which
the Executive shall receive pursuant to the Bonus Plan and Section 6.2(b), the
Committee shall instruct the Secretary of the Company to issue such Bonus Stock
and may impose such conditions on the issuance of such Bonus Stock as it deems
appropriate. Notwithstanding anything to the contrary contained herein, bonus
stock to be awarded from time to time to an executive officer of Canada Safeway
Limited or Lucerne Foods Ltd. may be first issued to either or both of such
subsidiaries for distribution to such executive officer.
ARTICLE VII
TERMS OF BONUS STOCK
Section 7.1 - Bonus Stock Agreement
Bonus Stock shall be issued only pursuant to a written Bonus Stock
Agreement, which shall be executed by the Executive and an authorized officer
of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with this Plan, including, but not
limited to, such terms and conditions as may be required in order for the Bonus
Stock to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code if the Committee determines, in its absolute
discretion, that the award of Bonus Stock should so qualify.
Section 7.2 - Rights as Stockholders
Upon delivery of the shares of Bonus Stock to the Bonus Stockholder
or, if applicable, the escrow holder pursuant to Section 7.4, the Bonus
Stockholder shall have all the rights of a stockholder with respect to said
shares, subject to the restrictions in his Bonus Stock Agreement, including the
right to vote the shares and to receive all dividends and other distributions
paid or made with respect to the shares; provided, however, that in the
absolute discretion of the Committee, any extraordinary
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distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 7.3.
Section 7.3 - Restriction
All shares of Bonus Stock issued under this Plan (including any shares
received by holders thereof with respect to shares of Bonus Stock as a result
of stock dividends, stock splits or any other form of recapitalization) shall,
in the terms of each individual Bonus Stock Agreement, be subject to such
restrictions as the Committee shall provide, which restrictions may include,
without limitation, restrictions on sale and other dispositions of the Bonus
Stock and restrictions based on duration of employment with the Company;
provided however, that by a resolution adopted after the Bonus Stock is issued,
the Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Bonus Stock Agreement. Bonus Stock may not be sold or encumbered until all
restrictions on such Bonus Stock are terminated or expire.
Section 7.4 - Custody of Stock
The Secretary of the Company or such other escrow holder as the
Committee may appoint may, if requested by the Committee, retain physical
custody of each certificate representing Bonus Stock until all of the
restrictions imposed under the Bonus Stock Agreement with respect to the shares
evidenced by such certificate expire or shall have been removed.
Section 7.5 - Legend
In order to enforce the restrictions imposed upon shares of Bonus
Stock hereunder, the Committee shall cause a legend or legends to be placed on
certificates representing all shares of Bonus Stock that are still subject to
restrictions under Bonus Stock Agreements, which legend or legends shall make
appropriate reference to the conditions imposed thereby.
ARTICLE VIII
ADMINISTRATION
Section 8.1 - Stock Option Committee
(a) The Stock Option Committee shall consist of at least three
persons (or such smaller number as may be permitted under Rule 16b-3 which has
been adopted by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, if and as such Rule is then in effect ("Rule 16b-3"))
appointed by and holding office during the pleasure of the Board. No Options
or Bonus Stock may be granted to any member of the Committee during the term of
his membership on the Committee. No person shall be eligible to serve on the
Committee unless he is then a "disinterested person" within the meaning of Rule
16b-3.
(b) Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee shall be
filled by the Board.
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Section 8.2 - Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan, the Stock Option Agreements and the
Bonus Stock Agreements, and to adopt such rules for the administration,
interpretation and application of the Plan, the Stock Option Agreements and the
Bonus Stock Agreements as are consistent therewith and to interpret, amend or
revoke any such rules. Any such interpretations and rules in regard to
Incentive Stock Options shall be consistent with the basic purpose of the Plan
to grant "incentive stock options" within the meaning of Section 422 of the
Code. In its absolute discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) are
required to be determined in the absolute discretion of the Committee.
Section 8.3 - Majority Rule
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
Section 8.4 - Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
Officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Optionees and Bonus Stockholders, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
the Options or the Bonus Stock, and all members of the Committee shall be fully
protected by the Company in respect to any such action, determination or
interpretation.
ARTICLE IX
OTHER PROVISIONS
Section 9.1 - Options Not Transferable
No Option or interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer, alienation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that nothing in this Section 9.1 shall prevent transfers by
will or by the applicable laws of descent and distribution.
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Section 9.2 - Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board.
However, to the extent required by Rule 16b-3 or the Code, no action of the
Board may, except as provided in Section 2.3, increase any limit imposed in
Section 2.1 on the maximum number of shares which may be issued on exercise of
Options or as Bonus Stock, modify the Award Limit, modify the eligibility
requirements of Section 3.1 and 6.1, reduce the minimum Option price
requirements of Section 4.2 or extend the limit imposed in this Section 9.2 on
the period during which Options and Bonus Stock may be granted or otherwise
amend the Plan in a manner requiring stockholder approval as a matter of
Regulation 16b-3, Section 162(m) of the Code or other applicable law,
regulation or rule without approval of the Company's stockholders given within
12 months before or after the action by the Board. Neither the amendment,
suspension nor termination of the Plan shall, without the consent of the holder
of the Option or Bonus Stockholder, impair any rights or obligations under any
Option or Bonus Stock theretofore granted. No Option or Bonus Stock may be
granted during any period of suspension nor after termination of the Plan, and
in no event may any Option or Bonus Stock be granted under this Plan after the
first to occur of the following events:
(a) The expiration of ten years from the date the Plan is adopted by
the Board; or
(b) The expiration of ten years from the date the Plan is approved by
the Company's stockholders under Section 9.3.
Section 9.3 - Approval of Plan by Stockholders
The original Plan was approved by the Company's stockholders in 1986.
The first Amended and Restated Plan was approved by the Company's stockholders
in 1990. The Plan was further amended effective October 10, 1991 and December
13, 1991 and, to the extent required by applicable law, such amendments were
approved by the Company's shareholders in 1992. The 1994 Amended and Restated
Plan shall be submitted for the approval of the Company's stockholders within
12 months after the date of the Board's initial adoption of the 1994 Amended
and Restated Plan. Options may be granted under the first Amended and Restated
Plan, as amended in 1991, until the Company's stockholders approve the 1994
Amended and Restated Plan. In addition, Options and Bonus Stock may be granted
under the 1994 Amended and Restated Plan prior to such stockholder approval;
provided, however, that Options granted under the 1994 Amended and Restated
Plan after the adoption of the 1994 Amended and Restated Plan by the Board but
prior to such stockholder approval shall not be excisable prior to the time
when the Plan is approved by the stockholders; provided, further, that if
stockholder approval of Options and Bonus Stock granted under the 1994 Amended
and Restated Plan after adoption has not been obtained at the end of said
12-month period, all such Options and Bonus Stock shall thereupon be cancelled
and become null and void.
Section 9.4 - Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary (a) to establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation or any Subsidiary or (b) to grant or assume options or other rights
otherwise than under this Plan in
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connection with any proper corporate purpose, including, but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.
Section 9.5 - Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan.
* * * *
I hereby certify that the foregoing Amended and Restated Plan was duly
adopted by the Board of Directors of Safeway Inc. as of January 31, 1994.
Executed on this ____ day of ____________, 1994.
_____________________________
Secretary
* * * *
I hereby certify that the foregoing Amended and Restated Plan was duly
approved by the stockholders of Safeway Inc. on __________ __, 1994.
Executed on this ____ day of ____________, 1994.
_____________________________
Secretary
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