NOTE AMENDMENT AGREEMENT NO. 3
THIS NOTE AMENDMENT AGREEMENT NO. 3, dated as of July 22, 1997, is between
PAMIDA HOLDINGS CORPORATION, a Delaware corporation (the "Company"), and 399
VENTURE PARTNERS, INC., a Delaware corporation ("Venture").
* * *
As of the date of this Agreement, the Company has outstanding
$5,315,118.09 principal amount of 13.5% Senior Promissory Notes (the "Senior
Notes"), $14,551,384.79 principal amount of 14% Subordinated Promissory Notes
(the "Subordinated Notes") and $10,974,758.55 principal amount of 14.25% Junior
Subordinated Promissory Notes (the "Junior Subordinated Notes"). The Senior
Notes, Subordinated Notes and Junior Subordinated Notes are collectively
referred to herein as the "Notes". Venture holds more than 50% of the aggregate
outstanding principal amount of the Senior Notes, more than 50% of the aggregate
outstanding principal amount of the Subordinated Notes and more than 50% of the
aggregate outstanding principal amount of the Junior Subordinated Notes. Venture
and the Company have the power to amend the Notes pursuant to paragraph 6 of
each of the Notes. Venture and the Company now desire to further amend all of
the Notes, as previously amended pursuant to a Note Amendment Agreement dated as
of December 18, 1992, between the Company and Court Square Capital Limited, and
a Note Amendment Agreement No. 2 dated as of March 1, 1993 between the Company
and Venture (formerly known as Citicorp Investments Inc.), pursuant to this
Agreement.
THEREFORE, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF NOTES. Each of the Notes shall be amended to be
payable solely in shares of the Company's stock in accordance with the
provisions of the following sentence of this Section 1. One share of either
Common Stock of the Company ("Common Stock") or Nonvoting Common Stock of the
Company ("Nonvoting Common Stock") shall be issued for each $9.00 of outstanding
principal and accrued interest as provided in the "Allonge to Promissory Note"
in the form of Exhibit A hereto (the "Allonge") which shall become effective
upon satisfaction of certain conditions as provided in Section 4 hereof.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Venture that, subject to approval by the
Company's stockholders as provided in Section 4 hereof, the execution, delivery
and performance of this Agreement and the transactions contemplated hereby have
been duly authorized by the Company; and that execution and delivery by the
Company of this Agreement and the issuance of shares of Common Stock or
Nonvoting Common Stock as contemplated by the Allonge do not and will not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in the creation of any lien,
security interest, charge or encumbrances upon the Company's capital stock or
assets pursuant to, (iv) give any third party the right to accelerate any
obligation under, (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or notice to any
court or administrative or governmental body (other than in connection with
certain state and federal securities laws) pursuant to the Company's Restated
Certificate of Incorporation, as amended, or the Company's Revised Bylaws, as
amended, or any law, statute, rule, regulation, instrument, order, judgment or
decree to which the Company or any of its subsidiaries or any of their
respective properties is subject, or any agreement or instrument to which the
Company or any of its subsidiaries is a party or any of their respective
properties is subject. The Company further represents and warrants to Venture
that the authorized equity capital of the Company as of the date hereof consists
of 10,000,000 shares of Common Stock, par value $.01 per share, of which
5,004,942 shares are issued and outstanding, 514 shares of 16.25% Senior
Cumulative Preferred Stock, par value $1.00 per share (the "Senior Preferred"),
of which 513.95939 shares are issued and outstanding, 6,987 shares of 14.25%
Junior Cumulative Preferred Stock, par value $1.00 per share (the "Junior
Preferred"), of which 1,626.86016 shares are issued and outstanding, and
2,000,000 shares of Nonvoting Common Stock, par value $.01 per share, no shares
of which are issued and outstanding; that, except for 345,042 shares of Common
Stock reserved for issuance under the Pamida Holdings Corporation 1992 Stock
Option Plan and except as contemplated hereby, there are no outstanding rights
to acquire shares of the Company through options, warrants, conversion rights or
otherwise; that the liquidation value (as determined pursuant to the terms of
the Restated Certificate of Incorporation of the Company as in effect as of the
date hereof) for the Senior Preferred and the Junior Preferred, respectively,
was $669,300.42 and $2,058,471.04 as of May 31, 1997; and that, as of the date
hereof, the Company has outstanding $5,315,118.09 principal amount of Senior
Notes, $14,551,384.79 principal amount of Subordinated Notes and $10,974,758.55
principal amount of Junior Subordinated Notes. The Company further represents
and agrees that it shall not issue any additional shares of capital stock prior
to the effective date of the amendments to the Notes effected by the Allonge as
determined pursuant to Section 4 hereof, other than issuances of shares under
the Pamida Holdings Corporation 1992 Stock Option Plan, without the prior
written consent of Venture.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF VENTURE. Venture hereby
represents and warrants to the Company that it is the sole and lawful owner of
$3,915,677.52 of the aggregate outstanding principal amount of the Senior Notes,
$10,629,263.60 of the aggregate outstanding principal amount of the Subordinated
Notes and $10,974,758.55 of the aggregate outstanding principal amount of the
Junior Subordinated Notes as of the date hereof; that it has full right and
lawful authority, without the consent of anyone whose consent has not been
given, to enter into, execute and deliver this Agreement and to consummate the
transactions contemplated hereby; and that M. Xxxxxx Xxxxxxxx has authority to
execute and deliver this Agreement and to carry out its terms on behalf of
Venture.
SECTION 4. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. The amendments to the
Notes effected by the Allonge shall become effective upon the satisfaction of
all of the following conditions: (i) the requisite approval by the Company's
stockholders pursuant to the Company's Restated Certificate of Incorporation of
the transactions contemplated by the Allonge and the concurrent authorization by
the Company's stockholders pursuant to the General Corporation law of the State
of Delaware of the requisite number of shares of the Common Stock and the
requisite number of shares and amendment to the terms of the Nonvoting Common
Stock (substantially in the form of Exhibit B hereto) to be issued in connection
with such transactions, (ii) the change and reclassification of each outstanding
share of Senior Preferred and each outstanding share of Junior Preferred
(collectively, the "Preferred Stock") into the number of shares of Common Stock
of the Company equal to the liquidation value of the Preferred Stock (as
determined pursuant to the terms of the Restated Certificate of Incorporation of
the Company as in effect as of the date hereof) plus any unpaid Preferred Stock
dividends not included in the liquidation value accrued as of the close of
business on the effective date of the change and reclassification divided by
nine and, on an individual shareholder basis, rounded up to the next whole
number, and (iii) the receipt by the Company of a favorable opinion from Alex.
Xxxxx & Sons, Incorporated as to the fairness of the transactions contemplated
by the Allonge and the change and reclassification of the Preferred Stock to the
present holders of Common Stock of the Company. If all of the conditions
referred to in the preceding sentence are not satisfied on or prior to December
31, 1997, then this Agreement shall be null and void and of no further force or
effect.
SECTION 5. NO COMMISSIONS. Each party represents and agrees that no
commission or other remuneration has been or will be paid or given directly or
indirectly for soliciting the execution or delivery of this Amendment or the
transactions contemplated hereby.
SECTION 6. SECURITIES LAW RESTRICTIONS. The shares of Nonvoting Common
Stock or Common Stock to be issued to Venture either initially or upon
conversion of Nonvoting Common Stock shall be restricted securities within the
meaning of Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), and shall bear an appropriate legend. Venture agrees that
such shares may be transferred only pursuant to Rule 144 under the Securities
Act or another available exemption from registration under the Securities Act
if, in the opinion of counsel to the Company, such other exemption is available.
All other holders of Notes will receive unrestricted shares of Common Stock
provided that they have continually held the Notes for at least two years
(calculated in accordance with Rule 144) and have not been affiliates of the
Company for at least three months as of the effective date of the Allonge.
SECTION 7. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken
together will constitute one and the same Agreement.
SECTION 8. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
SECTION 9. GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the
internal law, and not the law of conflicts, of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PAMIDA HOLDINGS CORPORATION
By:/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, Chairman of
the Board and Chief Executive Officer
399 VENTURE PARTNERS, INC.
By:/s/ X. Xxxxxx Xxxxxxxx
X. Xxxxxx Xxxxxxxx, Vice President
EXHIBIT A
ALLONGE TO PROMISSORY NOTE
The Promissory Note ("Promissory Note") of Pamida Holdings Corporation
(the "Company") described below is hereby amended by this Allonge to Promissory
Note which shall form part of the Promissory Note and shall supersede the terms
and conditions of the Promissory Note to the extent inconsistent herewith.
1. PAYMENT. The entire outstanding principal balance of this Promissory
Note as of the date hereof (including amounts previously added to the principal
balance in payment of interest) ("Principal") and interest accrued under this
Promissory Note from the most recent Quarterly Payment Date through the date
immediately preceding the date hereof as set forth below ("Interest") shall be
due and payable on the date hereof in the number of shares of Common Stock (or
Nonvoting Common Stock if Section 2 hereof is applicable) of the Company
calculated as follows: The number of shares to be issued in full payment of all
of the Company's obligations under this Promissory Note shall equal the sum of
the Principal and Interest divided by nine (9) and rounded up to the next whole
number.
2. NONVOTING COMMON STOCK. Notwithstanding the provisions of Section 1
hereof, if the payment of this Promissory Note in shares of Common Stock
together with the contemporaneous payment in shares of Common Stock of other
presently outstanding promissory notes of the Company held by the holder of this
Promissory Note would have the effect of causing the registered holder (or a
group acting in concert as a partnership or other group of which the holder is a
member) to become the beneficial owner (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of securities of the Company
representing 30% or more of the combined voting power of the outstanding
securities of the Company ordinarily (and apart from rights arising under
special circumstances) having the right to vote in the election of directors,
then this Promissory Note shall be payable in shares of Nonvoting Common Stock
(as constituted as of the close of business on the date hereof) in lieu of
Common Stock. Except for such right to vote, shares of Nonvoting Common Stock
shall be equal in all respects to the Common Stock and shall be convertible into
the same number of shares of Common Stock under certain conditions.
3. AUTOMATIC CONVERSION. Effective on the date hereof, this Promissory
Note automatically and without further action being required shall be deemed
converted solely into the right to receive the applicable number of shares of
Common Stock or Nonvoting Common Stock, as the case may be, as calculated in
accordance with this Allonge to Promissory Note; and the registered holder of
this Promissory Note thereafter shall have no rights under this Promissory Note
except to receive such number of shares.
4. DISCHARGE AND CANCELLATION. This Promissory Note is hereby discharged,
and the Company shall be forever released from all its obligations and
liabilities under this Promissory Note, subject only to issuance of such shares
of Common Stock or Nonvoting Common Stock, as the case may be, which shall be
delivered to the registered holder upon surrender of this Promissory Note
(including this Allonge to Promissory Note) to the Company for cancellation and
will not be reissued.
5. NO STOCKHOLDER RIGHTS. Nothing contained in this Promissory Note shall
be construed as conferring upon the registered holder or any other person the
right to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders for the election of directors of the Company or with
respect to any other matters or any rights whatsoever as a stockholder of the
Company; and no dividends or interest shall hereafter be payable or accrued in
respect of this Note or the interest represented hereby or the shares obtainable
hereunder until, and only to the extent that, this Promissory Note shall have
been surrendered and shares shall have been issued to the registered holder in
accordance with the terms of this Allonge to Promissory Note.
6. PLACE OF TENDER. Tender of this Promissory Note (including this Allonge
to Promissory Note) is to be made at the offices of the Company, Pamida Holdings
Corporation, 8800 "F" Street, Omaha, Nebraska 68127-1574, Attention: Chief
Financial Officer or to such other address as specified by prior written notice
from the Company to the registered holder of this Promissory Note. Shares of
Common Stock will be delivered to the registered holder promptly upon such
tender at such holder's address as set forth on the records of the Company.
7. GOVERNING LAW. This Promissory Note shall be governed by and
construed in accordance with the laws of Delaware, excluding that body of law
relating to conflict of laws.
8. HEADINGS; REFERENCES. All headings used herein are used for
convenience only and shall not be used to construe or interpret this
Promissory Note. Except where otherwise indicated, all references herein to
sections refer to sections hereof.
9. DEFINITIONS. For purposes of this Allonge to Promissory Note,
"Common Stock" means Common Stock of the Company, and "Nonvoting Common
Stock" means Nonvoting Common Stock of the Company.
IN WITNESS WHEREOF, the Company has executed and delivered this Allonge to
Promissory Note on _________________, 1997.
PAMIDA HOLDINGS CORPORATION
By: ____________________________________
Xxxxxx X. Xxxxxxx, Chairman of the
Board and Chief Executive Officer
This Allonge to Promissory Note amends the Promissory Note described below:
Series:
Date:
Registered Holder:
Principal (including amounts
added in payment of interest):
Interest:
Total Principal and Interest:
Shares to be issued in full payment of this Promissory Note
Number of shares:
Class:
Endorsed and Tendered
for Exchange in Accordance
with this Allonge to Promissory Note
______________________________________
Registered Holder
By:___________________________________
Its:__________________________________
Date:_________________________________
EXHIBIT B
NONVOTING COMMON STOCK
Part 4 of Section 4.3 of Article Fourth of the Restated Certificate of
Incorporation of the Corporation shall be amended to read in its entirety as
follows:
Part 4. CONVERSION.
4A. CONVERSION OF NONVOTING COMMON STOCK.
Each holder of shares of Nonvoting Common Stock shall be entitled to
convert into the same number of shares of Common Stock any or all of such
holder's shares of Nonvoting Common Stock if (i) such conversion would not
have the effect of causing such holder (or a group acting in concert as a
partnership or other group of which such holder is a member) to become the
beneficial owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of securities of the Corporation
representing 30% or more of the combined voting power of the outstanding
securities of the Corporation ordinarily (and apart from rights arising
under special circumstances) having the right to vote in the election of
directors (hereinafter, a "30% Holder"); provided, however, that,
notwithstanding the foregoing provisions of this clause (i), if
immediately prior to a transfer of shares of Nonvoting Common Stock to a
transferee holder, the transferor of such shares would have been a 30%
Holder if its holdings of Nonvoting Common Stock were deemed converted
into shares of Common Stock, then the transferee holder of such shares of
Nonvoting Common Stock shall not have the right to convert such shares of
Nonvoting Common Stock into shares of Common Stock until the sixty-first
day after the date of the transfer, or (ii) the 11 3/4% Senior
Subordinated Notes due 2003 of Pamida, Inc., a Delaware corporation (the
"Senior Subordinated Notes") are not outstanding and have not been
replaced with a debt issue with comparable provisions requiring redemption
or otherwise imposing requirements or restrictions on the Corporation or
the issuer of such replacement debt issue in the event a person or group
becomes a 30% Holder. For purposes of this Part 4, a "person" shall
include any natural person and any corporation, partnership, joint
venture, trust, unincorporated organization, or other entity or
organization.
4B. CONVERSION PROCEDURE.
(i) Each conversion of shares of Nonvoting Common Stock into shares
of Common Stock pursuant to Part 4A above shall be effected by the
surrender of the certificate or certificates representing the shares to be
converted at the principal office of the Corporation at any time during
normal business hours, together with a written notice by the holder of
such shares of Nonvoting Common Stock stating that such holder desires to
convert the shares, or a stated number of the shares, of Nonvoting Common
Stock represented by such certificate or certificates into shares of
Common Stock. Each conversion shall be deemed to have been effected as of
the close of business on the date on which such certificate or
certificates have been surrendered and such notice has been received, and
at such time the rights of the holder of the converted shares of Nonvoting
Common Stock as such holder shall cease and the person or persons in whose
name or names the certificate or certificates for shares of Common Stock
are to be issued upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Common Stock represented
thereby.
(ii) Promptly after the surrender of such certificates and the
receipt of such written notice, the Corporation shall issue and deliver in
accordance with the surrendering holder's instructions (a) the certificate
or certificates for the shares of Common Stock issuable upon such
conversion and (b) a certificate representing any shares of Nonvoting
Common Stock which were represented by the certificate or certificates
surrendered to the Corporation in connection with such conversion but
which were not converted.
(iii) The issuance of certificates for shares of Common Stock upon
conversion of shares of Nonvoting Common Stock will be made without charge
to the holders of such shares for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion
and the related issuance of shares of Common Stock.
(iv) The Corporation at all times shall reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of issuance upon the conversion of shares of Nonvoting Common
Stock, such number of shares of Common Stock as may be issuable upon the
conversion of all outstanding shares of Nonvoting Common Stock. All shares
of Common Stock which are so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable, and free from all taxes,
liens, and charges. The Corporation shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of
Common Stock may be listed (except for official notice of issuance which
will be immediately transmitted by the Corporation upon issuance).
(v) The Corporation shall not close its books against the transfer
of shares of Nonvoting Common Stock or shares of Common Stock issued or
issuable upon conversion of shares of Nonvoting Common Stock in any manner
which would interfere with the timely conversion of shares of Nonvoting
Common Stock.
(vi) If the Corporation in any manner subdivides or combines the
outstanding shares of Common Stock or Nonvoting Common Stock, then the
outstanding shares of the other of such classes of stock shall be
proportionately subdivided or combined in a similar manner.
