RETENTION BONUS AGREEMENT
This Retention Bonus Agreement is entered into this 2nd day of April, 1999,
by and between PAMIDA, INC. ("Pamida"), a Delaware corporation, and XXXXXX X.
XXXXXXX (the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee currently is a key executive of Pamida; and
WHEREAS, an entity which might have an interest in acquiring the business
of Pamida would be more likely to pursue such a transaction and to pay full
value for such business if such entity could reasonably expect the Employee to
remain in the employ of Pamida or Pamida's successor following such acquisition;
and
WHEREAS, Pamida desires to induce the Employee to remain in the employ of
Pamida or Pamida's successor if a Retention Event (as defined below) occurs;
NOW, THEREFORE, in consideration of the premises and of the covenants set
forth in this agreement, the parties hereto, intending to be legally bound,
agree as follows:
1. For purposes of this agreement, a "Retention Event" shall be deemed to
have occurred upon the happening of any of the following events:
(a) Pamida Holdings Corporation ("Holdings") is merged or
consolidated into another corporation, and immediately after
such merger or consolidation becomes effective the holders
of a majority of the outstanding shares of capital stock of
Holdings immediately prior to the effectiveness of such
merger or consolidation do not own (directly or indirectly)
a majority of the outstanding shares of voting capital stock
of the surviving or resulting corporation in such merger or
consolidation.
(b) Holdings ceases to own (directly or indirectly) a majority
of the outstanding shares of voting capital stock of Pamida
(unless such event results from the merger of Pamida into
Holdings, with no material change in the ownership of the
voting capital stock of Holdings, or from the dissolution of
Pamida and the continuation of its business by Holdings).
(c) Pamida is merged or consolidated into a corporation other
than Holdings, and at any time after such merger or
consolidation becomes effective Holdings does not own
(directly or indirectly) a majority of the outstanding
shares of voting capital stock of the surviving or resulting
corporation in such merger or consolidation.
(d) Pamida sells or otherwise disposes of all or substantially
all of the property and assets of Pamida, other than to an
entity or group of entities which immediately prior to such
transaction is under common ownership (directly or
indirectly) with Pamida.
(e) Any person, entity, or group of persons within the meaning
of Sections 13(d) or 14(d) of the Securities Exchange Act of
1934 (the "1934 Act") and the rules promulgated thereunder,
other than 399 Venture Partners, Inc. or any of its
affiliates (as defined in Rule 12b-2 under the 1934 Act),
becomes the beneficial owner (within the meaning of Rule
13d-3 under the 0000 Xxx) of thirty percent (30%) or more of
the outstanding voting capital stock of Holdings, and 399
Venture Partners, Inc. and its affiliates then collectively
own less than twenty percent (20%) of the aggregate number
of shares of Common Stock and Nonvoting Common Stock of
Holdings then outstanding (unless 399 Venture Partners, Inc.
and/or its affiliates are part of the group owning such 30%
or more).
(f) During any period of two consecutive years or less,
individuals who at the beginning of such period constituted
the Board of Directors of Holdings cease, for any reason, to
constitute at least a majority of the Board of Directors of
Holdings, unless the election or nomination for election of
each new director of Holdings who took office during such
period was approved by a vote of at least two-thirds of the
directors of Holdings still in office at the time of such
election or nomination for election who were directors of
Holdings at the beginning of such period or unless 399
Venture Partners, Inc. or Citicorp Venture Capital, Inc.
approves any such replacement director.
2. If (i) a Retention Event occurs, (ii) the Employee is employed by Pamida
at the time the Retention Event occurs, and (iii) the Employee remains in the
employ of Pamida (or of the entity which succeeds to the business of Pamida upon
the occurrence of the Retention Event) for a continuous period of six (6) months
after the effective date of the Retention Event, then within ten (10) days after
the elapse of such 6-month period Pamida agrees to pay the Employee the sum of
$400,000.00 as a retention bonus in consideration of such continued employment.
3. If (i) a Retention Event occurs, (ii) the Employee is employed by Pamida
immediately prior to the time the Retention Event occurs, and (iii) either upon
the effective date of the Retention Event or within six (6) months after the
effective date of the Retention Event Pamida (or the entity which succeeds to
the business of Pamida upon the occurrence of the Retention Event) terminates
the employment of the Employee without cause, then within ten (10) days after
the effective date of such termination of employment Pamida agrees to pay the
Employee the sum of $400,000.00 in consideration of the Employee's willingness
to remain in the employ of Pamida or such successor after the occurrence of a
Retention Event.
4. For purposes of this agreement, "cause" shall mean only (i) the
Employee's confession or conviction of theft, fraud, embezzlement, or any other
crime involving dishonesty with respect to Pamida or any parent, subsidiary, or
affiliate of Pamida, (ii) the Employee's excessive absenteeism (other than by
reason of physical injury, disease, or mental illness) without reasonable cause,
(iii) the Employee's material violation of the provisions of any confidentiality
or nondisclosure agreement with Pamida or any parent, subsidiary, or affiliate
of Pamida, (iv) habitual and material negligence by the Employee in the
performance of the Employee's duties and responsibilities as an employee of
Pamida and the Employee's failure to cure such negligence within thirty (30)
days after the Employee's receipt of a written notice from the Board of
Directors or Chief Executive Officer of Pamida setting forth in reasonable
detail the particulars of such negligence, (v) material noncompliance by the
Employee with the Employee's obligations under any employment agreement with
Pamida to which the Employee is a party and the Employee's failure to correct
such non-compliance within thirty (30) days after the Employee's receipt of a
written notice from the Board of Directors or Chief Executive Officer of Pamida
setting forth in reasonable detail the particulars of such non-compliance, or
(vi) material failure by the Employee to comply with a lawful directive of the
Board of Directors or Chief Executive Officer of Pamida and the Employee's
failure to cure such non-compliance within thirty (30) days after the Employee's
receipt of a written notice from the Board of Directors or Chief Executive
Officer of Pamida setting forth in reasonable detail the particulars of such
non-compliance. For purposes of this Paragraph 4, neither the results of the
operations of Pamida nor any business judgment made in good faith by the
Employee shall constitute an independent basis for termination for cause of the
Employee's employment by Pamida. For purposes of this Paragraph 4, references to
"Pamida" shall include an entity which succeeds to the business of Pamida upon
the occurrence of a Retention Event. The provisions of this Paragraph 4 are
subject in all events to the provisions of Paragraph 8.
5. If the employment of the Employee by Pamida (or by the entity which
succeeds to the business of Pamida upon the occurrence of a Retention Event)
terminates either upon the effective date of the Retention Event or within six
(6) months after the Effective Date of the Retention Event for a reason other
than the termination of such employment by Pamida or such successor entity
without cause, then the Employee shall not be entitled to any payment under this
agreement.
6. If no Retention Event has occurred by the close of business on March 11,
2000, then this agreement automatically will terminate at such time; and, in
such event, Pamida will have no further obligation to the Employee under this
agreement.
7. This agreement shall be binding upon Pamida and Pamida's successors and
assigns and shall inure to the benefit of the Employee and the Employee's heirs
and personal representatives. In connection with any Retention Event, Pamida
shall take such actions as may be necessary to assure either that a sufficient
amount of its unencumbered funds will remain available to fully satisfy the
obligations of Pamida under this agreement or that such obligations are assumed
by a financially responsible entity whose creditworthiness is at least equal to
that of Pamida.
8. This agreement is not, and shall not for any purpose be deemed to
constitute, an employment or severance agreement between Pamida and the
Employee. Nothing in this agreement shall confer upon the Employee the right to
remain in the employ of Pamida for any particular period of time or in any
particular capacity or affect any right which Pamida or the Employee may have to
terminate the employment relationship between Pamida and the Employee at any
time, for any reason, with or without cause.
9. This agreement shall be governed by and construed in accordance with the
laws of Nebraska.
10. The Employee understands that Pamida desires to maintain the
confidentiality of this agreement and its terms and further desires to maintain
the confidentiality of any discussions or negotiations that Pamida may undertake
with respect to a possible Retention Event. Accordingly, the Employee agrees not
to disclose to or discuss with anyone the existence of this agreement or any of
the terms of this agreement without the prior written approval of the Chief
Executive Officer of Pamida prior to the written public disclosure of this
agreement and its terms by Pamida or Holdings, except that the Employee may
discuss this agreement with the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, and Senior Vice President-Human Resources of
Pamida. The Employee further agrees not to disclose to or discuss with anyone
the existence or possible existence of any discussions or negotiations that
Pamida has undertaken or may undertake with respect to a possible Retention
Event so long as such discussions or negotiations have not been publicly
disclosed in writing by Pamida or Holdings; provided, that, at the direction of
the Chief Executive Officer, Chief Operating Officer, or Chief Financial Officer
of Pamida, the Employee may discuss matters relating to a possible Retention
Event with such persons and to such extent as may be specified by any such
executive officer of Pamida in such directions. If the Employee violates any of
the confidentiality provisions of this Paragraph 10 at any time prior to the
consummation of a Retention Event, then the Board of Directors of Pamida, in its
sole and absolute discretion, may terminate this agreement, and Pamida thereupon
shall have no further obligation or liability to the Employee under this
agreement.
IN WITNESS WHEREOF, Pamida and the Employee have executed this agreement on
the day and year first above written.
PAMIDA, INC., a Delaware corporation
By: /s/Xxxxx X. Xxxxxxxx
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Title: Executive Vice President
/s/Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Employee
