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FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
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This First Amendment to the Employment Agreement made as of June 4,
1995 (the "Agreement") between Kmart Corporation, a Michigan corporation
(together with its successors and assigns permitted under this Agreement, the
"Company"), and Xxxxx Xxxx (the "Executive") is made as of September 21, 1998.
1. Section 1(g) of the Agreement is hereby amended by the addition of
the following flush language at the end thereof:
"Notwithstanding the foregoing, the parties hereto agree that no
determination made or to be made by the Board in connection with the
stock options awarded pursuant to Section 6(d) hereof shall, by itself,
constitute grounds for a Constructive Termination Without Cause."
2. Section 2 of the Agreement is hereby revised to read, in its
entirety, as follows:
"2. Term of Employment.
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The Company hereby employs the Executive, and the
Executive hereby accepts such employment, for the period commencing
June 4, 1995 and ending at the close of business on April 1, 2001,
subject to earlier termination of the Term of Employment in accordance
with the terms of this Agreement; provided that the Term of Employment
may be extended by mutual consent of the Parties."
3. Section 6(a) of the Agreement is hereby revised to read, in its
entirety, as follows:
"(a) General. During the Term of Employment, the
Executive shall be eligible to participate in the long-term incentive
programs of the Company. In any event, he shall be entitled to the
awards described in Sections 6(b), 6(c) and 6(d) below, subject to the
conditions described therein."
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4. Section 6 of the Agreement is hereby revised by the addition of the
following new Section 6(d) at the end thereof:
"(d) Additional Stock Option Awards. In consideration
of the extension of the Term of Employment pursuant to the First
Amendment to the Agreement made as of September 21, 1998, the Company
shall grant the Executive additional 10-year options, substantially in
the form attached to the First Amendment as Exhibits A and B, to
purchase an aggregate 1,000,000 shares of Stock (the "Extension
Options"). The Extension Options shall be granted pursuant to the Kmart
Corporation 1997 Long-Term Equity Compensation Plan (the "1997 Plan")
and the Kmart Corporation 1992 Stock Option Plan (the "1992 Plan" and,
together with the 1997 Plan, the "Plans"), but to the extent that any
provisions of this Section 6(d) or Exhibit A or B to the First
Amendment conflict with the provisions of the Plans, the provisions of
this Section 6(d) and Exhibits A and B to the First Amendment shall be
controlling. As of September 21, 1998, Extension Options to purchase
686,615 shares of Stock shall be granted under the 1997 Plan, and
Extension Options to purchase 313,385 shares of Stock shall be granted
under the 1992 Plan. The exercise price of the Extension Options shall
be $13.19 per share, which was the Fair Market Value (as defined in the
respective Plan) of a share of Stock on the grant date. The Extension
Options shall vest (a "Vesting Event") only upon satisfaction of the
following two conditions: (Condition 1) the Executive's execution of a
separate written waiver of all cash payments described in Sections
10(d)(ii) and 10(d)(iv) or, to the extent relating to payments
described in Sections 10(d)(ii) and 10(d)(iv) hereof, Section 10(e)
hereof; and (Condition 2) either (x) the Board's formal approval of
successorship arrangements with respect to the Executive's positions
and responsibilities with the Company, which approval specifically
refers to the satisfaction of this vesting requirement, or (y) a Change
in Control (as defined in the Plans). Notwithstanding Section 10(e)
hereof, but subject to the immediately preceding sentence, the
Extension Options shall not vest upon a Change in Control. Vested
Extension Options shall become exercisable only upon the earliest to
occur of April 1, 2001, a Change in Control or the Executive's death.
Except as provided in the last sentence of this Section 6(d), Extension
Options which become exercisable shall remain exercisable for the
remainder of their 10-year terms. In the event that holders of the
Company's common stock receive cash, securities or other property in
respect of their common stock in connection with a Change in Control
transaction which results in a Vesting Event, the Company shall use its
reasonable efforts to enable the Executive (if he so
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elects) to exercise any vested Extension Options at a time and in a
fashion that will entitle him to receive in exchange for any shares
thus acquired the same consideration as is received in such Change in
Control transaction by other holders of the Company's common stock. In
the event of a Change in Control which does not result in a Vesting
Event and in which the Company is not the surviving entity, the Company
shall use its reasonable efforts to assure that the Executive shall be
provided replacement options that are exercisable for equity securities
of the surviving entity (or an equivalent award) which shall contain
terms, conditions and an after-tax economic opportunity (including,
without limitation, an aggregate spread value) no less favorable to the
Executive than did the Extension Options immediately prior to such
Change in Control. If the Executive's employment terminates under any
circumstances prior to a Vesting Event (including, without limitation,
because of death or disability), the unvested Extension Options shall
terminate without vesting upon such termination of employment.
Notwithstanding anything to the contrary in this Section 6(d), if the
Executive violates the provisions of Section 11 hereof (without regard
to the time limitations of such Section) prior to the exercise of all
Extension Options, all then unexercised Extension Options held by the
Executive (whether or not vested and exercisable) shall terminate upon
such violation."
5. Section 10(d)(ii) is hereby revised to read, in its entirety, as
follows:
"(ii) Base Salary, at the annualized rate in effect
on the date of termination of the Executive's employment (or in the
event a reduction in Base Salary is the basis for a Constructive
Termination Without Cause, then the Base Salary in effect immediately
prior to such reduction), for the period until the end of the
originally scheduled Term of Employment, as extended by the First
Amendment dated September 21, 1998; provided that in no event shall
such period be less than 12 months nor more than 36 months; and
provided further that the Executive and the Company may agree that the
Company shall pay him the present value of such salary continuation
payments in a lump sum (using as the discount rate the Applicable
Federal Rate for short-term Treasury obligations as published by the
Internal Revenue Service for the month in which such termination
occurs);"
6. As amended by this First Amendment, the Agreement is hereby
specifically ratified and reaffirmed and shall continue in full force and
effect.
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IN WITNESS WHEREOF, the undersigned have executed this First Amendment
as of September 21, 1998.
KMART CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
/s/ Xxxxx Xxxx
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Xxxxx Xxxx
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KMART CORPORATION
STOCK OPTION PLANS
NON-QUALIFIED STOCK OPTION AGREEMENT
OPTIONEE: Xxxxx Xxxx
SOCIAL SECURITY NUMBER: [__________]
OPTIONED SHARES: 686,615 shares of common stock, $1.00 par value, of
Kmart Corporation.
PLAN: 1997 Long Term Equity Compensation Plan
PER SHARE OPTION PRICE: $13.19
OPTION DATE: September 21, 1998
TERMINATION DATE: September 21, 2008
This Stock Option Agreement (the "Agreement") is executed and delivered as of
the Option Date by and between Kmart Corporation (the "Company") and the
Optionee, an employee of the Company. The parties hereby agree as follows:
1. The Company, pursuant to the above Plan, which is incorporated herein
by reference, and subject to the terms and conditions thereof (except
as otherwise specified herein), hereby grants to the Optionee an option
to purchase the Optioned Shares at the Per Share Option Price (which
represents the fair market value of the Company's common stock on the
Option Date). The option granted hereby shall vest (a "Vesting Event")
only upon satisfaction of the following two conditions: (Condition 1)
the Optionee's execution of a separate written waiver of all cash
payments described in Sections 10(d)(ii) and 10(d)(iv) or, to the
extent relating to payments described in Sections 10(d)(ii) and
10(d)(iv), Section 10(e) of Optionee's Employment Agreement with the
Company made as of June 4, 1995, as amended from time to time (his
"Employment Agreement"); and (Condition 2) either (x) formal approval
by the Company's Board of Directors of successorship arrangements with
respect to the Optionee's positions and responsibilities with the
Company, which approval specifically refers to the satisfaction of
this vesting requirement, or (y) a Change in Control (as defined in the
Plan). If the option granted hereby becomes vested, it shall then
become exercisable only upon the earliest to occur of April 1, 2001, a
Change in Control or the Optionee's death.
2. Notwithstanding any provision to the contrary contained in the Plan,
but subject to Section 1 hereof, the option granted hereby shall not
vest upon a Change in Control, except as provided in Section 1 hereof.
Further, if the Optionee's employment terminates under any
circumstances prior to a Vesting Event (including, without limitation,
because of the Optionee's death or disability), the option shall
terminate without vesting upon such termination of employment.
Notwithstanding any provision of the Plan, the Optionee hereby
specifically waives any right to have the option granted hereby vest
except upon the occurrence of a Vesting Event and, subject to Section 3
hereof, any right to have the option granted hereby become exercisable
other than as provided in Section 1 hereof.
3. In the event that holders of the Company's common stock receive cash,
securities or other property in respect of their common stock in
connection with a Change in Control transaction, the Company shall use
its best efforts to enable the Optionee (if he so elects)
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to exercise any options granted hereby which shall have vested at a
time and in a fashion that will entitle him to receive in exchange for
any shares thus acquired the same consideration as is received in such
Change in Control transaction by other holders of the Company's common
stock. In the case of a Change in Control which does not result in a
Vesting Event and in which the Company is not the surviving entity, the
Company shall use its reasonable efforts to assure that the Optionee
shall be provided replacement options that are exercisable for equity
securities of the surviving entity (or an equivalent award) which shall
contain terms, conditions and an after-tax economic opportunity
(including, without limitation, an aggregate spread value) no less
favorable to the Optionee than did the options granted hereby
immediately prior to such Change in Control.
4. The option granted hereby shall not be treated as an incentive stock
option under the Internal Revenue Code.
5. The option granted hereby shall terminate no later than at the close of
business on the Termination Date; provided, however, that if the option
has not become vested on or before April 1, 2001, the option shall
terminate on April 1, 2001. If the option vests and becomes
exercisable, it shall remain exercisable until the close of business on
the Termination Date, except that if the Optionee violates the
provisions of Section 11 (without regard to the time limitations of
such Section) of his Employment Agreement, the option granted hereby
(whether or not vested and exercisable) shall terminate upon such
violation.
6. The Optionee shall comply with and be bound by all the terms and
conditions contained in the Plan, except that to the extent that any
provision of this Agreement conflicts with any provision of the Plan,
the provision of this Agreement shall be controlling.
7. The option granted hereby shall be exercisable during the Optionee's
lifetime only by the Optionee in accordance with the terms of this
Agreement and the terms of the Plan and shall not be assignable or
transferable except by Will or the laws of descent and distribution;
provided, however, that the option may after the death of the Optionee
be exercised pursuant to the terms of this Agreement and the terms of
the Plan by a Beneficiary of the Optionee.
8. The obligation of the Company to sell and deliver any stock under this
option is specifically subject to all applicable laws, rules,
regulations and governmental and stockholder approvals.
9. Any notice by the Optionee to the Company hereunder shall be in writing
and shall be deemed duly given only upon receipt thereof by the Company
at its principal offices. Any notice by the Company to the Optionee
shall be in writing and shall be duly given if mailed at the address
last specified to the Company by the Optionee.
10. The validity and construction of this Agreement shall be governed by
the laws of the State of Michigan.
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In Witness Whereof, the Company has caused this Agreement to be executed by a
duly authorized representative and the Optionee has hereunto set his hand as of
the day and year first above written.
KMART CORPORATION OPTIONEE
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Xxxxxxx X. Xxxxxxx Xxxxx Xxxx
Please Sign And Retain This Stock Option Agreement For Your Future Reference
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KMART CORPORATION
STOCK OPTION PLANS
NON-QUALIFIED STOCK OPTION AGREEMENT
OPTIONEE: Xxxxx Xxxx
SOCIAL SECURITY NUMBER: [__________]
OPTIONED SHARES: 313,385 shares of common stock, $1.00 par value, of
Kmart Corporation.
PLAN: 1992 Stock Option Plan
PER SHARE OPTION PRICE: $13.19
OPTION DATE: September 21, 1998
TERMINATION DATE: September 21, 2008
This Stock Option Agreement (the "Agreement") is executed and delivered as of
the Option Date by and between Kmart Corporation (the "Company") and the
Optionee, an employee of the Company. The parties hereby agree as follows:
1. The Company, pursuant to the above Plan, which is incorporated herein
by reference, and subject to the terms and conditions thereof (except
as otherwise specified herein), hereby grants to the Optionee an option
to purchase the Optioned Shares at the Per Share Option Price (which
represents the fair market value of the Company's common stock on the
Option Date). The option granted hereby shall vest (a "Vesting Event")
only upon satisfaction of the following two conditions: (Condition 1)
the Optionee's execution of a separate written waiver of all cash
payments described in Sections 10(d)(ii) and 10(d)(iv) or, to the
extent relating to payments described in Sections 10(d)(ii) and
10(d)(iv), Section 10(e) of Optionee's Employment Agreement with the
Company made as of June 4, 1995, as amended from time to time (his
"Employment Agreement"); and (Condition 2) either (x) formal approval
by the Company's Board of Directors of successorship arrangements with
respect to the Optionee's positions and responsibilities with the
Company, which approval specifically refers to the satisfaction of this
vesting requirement, or (y) a Change in Control (as defined in the
Plan). If the option granted hereby becomes vested, it shall then
become exercisable only upon the earliest to occur of April 1, 2001, a
Change in Control or the Optionee's death.
2. Notwithstanding any provision to the contrary contained in the Plan,
the option granted hereby shall not vest upon a Change in Control,
except as provided in Section 1 hereof. Further, if the Optionee's
employment terminates under any circumstances prior to a Vesting Event
(including, without limitation, because of the Optionee's death or
disability), the option shall terminate without vesting upon such
termination of employment. Notwithstanding any provision of the Plan,
the Optionee hereby specifically waives any right to have the option
granted hereby vest except upon the occurrence of a Vesting Event and,
subject to Section 3 hereof, any right to have the option granted
hereby become exercisable other than as provided in Section 1 hereof.
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3. In the event that holders of the Company's common stock receive cash,
securities or other property in respect of their common stock in
connection with a Change in Control transaction, the Company shall use
its best efforts to enable the Optionee (if he so elects) to exercise
any options granted hereby which shall have vested at a time and in a
fashion that will entitle him to receive in exchange for any shares
thus acquired the same consideration as is received in such Change in
Control transaction by other holder of the Company's common stock. In
the case of a Change in Control which does not result in a Vesting
Event and in which the Company is not the surviving entity, the Company
shall use its reasonable efforts to assure that the Optionee shall be
provided replacement options that are exercisable for equity securities
of the surviving entity (or an equivalent award) which shall contain
terms, conditions and an after-tax economic opportunity (including,
without limitation, an aggregate spread value) no less favorable to the
Optionee than did the options granted hereby immediately prior to such
Change in Control.
4. The option granted hereby shall not be treated as an incentive stock
option under the Internal Revenue Code.
5. The option granted hereby shall terminate no later than at the close of
business on the Termination Date; provided, however, that if the option
has not become vested on or before April 1, 2001, the option shall
terminate on April 1, 2001. If the option vests and becomes
exercisable, it shall remain exercisable until the close of business on
the Termination Date, except that if the Optionee violates the
provisions of Section 11 (without regard to the time limitations of
such Section) of his Employment Agreement, the option granted hereby
(whether or not vested and exercisable) shall terminate upon such
violation
6. The Optionee shall comply with and be bound by all the terms and
conditions contained in the Plan, except that to the extent that any
provision of this Agreement conflicts with any provision of the Plan,
the provision of this Agreement shall be controlling.
7. The option granted hereby shall be exercisable during the Optionee's
lifetime only by the Optionee in accordance with the terms of this
Agreement and the terms of the Plan and shall not be assignable or
transferable except by Will or the laws of descent and distribution;
provided, however, that the option may after the death of the Optionee
be exercised pursuant to the terms of this Agreement and the terms of
the Plan by a Beneficiary of the Optionee.
8. The obligation of the Company to sell and deliver any stock under this
option is specifically subject to all applicable laws, rules,
regulations and governmental and stockholder approvals.
9. Any notice by the Optionee to the Company hereunder shall be in writing
and shall be deemed duly given only upon receipt thereof by the Company
at its principal offices. Any notice by the Company to the Optionee
shall be in writing and shall be duly given if mailed at the address
last specified to the Company by the Optionee.
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10. The validity and construction of this Agreement shall be governed by
the laws of the State of Michigan.
In Witness Whereof, the Company has caused this Agreement to be executed by a
duly authorized representative and the Optionee has hereunto set his hand as of
the day and year first above written.
KMART CORPORATION OPTIONEE
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Xxxxxxx X. Xxxxxxx Xxxxx Xxxx
Please Sign And Retain This Stock Option Agreement For Your Future Reference
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