LONG-TERM INCENTIVE AWARD AGREEMENT
This Long-Term Incentive Award Agreement is made and entered into as of the
6th day of March, 1997, between PAMIDA, INC. (the "Company"), a Delaware
corporation, and XXXXXX X. XXXXXXX (the "Executive").
* * *
WHEREAS, the Company is a wholly owned subsidiary of Pamida Holdings
Corporation ("Holdings"), a Delaware corporation; and
WHEREAS, the Executive is employed by the Company in an executive capacity;
and
WHEREAS, the Company desires to provide an incentive to the Executive to
remain in the employ of the Company and to put forth his best efforts on behalf
of the Company; and
WHEREAS, the Company desires to align the interests of the Executive with
the interests of the stockholders of Holdings by basing such incentive upon
possible future appreciation in the market price of the Common Stock of
Holdings;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. GRANT OF LONG-TERM INCENTIVE AWARD. The Company hereby grants to the
Executive a Long-Term Incentive Award consisting of 125,000 Appreciation Units.
The Company makes no representation or warranty to the Executive with respect to
the possible future value of the Long-Term Incentive Award.
2. LONG-TERM INCENTIVE AWARD PAYMENT. If the Executive is a regular
full-time employee of the Company at the close of business on March 5, 2000, and
at the close of business on that date has been continuously employed by the
Company on a regular full-time basis since the date of this agreement, then the
Company agrees to pay to the Executive in cash or before April 15, 2000, an
amount equal to the product of (a) the number of Appreciation Units set forth in
Paragraph 1 multiplied by (b) the positive difference, if any, resulting from
the subtraction of (I) $3.0625 from (II) the lesser of (i) the Average Price or
(ii) $9.0625. If there is no positive difference resulting from the subtraction
referred to in the preceding sentence, then no payment shall be due or made to
the Executive under this Paragraph 2. For purposes of this Paragraph 2, "Average
Price" means the arithmetic average of the closing prices of the Common Stock of
Holdings on the American Stock Exchange on the first twenty (20) trading days
subsequent to March 5, 2000, on which the Common Stock of Holdings is traded on
such Exchange. If the Common Stock of Holdings is not listed on the American
Stock Exchange during the relevant period subsequent to March 5, 2000, then such
closing prices shall be determined by reference to the principal market or
exchange in or on which the Common Stock of Holdings is traded during the
relevant period. If the Executive is not a regular full-time employee of the
Company at the close of business on March 5, 2000, or if the Executive has not
been continuously employed by the Company on a regular full-time basis during
the period from March 6, 1997, through March 5, 2000, then the Executive shall
not be entitled to receive any Long-Term Incentive Award payment pursuant to
this Paragraph 2.
3. DEATH OR DISABILITY OF THE EXECUTIVE. If the Executive dies prior to the
close of business on March 5, 2000, or if the Executive ceases to be a regular
full-time employee of the Company prior to such time by reason of a Disability,
then the Board of Directors of Holdings shall have the authority, exercisable in
its sole and absolute discretion, to approve the payment to the Executive (or to
the Executive's estate, in the event of the Executive's death) of all or any
portion of the Long-Term Incentive Award payment which the Executive would have
received on March 6, 2000, pursuant to Paragraph 2 if the Executive had
satisfied the conditions set forth in Paragraph 2 for the receipt of such
payment; but the Executive shall have no right to receive any amount pursuant to
this Paragraph 3 unless a discretionary payment is so approved by the Board of
Directors of Holdings. If a discretionary payment pursuant to this Paragraph 3
is approved by the Board of Directors of Holdings, then such payment shall be
made at such time as the Board of Directors of Holdings may specify. For
purposes of this agreement, "Disability" means a physical or mental illness or
incapacity of the Executive which has resulted in a determination that the
Executive is entitled to receive benefits (a) under a long-term disability
insurance policy maintained by the Company for the Executive or (b) if no such
insurance policy is then in existence, under the federal social security
disability insurance program.
4. CHANGE OF CONTROL OF HOLDINGS. If, after a Holdings Change of Control
but prior to March 6, 2000, (a) the Executive ceases to be a regular full-time
employee of the Company (a "Termination"), (b) on the date of the Termination
(the "Termination Date") the Executive had been continuously employed by the
Company on a regular full-time basis since the date of this agreement, (c) the
Termination occurred other than as a result of the Executive's death, voluntary
resignation or retirement, or Disability, and (d) on the Termination Date (i)
Holdings owned at least a majority of the then outstanding voting capital stock
of the Company and (ii) the Common Stock of Holdings was publicly traded on the
American Stock Exchange or another recognized United States securities market,
then the Company agrees to pay to the Executive in cash within twenty (20) days
after the Termination Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 4.
For purposes of this Paragraph 4, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Termination
Date on which the Common Stock of Holdings was traded on such Exchange. If the
Common Stock of Holdings is not listed on the American Stock Exchange during the
relevant period prior to the Termination Date, then such closing prices shall be
determined by reference to the principal market or exchange in or on which the
Common Stock of Holdings is traded during the relevant period. For purposes of
this Paragraph 4, "Holdings Change of Control" means the happening of either of
the following events:
(a) 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 of the 0000
Xxx) of thirty percent (30%) or more of the outstanding voting capital
stock of Holdings, or
(b) 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.
5. CHANGE OF CONTROL OF THE COMPANY. If, prior to March 6, 2000, there is a
Company Change of Control and on the effective date of such Company Change of
Control (the "Effective Date") the Executive is a regular full-time employee of
the Company (and has been so employed continuously since the date of this
agreement), then the Company shall pay to the Executive within twenty (20) days
after the Effective Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 5.
For purposes of this Paragraph 5, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Effective Date
on which the Common Stock of Holdings was traded on such Exchange; provided,
that if there are fewer than twenty (20) trading days between the date of the
first public announcement of a proposed Company Change of Control (the
"Announcement Date") and the Effective Date, then only the trading days
following the Announcement Date shall be taken into account for purposes of
determining the Average Price; provided, further, that if the Effective Date
occurs on or before the Announcement Date, then the Average Price shall be the
fair market value of the consideration received or to be received by Holdings or
the stockholders of Holdings, as the case may be, in connection with or by
reason of the transaction resulting or which will result in the Company Change
of Control, in either case determined on a per share basis with respect to the
shares of Common Stock of Holdings then outstanding (including, to the extent
applicable, shares of Common Stock issuable upon the exercise of outstanding
options to purchase shares of the Common Stock of Holdings); and provided
further, that if the company Change of Control involves an issuer tender offer
or other "going private" transaction, then the Average Price shall be the amount
per outstanding share of Common Stock of Holdings paid or to be paid by the
purchaser in such issuer tender offer or other "going private" transaction. If
the Common Stock of Holdings is not listed on the American Stock Exchange during
the relevant period prior to the Effective Date, then such closing prices shall
be determined by reference to the principal market or exchange in or on which
the Common Stock of Holdings is traded during the relevant period. For purposes
of this Paragraph 5, "Company Change of Control" means the happening of any of
the following events:
(a) 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 voting capital stock of
Holdings immediately prior to the effectiveness of such merger or
consolidation do not own a majority of the outstanding shares of voting
capital stock of the surviving or resulting corporation in such merger,
(b) Holdings ceases to own a majority of the outstanding shares of voting
capital stock of the Company (unless such event results from the merger of
the Company into Holdings, with no change in the ownership of the voting
capital stock of Holdings),
(c) the Company 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 a majority of the outstanding shares of
voting capital stock of the surviving or resulting corporation in such
merger or consolidation,
(d) the stockholders of the Company vote (or act by written consent) to
dissolve the Company or to sell or otherwise dispose of all or
substantially all of the property and assets of the Company, or
(e) the Common Stock of Holdings ceases to be publicly traded because of an
issuer tender offer or other "going private" transaction.
6. TERMINATION WITHOUT CAUSE. If (a) the Company terminates the employment
of the Executive without Cause (a "Discharge"), including but not limited to a
constructive Discharge arising from a material reduction in the Executive's
duties or a material reduction in the Executive's rank or base salary, (b) on
the effective date of the Discharge (the "Discharge Date") the Executive had
been continuously employed by the Company on a regular full-time basis since the
date of this agreement, and (c) the Discharge occurred other than as a result of
the Executive's death, voluntary resignation or retirement, or Disability, then
the Company agrees to pay to the Executive in cash within twenty (20) days after
the Discharge Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 6.
For purposes of this Paragraph 6, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Discharge Date
on which the Common Stock of Holdings was traded on such Exchange. If the Common
Stock of Holdings is not listed on the American Stock Exchange during the
relevant period prior to the Discharge Date, then such closing prices shall be
determined by reference to the principal market or exchange in or on which the
Common Stock of Holdings is traded during the relevant period. For purposes of
this Paragraph 6, "Cause" shall mean only (i) the Executive's confession or
conviction of theft, fraud, embezzlement, or any other crime involving
dishonesty with respect to the Company or any parent, subsidiary, or affiliate
of the Company, (ii) the Executive's excessive absenteeism (other than by reason
of physical injury, disease, or mental illness) without reasonable cause, (iii)
habitual and material negligence by the Executive in the performance of his
duties and responsibilities as an executive of the Company and his failure to
cure such negligence within thirty (30) days after his receipt of a written
notice from the Company setting forth in reasonable detail the particulars of
such negligence, or (iv) material failure by the Executive to comply with a
lawful directive of the Company and his failure to cure such non-compliance
within thirty (30) days after his receipt of a written notice from the Company
setting forth in reasonable detail the particulars of such non-compliance.
7. NATURE OF INCENTIVE AWARD. Although the value, if any, of the Long-Term
Incentive Award will be derived from the market price of the Common Stock of
Holdings, neither the Long-Term Incentive Award nor the Appreciation Units
constitute or shall be deemed for any purpose to be or represent capital stock
of or equity interests of any kind in Holdings or the Company. Nothing contained
in this agreement shall be construed for any purpose to constitute the Executive
a stockholder of Holdings or the Company at any time or to give the Executive
any of the rights of a stockholder of Holdings or the Company at any time.
8. NONASSIGNABILITY. Neither the Long-Term Incentive Award nor the
Appreciation Units nor any interest in the Long-Term Incentive Award or the
Appreciation Units nor any of the Executive's rights and interests under this
agreement may be assigned or transferred by the Executive in whole or in part
either directly or by operation of law or otherwise; and neither the Long-Term
Incentive Award nor the Appreciation Units nor any interest in the Long-Term
Incentive Award or the Appreciation Units nor any of the Executive's rights and
interests under this agreement may be pledged, encumbered, or otherwise
subjected to any obligation or liability of the Executive. However, in the event
of the death of the Executive after the applicable preconditions to his right to
receive a payment under this agreement have been fully satisfied but prior to
his receipt of such payment, the Executive's estate shall succeed to such right
and shall be entitled to receive such payment.
9. RIGHT OF DISCHARGE RESERVED. This agreement is not, and shall not for
any purpose be deemed to constitute, an employment agreement between the Company
and the Executive. Nothing contained in this agreement, including but not
limited to the grant of a Long-Term Incentive Award to the Executive, confers
upon the Executive the right to continue in the employ of the Company or any
parent or subsidiary of the Company for any particular period of time or in any
particular capacity or affects any right which the Company or any parent or
subsidiary of the Company may have to terminate the employment of the Executive.
10. CAPITAL STOCK ADJUSTMENT. In the event that the number of outstanding
shares of Common Stock of Holdings is increased by reason of a stock dividend or
a stock split, the number of Appreciation Units granted to the Executive in
Paragraph 1 shall be proportionately increased and the dollar amounts set forth
in clauses (b)(I) and (II) of Xxxxxxxxxx 0, 0, 0, xxx 0 xxxxx xx proportionately
decreased for the purpose of computing the amount, if any, payable to the
Executive pursuant to this agreement. In the event that the number of
outstanding shares of Common Stock of Holdings is reduced by reason of a reverse
stock split or a combination of shares of the Common Stock of Holdings, the
number of Appreciation Units granted to the Executive in Paragraph 1 shall be
proportionately decreased and the dollar amounts set forth in clauses (b)(I) and
(II) of Xxxxxxxxxx 0, 0, 0, xxx 0 xxxxx xx proportionately increased for the
purpose of computing the amount, if any, payable to the Executive pursuant to
this agreement. The purpose of this Paragraph 10 is to maintain the same
economic position for the Executive and the Company immediately after such stock
dividend, stock split, reverse stock split, or combination of shares as the
Executive and the Company had immediately before such stock dividend, stock
split, reverse stock split, or combination of shares; and this Paragraph 10
shall be construed and applied so as to achieve such objective. Any adjustments
required pursuant to this Paragraph 10 shall be made and communicated to the
Executive and the Company by the Board of Directors of Holdings promptly after
the occurrence of the event that necessitates such adjustment (or in advance of
such event, effective upon the occurrence of such event).
11. CAPTIONS. The captions of the various paragraphs of this agreement are
for the purpose of convenient reference only and are not intended to define or
limit the contents of such paragraphs.
12. CREDITOR STATUS. The Executive shall have no legal or equitable rights,
interests, or claims in or to any particular property or assets of the Company,
all of which shall be and remain the general unrestricted assets of the Company.
If any amount becomes payable to the Executive under this agreement, including
but not limited to a discretionary payment to the Executive's estate in the
event of the Executive's death, the Executive or his estate, as the case may be,
shall be and have the status of a general unsecured creditor of the Company; and
this agreement constitutes a mere unfunded and unsecured contingent promise of
the Company to make a certain payment in the future if all of the preconditions
to such payment are fully satisfied.
13. WITHHOLDING; PAYROLL TAXES. To the extent required by applicable laws
in effect at the time a payment, if any, is made under this agreement, the
Company shall withhold from such payment any taxes or other obligations required
to be withheld from such payment by federal, state, or local laws.
14. UNFUNDED PLAN. This agreement and any similar agreements concurrently
being entered into with other executives of the Company together are and shall
be an unfunded plan within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA") for purposes of Title I of ERISA and for income
tax purposes.
15. GOVERNING LAW. All rights and obligations under this agreement shall be
construed and interpreted in accordance with the laws of Delaware.
16.BINDING EFFECT. This agreement shall be binding upon the Company, the
Executive, and their respective heirs, personal representatives, successors, and
assigns. However, nothing contained in this paragraph shall be construed to
allow the Executive to make any assignment which is otherwise prohibited by this
agreement.
IN WITNESS WHEREOF, the Company and the Executive have duly executed this
agreement as of the date first above written.
PAMIDA, INC., a Delaware corporation
By: /S/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx, Executive
Vice President
/S/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
