{"id":39300,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/employment-agreement-kmart-corp-and-charles-c-conaway.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employment-agreement-kmart-corp-and-charles-c-conaway","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/employment-agreement-kmart-corp-and-charles-c-conaway.html","title":{"rendered":"Employment Agreement &#8211; Kmart Corp. and Charles C. Conaway"},"content":{"rendered":"<pre>                                    AMENDMENT\n                                       TO\n                              EMPLOYMENT AGREEMENT\n\n\n                  This FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT, made and\nentered into by and between KMART CORPORATION, a Michigan corporation (together\nwith its successors and assigns permitted under this Agreement, the \"Company\"),\nand CHARLES C. CONAWAY (the \"Executive\") effective as of the 15th day of May\n2001.\n\n                  WHEREAS, the Executive has entered into an employment\nagreement with the Company, dated as of May 30, 2000 (the \"Employment\nAgreement\"), pursuant to which the Executive serves the Company as its Chief\nExecutive Officer and Chairman.\n\n                  WHEREAS, the Company has determined that it is appropriate and\nin the best interests of the shareholders of the Company to provide the\nExecutive with additional incentive compensation opportunities based on the\nachievement by the Company of certain pre-established performance goals;\n\n                  WHEREAS, the Employment Agreement may be amended by the\nwritten agreement of the parties; and\n\n                  WHEREAS, the Company and the Executive now wish to amend the\nEmployment Agreement to reflect the additional incentive compensation\nopportunities.\n\n                  NOW, THEREFORE, in consideration of the premises and the\nmutual agreements hereinafter contained, the parties do hereby amend the\nEmployment Agreement as follows, effective as of the date hereof:\n\n         1. A new item (iv) shall be added at the end of Section 6(b) of the\nEmployment Agreement to read as follows:\n\n                  \"(iv) Performance Option Grant. On May 15, 2001 (the \"Grant\nDate\"), the Committee granted to the Executive a 10-year option to purchase an\naggregate of 2,500,000 shares of Stock (the \"Performance Option\"). The exercise\nprice per share of the Performance Option shall be equal to $10.15 per share,\nthe fair market value of the Stock on the Grant Date. The Performance Option\nshall be divided into three tranches, with each tranche being subject to the\nperformance requirements described below:\n\n                  (1) The performance requirement with respect to the first\ntranche, covering 1,250,000 shares of Stock under the Performance Option, shall\nbe based upon the Company's achieving a target level of earnings per share to be\nestablished by the Committee in consultation with the Executive within 6 months\nof the Grant Date, which target must be attained by the Company for any four\nconsecutive fiscal quarters of the Company ending on or before January 31, 2004;\n\n                  (2) The performance requirement with respect to the second\ntranche, covering 750,000 shares of Stock under the Performance Option, shall be\nbased upon the Company's achieving the \"Inventory Turnover\" target established\nand administered by the Committee for purposes of the Company's Long-Term ELT\nPerformance Share Plan for the performance period ending as of January 31, 2004;\nand\n\n                  (3) The performance requirement with respect to the third\ntranche, covering 500,000 shares of Stock under the Performance Option, shall be\nbased upon the Company's achieving the \"Customer Super Service Index\" target\nestablished and administered by the Committee for purposes of the Company's\nLong-Term ELT Performance Share Plan for the performance period ending as of\nJanuary 31, 2004.\n\nIn the event of any merger, reorganization, consolidation, recapitalization,\nstock dividend, stock split, reverse stock split, spin-off or similar\ntransaction or other change in corporate structure affecting the calculation of\nearnings per share, or any other performance objective established hereunder,\nsuch adjustments and other substitutions shall be made to the performance\nrequirements established hereunder as the Committee in its sole discretion deems\nequitable or appropriate.\n\n\n\n\n   2\n\n\nAny tranche of the Performance Option for which the applicable performance\nrequirement shall have been satisfied shall become vested and exercisable in\nthree equal installments, each relating to one third of the number of shares\ncovered by such tranche, on each of January 31, 2004, 2005 and 2006, provided\nthe Executive remains employed by the Company on the applicable vesting date.\nNotwithstanding the failure to satisfy the requirements set forth in the\npreceding sentence:\n\n         (a) In the case of a termination of employment that occurs on or prior\nto January 30, 2004, all tranches of the Performance Option shall also become\nvested and exercisable if, under the circumstances of the Executive's\ntermination of employment or if there is a Change in Control, any other options\nthen held by him become vested and exercisable, or would have become vested and\nexercisable if such options were not then already vested and exercisable, in\naccordance with the provisions of Section 11 hereof (an \"Acceleration Event\");\nand\n\n         (b) In the case of an Acceleration Event that occurs after January 30,\n2004 and prior to January 31, 2006, any tranche of the Performance Option as to\nwhich the applicable performance requirement has been satisfied as of January\n31, 2004 shall also become vested and exercisable.\n\nAll tranches of the Performance Option for which the applicable performance\nrequirement shall not have been satisfied as of January 31, 2004 shall\nnevertheless become vested and exercisable on the ninth (9th) anniversary of the\nGrant Date, provided the Executive remains employed by the Company on such date\n(notwithstanding the provisions of Section 11 hereof, which shall not apply\nafter January 31, 2004 to accelerate the vesting of any particular tranche of\nthe Performance Option to the extent the performance conditions relating to such\ntranche were not satisfied as of January 31, 2004, except in the circumstances\nset forth in Section 11(e)). Notwithstanding anything to the contrary in this\nSection 6(b) or in the 1997 Plan, if the Executive violates the provisions of\nSection 12 hereof, the Performance Option shall immediately terminate.\"\n\nAs soon as practicable following the date hereof, the Company and the Executive\nwill enter into a stock option agreement with terms and conditions consistent in\nall respects with the provisions of this Section 6(b)(iv) and this Employment\nAgreement and otherwise substantially the same as nonqualified stock options\ngranted under the of the Company's 1997 Long-Term Equity Compensation Plan, as\namended (the \"1997 Plan\"). Such option shall be issued either under the terms of\nthe 1997 Plan or outside the terms of the 1997 Plan, in which case the Company\nwill take all necessary actions to file, on or before the first anniversary of\nthe Grant Date, and to keep effective, a registration statement on Form S-8\ncovering the sale of Stock by the Company pursuant to the exercise of the\nPerformance Option.\n\n         2. A new subsection (c) shall be added at the end of Section 6 of the\nEmployment Agreement to read as follows:\n\n                  \"(c) Executive Loan. As soon as practicable following the\neffective date hereof, the Company will provide the Executive a loan in the\nprincipal amount of $5,000,000 (the \"Loan\") that shall be due and payable on\nFebruary 1, 2006 and that shall bear interest at the minimum rate necessary on\nthe date the loan is extended to avoid imputation of tax under Section 7872 of\nthe Internal Revenue Code of 1986, as amended. The Company and the Executive\nwill enter into a full recourse, unsecured promissory note with respect to the\nLoan, with customary terms and conditions consistent in all respects with the\nprovisions of this Section 6(c). Interest on the Loan accruing during the term\nof the Loan shall be compounded annually and shall be deferred until January 31,\n2006.\n\nThe outstanding principal and accrued interest under the Loan shall\nautomatically and without further action on the part of the Company or the\nExecutive be forgiven in full by the Company, provided the Executive remains\nemployed by the Company through January 31, 2006. All principal and accrued\ninterest on the Loan shall also be forgiven, without further action on the part\nof the Company or the Executive, upon the earlier to occur of the following\nprior to February 1, 2006: (i) the Company's delivery to the Executive of a\nnotice of non-extension pursuant to Section 2, hereof, or (ii) the Executive's\ntermination of employment from the Company under any circumstance that results\nin acceleration of vesting prior to the scheduled vesting date of any stock\noptions then held by the Executive pursuant to the provisions of Section 11\nhereof (the applicable event being a \"Loan Forgiveness Event\").\n\nIn the event of Executive's termination of employment prior to January 31, 2006\nunder circumstances not constituting a Loan Forgiveness Event, unpaid principal\nand accrued interest under the Loan shall be repayable in full upon such\ntermination in accordance with the terms of the promissory note and any cash\ncompensation then owed to the Executive by the Company may be offset against any\namounts then owed by\n\n\n\n   3\n\nthe Executive to the Company with respect to the Loan; provided, however, that\nin the event there is any dispute between the Company and the Executive as to\nwhether the underlying circumstances of termination constitute a Loan\nForgiveness Event, no offset shall be applied by the Company until such dispute\nhas been finally resolved in accordance with the provisions of Section 26\nhereof.\n\nThe Executive shall be solely responsible for his personal tax liability arising\nas a result of the Loan and any forgiveness of principal or interest under the\nLoan. Notwithstanding the foregoing, in the event that the Internal Revenue\nService determines at any time that principal or interest under the Loan should\nbe taken into account as taxable income by the Executive at the time it is\nentered into, any resulting tax, including any resulting state and local taxes\n(collectively \"Associated Taxes\"), and any related interest and penalties, will\nbe either paid by the Company or advanced to the Executive, at his election,\nwhen due. In addition, the Company shall make additional payments to the\nExecutive to hold him harmless from: (i) any tax liabilities attributable to its\npayment of any related interest and penalties (but not of the Associated Taxes),\nand (ii) any imputed income associated with interest-free component of the\nExecutive's repayment obligation referred to in the next succeeding paragraph\n(the \"Hold Harmless Payments\").\n\nShould the Company wish to contest, together with the Hold Harmless Payments the\naccelerated inclusion of such income, then the Executive shall reasonably\ncooperate with the Company as to such contest, and the Associated Taxes, and any\namounts due with respect to related interest and penalties, may be paid by the\nCompany or, at his election advanced to the Executive, at such later time as is\nagreed to by the Executive, together with the Hold Harmless Payments. Any such\nAssociated Taxes shall be repaid by the Executive to the Company (without\ninterest), either at the time the Loan is otherwise repayable by the Executive,\nor at the time such loan is forgiven in accordance with this Section 6(c),\nwhichever is applicable. Any such Hold Harmless Payments shall be the sole\nresponsibility of the Company.\"\n\n         3. Defined Terms used herein and not otherwise defined in this\nAmendment shall have the same meaning as when used under the Employment\nAgreement.\n\n         4. Except as amended and modified hereby, the terms of the Employment\nAgreement shall remain in full force and effect.\n\n\n                  IN WITNESS WHEREOF, the parties hereto have entered into the\nFirst Amendment to Employment Agreement as of the day and year first written\nabove.\n\n                         EXECUTIVE\n\n\n\n                         \/s\/ Charles C. Conaway\n                         ---------------------------------------------\n                         Charles C. Conaway\n\n\n\n                         KMART CORPORATION\n\n\n\n                         \/s\/ Robert D. Kennedy\n                         ---------------------------------------------\n                         By: Robert D. Kennedy\n                         Title: Chairman, Compensation and Incentives Committee\n\n\n\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7994],"corporate_contracts_industries":[9495],"corporate_contracts_types":[9539,9544],"class_list":["post-39300","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-kmart-corp","corporate_contracts_industries-retail__department","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/39300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=39300"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=39300"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=39300"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=39300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}