0000030908-95-000004.txt : 19950914
0000030908-95-000004.hdr.sgml : 19950914
ACCESSION NUMBER: 0000030908-95-000004
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 5
CONFORMED PERIOD OF REPORT: 19950729
FILED AS OF DATE: 19950912
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: EAGLE FOOD CENTERS INC
CENTRAL INDEX KEY: 0000030908
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411]
IRS NUMBER: 363548019
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0131
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-17871
FILM NUMBER: 95572861
BUSINESS ADDRESS:
STREET 1: RTE 67 KNOXVILLE RD
CITY: MILAN
STATE: IL
ZIP: 61264
BUSINESS PHONE: 3097877730
MAIL ADDRESS:
STREET 1: PO BOX 6700
CITY: ROCK ISLAND
STATE: IL
ZIP: 61204-6700
10-Q
1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File Number 0-17871
EAGLE FOOD CENT ERS, INC.
(Exact name of registrant as specified in the charter)
Delaware 36-3548019
(State or other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or organization)
Rt. 67 & Knoxville Rd., Milan, Illinois 61264
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (309) 787-7730
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
The number of shares of the Registrant's Common Stock, par value one
cent ($0.01) per share, outstanding at August 30, 1995 was
11,176,994.
Page 1 of 10 pages
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
EAGLE FOOD CENTERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(unaudited)
Quarter Ended Two Quarters End
July 29, 1995 July 30, 1994 July 29, 1995 July 30, 1994
Sales. . . . . . . . . . . . . . . . . $ 249,045 $ 252,222 $ 494,575 $ 502,319
Cost of Goods Sold . . . . . . . . . . 186,945 189,917 371,050 377,492
Gross Margin. . . . . . . . . . . . 62,100 62,305 123,525 124,827
Operating Expenses:
Selling, General & Administrative . 56,946 56,375 112,885 109,962
Voluntary Severance Program . . . . 0 6,917 0 6,917
Depreciation and Amortization . . . 6,125 5,847 12,365 11,671
Operating Income (Loss). . . . . (971) (6,834) (1,725) (3,723)
Interest Expense . . . . . . . . . . . 3,940 3,572 7,906 7,066
Earnings (Loss) Before Income Tax
(Benefit) and Extraordinary Charge. (4,911) (10,406) (9,631) (10,789)
Income Tax (Benefit) . . . . . . . . . (245) (4,078) (482) (4,100)
Earnings (Loss) Before Extraordinary
Charge. . . . . . . . . . . . . . . (4,666) (6,328) (9,149) (6,689)
Extraordinary Charge . . . . . . . . . 625 0 625 0
Net Earnings (Loss). . . . . . . . . . $ (5,291) $ (6,328) $ (9,774) $ (6,689)
Earnings (Loss) per Share:
Before Extraordinary Charge . . . . $ (0.42) $ (0.58) $ (0.82) $ (0.61)
Extraordinary Charge. . . . . . . . (0.06) 0 (0.06) 0
Net Earnings (Loss) . . . . . . . . $ (0.48) $ (0.58) $ (0.88) $ (0.61)
Weighted Average Common Shares
Outstanding 11,147,000 11,051,994 11,099,000 11,051,994
See notes to consolidated financial statements.
EAGLE FOOD CENTERS, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
ASSETS
July 29, January 28,
1995 1995
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents. . . . $ 3,064 $ 4,096
Restricted assets - marketable
securities, at market . . . . 7,049 5,239
Accounts receivable. . . . . . . 10,412 11,035
Income taxes receivable. . . . . 2,042 7,213
Inventories. . . . . . . . . . . 75,980 83,939
Prepaid expenses and other . . . 3,718 2,663
Total current assets. . . . . 102,265 114,185
Property and equipment (net) . . . 155,238 167,749
Other assets:
Deferred debt issuance costs . . 2,643 2,960
Excess of cost over fair
value of net assets acquired. . 2,609 2,650
Property held for sale/leaseback 20,963 20,710
Other. . . . . . . . . . . . . . 3,500 3,230
Total other assets. . . . . . 29,715 29,550
Total assets. . . . . . . . . $287,218 $311,484
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . $ 40,784 $ 44,738
Payroll and employee benefits. . 14,897 14,678
Accrued liabilities. . . . . . . 13,337 11,982
Closed facilities liability. . . 19,207 8,203
Accrued taxes. . . . . . . . . . 8,040 8,117
Bank revolving credit loan . . . 15,908 22,000
Current portion of
long-term debt . . . . . . . . 3,760 3,667
Total current liabilities . . 115,933 113,385
Long-term debt:
Senior Notes . . . . . . . . . . 100,000 100,000
Capital lease obligations. . . . 16,310 18,216
Total long-term debt. . . . . 116,310 118,216
Other liabilities:
Reserve for closed facilities. . 12,364 27,082
Other deferred liabilities . . . 9,578 10,316
Total other liabilities . . . 21,942 37,398
Shareholders' equity:
Preferred stock, $.01 par value,
100,000 shares authorized . . -- --
Common stock, $.01 par value,
18,000,000 shares authorized,
11,500,000 shares issued . . . 115 115
Capital in excess of par value . 53,541 53,541
Common stock in treasury,
at cost, 448,006 shares. . . . (2,850) (2,850)
Other. . . . . . . . . . . . . . (65) (387)
Accumulated (deficit) . . . . . (17,708) (7,934)
Total shareholders' equity. . 33,033 42,485
Total liabilities and
shareholders' equity. . . . $287,218 $311,484
See notes to consolidated financial statements.
EAGLE FOOD CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Two Quarters Ended
July 29, 1995 July 30, 1994
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . $ (9,774) $ (6,689)
Adjustments to reconcile net earnings (loss) to
cash provided from operating activities:
Extraordinary charge before income tax effect . 658 0
Depreciation and amortization . . . . . . . . . 12,365 11,671
LIFO charge . . . . . . . . . . . . . . . . . . 500 250
Deferred charges and credits. . . . . . . . . . 1,665 2,774
(Gain) loss on disposal of assets . . . . . . . 506 174
Changes in assets and liabilities:
Receivables and other assets. . . . . . . . . . 4,124 (2,386)
Inventories . . . . . . . . . . . . . . . . . . 7,459 4,336
Accounts payable. . . . . . . . . . . . . . . . (3,954) (4,557)
Accrued and other liabilities . . . . . . . . . 758 1,724
Reserve for closed facilities . . . . . . . . . (4,690) (3,793)
Net cash provided by operating activities . . 9,617 3,504
Cash flows from investing activities:
Additions to property and equipment . . . . . . (1,198) (8,378)
Additions to property held for sale/leaseback . (253) (864)
Purchases of marketable securities. . . . . . . (1,487) 0
Cash proceeds from dispositions of
property and equipment . . . . . . . . . . . 879 648
Net cash used in investing activities . . (2,059) (8,594)
Cash flows from financing activities:
Retirement of debt. . . . . . . . . . . . . . . 0 (30)
Net revolving credit borrowing (repayment). . . (6,092) 5,000
Principal payments of capital
lease obligations . . . . . . . . . . . . . . (1,814) (1,347)
Deferred financing costs. . . . . . . . . . . . (684) (175)
Net cash provided (used) by financing
activities . . . . . . . . . . . . . . . (8,590) 3,448
(Decrease) in cash and cash equivalents . . . . (1,032) (1,642)
Cash and cash equivalents at
beginning of period . . . . . . . . . . . . . 4,096 8,056
Cash and cash equivalents at end of period. . . $ 3,064 $ 6,414
Supplemental disclosures of cash flow information:
Cash paid for interest . . . . . . . . . . . $ 8,611 $ 6,713
Cash paid for income taxes . . . . . . . . . $ (5,690) $ (1,360)
Noncash investing and financing activities
Capital lease additions. . . . . . . . . . . $ 0 $ 2,076
Unrealized (loss) gain on securities . . . . $ 323 $ 0
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Accounting Policies
The accompanying unaudited financial statements have been prepared
in accordance with the summary of significant accounting policies
set forth in the notes to the audited financial statements
contained in the Company's Form 10-K filed with the Securities and
Exchange Commission on April 28, 1995.
In the opinion of management, the accompanying unaudited financial
statements reflect all adjustments necessary for a fair statement
of the results of operations and financial position for the interim
periods presented. Operating results for the 26 weeks ended July
29, 1995 are not necessarily indicative of the results that may be
expected for the fiscal year ending February 3, 1996.
Legal Proceedings
The legal actions between the Company and National NLP, Inc. have
been terminated. The court granted judgement in favor of Eagle on all
issues. The countersuit filed by NLP claiming there was a contract
was dismissed.
Extraordinary Charge
The Company completed an agreement with Congress Financial
Corporation (Central) for a $40.0 million Revolving Credit Facility
(subsequently expanded to $50.0 million). The early termination of
the prior Revolving Credit Agreement resulted in an extraordinary
charge of $625,000 (net of tax). This charge represents the
unamortized deferred charges related to the replaced Revolving
Credit Agreement.
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Sales for the Company's second fiscal quarter ended July 29, 1995
were $249.0 million, a decrease of $3.2 million or 1.3% from the
second quarter of 1994. Same store sales for the quarter increased
1.9%. For the two quarters ended July 29, 1995 sales were $494.6
million, a decrease of $7.7 million or 1.5% from the first two
quarters of 1994. Same store sales for the two quarters increased
0.6% compared to 1994. The Company is operating seven fewer stores
as of the end of the second quarter of 1995 compared to the end of
the second quarter of 1994.
Gross margin was 24.94% of sales for the quarter ended July 29,
1995 compared to 24.70% of sales in the comparable quarter of 1994.
Gross margin improvement resulted from more effective promotions,
better buying practices and distribution expense reductions. For
the two quarters ended July 29, 1995 gross margin was 24.98% of
sales compared to 24.85% of sales for the same time period in 1994.
Selling, general and administrative expenses were 22.87% of sales
for the quarter ended July 29, 1995 compared to 22.35% of sales in
the comparable quarter of 1994. For the two quarters ended July
29, 1995, selling, general and administrative expenses were 22.83%
of sales versus 21.89% of sales for the same period in 1994. The
year-to-year increase primarily reflects increases in store
employee costs due to union wage and benefit increases, increases
in supply costs and $1.2 million of non-recurring charges related
to a lease termination and severance payments.
Depreciation and amortization expenses increased to $6.1 million or
2.46% of sales for the quarter ended July 29, 1995 compared to $5.8
million or 2.32% of sales in the same quarter in 1994. For the two
quarters ended July 29, 1995, depreciation and amortization
expenses increased to $12.4 million or 2.5% of sales compared to
$11.7 million or 2.32% of sales for the same period in 1994. The
higher depreciation expenses are primarily related to two new
stores that were opened since the second quarter of 1994 and a new
capital lease for store computer equipment.
Net interest expense in the quarter ended July 29, 1995 increased
to $3.9 million or 1.58% of sales compared to $3.6 million or 1.42%
of sales in the comparable quarter of 1994. The increase in
interest expense was due to an increase in short term borrowings
under the Revolving Credit Agreement. Net interest expense for the
two quarters ended July 29, 1995 was $7.9 million or 1.60% of sales
compared to $7.1 million or 1.41% of sales in the comparable 1994
time period. There were $15.9 million of borrowings outstanding
against the Revolving Credit Agreement as of July 29, 1995.
The net loss for the second quarter ended July 29, 1995 was $5.3
million or $0.48 per share compared to a net loss of $6.3 million
or $0.58 per share for the comparable 1994 period. The 1995 net
loss includes an extraordinary charge of $625,000 related to the
refinancing of the revolving credit facility and $1.2 million of
non-recurring charges related to a lease termination and severance
payments. The 1994 net loss includes a $4.3 million after tax
charge for a voluntary severance program. Excluding the
extraordinary and non-recurring charges in 1995 and the severance
program costs in 1994, the earnings before interest, taxes,
depreciation, and amortization (EBITDA) for the second quarter were
$6.3 million in 1995 compared to $5.9 million in the comparable
quarter of 1994.
The net loss for the two quarters ended July 29, 1995 was $9.8
million or $0.88 per share compared to a loss of $6.7 million or
$0.61 per share in the comparable 1994 period. Excluding the
extraordinary and non-recurring charges and the voluntary severance
expense in the respective years, results of operations for the
first two quarters would have been a loss of $0.72 per share in
1995 compared to a loss of $0.22 per share in 1994.
Liquidity and Capital Resources
Cash provided by operating activities totaled $9.6 million for the
two quarters ended July 29, 1995 compared to cash provided of $3.5
million in the comparable two quarters of 1994. Reductions in
inventory and accounts receivable and other assets provided $7.5
million and $4.1 million, respectively, in cash for the 1995
period.
Capital expenditures for the two quarters ended July 29, 1995
totaled $1.2 million compared to $8.4 million in the first two
quarters of 1994. No stores were opened in the second quarter and
two stores were closed. Costs associated with the closings are
covered by the store closing reserve. The Company expects to spend
approximately $6.0 million for capital expenditures in fiscal 1995,
unless business conditions change.
Working capital at July 29, 1995 was negative $13.7 million and the
current ratio was .88 to 1, compared to $32.6 million and 1.30 to
1 at July 30, 1994 and $800,000 or 1.01 to 1 at January 28, 1995.
There were $15.9 million in borrowings outstanding against the
Revolving Credit Agreement as of July 29, 1995. The Company has
reclassified $11.0 million to current liabilities in connection
with its intentions to buy out of the Westville lease obligation
within the next twelve months. Before this reclassification,
working capital at July 29, 1995 was negative $2.7 million and the
current ratio would have been approxiametly 1 to 1.
Subsequent Events
The Company expects to complete a buyout of its lease obligation on
the closed warehouse location in Westville, Indiana. In
conjunction with this transaction, the Company has incurred $11.2
million of letters of credit to secure the Company's proposed
settlement ot the lease obligation. The Company expects that all
costs associated with the Westville lease termination will be
covered by the reserve previously established.
The Company has expanded its revolving credit facility from $40.0
to $50.0 million under the same terms and conditions to accommodate
the issuance of these letters of credit. The credit facility requires
that availibility is determined using a borrowing base calculation
on eligible inventory.
The Company has sold and leased back one store in a transaction
which closed since the end of the second quarter realizing proceeds
of $2.4 million.
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
The legal actions between the Company and National NLP, Inc. have
been terminated. The court granted judgement in favor of Eagle on all
issues. The countersuit filed by NLP claiming there was a contract
was dismissed.
Item 4: Submission of Matters to a Vote of Security Holders
At the Company's 1995 Annual Meeting of Shareholders on June 21,
1995, the shareholders elected the following persons to its Board
of Directors for a one year term:
Martin J. Rabinowitz Peter B. Foreman
Robert J. Kelly Michael J. Knilans
Pasquale V. Petitti Alain M. Oberrotman
Herbert T. Dotterer Marc C. Particelli
Steven M. Friedman William J. Snyder
In the matter of the election of directors, 9,847,843 votes were
cast in favor of each director, no votes were cast against, and
holders of 616,411 shares abstained or did not vote.
In the matter of ratification of the 1995 Stock Incentive Plan,
7,860,283 votes were cast in favor, 950,473 votes against, and
1,653,498 shares abstained or did not vote.
In the matter of ratification of the appointment of Deloitte &
Touche, LLP as independent auditors, 10,417,954 votes were cast in
favor of approval, 34,197 votes were cast against, and holders of
12,103 shares abstained or did not vote.
All votes were in the majority, and thus the directors were
declared elected, the 1995 Stock Incentive Plan declared ratified,
and the appointment of auditor proposal declared approved.
Item 6: Exhibits and Reports on Form 8 K
A: Exhibits
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized:
EAGLE FOOD CENTERS, INC.
Dated: September 8, 1995 /s/ Robert J. Kelly
Robert J. Kelly
President and Chief Executive Officer
Dated: September 8, 1995 /s/ Herbert T. Dotterer
Herbert T. Dotterer
Sr. Vice President - Finance and
Chief Financial Officer
Exhibit
Number Description
3.1-- Certificate of Incorporation of the Company (filed as
Exhibit 3.1 to the Registration Statement on Form S-1
No. 33-29404 and incorporated herein by reference).
3.2-- By-laws of the Company (filed as Exhibit 3.2 to the
Registration Statement on Form S-1 No. 33-29404 and
incorporated herein by reference).
4.1-- Form of Note (filed as Exhibit 4.3 to the Registration
Statement on Form S-1 No. 33-59454 and incorporated
herein by reference).
4.2-- Form of Indenture, dated as of April 26, 1993, between
the Company and First Trust National Association, as
trustee (filed as Exhibit 4.4 to the Registration
Statement on Form S-1 No. 33-59454 and incorporated
herein by reference).
10.1-- Transaction Agreement, dated as of October 9, 1987,
between EFC and Lucky Stores, Inc. (filed as
Exhibit 10.8 to the Registration Statement on Form S-1
No. 33-20450 and incorporated herein by reference).
10.2-- Assignment and Assumption Agreement, dated November 10,
1987, among EFC, Lucky Stores, Inc. and Pasquale
V. Petitti regarding the Deferred Compensation
Agreement (filed as Exhibit 10.11 of the Registration
Statement on Form S-1 No. 33-20450 and incorporated
herein by reference).
10.3-- Trademark License Agreement, dated November 10, 1987,
between Lucky Stores, Inc. and EFC (filed as
Exhibit 10.19 to the Registration Statement on Form S-1
No. 33-20450 and incorporated herein by reference).
10.4-- Letter Agreement, dated June 10, 1988, between the
Company's predecessor and Lucky Stores, Inc. amending
the Trademark License Agreement (filed as Exhibit 10.20
to the Company's Annual Report on Form 10-K for the
year ended January 28, 1989 (the "1988 10-K") and
incorporated herein by reference).
10.5-- Management Information Services Agreement, dated
November 10, 1987, between Lucky Stores, Inc. and the
Company's predecessor (filed as Exhibit 10.20 to the
Registration Statement on Form S-1 No. 33-20450 and
incorporated herein by reference).
10.6-- Letter Agreement, dated June 10, 1988, between the
Company's predecessor and Lucky Stores, Inc. Stores,
Inc. amending the Management Information Services
Agreement (filed as Exhibit 10.22 to the Company's
Annual Report on Form 10-K for the year ended January
28, 1989 and incorporated herein by reference).
10.7-- Non-Competition Agreement, dated November 10, 1987,
between the Company's predecessor and Lucky Stores,
Inc. (filed as Exhibit 10.21 to the Registration
Statement on Form S-1 No. 33-20450 and incorporated
herein by reference).
10.8-- Credit Agreement, dated as of April 26, 1993, among the
Company, as borrower, the lenders party thereto and
Caisse Nationale de Credit Agricole, Chicago Branch,
and the First National Bank of Chicago as co-agents; as
amended by First Amendment to Credit Agreement dated as
of October 15, 1993, a Second Amendment to Credit
Agreement and Waiver dated as of January 28, 1994, and
a Third Amendment to Credit Agreement dated April 29,
1994.
10.9-- Letter Agreement, dated April 28, 1988, among American
Stores Company, the Company's predecessor and Odyssey
Partners (filed as Exhibit 10.29 to the Registration
Statement on Form S-1 No. 33-20450 and incorporated
herein by reference).
10.10-- Eagle Food Centers, Inc. Stock Incentive Plan, adopted
in June 1990 (filed as Exhibit 19 to the Company's
Annual Report on Form 10-K for the year ended
February 1, 1992 and incorporated herein by reference).
10.11-- Agreement, dated as of February 8, 1993, by and between
the Company and Oakridge Properties, Ltd. (filed as
Exhibit 10.17 to the Registration Statement on Form S-1
No. 33-59454 and incorporated herein by reference).
10.12-- Form of Irrevocable Trust Agreement, to be dated as of
April 26, 1993, among the Company, Eagle Capital
Corporation II and Shawmut Bank Connecticut, National
Association, as trustee (filed as Exhibit 10.18 to the
Registration Statement on Form S-1 No. 33-59454 and
incorporated herein by reference).
10.13-- Performance Equity Plan of the Company as amended March
12, 1992. (Filed as Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the year ended January
30, 1993 and incorporated herein by reference.)
10.14-- Fourth Amendment to the Credit Agreement and waiver
dated September 7, 1994. Fifth Amendment to the Credit
Agreement and waiver dated December 9, 1994. Sixth
Amendment to the Credit Agreement dated January 27,
1995.
10.15-- Seventh Amendment to the Credit Agreement and waiver
dated April 24, 1995.
10.16-- Loan and Security Agreement, dated as of May 22, 1995,
among the Company, as borrower, and the lender party
thereto, Congress Financial Corporation (Central).
10.17*-- First Amendment to the Loan and Security Agreement
dated August 21, 1995.
10.18*-- 1995 Stock Incentive Plan as approved on June 21, 1995.
10.19*-- Employment agreement dated May 10, 1995 between the
Company and Robert J. Kelly, its President and C.E.O.
12.1-- Computation of Ratio of Earnings to Fixed Charges
(filed as Exhibit 12.1 to the Registration Statement on
Form S-1 No. 33-59454 and incorporated herein by
reference).
22.-- Subsidiaries of the Registrant.
27*-- Financial Data Schedule (for SEC use only).
*Filed herewith.
EX-10.17
2
Exhibit 10.17
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
This AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT ("Amend-
ment") dated as of August , 1995 by and between Congress
Financial Corporation (Central) ("Lender") and Eagle Food Centers,
Inc. ("Borrower").
R E C I T A L S:
WHEREAS, Lender and Borrower are parties to that certain
Loan and Security Agreement dated as of May 25, 1995; as the same
has been amended on or prior to the date hereof, (the "Loan
Agreement"; capitalized terms used and not defined herein shall
have the meanings assigned to them in the Loan Agreement as
amended hereby);
WHEREAS, the Borrower has requested that Lender consent
to an amendment to the Loan Agreement as more fully described
herein; and
WHEREAS, Lender has granted its consent to such
amendment upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Amendment. Immediately upon the satisfaction of each
of the conditions precedent set forth in Section 2 of this
Amendment, Section 1.35 of the Loan Agreement is amended by
replacing the dollar amount which appears therein with the dollar
amount "$50,000,000."
Section 2. Conditions to Effectiveness of Amendment. The
effectiveness of this Amendment is subject to the satisfaction of
the following conditions precedent:
2.1 Documents.
(a) Amendment. The Lender shall have
received a duly executed counterpart of this
Amendment from Borrower.
(b) Participation Agreement Amendments. Each
Person which has acquired a participation interest in
any or all of Lender's rights under the Loan Agreement
shall have executed and delivered to Lender an
amendment, in form and substance satisfactory to Lender,
to the applicable participation agreement.
2.2 Certified Resolutions, etc. Lender shall have
received a certificate, in form and substance satisfactory to the
Lender, of the secretary or assistant secretary of the Borrower
dated the effective date of this Amendment (the "Effective Date"),
certifying (i) the resolutions of its Board of Directors approving
and authorizing the execution, delivery and performance by it of
this Amendment and the continued effectiveness thereof, (ii) that
there have been no changes in its certificate of incorporation or
by-laws since May 25, 1995, or if there have been changes in its
certificate of incorporation or by-laws since May 25, 1995,
certifying its certificate of incorporation and/or by-laws, as the
case may be, as in effect on the Effective Date and (iii) specimen
signatures of its officers authorized to sign this Amendment.
2.3 Consents, Licenses, Approval, etc. All consents,
licenses and approvals, if any, required in connection with the
execution, delivery and performance by the Borrower of this
Amendment or the Loan Agreement, as amended by this Amendment, or
the validity or enforceability thereof, or in connection with any
of the transactions effected pursuant to this Amendment or the
Loan Agreement, as amended by this Amendment, shall be in full
force and effect.
2.4 No Injunction. No law or regulation shall have
been adopted, no order, judgment or decree of any governmental
authority shall have been issued, and no litigation shall be
pending or threatened, which in the reasonable judgment of Lender
would enjoin, prohibit or restrain, or impose or result in the
imposition of any material adverse condition upon, the execution,
delivery or performance by the Borrower of this Amendment or the
Loan Agreement, as amended by this Amendment.
2.5 Opinion. Lender shall have received a favorable
legal opinion, dated the Effective Date, of counsel to the
Borrower in form and substance satisfactory to Lender.
Section 3. Representations and Warranties. In order to induce
Lender to enter into this Amendment, Borrower represents and
warrants to Lender, upon the effectiveness of this Amendment,
which representations and warranties shall survive the execution
and delivery of this Amendment, that:
3.1 No Default; etc. No Event of Default and no event
or condition which, merely with notice or the passage of time or
both, would constitute an Event of Default, has occurred and is
continuing after giving effect to this Amendment or would result
from the execution or delivery of this Amendment or the
consummation of the transactions contemplated hereby.
3.2 Corporate Power and Authority: Authorization.
Borrower has the corporate power and authority to execute and
deliver this Amendment and to carry out the terms and provisions
of the Loan Agreement, as amended by this Amendment, and the
execution and delivery by Borrower of this Amendment and the Loan
Agreement, as amended by this Amendment, and the performance by
the Borrower of its obligations hereunder and thereunder have been
duly authorized by all requisite corporate action by Borrower.
3.3 Execution and Delivery. Borrower has duly executed
and delivered this Amendment.
3.4 Enforceability. This Amendment and the Loan
Agreement, as amended by this Amendment, constitute the legal,
valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' right generally, and by general
principles of equity.
3.5 Representations and Warranties. All of the
representations and warranties contained in the Loan Agreement and
in the other Financing Agreements (other than those which speak
expressly only as of a different date) are true and correct as of
the date hereof after giving effect to this Amendment and the
transactions contemplated hereby.
Section 4. Payment of Amendment Fees and Expenses. Upon the
effectiveness of this Amendment, Borrower shall pay Lender a fee
of $100,000 in compensation for the increase in the commitment,
which fee shall be fully earned at such time. Lender shall charge
the amount thereof together with any costs and expenses incurred
in connection with this Amendment directly to the loan account(s)
of the Borrower as contemplated by Sections 6.4 and 9.17 of the
Loan Agreement.
Section 5. Miscellaneous.
5.1 Effect; Ratification. The amendment set forth
herein is effective solely for the purposes set forth herein and
shall be limited precisely as written, and shall not be deemed to
(i) be a consent to any amendment, waiver or modification of any
other term or condition of the Loan Agreement or of any other
Financing Agreement or (ii) prejudice any right or rights that
Lender may now have or may have in the future under or in
connection with the Loan Agreement or any other Financing
Agreement. Each reference in the Loan Agreement to "this
Agreement", "herein", "hereof" and words of like import and each
reference in the other Financing Agreements to the "Loan
Agreement" shall mean the Loan Agreement as amended hereby. This
Amendment shall be construed in connection with and as part of the
Loan Agreement and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Loan
Agreement and each other Financing Agreement, except as herein
amended or waived, are hereby ratified and confirmed and shall
remain in full force and effect.
5.2 Counterparts. This Amendment may be executed in
any number of counterparts, each such counterpart constituting an
original but all together one and the same instrument.
5.3 GOVERNING LAW. This Amendment shall be governed
by, and construed and interpreted in accordance with, the internal
laws of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment as of the date first above written.
CONGRESS FINANCIAL CORPORATION (CENTRAL)
By
Title:
EAGLE FOOD CENTERS, INC.
By
Title:
EX-10.18
3
Exhibit 10.18
EAGLE FOOD CENTERS, INC.
1995 STOCK INCENTIVE PLAN
Effective Date: June 21, 1995
1. Purpose. The purpose of the Plan is to provide
additional incentive to those officers, employees,
advisors, consultants and nonemployee members of the Board
of Directors of the Company and its Subsidiaries whose
substantial contributions are essential to the continued
growth and success of the Company's business in order to
strengthen their commitment to the Company and its
Subsidiaries, to motivate such officers and employees to
faithfully and diligently perform their assigned
responsibilities and to attract and retain competent and
dedicated individuals whose efforts will result in the
long-term growth and profitability of the Company. An
additional purpose of the Plan is to build a proprietary
interest among the Company's Non-Employee Directors and
thereby secure for the Company s stockholders the benefits
associated with common stock ownership by those who will
oversee the Company's future growth and success. To
accomplish such purposes, the Plan provides that the
Company may grant Incentive Stock Options, Nonqualified
Stock Options, Non-Employee Director Options, Restricted
Stock, Stock Bonuses or Stock Appreciation Rights. The
provisions of the Plan are intended to satisfy the
requirements of Section 16(b) of the Exchange Act.
2. Definitions. For purposes of this Plan:
(a) "Advisor" or "Consultant" means an advisor or
consultant who is an independent contractor with respect
to the Company, and who provides bona fide services
(other than in connection with the offer or sale of
securities in a capital raising transaction) to the
executive officers or Board of Directors with regarding
to major functions, positions or operations of the
Company's business; who is not an employee, officer,
director or holder of more than 10% of the outstanding
voting securities of the Company; and whose services the
Committee determines is of vital importance to the
overall success of the Company.
(b) Agreement means the written agreement
evidencing the grant of an Award and setting forth the
terms and conditions thereof.
(c) Award means, individually or collectively, a
grant under this Plan of Options, Stock Appreciation
Rights, Restricted Stock or Stock Bonuses.
(d) Board means the Board of Directors of the
Company.
(e) Change in Capitalization means any increase,
reduction, or change or exchange of Shares for a
different number or kind of shares or other securities of
the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization,
issuance of warrants or rights, stock dividend, stock
split or reverse stock split, combination or exchange of
Shares, repurchase of Shares, change in corporate
structure or otherwise.
(f) Change in Control shall be deemed to have
occurred if the conditions set forth in any one or more
of the following paragraphs shall have been satisfied:
(i) any person (as defined in Sections 13(d) and
14(d) of the Exchange Act) (other than Odyssey Partners,
L.P. or other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company,
or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same
proportions as their ownership of Shares of the Company),
is or becomes the Beneficial Owners, directly or
indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company s
then outstanding securities; or
(ii) the stockholders of the Company approve (a) a
plan of complete liquidation of the Company; or (b) an
agreement for the sale or disposition of all or
substantially all the Company s assets; or (c) a merger
or consolidation of the Company with any other
corporation, other than a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity), at least 50% of the combined voting securities
of the Company (or such surviving entity) outstanding
immediately after such merger or consolidation; or
(iii) the Board of Directors agrees by a two-third
(2/3) vote, that a Change in Control of the Company has
occurred, or is about to occur and, within six (6)
months, actually does occur.
However, in no event shall a Change in Control be
deemed to have occurred, with respect to a Participant,
if that Participant is a material equity participant of
a purchasing group which consummates the Change in
Control transaction. A Participant shall be deemed a
material equity participant for purposes of the
preceding sentence if the Participant is an equity
participant or has agreed to become an equity participant
in the purchasing company or group (except for (i)
passive ownership of less than 3% of the Shares of the
purchasing company; or (ii) ownership of equity
participation in the purchasing company or group which is
otherwise not deemed to be significant, as determined
prior to the Change in Control by a majority of the
disinterested Directors).
(g) Code means the Internal Revenue Code of 1986,
as amended.
(h) Committee means a committee appointed by the
Board to administer the Plan and to perform the functions
set forth herein. Unless otherwise determined by the
Board, the Committee shall be the Compensation Committee
of the Board.
(i) Company means Eagle Food Centers, Inc., an Iowa
corporation, or any successor thereto.
(j) Disability means the inability, due to illness
or injury, to engage in any gainful occupation for which
the individual is suited by education, training or
experience, which condition continues for at least six
(6) months.
(k) Eligible Employee means any officer, employee,
advisor or consultant, of the Company or a Subsidiary or
Parent of the Company designated by the Committee as
eligible to receive Awards subject to the conditions set
forth herein.
(l) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(m) "Executive Officer" shall mean an officer of the
Company named by the Board of Directors as an executive
officer for purposes of required reporting under Section
16 of the Exchange Act.
(n) Fair Market Value means the fair market value
of the Shares as determined by the Committee in its sole
discretion; provided, however, that (A) if the Shares are
the admitted to trading on a national securities
exchange, the Fair Market Value on any date shall be the
last sale price reported for the Shares on such exchange
on such date or on the last date preceding such date on
which a sale was reported, (B) if the Shares are admitted
to quotation on the National Association of Securities
Dealers Automated Quotation System ( NASDAQ ) or other
comparable quotation system and have been designated as
a National Market System ( NMS ) security, the Fair
Market Value on any date shall be the last sale price
reported for the Shares on such system on such date or on
the last day preceding such date on which a sale was
reported or (C) if the Shares are admitted to quotation
on NASDAQ and have not been designated an NMS security,
or the Shares are traded in the non-NASDAQ over the
counter market, the Fair Market Value on any date shall
be the average of the highest bid and lowest asked prices
of the shares on such system or market on such date.
(o) Incentive Stock Option means an Option within
the meaning of Section 422 of the Code.
(p) Non-Employee Director means a member of the
Board who is not an employee of the Company or a
Subsidiary.
(q) Non-Employee Director Option means an Option
granted under Section 11 hereof.
(r) Nonqualified Stock Option means an Option,
including a Non-Employee Director Option, that is not an
Incentive Stock Option.
(s) Option means an Incentive Stock Option, a
Nonqualified Stock Option, or either or both of them, as
the context requires.
(t) Participant means a person to whom an Award
has been granted under the Plan.
(u) Parent means any corporation in an unbroken
chain of corporations ending with the Company, if each of
the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power
of all classes of stock of one of the other corporations
in such chain.
(v) "Period of Restriction" means the period during
which the transfer of Shares of Restricted Stock is
restricted in some way (based on the passage of time, the
achievement of performance goals, or upon the occurrence
of other events as determined by the Committee, at its
discretion), and is subject to a substantial risk of
forfeiture, as provided in Section 10 below.
(w) Plan means the Eagle Food Centers, Inc. 1995
Stock Incentive Plan, as amended from time to time.
(x) "Restricted Stock" means a Stock Award granted to
a Participant pursuant to Section 10 below which the
Committee has determined should be subject to one or more
restrictions on transfer for a specified Period of
Restriction.
(y) Securities Act means the Securities Act of
1933, as amended.
(z) Shares means shares of the common stock, $.01
par value per share, of the Company (including any new,
additional or different stock or securities resulting
from a Change in Capitalization), as the case may be.
(aa) Stock Appreciation Right means a right to
receive all or some portion of the increase in the value
of Shares as provided in Section 7 hereof.
(bb) "Stock Bonus" shall mean a grant of Shares
to an Employee, Advisor or Consultant pursuant to Section
10 below.
(cc) Subsidiary means any corporation in an
unbroken chain of corporations, beginning with the
Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
(dd) Ten-Percent Stockholder means an Eligible
Employee, who, at the time an Incentive Stock Option is
to be granted to such Eligible Employee, owns (within the
meaning of Section 422(b)(6) of the Code) stock
possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the
Company, a Parent or a Subsidiary within the meaning of
Sections 424(e) and 424(f), respectively, of the Code.
3. Administration.
(a) The Plan shall be administered by the Committee,
which Committee shall at all times satisfy the provisions
of Rule 16b-3 under the Exchange Act. The Committee shall
hold meetings at such times as may be necessary for the
proper administration of the Plan. The Committee shall
keep minutes of its meetings. A majority of the Committee
shall constitute a quorum and a majority of a quorum may
authorize any action. Any decision reduced to writing
and signed by a majority of the members of the Committee
shall be fully effective as if it had been made at a
meeting duly held. No member of the Committee shall be
personally liable for any action, determination or
interpretation made in good faith with respect to the
Plan, Options, or Stock Appreciation Rights, and all
members of the Committee shall be fully indemnified by
the Company with respect to any such action,
determination or interpretation. The Company shall pay
all expenses incurred in the administration of the Plan.
(b) Subject to the express terms and conditions set
forth herein, the Committee shall have the power from
time to time:
(i) to determine those Eligible Employees to whom
Awards shall be granted under the Plan and the number of
Shares subject to such Awards to be granted to each
Eligible Employee and to prescribe the terms and
conditions (which need not be identical) of each Award ,
including the purchase price per share of each Award ;
(ii)to construe and interpret the Plan, the Awards
granted hereunder and to establish, amend and revoke
rules and regulations for the administration of the Plan,
including, but not limited to, correcting any defect or
supplying any omission, or reconciling any inconsistency
in the Plan or in any Agreement, and (subject to the
provisions of Section 13 below) to amend the terms and
conditions of any outstanding Award to the extent such
terms and conditions are within the discretion of the
Committee as provided in the Plan, in the manner and to
the extent it shall deem necessary or advisable to make
the Plan fully effective, and all decisions and
determinations by the Committee in the exercise of this
power shall be final and binding upon the Company or a
Subsidiary or Parent, and the Participants, as the case
may be;
(iii) to determine the duration and purposes for
leaves of absence which may be granted to a Participant
without constituting a termination of employment or
service for purposes of the Plan; and
(iv) generally, to exercise such powers and to
perform such acts as are deemed necessary or advisable to
promote the best interests of the Company with respect to
the Plan.
4. Stock Subject to Plan.
(a) The maximum number of Shares that may be issued
or transferred pursuant to Awards granted under this Plan
is 2,000,000 (or the number and kind of shares of stock
or other securities that are substituted for those Shares
or to which those Shares are adjusted upon a Change in
Capitalization), and the Company shall reserve for the
purposes of the Plan, out of its authorized but unissued
Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be
determined by the Board.
(b) Whenever any outstanding Award or portion thereof
expires, is canceled or is otherwise terminated (other
than by exercise of the Award ), the Shares allocable to
the unexercised portion of such Award may again be the
subject of Awards hereunder, to the extent permitted by
Rule 16b-3 under the Exchange Act.
5. Eligibility. Subject to the provisions of the
Plan, the Committee shall have full and final authority
to select those Eligible Employees who will receive
Awards.
6. Options. The Committee may grant Options in
accordance with the Plan, the terms and conditions of
which shall be set forth in an Agreement. Each Option
and Agreement shall be subject to the following
conditions:
(a) Purchase Price. The purchase price or the manner
in which the purchase price is to be determined for
Shares under each Option shall be set forth in the
Agreement; provided, however, that the purchase price per
Share under each Nonqualified Stock Option shall not be
less than 50% of the Fair Market Value of a Share at the
time the Option is granted, 100% in the case of an
Incentive Stock Option generally and 110% in the case of
an Incentive Stock Option granted to a Ten-Percent
Stockholder.
(b) Duration. Options granted hereunder shall be for
such term as the Committee shall determine; provided,
however, that no Option shall be exercisable after the
expiration of ten (10) years from the date it is granted
(five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder). The Committee
may, subsequent to the granting of any Option, extend the
term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the
preceding sentence.
(c) Non-transferability. No Option granted hereunder
shall be transferable by the Participant to whom such
Option is granted otherwise than by will or the laws of
descent and distribution, and an Option may be exercised
during the lifetime of such Participant only by the
Participant or such Participant's guardian or legal
representative. The terms of such Option shall be
binding upon the beneficiaries, executors,
administrators, heirs and successors of the Participant.
(d) Vesting. Subject to subsection 6(e) below,
unless otherwise provided herein or set forth in the
Agreement, each Option shall become exercisable as to 33
1/3 percent of the Shares covered by the Option on the
first anniversary of the date the Option was granted and
as to an additional 33 1/3 percent of the Shares covered
by the Option on each of the following two (2)
anniversaries of such date of grant. To the extent not
exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the date the
Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any
time.
(e) Accelerated Vesting. Notwithstanding the
provisions of subsection 6(d) above, each Option granted
to a Participant shall become immediately exercisable in
full upon the occurrence of a Change in Control.
(f) Termination of Employment. In the event that a
Participant ceases to be employed by the Company or any
Subsidiary, any outstanding Options held by such
Participant shall, unless the Agreement evidencing such
Option provides otherwise, terminate as follows:
(i) If the Participant's termination of employment is
due to his death or Disability, the Option (to the
extent exercisable at the time of the Participant's
termination of employment) shall be exercisable for
a period of one (1) year following such termination
of employment, and shall thereafter terminate; and
(ii) If the Participant's termination of employment is
for any other reason (including a Participant's ceasing
to be employed by a subsidiary as a result of the sale of
such Subsidiary or an interest in such Subsidiary), the
Option (to the extent exercisable at the time of the
Participant's termination of employment) shall be
exercisable for a period of thirty (30) days following
such termination of employment, and shall thereafter
terminate.
Notwithstanding the foregoing, the Committee may provide,
either at the time an Option is granted or thereafter,
that the Option may be exercised after the periods
provided for in this Section 6(f), but in no event beyond
the term of the Option.
(g) Method of Exercise. The exercise of an Option
shall be made only by a written notice delivered to the
Secretary of the Company at the Company's principal
executive office, specifying the number of shares to be
purchased and accompanied by payment therefore and
otherwise in accordance with the Agreement pursuant to
which the Option was granted. The purchase price for any
Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise in cash, by
check, or, at the discretion of the Committee and upon
such terms and conditions as the Committee shall approve,
by transferring Shares to the Company or by such other
method as the Committee may determine. Any Shares
transferred to the Company as payment of the purchase
price under an Option shall be valued at their Fair
Market Value on the day preceding the date of exercise of
such Option. If requested by the Committee, the
Participant shall deliver the Agreement evidencing the
Option or the Agreement evidencing any Stock Appreciation
Right to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such
Agreement to the Participant. Not less than 100 Shares
may be purchased at any time upon the exercise of an
Option unless the number of Shares so purchased
constitutes the total number of Shares then purchasable
under the Option.
(h) Rights of Participants. No Participant shall be
deemed for any purpose to be the owner of any Shares
subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof,
(ii) the Company shall have issued and delivered the
Shares to the Participant, and (iii) the Participant's
name shall have been entered as a stockholder of record
on the books of the Company. Thereupon, the Participant
shall have full voting, dividend and other ownership
rights with respect to such Shares.
7. Stock Appreciation Rights. The Committee may, in
its discretion, grant a Stock Appreciation Right alone (a
Free Standing Stock Appreciation Right ) or in
conjunction with the grant of an Option (a Related Stock
Appreciation Right ), in either case, in accordance with
the Plan, and the terms and conditions of such Stock
Appreciation Right shall be set forth in an Agreement. A
Related Stock Appreciation Right shall cover the same
Shares covered by the related Option (or such lesser
number of Shares as the Committee may determine) and
shall, except as provided in this Section 7 be subject to
the same terms and conditions as the related Option.
(a) Grant of Stock Appreciation Rights.
(i) Time of Grant of Related Stock Appreciation
Right. A Related Stock Appreciation Right may be
granted either at the time of grant, or at any time
thereafter during the term of the Option; provided,
however, that Related Stock Appreciation Rights
related to Incentive Stock Options may only be
granted at the time of grant of the Option.
(ii) Purchase Price. The purchase price or the manner
in which the purchase price is to be determined for
Shares covered by each Free Standing Stock
Appreciation Right shall be set forth in the
Agreement; provided, however, that the purchase price
per Share under each Free Standing Stock Appreciation
Right shall not be less than 50% of the Fair Market
Value of a Share at the time the Free Standing Stock
Appreciation Right is granted. The purchase price or
the manner in which the purchase price is to be
determined for Shares covered by each Related Stock
Appreciation Right shall be set forth in the
Agreement for the related Option.
(iii) Payment. A Stock Appreciation Right shall
entitle the holder thereof, upon exercise of the
Stock Appreciation Right or any portion thereof, to
receive payment of an amount computed pursuant to
Section 7 (a) (vi) below.
(iv) Exercise. Free Standing Stock Appreciation
Rights generally will be exercisable at such time or
times, and may be subject to such other terms and
conditions, as shall be determined by the Committee,
in its discretion, and such terms and conditions
shall be set forth in the Agreement; provided,
however, that no Free Standing Stock Appreciation
Right shall be exercisable after the expiration of
ten (10) years from the date it is granted. No Free
Standing Stock Appreciation Right granted hereunder
shall be transferable by the Participant to whom such
right is granted otherwise than by will or the laws
of descent and distribution, and a Free Standing
Stock Appreciation Right may be exercised during the
lifetime of such Participant only by the Participant
or such Participant's guardian or legal
representative. The terms of such Free Standing
Stock Appreciation Right shall be binding upon the
beneficiaries, executors, administrators, heirs and
successors of the Participant.
Subject to subsection 7(a)(v) below, a Related Stock
Appreciation Right shall be exercisable at such time
or times and only to the extent that the related
Option is exercisable, and will not be transferable
except to the extent the related Option may be
transferable. A Related Stock Appreciation Right
granted in conjunction with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of
a Share on the date of exercise exceeds the purchase
price specified in the related Incentive Stock
Option.
(v) Accelerated Vesting. Notwithstanding the
provisions of subsection 7(a)(iv) above, each Stock
Appreciation Right granted to a Participant shall
become immediately exercisable in full upon the
occurrence of a Change in Control.
(vi) Amount Payable. Upon the exercise of a Stock
Appreciation Right, the Participant shall be entitled
to receive an amount determined by multiplying (A)
the excess of the Fair Market Value of a Share on the
date of exercise of such Stock Appreciation Right
over (i) with respect to a Related Stock Appreciation
Right, the per Share purchase price under the related
Option, and (ii) with respect to a Free Standing
Stock Appreciation Right, the per Share purchase
price set forth in the Agreement, by (B) the number
of Shares as to which such Stock Appreciation Right
is being exercised. Notwithstanding the foregoing,
the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right
by including such a limit at the time it is granted.
(vii) Treatment of Related Options and Related Stock
Appreciation Rights Upon Exercise. Upon the exercise
of a Related Stock Appreciation Right, the related
Option shall be canceled to the extent of the number
of Shares as to which the Related Stock Appreciation
Right is exercised and upon the exercise of an Option
granted in conjunction with a Related Stock
Appreciation Right, the Related Stock Appreciation
Right shall be canceled to the extent of the number
of Shares as to which the related Option is exercised
or surrendered.
(b) Method of Exercise. Stock Appreciation Rights shall
be exercised by a Participant only by a written notice
delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office,
specifying the number of Shares with respect to which the
Stock Appreciation Right is being exercised. If
requested by the Committee, the Participant shall deliver
the Agreement evidencing the Stock Appreciation Right
being exercised and with respect to a Related Stock
Appreciation Right, the Agreement evidencing any related
Option to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such
Agreement or Agreements to the Participant.
(c) Form of Payment. Payment of the amount determined
under Sections 7(a)(vi) above, may be made solely in
whole Shares in a number determined based upon their Fair
Market Value on the date of exercise of the Stock
Appreciation Right or, alternatively, at the sole
discretion of the Committee, solely in cash, or in a
combination of cash and Shares as the Committee deems
advisable. In the event that a Stock Appreciation Right
is exercised within the sixty-day period following a
Change in Control, any amount payable shall be solely in
cash. If the Committee decides to make full payment in
Shares, and the amount payable results in a fractional
Share, payment for the fractional Share will be made in
cash. Notwithstanding the foregoing, to the extent
required by Rule l6b-3 under the Exchange Act, no payment
in the form of cash may be made upon the exercise of a
Stock Appreciation Right pursuant to Section 7(a)(vi)
above, to an officer of the Company or a Subsidiary who
is subject to Section 16(b) of the Exchange Act, unless
the exercise of such Stock Appreciation Right is made
during the period beginning on the third business day and
ending on the twelfth business day following the date of
release for publication of the Company's quarterly or
annual statements of earnings.
8. Loans.
(a) The Company or any Parent or Subsidiary may make
loans to a Participant in connection with the exercise of
an Option, subject to the following terms and conditions
and such other terms and conditions not inconsistent with
the Plan including the rate of interest, if any, as the
Committee shall impose from time to time.
(b) No loan made under the Plan shall exceed the sum of
(i) the aggregate purchase price payable pursuant to the
Option with respect to which the loan is made, plus (ii)
the amount of the reasonably estimated income taxes
payable by the Participant with respect to the exercise
of the Option reduced by (iii) the aggregate par value of
the Shares being acquired pursuant to exercise of the
Option. In no event may any such loan exceed the Fair
Market Value, at the date of exercise, of the Shares
received pursuant to such exercise.
(c) No loan shall have an initial term exceeding ten (l0)
years; provided, however, that loans under the Plan shall
be renewable at the discretion of the Committee; and
provided, however, that the indebtedness under each loan
shall become due and payable, as the case may be, on a
date no later than (i) one (1) year after termination of
the Participant's employment due to death or disability,
or (ii) the date of termination of the Participant's
employment for any reason other than death or disability.
(d) Loans under the Plan may be satisfied by a
Participant, as determined by the Committee, in cash or,
with the consent of the Committee, in whole or in part by
the transfer to the Company of Shares whose Fair Market
Value on the date of such payment is equal to part or all
of the outstanding balance of such loan.
(e) A loan shall be secured by a pledge of Shares with a
Fair Market Value of not less than the principal amount
of the loan. After any repayment of a loan, pledged
Shares no longer required as security may be released to
the Participant.
(f) Every loan shall meet all applicable laws,
regulations and rules of the Federal Reserve Board and
any other governmental agency having jurisdiction.
9. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change of Capitalization, the
Committee shall conclusively determine the appropriate
adjustments, if any, to the maximum number and class of
shares of stock with respect to which Awards may be
granted under the Plan, and to the number and class of
shares of stock as to which Awards have been granted
under the Plan, and the purchase price therefor, if
applicable.
(b) Any such adjustment in the Shares or other securities
subject to outstanding Incentive Stock Options (including
any adjustments in the purchase price) shall be made in
such manner as not to constitute a modification as
defined by Section 424(h)(3) of the Code and only to the
extent otherwise permitted by Sections 422 and 424 of the
Code.
10. Stock Bonuses.
(a) Grant of Stock Bonuses. Subject to the terms and
provisions of the Plan, the Committee, at any time and
from time to time, may grant Shares to Employees,
Advisors and Consultants either outright or subject to
such restrictions as the Committee shall determine
pursuant to this Section 10, and in such amounts as the
Committee shall determine.
(b) Restricted Stock Agreement. If the Committee grants
Shares subject to restrictions, each such grant shall be
evidenced by a Restricted Stock Agreement that shall
specify the Period of Restriction, or Periods, the number
of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.
(c) Transferability. Except as provided in this Section
10, the Shares of Restricted Stock granted herein may not
be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and
specified in the Restricted Stock Agreement, or upon
earlier satisfaction of any other conditions, as
specified by the Committee in its sole discretion and set
forth in the Restricted Stock Agreement. However, in no
event may any Restricted Stock granted under this Plan to
an Executive Officer or Director become vested in a
Participant prior to twelve (12) months following the
date of its grant. All rights with respect to the
Restricted Stock granted to a Participant under the Plan
shall be available during his or her lifetime only by
such Participant.
(d) Other Restrictions. The Committee shall impose such
other restrictions on any Shares of Restricted Stock
granted pursuant to the Plan as it may deem advisable
including, without limitation, restrictions based upon
the achievement of specific (Company-wide, divisional,
and/or individual) performance goals, and/or restrictions
under applicable Federal or state securities laws; and
may legend the certificates representing Restricted Stock
to give appropriate notice of such restrictions.
(e) Certificate Legend. In addition to any legends
placed on certificates pursuant to subsection 10(d), each
certificate representing Shares of Restricted Stock
granted pursuant to the Plan shall bear the following
legend:
"The sale or other transfer of the Shares of Stock
represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to
certain restrictions on transfer as set forth in the
Eagle Food Centers, Inc. 1995 Stock Incentive Plan
and in a Restricted Stock Agreement dated
____________. A copy of the Plan and such Restricted
Stock Agreement may be obtained from the Secretary of
Eagle Food Centers, Inc."
(f) Removal of Restrictions. Except as otherwise
provided in this Section, Shares of Restricted Stock
covered by each Restricted Stock grant made under the
Plan shall become freely transferable by the Participant
after the last day of the Period of Restriction. Once
the Shares are released from the restrictions, the
Participant shall be entitled to have the legend required
by subsection 10(e) removed from his Stock certificate.
(g) Voting Rights. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to
those Shares.
(h) Dividends and Other Distributions. During the Period
of Restriction, Participants holding Shares of Restricted
Stock granted hereunder shall be entitled to receive all
dividends and other distributions paid with respect to
those Shares while they are so held. If any such
dividends or distributions are paid in Shares of Stock,
the Shares shall be subject to the same restrictions on
transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.
(i) Termination of Employment. In the event that a
Participant experiences a termination of employment with
the Company for any reason, including death, Disability,
or retirement, (as defined under the then-established
rules of the Company), any and all of the Participant's
Shares of Restricted Stock still subject to restrictions
as of the date of termination shall automatically be
forfeited and returned to the Company; provided, however,
that the Committee, in its sole discretion, may waive the
restrictions remaining on any or all Shares of Restricted
Stock, pursuant to this Section 10, and add such new
restrictions to those Shares of Restricted Stock as it
deems appropriate.
11. Non-Employee Director Options. Notwithstanding any
of the other provisions of the Plan to the contrary, the
provisions of this Section 11 shall apply to grants of
Options to Non-Employee Directors. Except as set forth in
this Section 11, the other provisions of the Plan shall
apply to Non-Employee Director Options to the extent not
inconsistent with this Section.
(a) General. Non-Employee Directors may elect annually
to receive payment of all or any portion of the fees for
their services as Directors in the form of options ( Non-
Employee Director Options ) to acquire Company Common
Stock in accordance with this Section 11 and may not be
granted Stock Appreciation Rights or Incentive Stock
Options under this Plan. Non-Employee Directors may
elect annually to receive the compensation for services
as a Director for the following year (not including
reimbursement of expenses) in the form of Non-Employee
Director Options. The Non-Employee Director Options will
be granted at the commencement of the 12-month period for
which the election has been made. The number of Non-
Employee Director Options granted to an electing non-
employee Director in any year shall be an amount whose
value, as determined by an independent valuation expert
retained by the employee members of the Board of
Directors, is equivalent on the date of grant to the cash
compensation which the Director would otherwise have been
entitled to receive for the year. No Agreement with any
Non-Employee Director may alter the provisions of this
Section and no Non-Employee Director Option may be
subject to a discretionary acceleration of
exercisability.
(b) Initial Election. On the effective date of this
Plan, each Non-Employee Director may elect as of such
date to receive Non-Employee Director Options for the
year period commencing on that date.
(c) Election by New Non-Employee Directors. Each Non-
Employee Director who, after the effective Date of this
Plan, is elected or appointed to the Board for the first
time will, at the time such director is elected or
appointed, be able to elect to receive Non-Employee
Director Options for the year period commencing on the
date of election.
(d) Vesting. Non-Employee Director Options shall become
exercisable one year after the date of grant (or such
longer period as the employee members of the Board of
Directors may set) and shall be exercisable at a price
equal to the market price of the Company s Common Stock
at the close of business on the day prior to the date of
grant. Non-Employee Director Options shall become
immediately exercisable upon a Director s death,
disability or upon a Change in Control. If a Director s
tenure ends for a reason other than death, disability or
Change in Control, then the number of Non-Employee
Director Options granted for the year in which the tenure
ends shall be reduced to reflect the amount of
compensation actually earned by the Director in that year
and the remaining Non-Employee Director Options granted
in that year shall be immediately exercisable.
(e) Duration. Except as otherwise provided in this
Section, each Non-Employee Director Option shall be for
a term of 10 years. The Committee may not provide for an
extended exercise period beyond the periods set forth in
this Section.
12. Release of Financial Information. A copy of the
Company's annual report to stockholders shall be delivered
to each Participant if and at the time any such report is
distributed to the Company's stockholders. Upon request,
by any Participant, the Company shall furnish to such
Participant a copy of its most recent annual report and
each quarterly report and current report filed under the
Exchange Act since the end of the Company's prior fiscal
year.
13. Termination and Amendment of the Plan. The Plan
shall terminate on the day preceding the tenth anniversary
of its effective date, except with respect to Awards
outstanding on such date, and no Awards may be granted
thereafter. The Board may sooner terminate or amend the
Plan at any time, and from time to time; provided,
however, that, except as provided in Section 9 hereof, no
amendment shall be effective unless approved by the
stockholders of the Company where stockholder approval of
such amendment is required (a) to comply with Rule 16b-3
under the Exchange Act or (b) to comply with any other
law, regulation or stock exchange rule. Notwithstanding
anything in this Section 13 to the contrary, subsequent to
the registration of a class of equity securities of the
Company under Section 12 of the Exchange Act, Section 11
relating to Options for Non Employee Directors shall not
be amended more than once in any six-month period, other
than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the
rules or regulations thereunder.
Except as provided in Section 9 hereof, rights and
obligations under any Award granted before any amendment
of the Plan shall not be adversely altered or impaired by
such amendment, except with the consent of the
Participant.
14. Non-Exclusivity of the Plan. The adoption of the
Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally
or only in specific cases.
15. Limitation of Liability. As illustrative of the
limitations of liability of the Company, but not intended
to be exhaustive thereof, nothing in the Plan shall be
construed to:
(a) give any employee any right to be granted an Award
other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or its
Parent or Subsidiaries to terminate the employment of any
person at any time; or
(d) be evidence of any agreement or understanding,
expressed or implied, that the Company, its Parent or
Subsidiaries, will employ any person in any particular
position, at any particular rate of compensation or for
any particular period of time.
16. Regulations and Other Approvals; Governing
Law.
(a) This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance
with the laws of the State of Delaware.
(b) The obligation of the Company to sell or deliver
Shares with respect to Options granted under the Plan
shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or
appropriate by the Committee.
(c) Any provisions of the Plan inconsistent with Rule
l6b-3 under Exchange Act shall be inoperative and shall
not affect the validity of the Plan.
(d) Except as otherwise provided in Section 13, the Board
may make such changes as may be necessary or appropriate
to comply with the rules and regulations of any
government authority or to obtain for Participants
granted Incentive Stock Options, the tax benefits under
the applicable provisions of the Code and regulations
promulgated thereunder.
(e) Each Award is subject to the requirement that, if at
any time the Committee determines, in its absolute
discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or
federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as
a condition of, or in connection with, the grant of an
Award or the issuance of Shares, no Awards shall be
granted or payment made or Shares issued, in whole or in
part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of
any conditions as acceptable to the Committee.
(f) In the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current
registration statement under the Securities Act and is
not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent
required by the Securities Act or regulations thereunder,
and the Committee may require a Participant receiving
Shares pursuant to the Plan, as a condition precedent to
receipt of such Shares, to represent to the Company in
writing that the Shares acquired by such Participant are
acquired for investment only and not with a view to
distribution.
17. Miscellaneous.
(a) Multiple Agreements. The terms of each Award may
differ from, other Awards granted under the Plan at the
same time, or at any other time. The Committee may also
grant more than one Award to a given Participant during
the term of the Plan, either in addition to, or in
substitution for, one or more Awards previously granted
to that Participant. The grant of multiple Awards may be
evidenced by a single Agreement or multiple Agreements,
as determined by the Committee.
(b) Withholding of Taxes. The Company shall have the
right to deduct from any payment of cash to any an
amount equal to the federal, state and local income taxes
and other amounts required by law to be withheld with
respect to any Award. Notwithstanding anything to the
contrary contained herein, if a Participant is entitled
to receive Shares upon exercise of an Option or Stock
Appreciation Right, the Company shall have the right to
require such Participant, prior to the delivery of such
Shares, to pay to the Company the amount of any federal,
state or local income taxes and other amounts that the
Company is required by law to withhold. Participants may
elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part,
by having the Company withhold Shares having a Fair
Market Value, on the date the tax is to be determined,
equal to the amount required to be withheld. All
elections shall be irrevocable, and be made in writing,
signed by the Participant in advance of the day that the
transaction becomes taxable. The Agreement evidencing
any Incentive Stock Options granted under this Plan shall
provide that if the Participant makes a disposition,
within the meaning of Section 424(c) of the Code and
regulations promulgated thereunder, of any Share or
Shares issued to such Participant pursuant to such
Participant's exercise of the Incentive Stock Option, and
such disposition occurs within the two-year period
commencing on the day after the date of grant of such
Option or within the one-year period commencing on the-
day after the date of transfer of the Share or Shares to
the Participant pursuant to the exercise of such Option,
such Participant shall, within ten (10) days of such
disposition, notify the Company thereof and thereafter
immediately deliver to the Company any amount of federal,
state or local income taxes and other amounts that the
Company informs the Participant the Company is required
to withhold.
(c) Designation of Beneficiary. Each Participant may,
with the consent of the Committee, designate a person or
persons to receive in the event of such Participant's
death, any Award or any amount of Shares payable pursuant
thereto, to which such Participant would then be
entitled. Such designation shall be made upon forms
supplied by and delivered to the Company and may be
revoked or changed in writing. In the event of the death
of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the
time of such Participant s death, the Company shall
deliver such Options, Stock Appreciation Rights,
Restricted Stock and/or amounts payable to the executor
or administrator of the estate of the Participant, or if
no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its
discretion, may deliver such Options, Stock Appreciation
Rights, Restricted Stock and/or amounts payable to the
spouse or to any one or more dependents or relatives of
the Participant, or if no spouse, dependent or relative
is known to the Company, then to such other person as the
Company may designate.
(d) Gender and Number. Except where otherwise indicated
by the context, any masculine term used herein also shall
include the feminine; the plural shall include the
singular and the singular shall include the plural.
(e) Severability. In the event any provision of the Plan
shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not
been included.
(f) Successors. All obligations of the Company under the
Plan, with respect to Awards granted hereunder, shall be
binding on any successor to the Company, whether the
existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise,
of all or substantially all of the business and/or assets
of the Company.
18. Effective Date. The effective date of the Plan is
June 21, 1995.
EX-10.19
4
Exhibit 10.19
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 10th day of May, 1995
between EAGLE FOOD CENTERS, INC., a Delaware corporation
with principal offices presently located at Route 67 and
Knoxville Road, Milan, Illinois 61264 (hereinafter
referred to as the "Corporation"), and ROBERT J. KELLY,
presently residing at 1520 Fawn Valley Road, Glendora,
California 91740 (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, the Corporation desires that Employee
shall be employed by the Corporation as its President and
Chief Executive Officer, and Employee is desirous of such
employment, upon the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises
and the mutual covenants and agreements hereinafter
contained, the parties hereto hereby agree as follows:
1. Employment. The Corporation shall employ
Employee, and Employee shall serve the Corporation, as
its President and Chief Executive Officer of the
Corporation, upon the terms and conditions hereinafter
set forth.
2. Term. The employment of Employee by the
Corporation hereunder shall commence as of the date
hereof and, unless sooner terminated in the manner
hereinafter provided, shall continue for a term of three
years until May 22, 1998; provided, however, that if
Employee does not arrive at the Corporation's offices and
commence his employment hereunder within 30 days after
the date hereof, this Agreement shall be null and void.
3. Office; Duties; Extent of Services.
(a) During the term of his employment
hereunder, Employee shall serve as President and Chief
Executive Officer of the Corporation, faithfully and to
the best of his ability, under the direction and
supervision of the Board of Directors of the Corporation
(the "Board of Directors") and the Chairman of the Board
of the Corporation (the "Chairman of the Board").
Employee shall transmit or shall cause to be transmitted
necessary instructions and advice to all subordinate
officers of the Corporation and its subsidiary companies
and all other proper persons. Employee also shall
perform such other duties and services and shall exercise
such other powers for the Corporation and for any of its
subsidiary companies, including, but not limited to,
acting as an officer and/or director of any such
subsidiary companies, as from time to time may be
assigned to him by the Board of Directors or the Chairman
of the Board, and shall enter into such supplemental
agreement or agreements with any such subsidiary company
or subsidiary companies with respect thereto (containing
terms which are not inconsistent with the provisions
hereof) as may be requested by the Board of Directors or
the Chairman of the Board, all without further
compensation other than that for which provision is made
in this Agreement.
(b) Employee agrees that he shall devote his
best efforts, energies and skills to the discharge of his
duties and responsibilities hereunder. To this end,
Employee agrees that he shall devote his full business
time and attention to the business and affairs of the
Corporation and he shall not, without the prior written
approval of the Chairman of the Board or the Board of
Directors, directly or indirectly, engage or participate
in, or become an officer or director of, or become
employed by, or render advisory or other services in
connection with, any other business enterprise.
4. Salary; Bonus Arrangements and Purchase of
Stock.
(a) During the term of his employment
hereunder, the Corporation shall pay to Employee a salary
for his services at the rate of $350,000 per annum (the
"Base Salary"), payable in accordance with the normal
payroll practices and procedures of the Corporation, and
subject to such increase or increases as may be approved
by the Board of Directors and evidenced by a writing
signed by the Chairman of the Board. The Corporation
shall pay Employee a signing bonus on the date of
Employee's arrival at the Corporation's offices in an
amount equal to $150,000; provided, however, that if
Employee's employment hereunder is terminated within six
(6) months after the date hereof by the Corporation for
"cause" (as hereinafter defined) or by Employee for any
reason other than "Good Reason" (as hereinafter defined),
Employee shall promptly return such $150,000 signing
bonus to the Corporation.
(b) During the term of this Agreement,
Employee shall be eligible to receive bonus compensation
at the end of each fiscal year of the Corporation in an
amount determined by the Board of Directors. The
Corporation and Employee shall use reasonable efforts to
agree on mutually acceptable performance targets for such
bonus compensation. Bonus compensation may be up to 100%
of the Base Salary during any year of Employee's
employment hereunder; provided, however, that bonus
compensation shall be at least $125,000 for the first
fiscal year of Employee's employment hereunder. Such
bonus compensation shall be prorated for the final fiscal
year of Employee's employment hereunder.
(c) Simultaneously with the execution and
delivery of this Agreement, Employee has purchased
125,000 shares of common stock of the Corporation (the
"Common Stock") at $2.25 per share. In connection with
such purchase, Employee has delivered to the Corporation
a full recourse promissory note, in the form attached
hereto as Exhibit A, in an initial principal amount equal
to the purchase price for such shares and the Corporation
has delivered such shares to Employee. Such promissory
note is secured by a pledge of such shares.
5. Stock Option.
(a) The Corporation hereby grants Employee
an option (the "Option") to purchase up to 600,000 shares
of Common Stock. The Option will be a stock option that
does not qualify as an "incentive stock option" under
Section 422(b) of the Internal Revenue Code of 1986, as
amended (i.e., a non-qualified stock option).
(b) Except as otherwise provided in this
Agreement, the Option shall be exercisable, on a
cumulative basis, at the times and prices as follows:
(i) up to 200,000 of the total shares subject to the
Option may be purchased by Employee on or after
the first anniversary of the date hereof at a
price equal to $2.50 per share;
(ii) up to an additional 200,000 shares of the
total shares subject to the Option may be
purchased by Employee on or after the second
anniversary of the date hereof at a price
equal to $3.50 per share; and
(iii) the balance of the total number of shares
subject to the Option may be purchased by
Employee on or after the third anniversary
of the date hereof at a price equal to $4.50
per share.
Subject to earlier termination as described
below, the portion of the Option granted pursuant to
clause (b)(i) above shall expire on the sixth anniversary
of the date hereof, the portion of the Option granted
pursuant to clause (b)(ii) above shall expire on the
seventh anniversary of the date hereof, and the portion
of the Option granted pursuant to clause (b)(iii) above
shall expire on the eighth anniversary of the date
hereof.
Except as provided in the immediately following
sentence, if the employment of Employee with the
Corporation shall terminate by reason of Employee's
death, permanent disability (as defined herein), by the
Corporation for any reason other than for "cause" (as
described herein) or by Employee for Good Reason (as
defined herein), the Option shall immediately become
exercisable by Employee (or Employee's legal
representative, beneficiary or estate, as the case may
be), for any and all of such number of shares subject to
the Option, at any time up to and including six months
after the effective date of such termination of
employment. If the employment of Employee with the
Corporation shall terminate for any reason other than
that provided in the immediately preceding sentence,
including, without limitation, termination by the
Corporation for "cause" (as described herein) or
termination by Employee for any reason other than Good
Reason, the Option shall terminate and become null and
void, as of the effective date of such termination.
In the event of a Change in Control (as defined
below), the Option shall immediately become exercisable
for any or all of such number of shares subject to the
Option. For purposes of this Agreement, a "Change in
Control" means the occurrence of either of the following
events: (a) the sale of the Corporation (other than to
Odyssey Partners, L.P. or any subsidiary or affiliate of
Odyssey Partners, L.P. so long as such subsidiary or
affiliate remains a subsidiary or affiliate, as the case
may be, of Odyssey Partners, L.P.), or (b) the merger of
the Corporation with another corporation (other than with
any subsidiary or affiliate of Odyssey Partners, L.P. so
long as such subsidiary or affiliate remains a subsidiary
or affiliate, as the case may be, of Odyssey Partners,
L.P.).
(c) Subject to the limitations on exercise
provided in this Agreement, the Option shall be exercised
by Employee as to all or part of the shares covered
thereby by giving written notice of exercise to the
Corporation, specifying the number of shares to be
purchased (unless the number purchased is the total
balance for which the Option is then exercisable;
provided, however, that in no event shall the Option be
exercised for a fraction of a share or for less than 100
shares) and specifying a business day not more than 10
days from the date such notice is given for the payment
of the purchase price against delivery of the shares
being purchased. On the date specified in the notice of
exercise the Corporation shall deliver such shares to
Employee and Employee shall deliver to the Corporation an
amount of cash equal to the aggregate purchase price for
such shares.
(d) If the Corporation (1) pays a stock
dividend on its Common Stock, (2) subdivides its
outstanding shares of Common Stock into a greater number
of shares, (3) combines its outstanding shares of Common
Stock into a smaller number of shares, or (4) issues by
reclassification of its Common Stock any shares of its
capital stock, then the number and kind of shares into
which the Option granted to Employee under Paragraph 5(a)
hereof is exercisable shall be adjusted so that Employee
upon exercise of the Option shall be entitled to receive
the kind and number of shares of the Corporation that
Employee would have owned or have been entitled to
receive after the happening of any of the events
described above had the Option been exercised immediately
prior to the happening of such event or any record date
with respect thereto. The exercise price for the Option
shall be adjusted by the inverse of any such adjustment
to the number of shares into which the Option is exer-
cisable. An adjustment made pursuant to this paragraph
(d) shall become effective on the date of the dividend
payment, subdivision, combination or issuance retroactive
to the record date with respect thereto, if any, for such
event. The adjustment to the number of shares into which
the Option is exercisable described in this paragraph (d)
shall be made each time any event listed in clauses (1)
through (4) of this paragraph (d) occurs.
6. Expenses Other than Relocation Expenses. It
is contemplated that, in connection with his employment
hereunder, Employee may be required to incur reasonable
and necessary travel, business entertainment and other
business expenses. The Corporation agrees to pay, or
reimburse Employee for, all reasonable and necessary
travel, business entertainment and other business
expenses incurred or expended by him incident to the
performance of his duties and responsibilities hereunder,
upon submission by Employee to the Chairman of the Board
(or his designee or designees) of vouchers or expense
statements satisfactorily evidencing such expenses. In
addition, Employee shall be entitled to a $25,000
automobile allowance in accordance with the Corporation's
existing policy regarding such allowances.
7. Relocation and Relocation Expenses.
(a) Employee agrees to move to a new
residence within one hour commuting distance of Milan,
Illinois (the "Principal Office City"), not later than
August 15, 1995 in accordance with the provisions of this
Paragraph 7. Following such date, if the Corporation
changes the location of its Principal Office City during
the then remaining term of Employee's employment
hereunder, then concurrently with such change Employee
agrees to move to a new residence within one hour
commuting distance of such new Principal Office City.
(b) Employee may continue to reside at
Employee's present residence located at 1520 Fawn Valley
Road, Glendora, California 91740 ("Employee's Present
Residence") until a date not later than August 15, 1995.
During such time as Employee resides at Employee's
Present Residence (including any transitory period during
which Employee is in the process of moving from
Employee's Present Residence to Employee's new residence
within one hour commuting distance of the Principal
Office City), but not later than August 15, 1995:
(i) Employee may commute between
Employee's Present Residence and the Principal
Office City, whereby Employee on a regular
basis, shall travel to the Corporation's offices
in the Principal Office City each Monday morning
and may leave the Principal Office City each
Friday afternoon;
(ii) the Corporation agrees to pay, or
reimburse Employee for, all reasonable and
necessary living expenses incurred or expended
by him in the Principal Office City and in
commuting to and from the Principal Office City,
including, but not limited to, air fare,
accommodations, meals, telephone and taxi
expenses, upon submission by Employee to the
Chairman of the Board (or his designee or
designees) of vouchers or expense statements
satisfactorily evidencing such expenses; and
(iii) the Corporation agrees to pay, or
reimburse Employee for, all reasonable and
necessary expenses incurred or expended by
Employee in connection with occasional trips
(not to exceed a reasonable number of trips per
year as determined by the Chairman of the Board)
to the Principal Office City by Employee's
immediate family, including, but not limited to,
air fare, accommodations, meals, telephone and
taxi expenses, upon submission by Employee to
the Chairman of the Board (or his designee or
designees) of vouchers or expense statements
satisfactorily evidencing such expenses.
(c) The Corporation agrees to pay, or
reimburse Employee for, all reasonable and necessary
moving expenses incurred by Employee in moving (including
any such expenses incurred in connection with moving his
immediate family) from Employee's Present Residence to a
new residence within one hour commuting distance of the
Principal Office City not later than January 1, 1996,
including, but not limited to, bills of any movers,
telephone, television, electrician, plumber, locksmith
charges, and tips and gratuities, upon submission by
Employee to the Chairman of the Board (or his designee or
designees) of vouchers or expense statements
satisfactorily evidencing such expenses.
(d) If Employee elects to do so, the
Corporation will arrange and pay all reasonable fees and
out of pocket expenses for a firm to enter into a home
repurchase program (the "relocation firm") with Employee
for the sale of Employee's present residence. The
relocation firm will make an offer to purchase Employee's
present residence based on the average of two independent
market appraisals from firms which are selected by mutual
agreement of the relocation firm and Employee.
(i) Employee shall have not less than
30 days within which he may accept or reject
such offer.
(ii) If Employee accepts such
offer, the Corporation agrees that it will pay
Employee the amount (if any, but not to exceed
$100,000) by which (A) $100,000 exceeds (B) the
sale proceeds payable to Employee, net of
amounts used to repay all mortgage indebtedness,
selling, closing and any related expenses.
(iii) If the relocation firm's offer is
not accepted by Employee within the period set
forth in paragraph 7(d)(i), Employee shall be
free to sell his residence upon whatever terms
and conditions as he desires.
8. Employee Benefits; Vacations. Employee shall
be entitled to participate in any and all life insurance,
medical insurance, disability insurance, directors' and
officers' liability insurance and any other employee
benefit plan or plans which from time to time may be
generally made available during the term of Employee's
employment hereunder by the Corporation to executives of
the Corporation of Employee's rank and status, or of
similar rank and status, to the extent that Employee
qualifies under the eligibility provisions of any such
plan or plans. Employee shall be entitled to vacations
(taken consecutively or in segments), aggregating four
(4) weeks in any year of the term of Employee's
employment hereunder, in accordance with the
Corporation's vacation policy, to be taken at times
consistent with the effective discharge of Employee's
duties.
9. Permanent Disability. In the event of the
permanent disability (as hereinafter defined) of Employee
during the term of his employment hereunder, the
Corporation shall have the right, upon written notice to
Employee, to terminate his employment hereunder,
effective upon the giving of such notice. Upon such
termination, the salary to which Employee would be
otherwise entitled pursuant to Paragraph 4(a) hereof
shall continue to be paid to Employee through the end of
the month in which such termination occurs and Employee
shall also be entitled to all accrued and unpaid bonus
compensation owing to him under Paragraph 4(b) hereof and
to exercise the Option to the extent not then exercised
in accordance with Paragraphs 5(b) and 5(c) hereof;
provided, however, that notwithstanding any such
termination of Employee's employment hereunder due to the
permanent disability of Employee, Employee shall be
entitled to receive the Base Salary through the date
which is eighteen months after the date of such
termination. Employee shall accept such payments in full
discharge and release of the Corporation of and from any
further obligations under this Agreement, but Employee
shall continue to have the obligations provided for in
Paragraph 12 hereof. For purposes of this Paragraph 9,
"permanent disability" shall be defined as (a) "permanent
disability" within the meaning of the disability
insurance policy or policies then maintained by the
Corporation for the benefit of employees of the
Corporation, or (b) if no such policy shall then be in
effect, or if more than one such policy shall then be in
effect in which the term "permanent disability" shall be
assigned different definitions, then "permanent
disability" shall be defined for purposes hereof to mean
any physical or mental disability or incapacity which
renders Employee incapable of fully performing the
services required of him in accordance with his
obligations under Paragraph 3 hereof for a period of 120
consecutive days or for shorter periods aggregating 120
days during any twelve-month period.
10. Death. In the event of the death of Employee
during the term of his employment hereunder, the salary
to which Employee would be otherwise entitled pursuant to
Paragraph 4(a) hereof shall continue to be paid through
the end of the month in which death occurs to the last
beneficiary designated by Employee by written notice to
the Corporation, or, failing such designation, to his
estate and such beneficiary or estate shall also be
entitled to all accrued and unpaid bonus compensation
owing to Employee under Paragraph 4(b) hereof and to
exercise the Option to the extent not then exercised in
accordance with Paragraphs 5(b) and 5(c) hereof;
provided, however, that notwithstanding any termination
of Employee's employment hereunder due to Employee's
death, such beneficiary or estate shall be entitled to
receive the Base Salary through the date which is
eighteen months after the date of such termination.
Employee shall have the right to name, from time to time,
any one person as beneficiary hereunder or, with the
consent of the Chairman of the Board, he may make other
forms of designation of beneficiary or beneficiaries.
Employee's designated beneficiary or beneficiaries or
personal representative, as the case may be, shall accept
the payments provided for in this Paragraph 10 in full
discharge and release of the Corporation of and from any
further obligations under this Agreement.
11. Termination.
(a) Employee's employment hereunder may be
terminated by the Corporation for "cause" at any time if
Employee shall commit any of the following "Acts of
Default":
(i) Employee shall have refused to
perform any of his obligations as set forth
herein in any material respect or Employee shall
have taken any action which causes material harm
to the Corporation or its operations, and
Employee shall have failed to cure such failure
or action within five (5) days after receiving
written notice thereof from the Board of
Directors or the Chairman of the Board;
(ii) Employee shall have committed an
act of fraud, theft or dishonesty against, or
shall breach a fiduciary obligation to, the
Corporation and/or any of its subsidiary
companies; or
(iii) Employee shall be convicted of
(or plead nolo contendere to) any felony or any
misdemeanor (whether or not involving the
Corporation and/or any of its subsidiary
companies) involving moral turpitude or which
might, in the opinion of the Board of Directors,
cause embarrassment to the Corporation and/or
any of its subsidiary companies.
In the event the Corporation elects to terminate the
employment of Employee for "cause" pursuant to this
Paragraph 11(a), the Chairman of the Board shall send
written notice to Employee terminating such employment
and describing the action of Employee constituting the
Act of Default, and thereupon the Corporation shall have
no further obligations under this Agreement, with the
exception of the obligation to pay Employee, promptly
after such termination, any accrued or unpaid salary
earned by Employee through and including the effective
date of such termination and any accrued and unpaid bonus
compensation owing to Employee pursuant to Paragraph 4(b)
hereof, but Employee shall continue to have the
obligations provided for in Paragraph 12 hereof. Nothing
contained in this Paragraph 11 shall constitute a waiver
or release by the Corporation of any rights or claims it
may have against Employee for actions or omissions which
may give rise to an event causing termination of this
Agreement pursuant to this Paragraph 11(a).
(b) Employee may terminate his employment
hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean any assignment to
Employee of any material duties other than those
contemplated by, or any limitation of Employee's powers
in any respect not contemplated by, Paragraph 3 hereof;
provided, however, that Employee first delivers written
notice thereof to the Chairman of the Board and the
Corporation shall have failed to cure such non-permitted
assignment or limitation within thirty (30) days after
receipt of such written notice. Any termination by
Employee pursuant to this Paragraph 11(b) shall be
communicated by written Notice of Termination to the
Chairman of the Board. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the
provision so indicated. In the event of any termination
of Employee's employment hereunder pursuant to this
Paragraph 11(b), Employee shall be entitled to the Base
Salary through the date which is eighteen months after
the date of such termination, and Employee shall also be
entitled to all accrued and unpaid bonus compensation
owing to him under Paragraph 4(b) hereof and to exercise
the Option to the extent not then exercised in accordance
with Paragraphs 5(b) and 5(c) hereof. In the event of
any termination of employment by Employee for Good
Reason, Employee shall have no further obligations under
this Agreement other than the obligations provided for in
Section 12 hereof.
(c) If this Agreement is not terminated
sooner as provided in this Agreement, it shall terminate
at the end of the three year term, unless the Corporation
elects to extend it for an additional term (in which case
it shall terminate at the end of such additional term).
If Employee's employment is terminated under this
Paragraph 11(c), the Corporation shall pay Employee
continuation of the Base Salary at Employee's then
current rate of Base Salary for twelve (12) months.
12. Restrictive Covenants and Confidentiality;
Injunctive Relief.
(a) Employee agrees, as a condition to the
performance by the Corporation of its obligations
hereunder, particularly its obligations under Paragraph
4 hereof, that during the term of his employment
hereunder and during the further period of one (1) year
after the termination of such employment, Employee shall
not, without the prior written approval of the Chairman
of the Board, directly or indirectly through any other
individual or entity:
(i) solicit, raid, entice or induce any
individual or entity that presently is or at any
time during the term of his employment hereunder
shall be, or who has indicated an interest in
becoming, a supplier of the Corporation, and/or
any of its subsidiary companies, to become a
supplier of any other individual or entity, and
Employee shall not approach any such individual
or entity for such purpose or authorize or
knowingly approve the taking of such actions by
any other individual or entity; or
(ii) solicit, raid, entice or induce
any individual who presently is or at any time
during the term of his employment hereunder
shall be an employee of or consultant to the
Corporation and/or any of its subsidiary
companies, to leave such employment or
consulting position or positions or to become
employed by or become a consultant to any other
individual or entity, and Employee shall not
approach any such employee or consultant for
such purpose or authorize or knowingly approve
the taking of such actions by any other
individual or entity.
(b) Recognizing and acknowledging that
confidential information may exist, from time to time,
with respect to the business and/or activities of the
Corporation and/or its subsidiary companies, and that the
knowledge, information and relationship with suppliers
and agents, including, but not limited to, supplier lists
and/or other such lists, and that the knowledge of the
Corporation's and/or its subsidiary companies' business
methods, systems, plans and policies and other
confidential information which he has heretofore and
shall hereafter establish, receive or obtain as an
employee of the Corporation and/or its subsidiary
companies or otherwise, are valuable and unique assets of
the respective businesses of the Corporation and its
subsidiary companies, Employee agrees that, during and
after the term of his employment hereunder, he shall not
(otherwise than pursuant to his duties hereunder),
without the prior written approval of the Chairman of the
Board, disclose any such knowledge or information
pertaining to the Corporation and/or any of its
subsidiary companies, their business, activities,
personnel or policies, to any individual or entity, for
any reason or purpose whatsoever, or use for his own
benefit or for the benefit of any other individual or
entity, any such knowledge or information. The
provisions of this Paragraph 12(b) shall not apply to
information which is or shall become generally known to
the public or the trade (except by reason of Employee's
breach of his obligations hereunder), information which
is or shall become available in trade or other
publications and information which Employee is required
to disclose by order of, or subpoena issued by, a court
of competent, jurisdiction or other governmental
authority (but only to the extent specifically ordered by
such court or other governmental authority); provided,
however, that Employee shall give the Corporation prior
written notice of the circumstances under which Employee
is so required to make disclosure of such information, as
well as the intended disclosure so that the Corporation
has the opportunity to seek a protective order or follow
such other course or courses of action as the
Corporation, in its sole discretion, may deem
appropriate.
(c) The provisions of this Paragraph 12
shall survive the termination of Employee's employment
hereunder, irrespective of the reason therefor.
(d) Employee recognizes and acknowledges
that the services to be rendered by him are of a special,
unique and extraordinary character and, in connection
with such services, he will have access to confidential
information vital to the Corporation's and/or its
subsidiary companies' businesses. By reason of this,
Employee consents and agrees that if he violates any of
the provisions of this Agreement with respect to
diversion of the Corporation's and/or its subsidiary
companies' suppliers or employees, or confidentiality,
the Corporation and its subsidiary companies would
sustain irreparable harm, and, therefore, in addition to
any other remedies which the Corporation may have under
this Agreement or otherwise, the Corporation and/or its
subsidiary companies shall be entitled to apply to any
court of competent jurisdiction for an injunction
restraining Employee from committing or continuing any
such violation or violations of this Agreement, and
Employee shall not object to any such application or
applications. Nothing in this Agreement shall be
construed as prohibiting the Corporation and/or its
subsidiary companies from pursuing any other remedy or
remedies, including, without limitation, recovery of
damages.
13. Transactions Offered to the Corporation;
Proprietary Materials. During the term of his employment
hereunder, Employee agrees to bring to the attention of
the Board of Directors or the Chairman of the Board, all
proposals, business opportunities or investments of
whatever nature, in areas in which the Corporation and/or
any of its subsidiary companies is active or may be
interested in becoming active, which are created or
devised by Employee or come to the attention of Employee
and which might reasonably be expected to be of interest
to the Corporation and/or any of its subsidiary
companies. Without limiting the generality of the
foregoing, Employee acknowledges and agrees that
memoranda, notes, records and other documents made or
compiled by Employee or made available to Employee during
the term of this Agreement concerning the business and/or
activities of the Corporation and/or any of its
subsidiary companies shall be the Corporation's property
and shall be delivered by Employee to the Chairman of the
Board upon termination of this Agreement or at any other
time at the request of the Board of Directors or the
Chairman of the Board.
14. Deductions and Withholding. Employee agrees
that the Corporation shall withhold from any and all
payments paid or payable to Employee, or on Employee's
behalf, pursuant to this Agreement, an amount equal to
any taxes required by any governmental regulatory
authority to be withheld or otherwise deducted and paid
by the Corporation in respect of such payments. In
connection with the exercise of the Option, the
Corporation may require Employee to reimburse the
Corporation for any such withholding tax liability in
respect of the issuance of shares upon such exercise. In
lieu thereof, the Corporation shall have the right to
withhold the amount of such taxes from any other sums due
or to become due from the Corporation. The Corporation
may, in its discretion, hold the stock certificate to
which Employee is entitled upon the exercise of the
Option as security for the payment of such withholding
tax liability, until cash sufficient to pay that
liability has been accumulated. In addition, the
Corporation shall be authorized, without the prior
written consent of Employee, to effect any such
withholding upon exercise of the Option by retention of
shares issuable upon such exercise having a fair market
value at the date of exercise which is equal to the
amount to be withheld; provided, however, that the
Corporation shall not be authorized to effect such
withholding without the prior written consent of Employee
if such withholding would subject Employee to liability
under Section 16(b) of the Securities Exchange Act of
1934, as amended.
15. Prior Agreements. This Agreement cancels and
supersedes any and all prior agreements and
understandings between the parties hereto respecting the
employment of Employee by the Corporation.
16. Representations and Warranties of the
Parties.
(a) Employee (x) represents and warrants to
the Corporation that (i) he is not under any obligation,
restriction or limitation, contractual or otherwise, to
any other individual or entity which would prohibit or
impede him from performing his duties and
responsibilities hereunder, and that he is free to enter
into and perform the terms and provisions of this
Agreement, (ii) he is in good physical health and does
not have any permanent disability, and (iii) he is
purchasing or acquiring the Common Stock acquired
hereunder for his own account, for investment only and
not with a view to the resale or distribution thereof in
violation of any federal or state securities laws, and
(y) agrees that any subsequent resale or distribution of
any of such Common Stock shall be made only pursuant to
either (A) an effective registration statement under the
Securities Act of 1933, as amended, covering such Common
Stock and under applicable state securities laws or
(B) specific exemptions from the registration
requirements of the Securities Act of 1933, as amended,
and any applicable state securities laws. In the event
that Employee exercises the Option, in connection
therewith Employee shall deliver to the Corporation a
written statement to the effect set forth in clauses
(x)(iii) and (y) above.
(b) This Agreement has been duly authorized
by all necessary corporate action on the part of the
Corporation and has been duly executed and delivered on
behalf and in the name of the Corporation by its Chief
Executive Officer.
17. Effectiveness. This Agreement shall become
effective when, and only when, the Corporation shall have
received (i) counterparts of this Agreement signed by the
Corporation and Employee, and (ii) a copy of a
physician's report, dated a recent date, as to the health
of Employee, in form and substance satisfactory to the
Corporation.
18. Waiver. Waiver by either party hereto of any
breach or default by the other party of any of the terms
and provisions of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to
or different from the breach or default waived.
19. Notices. All notices required to be given
under this Agreement shall be in writing and sent by
registered mail or certified mail, postage prepaid,
return receipt requested. Such notices shall be deemed
to have been validly served, given or delivered three (3)
business days after deposit in the United States mail
addressed to the party or parties to be notified at the
following addresses:
If to the Corporation:
Chairman of the Board of Directors
Eagle Food Centers, Inc.
Route 67 and Knoxville Road
Milan, Illinois 61264
with a copy to:
Simeon Gold, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
If to Employee:
Robert J. Kelly
1520 Fawn Valley Road
Glendora, California 91740
Either party may change the address to which
notices, requests, demands and other communications
hereunder shall be sent by sending written notice of such
change of address to the other party in the manner above
stated.
20. Assignability and Binding Effect. This
Agreement shall inure to the benefit of and shall be
binding upon the heirs, executors, administrators,
successors and legal representatives of Employee, and
shall inure to the benefit of and be binding upon the
Corporation and its successors and assigns. The
obligations of Employee may not be delegated and, except
as expressly provided in Paragraph 9 above relating to
the designation of beneficiaries, Employee may not
assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of this Agreement, or any of his rights
hereunder, without the prior written consent of the
Corporation, and any such attempted assignment, transfer,
pledge, encumbrance, hypothecation or other disposition
without such consent shall be null and void and without
effect. This Agreement may be assigned by the
Corporation, in its sole discretion, to any one or more
of its subsidiary companies or to another individual or
entity in connection with the merger or consolidation of
the Corporation with another corporation, partnership or
other business enterprise or the sale of all or
substantially all of the assets and business of the
Corporation to another individual or entity.
21. Complete Understanding; Amendments, Etc.
This Agreement constitutes the complete understanding and
entire agreement between the parties hereto with respect
to the employment of Employee hereunder, and no
statement, representation, warranty or covenant has been
made by either party with respect thereto except as
expressly set forth herein. This Agreement shall not be
altered, modified, amended or terminated (other than in
accordance with the provisions hereof) except by written
instrument signed by the party against whom enforcement
may be sought.
22. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Illinois.
23. Paragraph Headings. The paragraph headings
contained in this Agreement are for reference purposes
only and shall not limit, define or affect in any way the
meaning or interpretation of this Agreement or any
portion or portions thereof.
24. Separability. In case any one or more of the
provisions of this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained
herein shall not in any way be affected thereby.
25. Attorneys' Fees. Each party hereto agrees
that if the other party shall prevail in any action or
proceeding arising hereunder or in connection herewith,
such other party shall be entitled to reimbursement of
reasonable attorneys' fees and disbursements related to
such action or proceeding.
IN WITNESS WHEREOF, the parties hereto have
entered into this Agreement and duly set their hands on
the day and year first above written.
By:
Martin J. Rabinowitz,
Chairman of Board
PROMISSORY NOTE
$281,250.00 May 10, 1995
Milan, Illinois
FOR VALUE RECEIVED, the undersigned, Robert J. Kelly, a
resident of the State of California ("Borrower"), hereby
unconditionally promises to pay to the order of EAGLE FOOD CENTERS,
INC. ("Lender") at its address set forth below, or such other
address as Lender shall specify to Borrower in writing, the
principal sum of Two Hundred Eighty-One Thousand Two Hundred Fifty
United States Dollars ($281,250.00) on May 10, 1998, subject to the
provisions of the immediately following paragraph. Borrower
further promises to pay interest to Lender on the unpaid principal
balance hereof from the date hereof until such maturity date at a
rate per annum equal to 6.46%. Interest shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the
actual number of days elapsed. Interest shall be payable quarterly
in arrears on the first day of each calendar quarter during the
term hereof commencing July 1, 1995 and upon demand by Lender of
payment in full of this Note. If the indebtedness evidenced hereby
is not paid in full when due, Borrower shall be obligated
thereafter to pay interest on such overdue amount until the date
such amount is paid in full at a rate per annum equal to 3% above
the rate otherwise applicable hereunder.
Borrower and Lender are parties to the Employment Agreement,
dated as of May 10, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Employment Agreement").
Notwithstanding the immediately preceding paragraph, in the event
that either (i) Borrower's employment with Lender is terminated by
Lender for "cause" (as described in Paragraph 11(a) of the
Employment Agreement) or (ii) Borrower terminates his employment
with Lender for any reason other than "Good Reason" (as defined in
the Employment Agreement), the indebtedness evidenced hereby (with
accrued interest thereon) shall immediately become due and payable
without further notice, demand or presentment by Lender; provided,
however, that if Borrower terminates his employment with Lender for
"Good Reason", such indebtedness (with accrued interest thereon)
shall become due and payable without further notice, demand or
presentment by Lender on the date six months after the date of such
termination (or if such day is not a business day, on the
immediately preceding business day).
Borrower may prepay this Note in whole or in part without
premium or penalty upon prior written notice to Lender received no
later than 10:00 a.m. (Milan, Illinois time) on the date of such
prepayment. Any prepayment shall be accompanied by payment of the
accrued and unpaid interest due and owing on the principal amount
so prepaid to the date of such prepayment.
All payments of principal and interest hereunder shall be made
without set-off or counterclaim of any nature and in lawful money
of the United States of America. If any payment hereunder is due
and payable on any day which is a Saturday, Sunday or other day on
which commercial banks in Milan, Illinois are authorized or
required by law to close, the time for the making of such payment
shall be extended to the next succeeding business day and, with
respect to payments of principal, interest shall be payable thereon
during such extension at the rate provided herein.
Lender shall not by any act, delay, omission or otherwise be
deemed to have waived any rights or remedies hereunder. Such
rights and remedies are cumulative and not exclusive of any rights
or remedies provided by law. No waiver shall be valid unless
signed by Lender. No amendment hereof, unless signed by Lender,
and no course of dealing between Borrower and Lender, shall be
effective to modify or discharge this Note.
Except as otherwise specifically provided herein, all notices,
requests, demands or other communications to Lender or Borrower
shall be deemed to have been given or made when mailed, or
personally delivered in writing, to Lender or Borrower, as the case
may be, to the recipient's address set forth below, or such other
address as either Lender or Borrower shall hereafter specify to the
other in writing.
This Note shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns,
except that Borrower shall not have the right to assign its rights
or obligations hereunder or any interest herein without the prior
written consent of Lender.
This Note is secured by a pledge of the common stock of Lender
purchased by Borrower from Lender simultaneously with the execution
and delivery of the Employment Agreement. Lender shall have full
recourse to Borrower for the repayment of the indebtedness
evidenced by this Note.
This Note shall be governed by and construed in accordance
with the laws of the State of Illinois.
IN WITNESS WHEREOF, this Note has been duly executed and
delivered by Borrower on the date and year first written above.
___________________________
Robert J. Kelly
Lender's Address: Borrower's Address:
Eagle Food Centers, Inc. 1520 Fawn Valley Road
Route 67 and Knoxville Road Glendora, CA 91740
Milan, Illinois 61264
STATE OF ________ )
COUNTY OF ________ )
On this, the ____ day of _____, 1995, before me, the
subscriber, a notary public in and for the State and County
aforesaid, personally appeared Robert J. Kelly, and who
acknowledged that he, Robert J. Kelly, executed the foregoing Note
for the purposes therein contained.
WITNESS my hand and seal the day and year aforesaid.
Notary Public
[Notary Seal] My commission expires:
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered
into as of May 10, 1995, by and between ROBERT J. KELLY of 1520
Fawn Valley Road, Glendora, California 91740 (the "Pledgor") and
EAGLE FOOD CENTERS, INC., a Delaware corporation, with its
principal offices presently located at Route 67 and Knoxville Road,
Milan, Illinois 61264 (the "Company").
W I T N E S S E T H:
WHEREAS, the Pledgor and the Company have entered into an
Employment Agreement dated May 10, 1995, pursuant to which the
Pledgor has agreed to purchase and the Company has agreed to sell
125,000 shares of common stock of the Company, payable in the
principal amount of Two Hundred Eighty-One Thousand Two Hundred
Fifty Dollars ($281,250.00), which borrowing is evidenced by the
Pledgor's Promissory Note in such principal amount (the "Note");
and
WHEREAS, the parties hereto wish to secure in the manner set
forth in this Agreement the payment of all of the Pledgor's
indebtedness created under the Note, whether on account of
principal, interest, or otherwise (all of the foregoing
indebtedness and obligations being hereinafter collectively called
the "Debt");
NOW, THEREFORE, in consideration of the Debt and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Pledgor, the parties hereto covenant and
agree as follows:
1. Collateral. The Pledgor hereby assigns, transfers,
pledges, and sets over unto the Company, and its successors and
assigns, one hundred twenty-five thousand (125,000) shares of
common stock of the Company, evidenced by one (1) stock certificate
numbered _____, a copy of which is attached hereto, as security for
the payment of the Debt, together with all cash, stock, and other
dividends paid upon, all securities or instruments and other
property received in addition to or in exchange for, and all rights
to subscribe for securities incident to, such property (all such
property, dividends, security, and rights being hereinafter
collectively called the "Collateral").
2. Security Interest. The Pledgor agrees that the Company
shall have, and there is hereby granted to and created in favor of
the Company, a security interest under the Illinois Uniform
Commercial Code (the "Code") in and to the Collateral hereby
assigned and pledged and in and to the proceeds thereof as security
for the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of the Note. The Pledgor
will faithfully preserve and protect said security interest in the
Collateral and the proceeds thereof. Promptly upon request of the
Company from time to time, the Pledgor will do all such acts and
things, and will execute and deliver all such stock powers and
other documents and instruments, including, without limitation,
further pledges, assignments, financing statements, and
continuation statements, as the Company may deem necessary or
advisable in order to preserve, perfect, and protect the Company's
security interest in the Collateral and the proceeds thereof and to
assure that the Company may exercise and enforce its rights
hereunder, or otherwise by law, with respect to the Collateral and
such proceeds.
3. Perfection of Security Interest. For the purposes of
perfecting the Company's security interest in the Collateral, the
Pledgor has delivered to the Company possession of the Collateral.
4. Representations and Warranties. Pledgor is the legal and
beneficial owner of the Collateral free and clear of any lien,
except for the lien created by this Agreement. No consent,
authorization, approval, or other action by, and no notice to or
filing with, any governmental authority is required for the pledge
by Pledgor of the Collateral pursuant to this Agreement or for the
due execution, delivery or performance of this Agreement by
Pledgor.
5. Transfers and Other Liens. Pledgor agrees that he will
not (i) sell or otherwise dispose of, or grant any option or
warrant with respect to, any of the Collateral, or (ii) create or
permit to exist any lien upon or with respect to any of the
Collateral, except for the lien created pursuant to this Agreement.
6. Remedies on Default. If Pledgor shall default in payment
of the Note and such default remains uncured after not less than
ten (10) days' written notice to Pledgor of such default (a
"Default"), then, and in any such event, the Company shall have
such rights and remedies with respect to the Collateral or any part
thereof and the proceeds thereof as are provided by the Code and
such other rights and remedies with respect thereto which it may
have at law, in equity, or under this Agreement including, without
limitation, to the extent not inconsistent with the provisions of
the Code or other applicable law, the right to (i) transfer into
the Company's name, or into the names of its nominee or nominees
for the benefit of the Company, all or any portion of the
Collateral in its possession and thereafter receive cash dividends
paid thereon, vote the same, give all consents, waivers and
ratification in respect thereof, and otherwise act with respect
thereto as though it were the outright owner thereof and (ii) sell
all or any portion of the Collateral in its possession at any
public or private sale, upon ten (10) days' prior notice to the
Pledgor, at such place or places, at such time or times, upon such
terms (whether for cash or credit), and in such manner as the
Company may determine. Upon the occurrence of a Default and upon
notice by the Company to Pledgor, all rights of Pledgor to exercise
the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 7 below shall cease. Upon
the occurrence of a Default, all rights of Pledgor to receive the
dividends which it would otherwise be authorized to receive and
retain pursuant to Section 7 below shall cease.
7. Rights With Respect to Collateral in Absence of Default.
Unless and until a Default has occurred and is continuing or
exists, all cash payments made on account of the Collateral,
whether in the form of principal, interest, or dividends, shall be
paid to the Pledgor in accordance with his interest therein and the
Pledgor shall be entitled to exercise any voting rights with
respect to any of the Collateral to which voting rights attach and
give all consents, waivers, and ratification in respect thereof.
The Pledgor agrees to deliver to and deposit with the Company in
pledge, forthwith upon receipt thereof at any time, to be held by
the Company under and subject to the terms of this Agreement, all
stock dividends and other dividends (other than cash) received by
the Pledgor and paid upon any security included in the Collateral,
all securities received as a distribution on account of any
securities included in the Collateral, all securities received in
exchange for or in renewal of any securities included in the
Collateral, while this Agreement is in effect.
8. Security Interest Absolute. All rights of the Company
and security interests hereunder, and all obligations of Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any provision of the
Employment Agreement, the Note or any other agreement or instrument
relating thereto; (ii) any change in the time, manner or place of
payment of, or in any other term of, or any increase in the amount
of, all or any of the obligations evidenced by the Note, or any
other amendment or waiver of any term of, or any consent to any
departure from any requirement of, the Employment Agreement or the
Note; (iii) any exchange, release or non-perfection of any lien on
any other collateral; or (iv) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, a
borrower or a pledgor.
9. Termination; Successors and Assigns. Upon payment in
full of the Debt, this Agreement shall terminate and be of no
further force and effect, and the Company shall return to the
Pledgor such of the Collateral as is then in its possession. Until
such time, however, this Agreement shall bind the Pledgor, its
successors and assigns, and shall inure to the benefit of the
Company, and its successors and assigns.
10. Applicable Law. This Pledge shall be deemed to be a
contract under the laws of the State of Illinois and for all
purposes shall be governed by and construed in accordance with the
laws of such State.
11. Notice. All notices and other communications provided to
any party hereto under this Agreement shall be in writing or by
telex or by facsimile and addressed, delivered or transmitted to
such party at its address, telex or facsimile number as may be
designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by prepaid courier service, shall be
deemed given when received; any notice, if transmitted by telex or
facsimile, shall be deemed given when received. A communication,
demand or notice given pursuant to this Section shall be addressed:
a. If to the Company, at:
Chairman of the Board of Directors
Eagle Food Centers, Inc.
Route 67 and Knoxville Road
Milan, Illinois 61264
with a copy to:
Simeon Gold, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
b. If to the Pledgor, at:
Robert J. Kelly
1520 Fawn Valley Road
Glendora, California 91740
The Pledgor or the Company may change the respective address
upon which he or it shall receive notice hereunder by written
notice of such change to the other party as provided in this
Section.
12. Effectiveness. This Agreement shall become effective
upon execution by both parties hereto, which may be in duplicate
counterpart.
13. Incorporation of Terms. The Pledgor hereby acknowledges
that his rights hereunder are subject to all of the agreements,
conditions, covenants, provisions and stipulations contained in the
Note, which are to be kept and performed by Pledgor and the Company
and which are hereby made a part of this Agreement to the same
extent and with the same force and effect as if they were fully set
forth herein.
14. Amendments, etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by Pledgor herefrom
shall in any event be effective unless the same shall be in
writing, signed by the Company, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
15. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity and without invalidating the remaining
provisions of this Agreement.
IN WITNESS WHEREOF, this document is signed by the parties
hereto on that date, month and year first above written.
PLEDGOR:
Robert J. Kelly
EAGLE FOOD CENTERS, INC.
By:__________________________
Title:
EX-27
5
5
6-MOS
FEB-03-1996
JUL-29-1995
3,064,000
7,049,000
13,083,000
629,000
75,980,000
102,265,000
284,678,000
129,440,000
287,218,000
115,933,000
100,000,000
115,000
0
0
32,918,000
287,218,000
494,575,000
494,575,000
371,050,000
371,050,000
0
66,000
7,906,000
(9,631,000)
(482,000)
(9,149,000)
0
625,000
0
(9,774,000)
(0.88)
(0.88)