-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J3PGzGXscTvokAmMZ2jGgruZeqMHouqpcvlvCM7B2wUCnb8lIFTvHeLntBMaSKFe 5oFspwxLdyNrzSJPyCePSA== 0000897069-98-000581.txt : 19981125 0000897069-98-000581.hdr.sgml : 19981125 ACCESSION NUMBER: 0000897069-98-000581 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19981010 FILED AS OF DATE: 19981124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHULTZ SAV O STORES INC CENTRAL INDEX KEY: 0000087588 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 390600405 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00549 FILM NUMBER: 98758627 BUSINESS ADDRESS: STREET 1: 2215 UNION AVE CITY: SHEBOYGAN STATE: WI ZIP: 53081 BUSINESS PHONE: 4144574433 MAIL ADDRESS: STREET 1: 2215 UNION AVE CITY: SHEBOYGAN STATE: WI ZIP: 53081 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 10, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to __________________ Commission File Number 0-549 SCHULTZ SAV-O STORES, INC. (Exact Name of Registrant as Specified in its Charter) WISCONSIN 39-0600405 (State or other jurisdiction I.R.S. Employer of incorporation of organization) Identification No.) 2215 UNION AVENUE 53081 SHEBOYGAN, WISCONSIN (Zip Code) (Address of principal executive offices) Registrant's telephone number including area code 920-457-4433 --------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark |X| 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 (of for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark |X| whether the registrant has filed all reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of November 17, 1998, 6,577,779 shares of Common Stock, $0.05 par value, were issued and outstanding. SCHULTZ SAV-O STORES, INC. FORM 10-Q INDEX PAGE NUMBER PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets 3 Unaudited Consolidated Statements of Earnings 4 Unaudited Consolidated Statements of Cash Flows 5 Notes to Unaudited Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 12 2 PART I FINANCIAL INFORMATION Item 1. Financial Statements SCHULTZ SAV-O STORES, INC. CONSOLIDATED BALANCE SHEETS Unaudited Audited October 10, January 3, Assets 1998 1998 ------ -------------- ------------ Current assets: Cash and equivalents $ 30,828,000 $ 23,124,000 Receivables 9,309,000 9,718,000 Inventories 20,996,000 21,741,000 Other current assets 2,267,000 3,635,000 Deferred income taxes 4,496,000 4,131,000 ------------- ------------- Total current assets 67,896,000 62,349,000 Noncurrent receivable under capital subleases 6,885,000 7,270,000 Property under capital leases, net 2,565,000 2,786,000 Other noncurrent assets 3,554,000 3,782,000 Property and equipment, net 21,682,000 22,679,000 ------------- ------------- Total Assets $ 102,582,000 $ 98,866,000 ============= ============= Liabilities and Shareholders' Investment ---------------------------------------- Current liabilities: Accounts payable $ 23,919,000 $ 21,305,000 Accrued salaries and benefits 5,161,000 4,395,000 Accrued insurance 3,630,000 3,095,000 Retail repositioning reserve 710,000 610,000 Other accrued liabilities 2,902,000 2,861,000 Current obligations under capital leases 731,000 665,000 Current maturities of long-term debt 105,000 201,000 ------------- ------------- Total current liabilities 37,158,000 33,132,000 Long-term obligations under capital leases 10,600,000 11,177,000 Long-term debt 3,078,000 3,165,000 Deferred income taxes 880,000 1,008,000 Shareholders' investment: Common stock 438,000 438,000 Additional paid-in capital 14,164,000 13,940,000 Retained earnings 55,530,000 51,299,000 Treasury stock (19,266,000) (15,293,000) ------------- ------------- Total shareholders' investment 50,866,000 50,384,000 ------------- ------------- Total Liabilities and Shareholders' Investment $ 102,582,000 $ 98,866,000 ============= ============= 3 SCHULTZ SAV-O STORES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
For the 12-weeks ended For the 40-weeks ended October 10, October 4, October 10, October 4, 1998 1997 1998 1997 Net sales $ 112,550,000 $ 105,826,000 $ 368,760,000 $ 354,496,000 Costs and expenses: Cost of products sold 94,459,000 89,409,000 309,156,000 298,805,000 Operating and administrative expenses 15,019,000 13,763,000 50,564,000 47,627,000 ---------------- ---------------- ---------------- --------------- Operating income 3,072,000 2,654,000 9,040,000 8,064,000 Interest income 366,000 362,000 956,000 902,000 Interest expense (181,000) (195,000) (634,000) (653,000) ---------------- ---------------- ---------------- ---------------- Earnings before income taxes 3,257,000 2,821,000 9,362,000 8,313,000 Provision for income taxes 1,263,000 1,087,000 3,632,000 3,201,000 ---------------- ---------------- ---------------- --------------- Net earnings $ 1,994,000 $ 1,734,000 $ 5,730,000 $ 5,112,000 ================ ================ ================ =============== Basic earnings per share $ 0.29 $ 0.25 $ 0.84 $ 0.74 ================ ================ ================ =============== Diluted earnings per share $ 0.29 $ 0.25 $ 0.82 $ 0.73 ================ ================ ================ =============== Cash dividends paid per share $ 0.08 $ 0.07 $ 0.22 $ 0.20 ================ ================ ================ =============== Average common and equivalent shares 6,937,000 7,026,000 6,978,000 7,042,000 ================ ================ ================ ===============
4 SCHULTZ SAV-O STORES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the 40-weeks ended October 10, October 4, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 5,730,000 $5,112,000 Adjustments to reconcile net earnings to net cash flows from operating activities Depreciation and amortization 3,900,000 3,326,000 Changes in assets and liabilities Receivables 409,000 (6,452,000) Inventories 745,000 2,901,000 Other current assets 1,290,000 (2,304,000) Accounts payable 2,614,000 4,406,000 Accrued liabilities 1,173,000 (373,000) ------------ ----------- Net cash flows from operating activities 15,861,000 6,616,000 ------------ ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property and equipment (2,431,000) (1,325,000) Receipt of principal amounts under capital sublease agreements 341,000 388,000 Proceeds from asset sales 99,000 120,000 ------------ ---------- Net cash flows from investing activities (1,991,000) (817,000) ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Payment for acquisition of treasury stock (4,585,000) (3,727,000) Payment of cash dividends (1,499,000) (1,401,000) Proceeds from exercise of stock options 612,000 817,000 Principal payments under capital lease obligations (511,000) (540,000) Principal payments on long-term debt (183,000) (274,000) ------------ ----------- Net cash flows from financing activities (6,166,000) (5,125,000) ----------- ----------- CASH AND EQUIVALENTS: Net increase 7,704,000 674,000 Balance, beginning of period 23,124,000 27,763,000 -------------- ----------- Balance, end of period $ 30,828,000 $ 28,437,000 ============== ============ SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ 640,000 $ 686,000 Income taxes paid 4,147,000 4,582,000 5 SCHULTZ SAV-O STORES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The financial statements included herein have been prepared by the Company, without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information presented not misleading. The interim financial statements furnished with this report reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. It is suggested that these financial statements be read in conjunction with the audited financial statements and the notes thereto included in the Company's 1997 annual report to shareholders, as incorporated by reference in the Company's Form 10-K for the fiscal year ended January 3, 1998. (2) Interest Expense For the 12-weeks ended For the 40-weeks ended October 10, October 4, October 10, October 4, 1998 1997 1998 1997 -------- -------- -------- -------- Imputed - capital leases $109,000 $115,000 $363,000 $383,000 Long-term debt 72,000 80,000 245,000 270,000 Other - - 26,000 - -------- -------- -------- -------- Interest expense $181,000 $195,000 $634,000 $653,000 ======== ======== ======== ======== (3) Other Current Assets October 10, January 3, 1998 1998 Prepaid expenses $ 1,174,000 $1,209,000 Receivable under capital subleases 487,000 443,000 Property held for resale 313,000 1,663,000 Other assets 293,000 320,000 ----------- ---------- Other current assets $ 2,267,000 $3,635,000 =========== ========== 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Selected costs and results as a percent of net sales: - -------------------------------------------------------------------------------- For the 12-weeks ended For the 40-weeks ended October 10, October 4, October 10, October 4, 1998 1997 1998 1997 ------- -------- ------- ------ Cost of products sold 83.9% 84.5% 83.8% 84.3% Operating and administrative expenses 13.3 13.0 13.7 13.4 Earnings before income taxes 2.9 2.7 2.5 2.3 Net earnings 1.8 1.6 1.6 1.4 - -------------------------------------------------------------------------------- Net Sales Net sales for the 12- and 40-week periods ended October 10, 1998 were $112,550,000 and $368,760,000, respectively, compared to $105,826,000 and $354,496,000 for the same periods ended October 4, 1997, respectively. The increases of $6,724,000 and $14,264,000, or 6.4% and 4.0%, were due primarily to increased wholesale business volume resulting from the Company's continued additions and enhancements to its "virtual chain" of franchised and corporate retail supermarkets. Since October 4, 1997, the Company has completed five franchise facility projects. These franchise projects include one new market store, one replacement store, and three additions to existing stores. Collectively, these completed projects, located in Poynette, Lomira, Waterloo, Howards Grove, and Waupaca, Wisconsin added approximately 60,000 square feet of store selling space. On an aggregate basis, these stores contributed in excess of $3,500,000 in additional sales for the first 40 weeks of 1998 compared to the same period in 1997. Additionally, during the third quarter of 1998, the Company completed its renovation of the second supermarket it purchased from Nash Finch last October. With the opening of this replacement supermarket, the Company closed its older, noncompetitive corporate store in Appleton, Wisconsin. Also in conjunction with its "virtual chain" marketing concept, the Company continues to provide a number of ongoing customer savings, incentives, promotions and rewards to its top shoppers as part of its Piggly Wiggly Preferred Club(R) electronic card marketing program. These card marketing promotions and rewards continue to positively impact net sales. In addition to improved wholesale business volume, corporate retail sales also continued to increase despite the absence of food price inflation. Corporate stores open more than one year continued to show improved sales volume compared to the prior year. Retail sales also increased due to additional and more competitive corporate stores in Appleton and Oshkosh, Wisconsin since October 4, 1997. As of October 10, 1998, the Company had 69 franchised and 18 corporate supermarkets compared to 69 franchised and 16 corporate supermarkets at October 4, 1997. The Company currently expects that its positive trends in sales throughout the first three quarters will continue into the fourth quarter; however, the Company expects the level of its fourth quarter sales will be difficult to match those of last year's fourth quarter due principally to the following: (i) the fourth quarter of 1998 will be a 12-week quarter compared to 13 weeks for the fourth quarter of 1997; (ii) in 1998, some of the Company's competitors opened a number of large supermarkets competing directly with some of the Company's stores in certain market areas; (iii) during the fourth quarter of 1997, the Company had two corporate store grand openings in the greater Appleton, Wisconsin market resulting in higher sales volume; and (iv) the Company closed down one franchised unit in early November 1998 as part of a two-store consolidation. 7 The Company intends to attempt to continue its positive revenue trends by pursuing expansion or renovation projects at six franchise retail operations. These projects are in various phases of planning or construction, with completions scheduled throughout the first six months of 1999. They involve one new market franchise store in Cottage Grove, Wisconsin, one replacement franchise store in Fort Atkinson, Wisconsin, and four franchise expansion stores in Beaver Dam, Kiel, Crivitz, and Randolph, Wisconsin. On an aggregate basis, these four expansion projects are expected to increase selling square footage by approximately 40% at these stores. Cost of Products Sold Cost of products sold, as a percent of sales, decreased to 83.9% and 83.8% for the 12-and 40-week periods ended October 10, 1998, compared to the 84.5% and 84.3%, respectively, for the same periods in 1997. This decrease was a direct result of an increase in higher margin retail sales from additional corporate stores in Appleton and Oshkosh, Wisconsin opened since October 4, 1997. With these additional corporate stores, the Company's percentage of higher margin retail sales volume continued to increase relative to the lower margin wholesale sales. The Company expects this trend to continue through the end of 1998. Operating and Administrative Expenses Operating and administrative expenses, as a percent of sales, increased to 13.3% and 13.7% for the 12- and 40-week periods ended October 10, 1998, compared to 13.0% and 13.4% for the same periods in 1997. Total operating and administrative expenses increased primarily because of increased wages, benefits and other general operating costs for the new corporate supermarkets in Appleton and Oshkosh, Wisconsin. With these additional stores, the Company expects this trend to continue through the end of 1998. Due to the ongoing highly competitive nature of the industry, certain Company franchise operators and corporate retail supermarkets continue to experience operational difficulties in their respective marketplaces. The Company continues to evaluate various business alternatives relating to its underperforming operations. The Company's business alternatives include, but are not limited to, the sale and subsequent conversion of corporate stores to franchise units, closing stores, or implementing other operational changes. Similar to certain prior years, implementation of these alternatives may result in the Company incurring certain repositioning or restructuring charges for replaced, closed or sold stores. These actions can negatively impact net earnings in the short-term, but the Company believes that such actions will help improve the Company's long-term profitability. Net Earnings Net earnings for the 12- and 40-week periods ended October 10, 1998, compared to the same periods in 1997, increased 15.0% and 12.1% to $1,994,000 and $5,730,000, respectively. Diluted earnings per share for the 12-and 40-week periods ended October 10, 1998 increased 16.0% to $0.29 compared with $0.25 in 1997, and 12.3% to $0.82 compared with $0.73 in 1997. The Company's number of consecutive quarters showing increases in net earnings over the prior year's quarter has been extended to 23. With continuing improvements in sales and productivity, the Company's net earnings-to-sales ratio for the 12- and 40-week periods ended October 10, 1998 improved to 1.8% and 1.6%, respectively, compared to 1.6% and 1.4% for the same periods in 1997. 8 Liquidity and Capital Resources The Company's favorable 1998 year to date operating results continued to enhance its strong financial position. As has been the case in recent years, the primary source of liquidity for the 40-week period ended October 10, 1998 was cash generated from operating activities. Cash provided by operating activities was $15,861,000, an increase of $9,245,000 over the prior year 40-week period ended October 4, 1997 cash inflow of $6,616,000. The increase in cash flows from operations was due primarily to the timing of cash receipts, cash payments and changes in short-term financing to its wholesale customers for the purchase of new equipment. Net cash outflows from investing activities for the 40-week period ended October 10, 1998 totaled $1,991,000, compared to $817,000 during the same period in 1997. The change was due in large part to an increase in capital expenditures compared to the same period in 1997. A significant portion of the current year capital expenditure related to corporate business system technology improvements and equipment purchases for the Appleton store that was renovated and opened in August 1998. The Company has a 1998 capital budget of $4,300,000, of which approximately $1,900,000 remains available for future expenditures. The Company anticipates financing these needs from internally generated capital. Net cash outflows from financing activities for the 40-week period ended October 10, 1998 was $6,166,000, compared to $5,125,000 during the same period in 1997. The additional cash outflows was due principally to increased common stock repurchases during the 40-weeks ended October 10, 1998 compared to the same period in 1997. On September 22, 1998, the Company completed its existing $5,000,000 stock repurchase program that commenced in January 1997 after having repurchased 235,000 shares of its common stock at $14.50 per share. As a result of the completion of its existing stock repurchase plan, the Company's Board of Directors has instituted a new stock repurchase program which will allow the Company to repurchase up to an additional $5,000,000 of its common stock from time to time in the open market, pursuant to privately negotiated transactions, or otherwise, not including the repurchase of common stock issuable upon the exercise of stock options granted under the Company's stock option plans. This was the fourth announced stock repurchase program over the past seven years that have been fully completed by the Company. Since the first stock repurchase program commenced in January 1992, the Company has repurchased over 2,200,000 shares of its common stock. The Company maintains a revolving credit facility agreement with two lending institutions to provide up to $16 million of borrowings at rates not to exceed the bank's prime rates. At October 10, 1998 and October 4, 1997, the Company had no borrowings outstanding under these agreements. The Company's Board of Directors declared a fourth quarter cash dividend on its common stock of $0.08 per share. The dividend will be payable on November 27, 1998 to shareholders of record as of November 13, 1998. In summary, cash and equivalents increased $7,704,000 during the first 40 weeks of 1998, compared to an increase of $674,000 during the same period in 1997. Due to the Company's significant cash and other liquid assets, its consistent ability to generate cash flows from operations and availability of external financing, the Company foresees no difficulty in providing financing necessary to fund its capital commitments and working capital needs for the foreseeable future. 9 Year 2000 Issues The Company is dependent on computer hardware, software and other business systems ("IT systems") and non-information technology systems such as communication equipment, tractors and trailers, refrigeration controllers, scales, and other equipment containing embedded microprocessor technology ("non-IT systems"). The Company uses these IT and non-IT systems in several critical operating areas including product procurement and merchandising, retail store and warehouse distribution operations, inventory order entry and labor management, and accounting, administrative and maintenance systems. In 1997, the Company began evaluating its IT and non-IT systems in order to identify and adjust date sensitive systems for year 2000 compliance. As part of this undertaking, the Company established a team, headed by the Company's Vice President of Business Systems Support Group. The team is staffed primarily with internal professionals within the business systems group and some outside consultants on an as-needed basis. The team leader reports periodically on the year 2000 status to the Executive Committee and to the Company's Board of Directors. The team developed a plan to assess its IT and non-IT systems for year 2000 compliance requirements. The plan consisted of three main project phases: (1) to make an inventory listing of all IT and non-IT systems that may be subject to the year 2000 issue along with an assessment as to the scope of the issue as it related to these systems; (2) to remediate any and all year 2000 compliance problems; and (3) to test, validate and implement systems subsequent to remediation. At the end of the first quarter of 1998, the Company had substantially completed the first phase of the project. An inventory list of all systems have been identified and documented. Nearly half of all IT and non-IT systems previously identified have also been remediated at this time. The Company believes it will complete all remaining remediation efforts for existing systems over the next six months. Insofar as testing, validation and implementation are concerned, the Company has tested some of the core IT systems and has determined that they are projected to be year 2000 compliant by mid-1999. With regard to non-IT systems, the Company also expects these systems to be year 2000 compliant in 1999. The Company estimates it will cost $500,000 to become year 2000 compliant, all of which will be charged to operations. As part of the year 2000 project, the Company has identified business relationships with third parties, including suppliers, vendors, financial institutions and other service providers, which the Company believes is critical to its business operations. In connection with this, the Company has been communicating with these third parties through correspondence and/or interviews to ascertain the extent to which they are addressing their year 2000 compliance issues. The Company will continue to assess and monitor the progress of these third parties in resolving year 2000 issues. The Company undertakes a certain amount of risk by relying on the third parties' own year 2000 assessment. Because of this, the Company believes that a key vendor's failure to resolve its year 2000 issues is the most likely worst case scenario for the Company. Such failure could result in the Company not being able to procure products from a key vendor on a timely basis. The Company does not expect this most likely worst case scenario to have a material adverse impact on its core retail and wholesale businesses due principally to the Company's network of suppliers and vendors. The Company will, however, develop contingency plans to work with these key third parties in 1999. The projections and project completion dates cited above are based on management's best estimates and may be updated from time to time as additional information becomes available. 10 Special Note Regarding Forward-Looking Statements Certain matters discussed in this Form 10-Q are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the Company's future plans, objectives, strategies or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties including, but not limited, to the following: (i) presence of intense competitive market activity in the Company's market areas; (ii) ability to identify and develop new market locations for expansion purposes; (iii) continuing ability to obtain reasonable vendor marketing funds for promotional purposes; (iv) ongoing advancing information technology requirements; (v) ongoing absence of food price inflation; (vi) the Company's ability to continue to recruit, train and retain quality franchise and corporate retail store operators; and (vii) the potential recognition of repositioning charges resulting from potential closures, conversions and consolidations of retail stores due principally to the competitive nature of the industry and to the quality of the Company's retail store operators. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. 11 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 10.16 1990 Stock Option Plan, as amended as of October 15, 1998. Exhibit 10.17 1995 Equity Incentive Plan, as amended as of October 15, 1998. Exhibit 10.18 Form of Nonqualified Stock Option Agreement under 1995 Equity Incentive Plan. Exhibit 10.19 Schultz Sav-O Stores, Inc. Officer Annual Incentive Plan, as amended as of October 15, 1998. Exhibit 10.20 Form of Global Amendment to Nonqualified Stock Option Agreement(s) to be entered into with existing option grantees. Such amendments are materially different only as to the name of the grantee and the date of execution. Exhibit 27 Financial Data Schedule. (b) No reports of Form 8-K were filed by the Company during the first 40 weeks of fiscal 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SCHULTZ SAV-O STORES, INC. -------------------------- (Registrant) November 20, 1998 /S/Armand C. Go - ------------------------------- ----------------------------- (Date) Armand C. Go, Treasurer and Chief Accounting Officer 13 EX-10.16 2 1990 STOCK OPTION ADOPTED March 20, 1990 As Amended Through October 15, 1998 SCHULTZ SAV-O STORES, INC. 1990 STOCK OPTION PLAN 1. PURPOSE. The purpose of the Schultz Sav-O Stores, Inc. 1990 Stock Option Plan (the "Plan") is to promote the best interests of Schultz Sav-O Stores, Inc. (the "Company") and its shareholders by providing key employees of the Company and its Subsidiaries (as defined in Section 3) with an opportunity to acquire a, or increase their, proprietary interest in the Company and thereby develop a stronger incentive to put forth maximum effort for the continued success and growth of the Company. In addition, the opportunity to acquire a proprietary interest in the Company will aid in attracting and retaining key personnel of outstanding ability. It is intended that certain of the options granted pursuant to the Plan will constitute incentive stock options within the meaning of Section 422A of the Internal Revenue Code ("Incentive Stock Options") and the remainder of the options granted hereunder will constitute nonqualified stock options ("Nonqualified Options"), as determined by the Committee (as defined in Section 2). 2. ADMINISTRATION. (a) The Plan shall be administered by the Compensation and Stock Option Committee (the "Committee") of the Board of Directors of the Company (the "Board"). The Committee shall consist of not less than three members of the Board who shall qualify as "disinterested administrators" and/or "disinterested persons" as either or both of such terms are defined in the then existing rules and/or regulations promulgated under Section 16 ("Section 16 Rules") of the Securities Exchange Act of 1934, as amended ("Exchange Act"). A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by at least a majority of its members. Any decision or determination reduced to writing and signed by all of the members of the Committee shall be fully as effective as if it had been made by a unanimous vote at a meeting duly called and held. (b) In accordance with the provisions of the Plan, the Committee shall determine: (i) the key employees to whom options shall be granted hereunder; (ii) the number of shares of Stock (as defined in Section 4) to be subject to each option; (iii) the time at which the option is to be granted; (iv) the option period; (v) the option price; (vi) the manner in which options become exercisable and when such options terminate; (vii) whether the options shall be Incentive Stock Options or Nonqualified Options; (viii) whether to grant tax offset bonuses in connection with Nonqualified Options; and (ix) such other provisions of the option granted as the Committee may deem necessary or desirable. (c) The Committee has authority to adopt such rules and regulations for carrying out the Plan as it may deem proper and in the best interests of the Company. The Committee shall have complete authority to resolve all questions regarding interpretation, administration and application of this Plan, any related option agreements or instruments and -1- the value of shares of Stock subject to options for any purpose hereunder, and any such determination shall be final. 3. ELIGIBILITY. Any key employee ("Employee") of the Company or its future subsidiaries, as defined in Section 425(f) of the Internal Revenue Code ("Subsidiaries"), including any such Employee who is also an officer or director of the Company or its Subsidiaries, whose judgment, initiative and efforts, in the opinion of the Committee, contribute materially to the successful performance of the Company or its Subsidiaries, shall be eligible to receive options under the Plan. No option may be granted under the Plan to any director of the Company who is not also an Employee or to any current or former member of the Committee if such eligibility would then violate the disinterested administration requirements of the Section 16 Rules. 4. SHARES SUBJECT TO THE PLAN. The shares to be subject to options granted under the Plan shall be shares of the Company's Common Stock, $.05 current par value per share ("Stock"), and may be either authorized and unissued or treasury shares. The total number of shares of Stock for which options may be granted and which may be purchased pursuant to the exercise of options granted under the Plan shall not exceed an aggregate of 450,000 shares, subject to adjustment as provided in Section 10; provided, however, that in the event an option granted under the Plan expires, is cancelled or is terminated unexercised as to any shares of Stock covered thereby, such shares shall thereafter become available for the granting of additional options under the Plan. 5. OPTION PRICE. The option price per share of Stock shall be fixed by the Committee, but shall not be less than 100% of the fair market value of the Stock on the date the option is granted, as determined by the Committee. 6. GRANT OF OPTIONS. Subject to the terms and conditions of the Plan, the Committee may, from time to time, grant to selected Employees options to purchase such number of shares of Stock and on such terms and conditions as the Committee may determine. More than one option may be granted to the same Employee. The day on which the Committee approves the granting of an option shall be considered as the date on which such option is granted. Options granted to Employees may be either Incentive Stock Options or Nonqualified Options, as determined by the Committee. The granting of an option to an Employee shall give such Employee no rights as a shareholder of the Company, except as to shares actually issued to him upon exercise in accordance with the Plan. 7. OPTION PERIOD; INCENTIVE STOCK OPTION MAXIMUM. (a) The Committee shall determine the expiration date of each option, but such expiration date shall not be later than seven years after the date such option is granted. (b) The aggregate fair market value (determined at the time the option is granted) of the Stock with respect to which any Incentive Stock Options are exercisable for the first time by an Employee during any calendar year under the Plan or any other plan of the Company or any Subsidiary shall not exceed $100,000. -2- 8. EXERCISE OF OPTIONS. (a) An Employee entitled to exercise an option may, subject to its terms and conditions and the terms and conditions of the Plan, exercise the option in full at any time or in part from time to time by delivery to the Company at its principal office in Sheboygan, Wisconsin, of a written notice of exercise specifying the number of shares of Stock with respect to which the option is being exercised; provided, however, that, if then required by the Section 16 Rules, no option shall be exercisable until at least six months has elapsed from the date of grant of such option, except in the case of the death or disability of the Employee holding such option as set forth in the Employee's option agreement, or as otherwise allowed under the Section 16 Rules. (b) Any notice of exercise shall be accompanied by full payment of the option price of the shares of Stock being purchased (i) in cash or its equivalent; (ii) with the consent of the Committee as set forth in the option agreement, by tendering previously acquired shares of Stock (valued at their fair market value as of the date of exercise, as determined by the Committee); or (iii) with the consent of the Committee as set forth in the option agreement, by any combination of (i) and (ii). For purposes of (ii) and (iii) above, the term "previously acquired shares of Stock" shall only include Stock owned by the Employee prior to the exercise of the option for which payment is being made and shall not include shares of Stock which are being acquired pursuant to the exercise of such option. (c) Except as may be provided in the option agreement, an option granted under the Plan may be exercised only while the Employee is an employee of the Company or its Subsidiaries and only if he has been continuously so employed since the date the option was granted. Options may be exercised during the life of the Employee only by the Employee (or his legal representative). No shares of Stock shall be issued upon exercise until full payment therefor has been made. 9. TAX OFFSET BONUS; TAX WITHHOLDING. (a) A tax offset bonus may be granted in conjunction with all or part of any Nonqualified Option granted under the Plan, either at the time of the grant or at any time during the term of the Nonqualified Option by making provision therefor in the option agreement or an amendment to the option agreement. Upon exercise of a Nonqualified Option with respect to which a tax offset bonus has been granted, the Employee shall be entitled to receive from the Company an amount in cash determined by multiplying the excess of the fair market value of the shares of Stock for which the Nonqualified Option is exercised over the aggregate option price for such Stock by the Bonus Factor (as defined in Section 9(b)). The fair market value of such shares of Stock shall be determined by the Committee as of the date of exercise; provided, however, that, if the Employee is an officer, director or 10% or more shareholder of the Company and if then determined appropriate by the Committee, such fair market value shall be determined as of the date which is six months after the date of such exercise. The day on which the Employee exercises his Nonqualified Option pursuant to Section 8 shall be considered the date on which such Nonqualified Option was exercised. -3- (b) The "Bonus Factor" shall be the fraction calculated by dividing the Applicable Tax Rate, as hereinafter described, by an amount equal to one minus the Applicable Tax Rate. The Committee shall from time to time determine the Applicable Tax Rate or Rates to be used in determining the amount of tax offset bonuses (which may, but need not, be the same for each Employee), taking into account such factors as it may deem necessary, including without limitation, the maximum income tax rates applicable to individuals and the salary rates and grades of Employees; provided, however, that the Applicable Tax Rate(s) shall not exceed the maximum income tax rate imposed on corporations. The tax offset bonus shall be payable to the Employee within 15 days following exercise of a Nonqualified Option with respect to which such bonus relates; provided, however, that, in the case of an Employee who is an officer, director or 10% or more shareholder of the Company, such bonus shall be payable within 15 days following the date as of which the fair market value of the Stock purchased upon exercise of the Nonqualified Option is determined. All determinations by the Committee pursuant to this Section 9 shall be final. (c) The Company may deduct and withhold from any cash otherwise payable under this Section 9 such amount as may be required for the purpose of satisfying the Company's obligation to withhold federal, state or local taxes. Further, in the event the amount so withheld is insufficient for such purpose, the Company may require that the Employee pay to the Company upon its demand or otherwise make arrangements satisfactory to the Company for payment of, such amount as may be requested by the Company in order to satisfy its obligation to withhold any such taxes. (d) With the consent of the Committee as set forth in the option agreement, an Employee may be permitted to satisfy the Company's withholding requirements upon exercise of a Nonqualified Option by electing to have the Company withhold shares of Stock otherwise issuable to the Employee or to deliver to the Company shares of Stock having a fair market value (as determined by the Committee) on the date income is recognized pursuant to the exercise of a Nonqualified Option equal to the minimum amount required to be withheld. The election shall be made in writing and shall be made according to such rules and in such form as the Committee shall determine. 10. CAPITAL ADJUSTMENTS AFFECTING STOCK. In the event of a capital adjustment resulting from a stock dividend (other than a stock dividend in lieu of an ordinary cash dividend), stock split, spin-off, split-up, reorganization, recapitalization, merger, consolidation, combination or exchange of shares or the like, the number of shares of Stock subject to the Plan and the number of shares subject to outstanding options shall be adjusted in a manner consistent with such capital adjustment; provided, however, that no such adjustment shall require the Company to sell or issue any fractional shares and the adjustment shall be limited accordingly in a manner determined by the Committee. Additionally, the per share option price of any shares of Stock subject to outstanding options shall be adjusted so that there will be no change in the aggregate option price payable upon exercise of any such option. The determination of the Committee as to any adjustment hereunder shall be final. 11. POWERS OF COMPANY NOT AFFECTED. The existence of the Plan or any options granted under the Plan (including the option agreements or instruments evidencing such options) shall not affect in any way the right or power of the Company or its shareholders -4- to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger, consolidation or business combination of the Company, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights of the holders thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. 12. CORPORATE MERGERS AND OTHER CONSOLIDATIONS. The Committee may also grant options having terms and provisions which vary from those specified in the Plan, provided that any options granted pursuant to this Section 12 are granted in substitution for, or in connection with the assumption of, existing options or similar rights granted by another corporation and assumed or otherwise agreed to be provided for by the Company pursuant to or by reason of a transaction involving a corporate merger, consolidation, acquisition, business combination or other reorganization to which the Company or a subsidiary is a party. 13. OPTION AGREEMENTS. All options granted under the Plan shall be evidenced by written option agreements (which need not be identical) in such form as the Committee shall determine. Each option agreement shall specify whether the option granted thereunder is initially intended to constitute an Incentive Stock Option or Nonqualified Option. 14. TRANSFER RESTRICTIONS. (a) Except as otherwise provided by the Board or the Committee, options granted under the Plan shall not be transferable other than as designated by the Employee by will, or by the laws of descent and distribution. In the event that the Board or the Committee shall permit a transfer of options granted under the Plan, any permitted transferee shall have all of the rights of the Employee under the Plan and option agreement(s), as if the Employee had retained such options. (b) Shares of Stock purchased pursuant to exercise of options granted under the Plan may not be sold, offered for sale or otherwise disposed of, except pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Act") or in a transaction that, in the opinion of legal counsel to the Company, is exempt from registration under the Act. 15. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board shall have the right to amend, suspend or terminate the Plan or any portion hereof at any time; provided, however, that shareholder approval of any amendment to the Plan shall also be obtained if (a) then required by the (i) Section 16 Rules in order for the Plan to remain qualified under Rule 16b-3 (or any successor provision) under the Exchange Act, (ii) Internal Revenue Code in order to allow for Incentive Stock Options to still be granted under the Plan, or (iii) quotation or listing requirements of NASDAQ or any principal securities exchange or market on which the Stock is then traded in order to maintain the Stock's quotation or listing thereon; (b) such amendment materially modifies the eligibility requirements as provided in Section 3; (c) such amendment increases the total number of shares of Stock, except as -5- provided in Section 10, which may be purchased pursuant to the exercise of options granted under the Plan as provided in Section 4; or (d) such amendment reduces the minimum option price per share at which options may be granted to less than 100% of the fair market value of the Stock, as determined by the Committee, as provided in Section 5. No amendment, suspension or termination of the Plan shall alter, impair or adversely affect any of the rights, benefits or obligations of any Employee under any outstanding option previously granted thereto, unless the written consent of such Employee is obtained. 16. EFFECTIVE DATE AND TERM OF PLAN. The effective date of the Plan is the date of its adoption by the Board, subject to the approval of the Plan within 12 months of such effective date at a meeting of shareholders, and all options granted prior to such approval shall be subject to such approval and shall not be exercisable until after such approval. The Plan shall terminate on March 20, 1995, or on such earlier date as may be determined by the Board under Section 15. Termination of the Plan, however, shall not adversely affect the rights of Employees under options previously granted to them, and all unexpired options shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. 17. CHANGE IN CONTROL. (a) Notwithstanding any other provision of the Plan, upon the occurrence of a Change in Control (as defined in Section 17(c)) all options then outstanding under the Plan shall become immediately exercisable in full for the remainder of their terms and each Employee shall have the right for a period of 30 days following a Change in Control to require the Company to purchase his outstanding options for cash at the aggregate Acceleration Price (as defined in Section 17(b)) for all shares of Stock subject to such options held by such Employee; provided, however, that, if then required by the Section 16 Rules, Employees shall have the right to exercise outstanding options or require the Company to purchase such options only if at least six months has elapsed between the date of grant of such options and the Change in Control date. (b) The "Acceleration Price" shall be the excess of the highest of the following over each applicable option price per share (as the same may be adjusted from time to time pursuant to Section 10) on the Change in Control date: (i) the highest reported ask price of the Stock, as reported on NASDAQ or the principal securities exchange or market upon which the Stock is then listed or traded, on or within the 60 days prior to and including the Change in Control date; (ii) the highest purchase or sale price of the Stock reported in a Schedule 13D or an amendment thereto as paid or received on or within the 60 days prior to and including the Change in Control date; the highest tender offer price paid or offered for the Stock on or within the 60 days prior to and including the Change in Control date; and (iii) the highest cash merger or similar price paid or offered for the Stock on or within the 60 days prior to and including the Change of Control date. -6- (c) A "Change in Control" (and the Change in Control date) shall be the occurrence of any one of the following events (certain defined terms used in this Section 17(c) are defined in Section 17(d)): (i) the first day of receipt by the Company of a Schedule 13D, any amendment thereto or notice of a public announcement confirming that any Person (other than any employee benefit plan of the Company or of any subsidiary of the Company or any Person organized, appointed or established pursuant to the terms of any such benefit plan or any Person who is an Employee), together with his Affiliates or Associates, is or becomes the Beneficial Owner of securities representing at least 20% of the combined voting power of the Company; (ii) the first day on which two or more of the members of the Board are not Continuing Directors; (iii) the day on which the shareholders of the Company approve (A) any business combination, consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (B) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; or (iv) the day on which the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company. (d) For purposes of this Section 17: (i) a "Person" shall mean any individual, firm, corporation, partnership, trust or other entity. (ii) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Exchange Act. (iii) a Person shall be a "Beneficial Owner" of securities (A) which such Person beneficially owns, directly or indirectly, or (B) which such Person has the right to acquire (whether such right is exercisable immediately or only with the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants, options or otherwise, other than if such Person acquires or has the right to acquire such securities as an underwriter, broker, dealer or selling group member in connection with the public or private distribution of such securities pursuant to an underwriting or similar agreement with the Company or upon exercise of Rights issued under the Company's Rights Agreement with First Bank (N.A.) dated December 20, 1988, as amended. (iv) "Continuing Directors" means any member of the Board who was a member of the Board on March 20, 1990, and any successor of a Continuing Director who is recommended or elected to succeed the Continuing Director by a majority of the remaining Continuing Directors. (e) The Committee shall not have authority under Section 2 to modify the time when options may be exercised under this Section 17. -8- EX-10.17 3 1995 EQUITY INCENTIVE PLAN Adopted 12/20/94 Effective 1/30/95 As Amended Through 10/15/98 SCHULTZ SAV-O STORES, INC. 1995 EQUITY INCENTIVE PLAN Section 1. Purpose The purpose of Schultz Sav-O Stores, Inc. 1995 Equity Incentive Plan (the "Plan") is to promote the best interests of Schultz Sav-O Stores, Inc. (the "Company") and its shareholders by providing key employees of the Company and its Affiliates (as defined below) with an opportunity to acquire a, or increase their, proprietary interest in the Company. It is intended that the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company by those key employees who are primarily responsible for shaping and carrying out the long-range plans of the Company and securing the Company's continued growth and financial success. Section 2. Definitions As used in the Plan, the following terms shall have the respective meanings set forth below: (a) "Affiliate" shall mean any entity that, directly or through one or more intermediaries, is controlled by, controls, or is under common control with, the Company. (b) "Award" shall mean any Option, Stock Appreciation Right, Restricted Stock or Performance Share granted under the Plan. (c) "Award Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Award granted under the Plan. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (e) "Commission" shall mean the Securities and Exchange Commission. (f) "Committee" shall mean the Compensation and Stock Option Committee of the Board of Directors of the Company (or any other committee thereof designated by such Board to administer the Plan); provided, however, that the Committee is composed of not less than two directors, each of whom is a "disinterested person" within the meaning of Rule 16b-3. (g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. -1- (h) "Fair Market Value" shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. (i) "Incentive Stock Option" shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code (or any successor provision thereto). (j) "Key Employee" shall mean any officer or other key employee of the Company or of any Affiliate who is responsible for or contributes to the management, growth or profitability of the business of the Company or any Affiliate as determined by the Committee in its discretion. (k) "Non-Qualified Stock Option" shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. (l) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option. (m) "Participating Key Employee" shall mean a Key Employee designated to be granted an Award under the Plan. (n) "Performance Period" shall mean, in relation to Performance Shares, any period for which a performance goal or goals have been established. (o) "Performance Share" shall mean any right granted under Section 6(d) of the Plan that will be paid out as a Share (which, in specified circumstances, may be a Share of Restricted Stock). (p) "Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization or government or political subdivision thereof. (q) "Released Securities" shall mean Shares of Restricted Stock with respect to which all applicable restrictions have expired, lapsed or been waived. (r) "Restricted Securities" shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions. (s) "Restricted Stock" shall mean any Share granted under Section 6(c) of the Plan or, in specified circumstances, a Share paid in connection with a Performance Share under Section 6(e) of the Plan. (t) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission under the Exchange Act, or any successor rule or regulation thereto. -2- (u) "Shares" shall mean shares of common stock of the Company, $0.05 par value (including the associated Common Stock Purchase Rights), and such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(b) of the Plan. (v) "Stock Appreciation Right" shall mean any right granted under Section 6(b) of the Plan. Section 3. Administration The Plan shall be administered by the Committee; provided, however, that if at any time the Committee shall not be in existence, the functions of the Committee as specified in the Plan shall be exercised by those members of the Board of Directors of the Company who qualify as "disinterested persons" under Rule 16b-3. Subject to the terms of the Plan and applicable laws and without limitation by reason of enumeration, the Committee shall have full discretionary power and authority to: (i) designate Participating Key Employees; (ii) determine the type or types of Awards to be granted to each Participating Key Employee under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights or other matters are to be calculated in connection with) Awards granted to Participating Key Employees; (iv) determine the terms and conditions of any Award granted to a Participating Key Employee; (v) determine whether, to what extent and under what circumstances Awards granted to Participating Key Employees may be settled or exercised in cash, Shares, other securities, other Awards or other property, and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended; (vi) determine whether, to what extent and under what circumstances cash, Shares, other Awards and other amounts payable with respect to an Award granted to Participating Key Employees under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan (including, without limitation, any Award Agreement); (viii) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time or from time to time, and shall be final, conclusive and binding upon all Persons, including the Company, any Affiliate, any Participating Key Employee, any holder or beneficiary of any Award, any shareholder and any employee of the Company or of any Affiliate. -3- Section 4. Shares Available for Award (a) Shares Available. Subject to adjustment as provided in Section 4(b): (i) Number of Shares Available. The number of Shares with respect to which Awards may be granted under the Plan shall be 750,000, subject to the limitations set forth in Section 6(c)(i). (ii) Accounting for Awards. The number of Shares covered by an Award under the Plan, or to which such Award relates, shall be counted on the date of grant of such Award against the number of Shares available for granting Awards under the Plan. (iii) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares. (b) Adjustments. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee may, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares subject to the Plan and which thereafter may be made the subject of Awards under the Plan; (ii) the number and type of Shares subject to outstanding Awards; and (iii) the grant, purchase or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; provided, however, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b) of the Code (or any successor provision thereto); and provided further that the number of Shares subject to any Award payable or denominated in Shares shall always be a whole number. Section 5. Eligibility Any Key Employee, including any executive officer or employee-director of the Company or of any Affiliate, who is not a member of the Committee shall be eligible to be designated a Participating Key Employee. Section 6. Awards (a) Option Awards. The Committee is hereby authorized to grant Options to Key Employees with the terms and conditions as set forth below and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine in its discretion. -4- (i) Exercise Price. The exercise price per Share of an Option granted pursuant to this Section 6(a) shall be determined by the Committee; provided, however, that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option. (ii) Option Term. The term of each Option shall be fixed by the Committee; provided, however, that in no event shall the term of any Option exceed a period of seven years from the date of its grant. (iii) Exercisability and Method of Exercise. An Option shall become exercisable in such manner and within such period or periods and in such installments or otherwise as shall be determined by the Committee. The Committee also shall determine the method or methods by which, and the form or forms, including, without limitation, cash, Shares, other securities, other Awards, other property or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which payment of the exercise price with respect to any Option may be made or deemed to have been made. (iv) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code (or any successor provision thereto) and any regulations promulgated thereunder. Notwithstanding any provision in the Plan to the contrary, no Incentive Stock Option may be granted hereunder after the tenth anniversary of the adoption of the Plan by the Board of Directors of the Company. (b) Stock Appreciation Right Awards. The Committee is hereby authorized to grant Stock Appreciation Rights to Key Employees. Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right. Subject to the terms of the Plan, the grant price, term, methods of exercise, methods of settlement (including whether the Participating Key Employee will be paid in cash, Shares, other securities, other Awards, or other property or any combination thereof), and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee in its discretion. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate, including, without limitation, restricting the time of exercise of the Stock Appreciation Right to specified periods as may be necessary to satisfy the requirements of Rule 16b-3. -5- (c) Restricted Stock Awards (i) Issuance. The Committee is hereby authorized to grant Awards of Restricted Stock to Key Employees; provided, however, that the aggregate number of Shares of Restricted Stock granted under the Plan to all Participating Key Employees as a group shall not exceed 75,000 Shares (such number of Shares subject to adjustment in accordance with the terms of Section 4(b) hereof) of the total number of Shares available for Awards under Section 4(a)(i). (ii) Restrictions. Shares of Restricted Stock granted to Participating Key Employees shall be subject to such restrictions as the Committee may impose in its discretion (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate in its discretion. (iii) Registration. Any Restricted Stock granted under the Plan to a Participating Key Employee may be evidenced in such manner as the Committee may deem appropriate in its discretion, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan to a Participating Key Employee, such certificate shall be registered in the name of the Participating Key Employee and shall bear an appropriate legend (as determined by the Committee) referring to the terms, conditions and restrictions applicable to such Restricted Stock. (iv) Payment of Restricted Stock. At the end of the applicable restriction period relating to Restricted Stock granted to a Participating Key Employee, one or more stock certificates for the appropriate number of Shares, free of restrictions imposed under the Plan, shall be delivered to the Participating Key Employee or, if the Participating Key Employee received stock certificates representing the Restricted Stock at the time of grant, the legends placed on such certificates shall be removed. (v) Forfeiture. Except as otherwise determined by the Committee in its discretion, upon termination of employment of a Participating Key Employee (as determined under criteria established by the Committee in its discretion) for any reason during the applicable restriction period, all Shares of Restricted Stock still subject to restriction shall be forfeited by the Participating Key Employee; provided, however, that the Committee may, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock held by a Participating Key Employee. (d) Performance Share Awards (i) Issuance. The Committee is hereby authorized to grant Awards of Performance Shares to Key Employees. -6- (ii) Performance Goals and Other Terms. The Committee shall determine in its discretion the Performance Period, the performance goal or goals to be achieved during any Performance Period, the proportion of payments, if any, to be made for performance between the minimum and full performance levels, the restrictions applicable to Shares of Restricted Stock received upon payment of Performance Shares if Performance Shares are paid in such manner, and any other terms, conditions and rights relating to a grant of Performance Shares. Performance goals established by the Committee may be based on one or more measures such as return on shareholders' equity, earnings or any other standard or standards deemed relevant by the Committee, measured internally or relative to other organizations and before or after extraordinary items. (iii) Rights and Benefits During the Performance Period. The Committee may provide that, during a Performance Period, a Participating Key Employee shall be paid cash amounts, with respect to each Performance Share held by such Participating Key Employee, in the same manner, at the same time, and in the same amount paid, as a cash dividend on a Share. Participating Key Employees shall have no voting rights with respect to Performance Shares held by them. (iv) Adjustments with Respect to Performance Shares. Any other provision of the Plan to the contrary notwithstanding, the Committee may in its discretion at any time or from time to time adjust performance goals (up or down) and minimum or full performance levels (and any intermediate levels and proportion of payments related thereto), adjust the manner in which performance goals are measured, or shorten any Performance Period or waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock issued in payment of Performance Shares, if the Committee determines that conditions, including but not limited to, changes in the economy, changes in competitive conditions, changes in laws or governmental regulations, changes in generally accepted accounting principles, changes in the Company's accounting policies, acquisitions or dispositions by the Company or its Affiliates, or the occurrence of other unusual, unforeseen or extraordinary events, so warrant. (v) Payment of Performance Shares. As soon as is reasonably practicable following the end of the applicable Performance Period, one or more certificates representing the number of Shares equal to the number of Performance Shares payable shall be registered in the name of and delivered to the Participating Key Employee; provided, however, that any Shares of Restricted Stock payable in connection with Performance Shares shall, pending the expiration, lapse, or waiver of the applicable restrictions, be evidenced in the manner as set forth in Section 6(c)(iii) hereof. (e) General (i) No Consideration for Awards. Awards shall be granted to Participating Key Employees for no cash consideration unless otherwise determined by the Committee. -7- (ii) Award Agreements. Each Award granted under the Plan shall be evidenced by an Award Agreement in such form (consistent with the terms of the Plan) as shall have been approved by the Committee. (iii) Awards May Be Granted Separately or Together. Awards to Participating Key Employees under the Plan may be granted either alone or in addition to, in tandem with, or in substitution for, any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to, or in tandem with, other Awards, or in addition to, or in tandem with, awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards. (iv) Forms of Payment Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award to a Participating Key Employee may be made in such form or forms as the Committee shall determine, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee in its discretion. Such rules and procedures may include, without limitation, provisions for the payment or crediting of interest on installment or deferred payments. (v) Limits on Transfer of Options. Except as otherwise provided by the Board of Directors of the Company or the Committee, Awards granted under the Plan shall not be transferable other than as designated by the Participating Key Employee by will, or by the laws of descent and distribution. In the event that the Board of Directors of the Company or the Committee shall permit a transfer of an Award, any permitted transferee shall have all of the rights of the Participating Key Employee under the Plan, as if the Participating Key Employee had retained such Award. (vi) Term of Awards. Except as otherwise provided in the Plan, the term of each Award shall be for such period as may be determined by the Committee. (vii) Rule 16b-3 Six-Month Limitations. To the extent required in order to comply with Rule 16b-3 only, any equity security offered pursuant to the Plan may not be sold for at least six months after acquisition, except in the case of death or disability, and any derivative security issued pursuant to the Plan shall not be exercisable for at least six months, except in case of death or disability of the holder thereof. Terms used in the preceding sentence shall, for the purposes of such sentence only, have the meanings, if any, assigned or attributed to them under Rule 16b-3. (viii) Share Certificates; Representation. In addition to the restrictions imposed pursuant to Section 6(c) and Section 6(d) hereof, all certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Commission, Nasdaq Stock Market or any stock exchange or other market upon which such Shares are then listed or traded, and any applicable federal or state securities laws, and the Committee may cause a legend or legends -8- to be put on any such certificates to make appropriate reference to such restrictions. The Committee may require each Participating Key Employee, or other Person who acquires Shares under the Plan by means of an Award originally made to a Participating Key Employee to represent to the Company in writing that such Participating Key Employee, or other Person is acquiring the Shares without a view to the distribution thereof. Section 7. Amendment and Termination of the Plan; Correction of Defects and Omissions (a) Amendments to and Termination of the Plan. The Board of Directors of the Company may at any time amend, alter, suspend, discontinue or terminate the Plan; provided, however, that shareholder approval of any amendment of the Plan shall also be obtained if otherwise required by: (i) the rules and/or regulations promulgated under Section 16 of the Exchange Act (in order for the Plan to remain qualified under Rule 16b-3); (ii) the Code or any rules promulgated thereunder (in order to allow for Incentive Stock Options to be granted under the Plan); or (iii) the quotation or listing requirements of the Nasdaq National Market or any principal securities exchange or market on which the Shares are then traded (in order to maintain the quotation or listing of the Shares thereon). Termination of the Plan shall not affect the rights of Participating Key Employees with respect to Awards previously granted to them, and all unexpired Awards shall continue in force and effect after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. (b) Correction of Defects, Omissions and Inconsistencies. The Committee may in its discretion correct any defect, supply any omission or reconcile any inconsistency in any Award or Award Agreement in the manner and to the extent it shall deem desirable to carry the Plan into effect. Section 8. General Provisions (a) No Rights to Awards. No Key Employee, Participating Key Employee or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Key Employees, Participating Key Employees or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each Participating Key Employee. (b) Withholding. No later than the date as of which an amount first becomes includible in the gross income of a Participating Key Employee for federal income tax purposes with respect to any Award under the Plan, the Participating Key Employee shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, withholding obligations arising with respect to Awards to Participating Key Employees under the Plan may be settled with Shares previously owned by the Participating Key Employee; provided, however, that the Participating Key Employee may not settle such obligations with Shares that are part of, or are received upon exercise of, the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and any Affiliate shall, to the extent permitted by -9- law, have the right to deduct any such taxes from any payment otherwise due to the Participating Key Employee. The Committee may establish such procedures as it deems appropriate for the settling of withholding obligations with Shares, including, without limitation, the establishment of such procedures as may be necessary to satisfy the requirements of Rule 16b-3. (c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. (d) Rights and Status of Recipients of Awards. The grant of an Award shall not be construed as giving a Participating Key Employee the right to be retained in the employ of the Company or any Affiliate. Further, the Company or any Affiliate may at any time dismiss a Participating Key Employee from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. Except for rights accorded under the Plan and under any applicable Award Agreement, Participating Key Employees shall have no rights as holders of Shares as a result of the granting of Awards hereunder. (e) Unfunded Status of the Plan. Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company or the Committee and any Participating Key Employee or other Person. To the extent any Person holds any right by virtue of a grant under the Plan, such right (unless otherwise determined by the Committee) shall be no greater than the right of an unsecured general creditor of the Company. (f) Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the internal laws of the State of Wisconsin and applicable federal law. (g) Severability. If any provision of the Plan or any Award Agreement or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan, any Award Agreement or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, any Award Agreement or the Award, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan, any such Award Agreement and any such Award shall remain in full force and effect. -10- (h) No Fractional Shares. No fractional Shares or other securities shall be issued or delivered pursuant to the Plan, any Award Agreement or any Award, and the Committee shall determine (except as otherwise provided in the Plan) whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights thereto shall be canceled, terminated or otherwise eliminated. (i) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Section 9. Effective Date of the Plan The Plan shall be effective as of January 30, 1995 subject to shareholder approval of the Plan within 12 months following the date of adoption of the Plan by the Board of Directors, and all Awards granted under the Plan prior to the date of shareholder approval shall be subject to such approval and the effective date of such Award grants shall be deemed to be the date of such shareholder approval. Section 10. Term of the Plan No Award shall be granted under the Plan following the fifth anniversary of its effective date. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date and, to the extent set forth in the Plan, the authority of the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award, or to waive any conditions or restrictions with respect to any such Award, and the authority of the Board of Directors of the Company to amend the Plan, shall extend beyond such date. -11- EX-10.18 4 NONQUALIFIED STOCK OPTION AGREEMENT SCHULTZ SAV-O STORES, INC. NONQUALIFIED STOCK OPTION AGREEMENT THIS AGREEMENT, made and entered into as of this day of , 199_ (the "Grant Date"), by and between SCHULTZ SAV-O STORES, INC., a Wisconsin corporation (the "Company"), and (the "Optionee"). W I T N E S S E T H : WHEREAS, the terms of the Schultz Sav-O Stores, Inc. 1995 Equity Incentive Plan (the "Plan"), to the extent not stated herein, are specifically incorporated by reference in this Agreement and defined terms used herein which are not otherwise defined shall have the meaning set forth in the Plan; WHEREAS, the purpose of the Plan is to permit the grant of various equity-based incentive awards, including options to purchase shares of the Company's Common Stock, $.05 par value ("Common Stock"), to be granted to certain key employees of the Company; WHEREAS, the Optionee is now employed by the Company in a key capacity and has exhibited judgment, initiative and efforts which have contributed materially to the successful performance of the Company; and WHEREAS, the Company desires the Optionee to remain in the Company's employ and wishes to provide the Optionee with the opportunity to secure or increase his stock ownership in the Company in order to develop even a stronger incentive to put forth maximum effort for the continued success and growth of the Company. NOW, THEREFORE, in consideration of the premises and of the covenants and agreements herein set forth, the parties hereby mutually covenant and agree as follows: 1. Grant of Options. Subject to the terms and conditions of the Plan and this Agreement, and shareholder approval of the Plan at the Company's 1995 annual meeting of shareholders, the Company grants to the Optionee this option (the "Option") to purchase from the Company all or any part of the aggregate number of ______ shares of Common Stock (the "Optioned Shares"), subject to adjustment as provided in Paragraph 7. This Option is intended to constitute a nonqualified stock option and shall not be treated as an incentive stock option within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended. 2. Option Price. The option price to be paid for the Optioned Shares shall be $______ per share, subject to adjustment as provided in Paragraph 7. The per share option price has been determined by the Compensation and Stock Option Committee (the "Committee") of the Board of Directors of the Company (the "Board") to be not less than 100% of the fair market value of the Common Stock on the Grant Date. 3. Exercise of Option. (a) Subject to the terms and conditions of the Plan and except as otherwise provided in this Agreement, this Option may be exercised by the Optionee while in the employ of the Company, in whole or in part, from time to time or at any time, beginning on the Grant Date and ending on the seventh anniversary of the Grant Date (the "Termination Date") in accordance with the following schedule: Cumulative Percentage Elapsed Number of of Optioned Shares Years After Grant Date Which May be Purchased Less Than One Year 0% One Year 33-1/3% Two Years 66-2/3% Three Years and After 100% (b) If the Optionee is discharged or leaves the employ of the Company for any reason (other than termination by the Company for "cause," the death or disability of the Optionee or the retirement of the Optionee after reaching the age of 65), prior to the Termination Date, this Option, to the extent not theretofore exercised but then permitted to be exercised under the percentage limitations of Paragraph 3(a), may be exercised by the Optionee or by his legal representative at any time within three months after the date of termination of employment upon the tender to the Company in cash or its equivalent of the full purchase price (and not by the tender of previously acquired Common Stock), but in no event later than the Termination Date. (c) If the Optionee dies while he is in the employ of the Company, or if his employment is terminated by reason of his retirement after reaching the age of 65 or his disability prior to the Termination Date, this Option, to the extent not theretofore exercised (regardless of the percentage limitations of Paragraph 3(a)), may be exercised in whole or in part as follows: (i) by the legal representative of the Optionee at any time within six months after the date of the Optionee's death or (ii) by the Optionee or his legal representative at any time within three months after the termination of the Optionee's employment by reason of retirement after reaching the age of 65 or disability, but in no event later than the Termination Date in either case. (d) If the Optionee's employment is terminated by the Company "for cause," this Option to the extent not theretofore exercised shall terminate immediately and shall not be exercisable following such termination of employment. For purposes of this Paragraph 3, termination by the Company "for cause" shall mean any termination of the Optionee by reason of any action or omission on the part of the Optionee which is deemed contrary to the interests of the Company or not in the interests of the Company, as determined by the Board in its sole discretion. 2 (e) This Option may be exercised during the life of the Optionee only by the Optionee (or his legal representative as provided in this Paragraph 3). 4. Manner of Exercise and Payment. This Option may be exercised only by written notice to the Company by the Optionee (or his legal representative as provided in Paragraph 3) of the Optionee's (or such legal representative's) intent to exercise all or part of this Option, served upon the Secretary of the Company at its office at Sheboygan, Wisconsin, specifying the number of Optioned Shares in respect to which this Option is being exercised, accompanied by payment of the aggregate option price for such Optioned Shares, at the Optionee's (or such legal representative's) election (except as limited in Paragraph 3): (a) in cash or by certified check or bank draft to the order of the Company; (b) by delivering previously acquired shares of Common Stock, duly endorsed in blank or accompanied by stock powers duly endorsed in blank, valued at their fair market value at the time of exercise as determined by the Committee; or (c) by any combination of (a) and (b). For purposes of (b) and (c) above, the term "previously acquired shares of Common Stock" shall only include Common Stock owned by the Optionee prior to the exercise of this Option and shall not include shares of Common Stock which are being acquired pursuant to the exercise of this Option. Upon receipt of the payment of the aggregate option price for all of the Optioned Shares so purchased, certificates for such Optioned Shares shall be issued by or on behalf of the Company to the Optionee. The Optioned Shares so acquired, upon payment in full of the aggregate option price, shall be fully paid and nonassessable, except as provided by Section 180.0622(2) (b) of the Wisconsin Statutes. 5. Transferability; Limitations. Subject to the limitations of this Section 5, this Option shall be transferable, in whole or in part, upon the surrender of this Option by the Optionee to the Company for one or more new Options of like tenor representing, in the aggregate, the right to purchase the number of shares of Common Stock purchasable hereunder, each of such new Options to represent the right to purchase such number of shares of Common Stock as shall be designated by the Optionee at the time of such surrender, subject to the terms and conditions of the Plan and this Option. This Option may only be transferred by will or by the laws of descent or distribution, or to any member of the Optionee's "immediate family," as such term is defined in Rule 16a-1(e) under the Securities Exchange Act of 1934 (the "Exchange Act") or to trusts, partnerships or other entities established solely for the benefit of members of the Optionee's immediate family; provided, however, that (x) there may be no consideration for any such transfer, (y) subsequent transfers of any portion of this Option must also be in compliance with this Section 5 and (z) promptly after making any such transfer, the Optionee shall provide to the Company the Notice of Transfer of Option attached as Exhibit 1 hereto. In the event of such a permitted transfer of this Option, the transferee shall have all of the rights of the Optionee under the Plan and this Option, as if the Optionee had retained this Option. The terms of this Option shall be binding upon the permitted transferees, executors, administrators, heirs and successors of the Optionee. 3 6. Tax Withholding. (a) The Company may require as a condition precedent to the issuance or transfer of any shares of Common Stock upon exercise of this Option that the Optionee pay to the Company, upon its demand, or otherwise make arrangements satisfactory to the Company for payment of, such amount as may be requested by the Company for the purpose of satisfying the Company's tax withholding requirement. If the amount so requested is not so paid or if such arrangements are not made, the Company may refuse to issue or transfer any Optioned Shares upon exercise of this Option. (b) The Optionee shall be permitted to satisfy the Company's tax withholding requirements by delivering shares of previously owned Common Stock having a fair market value (as determined by the Committee) on the date income is recognized by the Optionee (the "Tax Date") pursuant to the exercise of this Option equal to the minimum amount required to be withheld. If the number of shares of Common Stock determined pursuant to the preceding sentence shall include a fractional share, the number of shares delivered shall be reduced to the next lower whole number and the Optionee shall deliver to the Company cash in lieu of such fractional share, in an amount equal to the Common Stock's then fair market value as determined by the Committee, or otherwise make arrangements satisfactory to the Company for payment of such amount 7. Adjustment to Optioned Shares and Option Price. In the event of a capital adjustment resulting from a stock dividend (other than a stock dividend in lieu of an ordinary cash dividend), stock split, reorganization, spin-off, split-up or distribution of assets to shareholders, recapitalization, merger, consolidation, combination or exchange of shares or the like, the Optioned Shares and the per share option price (but not the aggregate option price for all Optioned Shares, as adjusted) shall be adjusted in a manner consistent with such capital adjustment and in accordance with the Plan; provided, however, that no such adjustment shall require the Company to issue any fractional shares and the adjustment shall be limited accordingly as determined by the Committee. The determination of the Committee as to any adjustment shall be final. 8. Transfer Restrictions. The Optioned Shares to be acquired upon exercise of this Option may not be sold or offered for sale except pursuant to an effective registration statement under the Securities Act of 1933, as amended ("Act"), or in a transaction which, in the opinion of legal counsel for the Company, is exempt from the registration provisions of the Act. 9. Status of Optionee. The Optionee shall not be deemed for any purposes to be a shareholder of the Company with respect to any of the Optioned Shares except to the extent that this Option shall have been exercised, the aggregate option price for the Optioned Shares purchased shall have been fully paid and a stock certificate shall have been issued by or on behalf of the Company therefor. 10. Employment. It is fully understood that nothing contained in this Agreement or the Plan shall be deemed to confer upon the Optionee any right to continue in the employ of 4 the Company, nor to interfere in any way with the right of the Company to terminate the employment of the Optionee at any time. 11. Interpretation by Committee. As a condition of the granting of this Option, the Optionee agrees, for himself and his legal representatives, that the Plan and this Agreement shall be subject to discretionary interpretation by the Committee and that any interpretation by the Committee of the terms of the Plan and this Agreement shall be final, binding and conclusive on the Optionee and his legal representatives in all respects and shall not subject to challenge or dispute by the Optionee or his legal representatives. 12. Change in Control. (a) Notwithstanding any other provision of this Agreement (including, without limitation, Paragraph 3) upon the occurrence of a Change in Control (as hereinafter defined) this Option, to the extent then outstanding and unexercised, shall become immediately exercisable in full for the remainder of its term, but prior to the Termination Date, and the Optionee shall have the right for a period of 30 days following the Change in Control to require the Company to purchase this Option for cash at the aggregate Acceleration Price (as hereinafter defined) for all Optioned Shares then subject to issuance upon exercise of this Option; provided, however, that, if then required by the rules under Section 16 of the Securities Exchange Act of 1934, as amended ("Section 16 Rules"), the Optionee shall have the right to exercise this Option or require the Company to purchase this Option only if at least six months has elapsed between the Grant Date and the Change in Control date. (b) The "Acceleration Price" shall be the excess of the highest of the following over the option price per share set forth in Paragraph 2 (as the same may be adjusted from time to time pursuant to Paragraph 7) on the Change in Control date: (i) the highest reported ask price of the Common Stock, as reported on NASDAQ or the principal securities exchange or market upon which the Common Stock is then listed or traded, on or within the 60 days prior to and including the Change in Control date; (ii) the highest purchase or sale price of the Common Stock reported in a Schedule 13D or an amendment thereto as paid or received on or within the 60 days prior to and including the Change in Control date; (iii) the highest tender offer price paid or offered for the Common Stock on or within the 60 days prior to and including the Change in Control date; and (iv) the highest cash merger or similar price paid or offered for the Common Stock on or within the 60 days prior to and including the Change of Control date. (c) A "Change in Control" (and the Change in Control date) shall be the occurrence of any one of the following events (certain defined terms used in this Paragraph 12(c) are defined in Paragraph 12(d)): 5 (i) the first day of receipt by the Company of a Schedule 13D, any amendment thereto or notice of a public announcement confirming that any Person (other than any employee benefit plan of the Company or of any subsidiary of the Company or any Person organized, appointed or established pursuant to the terms of any such benefit plan or any Person who is a key employee of the Company), together with his Affiliates or Associates, is or becomes the Beneficial Owner of securities representing at least 20% of the combined voting power of the Company; (ii) the first day on which two or more of the members of the Board are not Continuing Directors; (iii) the day on which the shareholders of the Company approve (A) any business combination, consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (B) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; or (iv) the day on which the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company. d. For purposes of this Paragraph 12: (i) a "Person" shall mean any individual, firm, corporation, partnership, trust or other entity. (ii) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. (iii) a Person shall be a "Beneficial Owner" of securities (A) which such Person beneficially owns, directly or indirectly, or (B) which such Person has the right to acquire (whether such right is exercisable immediately or only with the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants, options or otherwise, other than if such Person acquires or has the right to acquire such securities as an underwriter, broker, dealer or selling group member in connection with the public or private distribution of such securities pursuant to an underwriting or similar agreement with the Company. (iv) "Continuing Directors" means any member of the Board who was a member of the Board on December 20, 1994, and any successor of a Continuing Director who is recommended or elected to succeed the Continuing Director by a majority of the remaining Continuing Directors. 6 13. Modification. At any time and from time to time the Committee may direct execution of an instrument providing for the modification, extension or renewal of this Option; provided, however, that no such modification, extension or renewal shall (a) confer on the Optionee any right or benefit which could not be conferred on him by the grant of a new option under the Plan at such time or (b) alter, impair or adversely affect this Option or Agreement without the written consent of the Optionee. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Optionee has hereunto affixed his signature as of the day and year first above written. SCHULTZ SAV-O STORES, INC. By: ___________________________ Title:__________________________ ------------------------------- ___________________, Optionee 7 Exhibit 1 SCHULTZ SAV-O STORES, INC. NOTICE OF TRANSFER OF STOCK OPTION This Notice is intended to (i) inform Schultz Sav-O Stores, Inc. (the "Company"), that ________________ ( the "Optionee") has transferred and assigned to the transferee named below (the "Transferee"), a member of the Optionee's "immediate family," as such term is defined in Rule 16a-1(e) of the Securities Exchange Act of 1934, or a trust, partnership or other entity established solely for the benefit of members of the Optionee's immediate family, all of the Optionee's right, title and interest in and to a nonqualified stock option (or portion thereof described below) to purchase ___________ shares of common stock of the Company at a price of $_____ per share, originally granted to the Optionee pursuant to the Nonqualified Stock Option Agreement, dated _____________, 19__, issued by the Company to the undersigned (the "Option") and (ii) request the Company to issue a new Option in the name of the Transferee. No consideration has been or will be received by the Optionee in connection with this transfer. The Option has been validly transferred and assigned by the Optionee to the following: - ------------------- ------------------------------------- Name of Transferee Street Address, City, State, Zip Code - ------------------------------------------------- If entire Option has not been transferred, number of shares underlying the portion transferred - --------------------------------- ------------------ Signature of Optionee Date of Transfer - ----------------------- ----------------- Signature of Transferee Name By executing this Notice, the Transferee hereby agrees to comply with and be subject to the terms and conditions of the Option. Receipt of this Notice is hereby acknowledged this ___ day of _________, 19__. SCHULTZ SAV-O STORES, INC. By Name: Title: EX-10.19 5 OFFICER ANNUAL INCENTIVE PLAN As Amended Through October 15, 1998 SCHULTZ SAV-O STORES, INC. OFFICER ANNUAL INCENTIVE PLAN 1. Purpose The purpose of the Schultz Sav-O Stores, Inc. Officer Annual Incentive Plan ("Plan") is to (a) reward Participants on an individual and team basis for the achievement of corporate financial goals and objectives which increase the economic value of the Company for the benefit of all shareholders; (b) provide competitive levels of compensation to its executive officers to enable the Company to attract and retain highly qualified and talented individuals who are able to exert a significant impact on the economic value of the Company for the benefit of all shareholders; (c) encourage teamwork and cooperation in the achievement of corporate financial goals and objectives; and (d) recognize differences in the performance of individual Participants. 2. Plan Administration The Compensation and Stock Option Committee of the Board of Directors (the "Committee") shall have full power, authority and responsibility for the design, construction, administration and interpretation of the Plan. The Committee may from time to time or at any time make such decisions and adopt such rules and regulations for the design, construction, administration and interpretation of the Plan as it deems appropriate. Any such decision made by the Committee shall be final, conclusive and binding upon all Participants and any person claiming under or through them. A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by at least a majority of a quorum. Any decision or determination reduced to writing and signed by all of the members of the Committee shall be fully as effective as if it had been made by a unanimous vote at a meeting of the Committee duly called and held. 3. Definitions 3.1 "Base Salary" means the dollar amount of a Participant's annual base salary actually earned during the Plan Year, without adjustment for bonuses (hereunder or otherwise), salary deferrals, value of benefits, stock option or other equity-based incentive award grants or exercises, imputed income, special payments, amounts contributed to or earned under the Company's Retirement Savings Plan or its Executive Benefits Restoration Plan or similar existing or future plans. 3.2 "Base Salary Percentage" means the percentage arrived at by dividing a Participant's Base Salary for a specified Plan Year by the aggregate Base Salaries of all Participants for the same Plan Year. 3.3 "Bonus Amount" means a Participant's annual aggregate bonus amount which is calculated in the manner set forth in Section 5.1. 3.4 "Bonus Pool" means the dollar amount of the cash award pool established for the specified Plan Year for the distribution of Bonus Awards to Participants for such Plan Year, calculated as follows: Bonus Pool = 10% of the dollar amount of the Current Year EVA + 5% of the dollar amount of the Incremental EVA + $25,000 for each percentage point increase, if any, in net sales of the Company for the specified Plan Year over net sales of the Company in the preceding Plan Year, each as reflected in the Company's audited financial statements for such Plan Years, subject to adjustment as determined by the Board to take into account extraordinary, unusual or nonrecurring events or circumstances (other than the acquisition of other supermarkets or businesses). 3.5 "Company Performance Bonus Pool" shall be equal to one-half of the Bonus Pool for the specified Plan Year. 3.6 "Current Year EVA" means the EVA as calculated for the specified Plan Year. 3.7 "Economic Value Added" or "EVA" means the NOPAT that remains after subtracting the product of the Threshold Rate of Return multiplied by the Investment Amount, expressed as follows: EVA = NOPAT C [Threshold Rate of Return x Investment Amount] EVA may be positive or negative. 3.8 "Incremental EVA" means the Current Year EVA minus the EVA for the prior Plan Year. For purposes of calculating Incremental EVA for the 1995 Plan Year, the EVA for 1994 was $1,128,000. Incremental EVA may not be negative. 3.9 "Individual Performance Bonus" shall have the meaning set forth in Section 5.1. 3.10 "Individual Performance Bonus Pool" shall be equal to one-half of the Bonus Pool for the specified Plan Year. 3.11 "Individual Performance Factor" shall have the meaning set forth in Section 5.2. -2- 3.12 "Investment Amount" means the dollar amount of the Company's average investment for the Plan Year, calculated by adding the investment reflected on the Company's financial statements as of the end of each fiscal quarter, and then dividing by four, where investment is determined as follows: Investment = indebtedness for borrowed money + shareholders' investment + obligations under capital leases 3.13 "NOPAT" means the Company's net earnings after tax (without reduction for any Bonus Amounts or Bonus Pool accrued, paid or payable under the Plan), plus interest expense after tax for the Plan Year, all as reflected in the Company's audited financial statements for the Plan Year. 3.14 "Participant" means an eligible executive officer of the Company under Section 4.1 who has been selected to participate in the Plan for the Plan Year pursuant to Section 4.2. 3.15 "Plan Year" means the one-year period coincident with the Company's applicable fiscal year. 3.16 "Threshold Rate of Return" shall be the target percentage rate of return on the Investment Amount for the specified Plan Year established by the Committee at the beginning of each Plan Year based on the Company's weighted average cost of capital. For the 1995 Plan Year, the Threshold Rate of Return has been established by the Committee as 9.1%. 4. Eligibility 4.1 Eligible Executive Officers. In general, all executive officers of the Company (which generally shall include those Company officers listed as such in the Company's annual report to shareholders) at the beginning of a Plan Year will be eligible for participation in the Plan. However, nomination of an executive officer by the Chief Executive Officer and approval by the Committee will be required for actual participation. 4.2 Nomination and Approval. Each Plan Year, the Company's Chief Executive Officer will nominate eligible executive officers to participate in the Plan for the specified Plan Year. The Committee will have the final authority to select the Participants for such Plan Year from among the eligible executive officers nominated by the Company's Chief Executive Officer. Selection normally will take place, and will be communicated to each Participant, prior to or shortly after the beginning of the specified Plan Year. 5. Bonus Amounts; Individual Performance Factors 5.1 Calculation of Bonus Amounts. Each Participant's Bonus Amount for a specified Plan Year will be equal to his pro-rata portion of the Company Performance Bonus Pool plus his Individual Performance Bonus. For any -3- specified Plan Year, a Participant's pro-rata portion of the Company Performance Bonus Pool shall be equal to the product of the Participant's Base Salary Percentage multiplied by the Company Performance Bonus Pool. The Participant's Individual Performance Bonus shall be equal to the product of the Participant's Base Salary Percentage multiplied by the Individual Performance Bonus Pool multiplied by his Individual Performance Factor; provided, however, that the aggregate Individual Performance Bonuses for all Participants for a specified Plan Year may not exceed the Individual Performance Bonus Pool for such Plan Year. If the aggregate Individual Performance Bonuses for all Participants for a specified Plan Year would exceed the Individual Performance Bonus Pool for such Plan Year, then the Committee in its discretion shall adjust the Participants' Individual Performance Bonuses so that such aggregate Individual Performance Bonuses will not exceed the Individual Performance Bonus Pool for such Plan Year. 5.2 Individual Performance Factor Calculation. Each Participant's Individual Performance Factor for a Plan Year will be based on the Participant's accomplishment of individual and/or group financial and/or other goals or objectives established by the Company's Chief Executive Officer, with the approval and ratification of the Committee (or as determined solely by the Committee in the case of the Company's Chief Executive Officer), as of the beginning of the specified Plan Year. Whenever possible, individual performance will be evaluated according to quantifiable or objective benchmarks of success and the level of the Participant's relative achievement of such quantifiable benchmarks. An achievement percentage continuum that ranges from achieving 0% to 150% of the quantifiable benchmark opportunity will be established and the Participant's relative level of achievement of such quantifiable benchmarks will be enumerated accordingly from 0 to 1.5 based on such continuum. After the end of a Plan Year, the Company's Chief Executive Officer, with the approval and ratification of the Committee (or solely by the Committee in the case of the Company's Chief Executive Officer), will evaluate and rate the Participant's performance over the Plan Year and the relative contribution of the Participant to the achievement of the previously established individual or group financial or other performance goals and objectives, and this evaluation will result in the Participant's Individual Performance Factor being determined according to the following schedule: Performance Individual Individual Rating Performance Factor Very Good 1.5 1.5 Good 1.0 Satisfactory 0.5 Marginal 0.0 -4- 6. Change in Status During the Plan Year 6.1 New Hire or Promotion An executive officer who is newly hired or promoted during a specified Plan Year to an executive officer position which, if held by the Participant at the beginning of the Plan Year, would have otherwise allowed the Participant to be eligible for participation in the Plan will generally not be eligible to receive a Bonus Amount for such Plan Year; provided, however, that the Company's Chief Executive Officer, with the approval and ratification of the Committee (or solely by the Committee in the case of the Company's Chief Executive Officer) may waive this policy and allow such executive officer to receive a pro rata Bonus Amount for such Plan Year based on the percentage of the Plan Year the executive officer was employed in such eligible executive officer position (determined based on the actual number of full months of employment in such executive officer position during the Plan Year divided by 12). Any such waiver of this policy will take into account such factors as the executive officer's contributions to the Company's achievement of corporate financial goals and objectives in such executive officer position and the portion of the Plan Year the individual actually spent in such executive officer position. 6.2 Death, Disability or Retirement If a Participant's employment as an effective officer is terminated during a Plan Year by reason of death, disability or normal or early retirement, the Participant (or his or her heirs or personal representatives in the case of death) will receive a pro rata Bonus Amount for such Plan Year based on the percentage of the Plan Year the Participant was employed in such position (determined based on the actual number of full months of employment of such Participant during the Plan Year divided by 12). 6.3 Termination for any Other Reason If a Participant's employment is terminated during a Plan Year for any reason other than death, disability or retirement, such Participant will generally not be eligible to receive a Bonus Amount for such Plan Year; provided, however, that the Company's Chief Executive Officer, with the approval and ratification of the Committee (or solely the Committee in the case of the Company's Chief Executive Officer) may waive this policy and allow such Participant to receive a pro-rata Bonus Amount for such Plan Year based on the percentage of the Plan Year the executive officer was employed in such eligible executive officer position (determined based on the actual number of full months of employment in such executive officer position during the Plan Year divided by 12). -5- 7. Administrative Provisions 7.1 Amendments and Terminations. The Company's Board of Directors shall have the right to modify or amend this Plan in whole or in part from time to time or at any time, or suspend it or terminate it entirely; provided, however, that no such modification, amendment, suspension or termination may, without the consent of any affected Participants (or beneficiaries of such Participants in the event of death), reduce the rights of any such Participants (or beneficiaries, as applicable) to a payment or distribution of a Bonus Amount already determined and earned under Plan terms in effect prior to such change. A Participant shall not be deemed to have earned or have any right to any Bonus Amount for a Plan Year until completion of that Plan Year and the determination of Bonus Amounts for such Plan Year by the Company's Chief Executive Officer and/or the Committee. 7.2 Effect of Award on Other Employee Benefits. By acceptance of a Bonus Amount, each Participant agrees that such Bonus Amount is special additional compensation and that it will not affect adversely any other employee benefit (e.g., Retirement Savings Plan, Executive Benefits Restoration Plan, life insurance, etc.), in which the Participant participates or to which he is entitled, except as provided in Section 7.4 below. The existence of the Plan or the grant of any Bonus Amounts hereunder shall not restrict the ability of the Committee or the Board to grant any other discretionary bonuses to any executive officers, employees or others outside of the Plan. 7.3 Retirement Programs; Severance Agreements. Bonus Amounts paid under this Plan shall be included in the Participant's compensation for purposes of the Company's Retirement Savings Plan, Executive Benefits Restoration Plan, any other qualified employee benefit plan and any applicable key executive employment and severance agreement with the Company. 7.4 No Right to Continued Employment or Additional Bonus Amounts. A Participant's eligibility for or actual receipt of a Bonus Amount in any specified Plan Year shall not give the Participant any right to continued employment with the Company, and the right and power to dismiss or terminate the employment of the Participant for any reason whatsoever (other than as otherwise specified in any applicable contract of employment between the Participant and the Company) is specifically reserved to the Company. In addition, the selection of an eligible executive officer as a Participant in the Plan for any Plan Year shall not require or infer the inclusion or selection of such person as a Participant for any subsequent Plan Year or, if such person is subsequently so included or selected, shall not require that the same Bonus Amount provided to the Participant under the Plan for an earlier Plan Year be provided to such Participant for the subsequent Plan Year. -6- 7.5 Adjustments to Performance Goals. When a performance goal or objective is based on Economic Value Added or other quantifiable financial or accounting measures, it may be appropriate to exclude certain items in order to properly measure performance. The Committee in its discretion will decide those items that shall be considered in adjusting actual results. For example, some types of items that may be considered for exclusion are: a. Extraordinary Items. Any gains or losses which will be treated as extraordinary in the Company's financial statements under generally accepted accounting principles. b. Unanticipated Nonrecurring Non-Ordinary Course Items. Unanticipated, nonrecurring, nonordinary course items such as: (i) Gains or losses from the sale or disposal of real estate or property. (ii) Gains resulting from insurance recoveries when such gains relate to claims filed in prior years. (iii) Losses resulting from natural catastrophes, when the cause of the catastrophe is beyond the control of the Company and did not result from any failure or negligence on the Company's part. (iv) Changes in accounting policies or practices. 7.6 Payment of Bonus Amounts. The Bonus Amounts payable for a Plan Year as determined by the Chief Executive Officer and/or Committee shall be distributed by the Company as soon as practicable after the date of the first public release of the Company's complete audited financial statements for such Plan Year. 8. Miscellaneous 8.1 Indemnification. Each person who is or who shall have been a member of the Committee or of the Company's Board of Directors, shall not be liable for, and shall be indemnified and held harmless by the Company against and from, any and all loss, cost, liability or expense (including attorneys' fees and disbursements) that may be imposed upon or incurred by him or her in connection with any claim, action, suit or proceeding to which he or she may be a party by reason of any action taken or failure to act under or pursuant to the Plan. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification, advancement of expenses or reimbursement to which such persons may be entitled under the Company's Articles of Incorporation, By-Laws, Indemnity Agreements, as a matter of law under the Wisconsin -7- Business Corporation Law, under applicable insurance policies or otherwise, or any other power or authority that the Company may have to indemnify or reimburse them or hold them harmless. 8.2 Expenses of the Plan. The expenses of administering this Plan shall be borne by the Company. 8.3 Withholding Taxes. The Company shall deduct from all Bonus Amounts paid or payable under the Plan any federal or state taxes required by law to be withheld with respect to such payments. 8.4 Non-Transferrable Benefits. Bonus Amounts (or any interests therein) paid or payable under the Plan are personal to Participants and are non-transferrable and non-assignable during the life of a Participant. 8.5 Unsecured Rights. The right of any Participant to receive a Bonus Amount under the Plan when determined and earned shall be an unsecured claim against the general assets of the Company and the Participant shall have no rights in or against any specific assets of the Company as a result of participation hereunder. 8.6 Powers of Company Not Affected. The existence of the Plan shall not affect in any way the right or power of the Company, the Board of Directors or its shareholders to make or authorize any or all adjustments, recapitalization, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. 8.7 Governing Law. This Plan shall be construed in accordance with and governed by the laws of the State of Wisconsin. 8.8 Effective Date. The effective date of the Plan is January 1, 1995. -8- EX-10.20 6 AMENDMENT TO NONQUALIFIED STOCK OPTION Name of Optionee: ______________ Date of Amendment: __________, 1998 GLOBAL AMENDMENT TO NONQUALIFIED STOCK OPTION AGREEMENT(S) THIS GLOBAL AMENDMENT TO NONQUALIFIED STOCK OPTION AGREEMENT(S) (this "Amendment") is entered into as of the date set forth above, by and between Schultz Sav-O Stores, Inc. (the "Company") and the optionee named above (the "Optionee"). WHEREAS, the Company and the Optionee have entered into one or more Nonqualified Stock Option Agreement(s) (the "Agreements") under the Company's 1990 Stock Option Agreement and/or the Company's 1995 Equity Incentive Plan; WHEREAS, the Company and the Optionee desire to amend the terms of each of the Agreements; NOW THEREFORE, the parties hereto agree as follows: A. Each of the Agreements is hereby amended so that Section 5 of each of the Agreements reads in its entirety as follows: 5. Transferability; Limitations. Subject to the limitations of this Section 5, this Option shall be transferable, in whole or in part, upon the surrender of this Option by the Optionee to the Company for one or more new Options of like tenor representing, in the aggregate, the right to purchase the number of shares of Common Stock purchasable hereunder, each of such new Options to represent the right to purchase such number of shares of Common Stock as shall be designated by the Optionee at the time of such surrender, subject to the terms and conditions of the Plan and this Option. This Option may only be transferred by will or by the laws of descent or distribution, or to any member of the Optionee's "immediate family," as such term is defined in Rule 16a-1(e) under the Securities Exchange Act of 1934 (the "Exchange Act") or to trusts, partnerships or other entities established solely for the benefit of members of the Optionee's immediate family; provided, however, that (x) there may be no consideration for any such transfer, (y) subsequent transfers of any portion of this Option must also be in compliance with this Section 5 and (z) promptly after making any such transfer, the Optionee shall provide to the Company the Notice of Transfer of Option attached as Exhibit 1 hereto. In the event of such a permitted transfer of this Option, the transferee shall have all of the rights of the Optionee under the Plan and this Option, as if the Optionee had retained this Option. The terms of this Option shall be binding upon the permitted transferees, executors, administrators, heirs and successors of the Optionee. B. An Exhibit 1, attached to this Amendment, is hereby made an exhibit to and a part of the Agreements. IN WITNESS WHEREOF, each of the undersigned has duly executed this Amendment as of the date first set forth above. SCHULTZ SAV-O STORES, INC. OPTIONEE By: ____________________________ ____________________ Name: Title: Exhibit 1 SCHULTZ SAV-O STORES, INC. NOTICE OF TRANSFER OF STOCK OPTION This Notice is intended to (i) inform Schultz Sav-O Stores, Inc. (the "Company"), that ________________ ( the "Optionee") has transferred and assigned to the transferee named below (the "Transferee"), a member of the Optionee's "immediate family," as such term is defined in Rule 16a-1(e) of the Securities Exchange Act of 1934, or a trust, partnership or other entity established solely for the benefit of members of the Optionee's immediate family, all of the Optionee's right, title and interest in and to a nonqualified stock option (or portion thereof described below) to purchase ___________ shares of common stock of the Company at a price of $_____ per share, originally granted to the Optionee pursuant to the Nonqualified Stock Option Agreement, dated _____________, 19__, issued by the Company to the undersigned (the "Option") and (ii) request the Company to issue a new Option in the name of the Transferee. No consideration has been or will be received by the Optionee in connection with this transfer. The Option has been validly transferred and assigned by the Optionee to the following: - -------------------------- ------------------------------------- Name of Transferee Street Address, City, State, Zip Code - ------------------------------------------------- If entire Option has not been transferred, number of shares underlying the portion transferred - --------------------------------- ------------------ Signature of Optionee Date of Transfer - --------------------------------- --------------------------- Signature of Transferee Name By executing this Notice, the Transferee hereby agrees to comply with and be subject to the terms and conditions of the Option. Receipt of this Notice is hereby acknowledged this ___ day of _________, 19__. SCHULTZ SAV-O STORES, INC. By____________________________ Name: ____________________ Title:____________________ EX-27 7 FDS --
5 The schedule contains summary financial information extracted from the consolidated financial statements of Schultz Sav-O Stores, Inc. as of and for the nine months ended October 10, 1998 and is qualified in its entirety by reference to such financial statements. 1 9-MOS JAN-02-1999 JAN-04-1998 OCT-10-1998 30,828,000 0 9,309,000 0 20,996,000 67,896,000 58,818,000 37,136,000 102,582,000 37,158,000 3,078,000 0 0 438,000 50,428,000 102,582,000 368,760,000 368,760,000 309,156,000 0 50,564,000 0 634,000 9,362,000 3,632,000 5,730,000 0 0 0 5,730,000 0.84 0.82 Net of "Allowances for doubtful accounts". Amounts included in "Othercosts and expenses".
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