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EXHIBIT 28(e)
NOTICE OF RESTRICTED STOCK AWARD
GRANTED MAY 30, 2000
("Grant Notice")
To Charles C. Conaway
1. Grant of Award. Pursuant to Section 10(d) of the employment agreement dated
May 30, 2000 between Kmart Corporation (the "Company") and you, you are hereby
granted, effective May 30, 2000, 615,000 restricted shares of the Company's
Common Stock (the "Restricted Stock"), to be issued subject to the terms and
conditions of this Grant Notice. Subject to Paragraphs 5, 6 and 7 below, the
restrictions on the Restricted Stock shall expire as follows: May 30, 2004 with
respect to 307,500 shares; May 30, 2005, with respect to 307,500 shares (the
"Expiration Date(s)").
2. Issuance of Stock. As soon as practicable, the Company shall cause the shares
of Restricted Stock to be issued in your name, and they will be held in the
custody of the Company or its designee for your account, shall be subject to the
restrictions described herein and shall bear appropriate legends with respect to
the restrictions described herein.
3. Possible Offset and Reduction. This award of Restricted Stock is subject to
the offset and reduction provisions set forth in Section 10(g) of the Employment
Agreement.
4. Certain Terminations. In the event that your employment shall be terminated
without Cause or there shall be a Constructive Termination (as such capitalized
terms are defined in the Employment Agreement) prior to the Expiration Date(s),
the restrictions set forth in Paragraph 4 shall lapse and the shares of
Restricted Stock shall no longer be subject to forfeiture. In each case, except
as otherwise provided in this Grant Notice, a stock certificate representing the
applicable shares of the Company's Common Stock, free of any restrictions and
legend except as may be imposed by law, shall be issued to you as soon
thereafter as practicable in an amount equal to the applicable number of shares
issued as Restricted Stock.
5. Dividends and Voting. After issuance in your name of the shares of Restricted
Stock and so long as the Restricted Stock is outstanding, you shall have the
right to vote and receive dividends with respect to such shares, provided that
dividends paid, if any, with respect to such shares during the period such
shares remain subject to forfeiture pursuant to Paragraph 4 shall be held in the
custody of the Company or its designee for your account and shall be subject to
the same restrictions as apply to the Restricted Stock. Without limiting the
foregoing, (a) in the event of a forfeiture of shares of Restricted Stock, such
dividends shall be forfeited in the same proportion as such
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shares and (b) when you or your estate becomes entitled to a stock certificate
pursuant to Paragraph 5, you or your estate shall be entitled to receive all
retained dividends less any dividends that may have been forfeited. Upon the
payment of such amount to you or your estate, you or your estate shall also be
entitled to receive interest on such amount from the respective dividend payment
dates at a reasonable rate to be determined by the Compensation and Incentives
Committee. All payments of dividends and interest shall be subject to applicable
tax withholding requirements.
6. Nontransferability/Forfeiture. Neither the award nor any shares of Restricted
Stock or the right to vote or receive dividends may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of by you or are subject
to any of your debts or liabilities until the applicable Expiration Dates.
The award and the shares of Restricted Stock issued hereunder are
subject to the terms and conditions of this Grant Notice and, except as
otherwise provided herein, the applicable shares of Restricted Stock shall be
immediately forfeited and reacquired by the Company and all of your rights
thereto shall terminate without further obligation on the part of the Company if
your employment with the Company terminates prior to the applicable Expiration
Date. Notwithstanding anything to the contrary in this Paragraph 4, if you
violate the provisions of Section 12 of the Employment Agreement, all unvested
shares of Restricted Stock shall be immediately forfeited and reacquired by the
Company.
7. Expiration of Restrictions/Employment Requirement. Except as otherwise
provided in this Grant Notice, if your employment with the Company or any of its
Subsidiaries continues to the Expiration Date(s), or employment with the Company
terminates due to death or Disability prior to the Expiration Date(s), a stock
certificate representing the applicable shares of the Company's Common Stock,
free of any restrictions and legend except as may be imposed by law, shall be
issued to you or your estate as soon as practicable after each Expiration Date
or the date of death or termination due to Disability, as the case may be, in an
amount equal to the applicable number of shares issued as Restricted Stock.
In the event of your death or Disability, either before or after the
Expiration Date(s), any shares of the Company's Common Stock which you are
entitled to have issued free of restriction which have not yet been issued shall
in the case of death be issued to your legal representative of your estate, and
may in the case of Disability be issued to your legal representative or
guardian. The Compensation and Incentives Committee may require an indemnity
and/or such evidence or other assurances as it may deem necessary prior to such
issuance.
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8. Change in Control. In the event of a Change in Control (as defined in the
Employment Agreement) and prior to the Expiration Date(s), the restrictions set
forth in Paragraph 4 shall lapse and the shares of Restricted Stock shall no
longer be subject to forfeiture. In that case, except as otherwise provided in
this Grant Notice, a stock certificate representing the applicable shares of the
Company's Common Stock, free of any restrictions and legend except as may be
imposed by law, shall be issued as soon thereafter as practicable in an amount
equal to the applicable number of shares issued as Restricted Stock.
9. SEC Registration. As soon as practicable, the Company shall file a
registration statement on Form S-8 (or any successor form) with the SEC under
the Securities Act of 1933 covering the issuance of the shares of Restricted
Stock issuable hereunder and shall maintain the effectiveness of such
registration statement until you sell all of the shares of Restricted Stock
issued hereunder or legal counsel advises that you are free to sell such
Restricted Stock without registration.
10. Withholding Tax. Notwithstanding anything to the contrary in this Grant
Notice, the obligations of the Company to issue stock free of restrictions upon
the vesting of any portion of the Restricted Stock shall be contingent upon your
satisfaction of all applicable withholding tax requirements. Such issuance shall
be subject to reduction in the number of such shares, if necessary, to comply
with applicable withholding tax obligations.
You may elect, in such form and at such time as the Company may
prescribe, to satisfy any tax required to be withheld under applicable federal,
state or local law upon issuance of the stock, in whole or in part, by either
having the Company withhold whole shares of Kmart Corporation Common Stock or by
delivering other whole shares of Kmart Corporation Common Stock owned by you for
at least six months, having a Fair Market Value (as such Capitalized Term is
defined in the Kmart Corporation 1997 Long-Term Equity Compensation Plan) equal
to the amount withheld.
11. General. The validity and construction of this Grant Notice shall be
governed by the laws of the State of Michigan without reference to principles of
conflict of laws.
This grant is not made pursuant to the Kmart Corporation 1997 Long-Term
Equity Compensation Plan, however, except as expressly set forth herein or in
the Employment Agreement, this option shall be governed by the terms of such
Plan; provided, however, that Section 13.3 of the Plan shall be expressly
disregarded for purposes of this Grant Notice. If there is any conflict between
such Plan and this Grant Notice, this Grant Notice shall govern. If there is any
conflict between the Employment Agreement and either the Grant Notice or the
Plan (including, but not limited to, Section 13.3), the Employment Agreement
shall govern.
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The obligation of the Company to issue and deliver any stock
under this grant is specifically subject to all applicable laws, rules,
regulations and required governmental approvals. The Company shall use its
reasonable best efforts to obtain such approvals as promptly as practicable.
Kmart Corporation
By: /s/ N.W. LaDuke
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Accepted and agreed:
/s/ Charles C. Conaway
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Charles C. Conaway
