SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: September 10, 1994
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 No.: 33-48862
HOMELAND HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-1311075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 N.E. 36th Street
Oklahoma City, Oklahoma 73125
(Address of principal executive offices) (Zip Code)
(405) 557-5500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of October 21, 1994.
Class A Common Stock, including redeemable common stock: 34,743,200 shares
Class B Common Stock: None
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
ASSETS
<TABLE>
<CAPTION>
September 10,January 1,
1994 1994
-----------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,701 $ 2,194
Receivables, net of allowance for uncollectible
accounts of $1,543 and $2,034 9,614 11,750
Inventories 91,745 93,145
Prepaid expenses and other current assets 10,611 3,697
Deferred tax assets 3,997 3,997
-------- --------
Total current assets 117,668 114,783
Property, plant and equipment:
Land 12,077 12,486
Buildings 30,361 30,335
Fixtures and equipment 61,422 60,043
Land and leasehold improvements 32,522 31,045
Software 17,915 17,410
Leased assets under capital leases 51,289 51,321
Construction in progress 3,691 2,564
-------- --------
209,277 205,204
Less accumulated depreciation
and amortization 78,229 67,509
-------- --------
Net property, plant and equipment 131,048 137,695
Excess of purchase price over fair
value of net assets acquired, net
of amortization of $795 and $717 3,737 3,815
Other assets and deferred charges 12,165 13,919
-------- --------
Total assets $264,618 $270,212
======== ========
Continued
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, Continued
(In thousands, except share and per share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 10,January 1,
1994 1994
-----------------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable - trade $ 31,939 $ 33,800
Salaries and wages 1,887 2,746
Taxes 8,199 4,724
Accrued interest payable 690 3,366
Other current liabilities 4,834 6,548
Current portion of long-term debt 750 6,000
Current portion of obligations under capital
leases 3,088 3,334
-------- --------
Total current liabilities 51,387 60,518
Long-term obligations:
Long-term debt 143,000 135,750
Obligations under capital leases 15,694 17,807
Other noncurrent liabilities 7,861 9,709
-------- --------
Total long-term obligations 166,555 163,266
Commitments and contingencies - -
Redeemable common stock, Class A, $.01 par value,
3,864,211 shares at September 10, 1994 and 3,970,211
shares at January 1, 1994, at redemption value 9,313 9,568
Stockholders' equity:
Common stock
Class A, $.01 par value, authorized - 40,500,000
shares, issued - 31,604,989 shares at September 10,
1994 and 31,498,989 shares at January 1, 1994
outstanding - 30,878,989 shares 316 315
Additional paid-in capital 46,612 46,358
Accumulated deficit (7,822) (7,753)
Minimum pension liability adjustment - (572)
Treasury stock, 726,000 shares at September 10, 1994
and 620,000 shares at January 1, 1994, at cost (1,743) (1,488)
-------- --------
Total stockholders' equity 37,363 36,860
-------- --------
Total liabilities and stockholders' equity $264,618 $270,212
======== ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
12 weeks 12 weeks
ended ended
September 10,September 11,
1994 1993
--------------------------
<S> <C> <C>
Sales, net $ 174,264 $ 180,866
Cost of sales 128,443 136,145
---------- ----------
Gross profit 45,821 44,721
Selling and administrative 43,962 41,050
---------- ----------
Operating profit 1,859 3,671
Interest expense 4,140 4,025
---------- ----------
Loss before income taxes (2,281) (354)
Income tax expense - 465
---------- ----------
Net loss $ (2,281) $ (819)
========== ==========
Net loss per common share $ (.07) $ (.02)
========== ==========
Weighted average shares outstanding 34,743,200 34,970,164
========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
36 weeks 36 weeks
ended ended
September 10,September 11,
1994 1993
--------------------------
<S> <C> <C>
Sales, net $ 541,591 $ 561,329
Cost of sales 400,115 417,770
---------- ----------
Gross profit 141,476 143,559
Selling and administrative 128,309 128,922
---------- ----------
Operating profit 13,167 14,637
Interest expense 12,190 13,453
---------- ----------
Income before income taxes and
extraordinary items 977 1,184
Income tax expense 1,046 1,945
---------- ----------
Loss before extraordinary items (69) (761)
Extraordinary items net of applicable income
taxes of $785 - (3,139)
---------- ----------
Net loss $ (69) $ (3,900)
========== ==========
Loss before extraordinary items
per common share $ (.00) $ (0.02)
Extraordinary items per common share - (0.09)
---------- ----------
Net loss per common share $ (.00) $ (0.11)
========== ==========
Weighted average shares outstanding 34,756,672 34,977,236
========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)
(Unaudited)
<CAPTION>
Minimum
Class A Additional Pension Total
Common Stock Paid-inAccumulatedLiabilityTreasury StockStockholders'
Shares Amount Capital DeficitAdjustmentShares Amount Equity
------ ------------- ----------------------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 2, 199331,364,989$314$46,036$(8,035)$ -486,000$(1,165)$37,150
Purchase of treasury stock 19,500- 47 - - 19,500 (47) -
Net loss - - - (3,900) - - - (3,900)
---------- ---- --------------- ----- ---------------------
Balance, September 11, 199331,384,489$314$46,083$(11,935)$ -505,500$(1,212)$33,250
========== ==== =============== ===== =====================
Balance, January 1, 199431,498,989$315$46,358$ (7,753)$(572)620,000$(1,488)$36,860
Purchase of treasury stock106,0001 254 - - 106,000 (255) -
Adjustment to reduce
minimum liability - - - - 572 - - 572
Net loss - - - (69) - - - (69)
---------- ---- --------------- ----- ---------------------
Balance, September 10, 199431,604,989$316$46,612$ (7,822)$ -726,000$(1,743)$37,363
========== ==== =============== ===== =====================
<FN>
<F1>
The accompanying notes are an integral part
of these financial statements.
</FN>
/TABLE
<PAGE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
36 weeks 36 weeks
ended ended
September 10,September 11,
1994 1993
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (69) $(3,900)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 11,399 11,152
Amortization of financing costs 998 1,039
Loss on disposal of assets 28 11
Amortization of beneficial interest in operating
leases 179 182
Write-off of financing costs on long-term
debt retired - 1,148
Provision for losses on accounts receivable 87 125
Change in assets and liabilities:
Decrease in receivables 2,049 4,733
Decrease in inventories 1,400 7,029
Increase in prepaid expenses and other current assets(6,914)(1,608)
(Increase) decrease in other assets and deferred charges107(89)
Increase (decrease) in accounts payable - trade(1,861) 980
Decrease in salaries and wages (859) (1,464)
Increase (decrease) in taxes 3,475 (720)
Decrease in accrued interest payable (2,676) (3,888)
Decrease in other current liabilities (1,142) (2,530)
Decrease in other noncurrent liabilities (1,768) (840)
------- -------
Net cash provided by operating activities 4,433 11,360
------- -------
Cash flows used in investing activities:
Capital expenditures (4,713) (3,893)
Cash received from sale of assets 401 298
------- -------
Net cash used in investing activities (4,312) (3,595)
------- -------
Cash flows used by financing activities:
Payments on subordinated debt - (47,750)
Net borrowings under revolving credit loans 3,000 13,250
Principal payments under notes payable (1,000) (1,250)
Principal payments under capital lease obligations(2,359) (2,178)
Payments to acquire treasury stock (255) (47)
Increase in book overdraft - 4,355
------- -------
Net cash used by financing activities (614) (33,620)
------- -------
</TABLE>
Continued
<PAGE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
36 weeks 36 weeks
ended ended
September 10,September 11,
1994 1993
--------------------------
<S> <C> <C>
Net decrease in cash and cash equivalents $ (493)$(25,855)
Cash and cash equivalents at beginning of period 2,194 25,855
------- --------
Cash and cash equivalents at end of period $ 1,701 $ -
======= ========
Supplemental information:
Cash paid during the period for interest $13,794 $ 16,389
======= ========
Cash paid during the period for income taxes $ 236 $ 135
======= ========
Supplemental schedule of noncash investing activities:
Capital lease obligations assumed $ - $ 3,017
======= ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Preparation of Consolidated Financial Statements.
The accompanying unaudited consolidated financial statements
of Homeland Holding Corporation and Subsidiary (the
"Company") reflect all adjustments consisting only of normal
and recurring adjustments which are, in the opinion of
management, necessary to present fairly the consolidated
financial position and the consolidated results of
operations and cash flows for the periods presented. These
unaudited consolidated financial statements should be read
in conjunction with the consolidated financial statements of
the Company for the period ended January 1, 1994 and the
notes thereto.
2. Accounting Policies.
The policies of the Company are summarized in the
consolidated financial statements of the Company for the 52
weeks ended January 1, 1994 and the notes thereto.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Comparison of Twelve and Thirty-Six Weeks Ended
September 10, 1994 with Twelve and Thirty-Six Weeks Ended
September 11, 1993.
Sales. Net sales for the 12 weeks and 36 weeks ended
September 10, 1994 decreased 3.7% and 3.5%, respectively, over
the net sales of the corresponding periods of 1993. The
decreases in net sales were primarily attributable to increased
competition in the Company's market area resulting primarily from
additional store openings of Wal-Mart Stores, Inc. ("Wal-Mart")
supercenter stores and Albertson's Inc. stores during late 1993
and 1994. (Five Wal-Mart supercenter stores and one Albertson's
store opened in the Company's market area during the first three
quarters of 1994). Although the Company does not know how many
stores Wal-Mart ultimately will open in the Company's market area
and the Company is taking steps to respond competitively,
including increased promotions (see Cost and Expenses below),
Wal-Mart's entry into the Company's market area may continue to
have an adverse effect on the Company's operations in the future.
Net sales for the 12 weeks and 36 weeks ended September
10, 1994 for the Company's continuing stores decreased 2.8% and
3.0%, respectively, over the comparable prior periods due
primarily to competitors' store openings in the Company's market
area.
Cost and Expenses. Gross profit as a percentage of
sales for the 12 weeks ended September 10, 1994 increased to
26.3% compared to 24.7% for the corresponding period of 1993.
Gross profit as a percentage of sales for the 36 weeks ended
September 10, 1994 increased to 26.1% compared to 25.6% for the
corresponding period of 1993. The increase in the gross profit
margin for the 12 weeks and 36 weeks ended September 10, 1994 was
due in part to higher vendor retail allowances than in the
corresponding periods of 1993. During the first three quarters
of 1994, additional emphasis was placed on obtaining vendor
retail allowances, which resulted in the Company's receiving more
such allowances during this period than in the first three
quarters of 1993. The increase in vendor retail allowances was
offset in part by increased markdowns which were taken in
response to the increased competition in the Company's market
area in an effort to remain price competitive and retain market
share. The increased markdowns occurred primarily in the first
quarter of 1994. The increase in gross profit margin for the 12
weeks ended September 10, 1994 was also due to above normal store
inventory losses which were recognized during the corresponding
period of the prior year.
Gross profit without regard to warehouse and
transportation costs as a percentage of sales increased to 28.8%
for the 12 weeks ended September 10, 1994 compared to 27.1% for
the comparable prior period, and increased to 28.5% for the 36
weeks ended September 10, 1994 compared to 27.8% for the same
period last year. This increase is due to the higher vendor
retail allowances during 1994 compared to the corresponding
period of 1993 and the above normal inventory losses experienced
at the Company's stores during the third quarter of 1993, offset
in part by increased markdowns (which occurred primarily in the
first quarter of 1994) in response to the increased competition.
Selling and administrative expenses increased to 25.2%
for the 12 weeks ended September 10, 1994 compared to 22.7% for
the comparable prior period. Selling and administrative expenses
as a percentage of sales increased to 23.7% for the 36 weeks
ended September 10, 1994 from 23.0% for the comparable prior
period on a total sales decline of $19.7 million. The increase
in selling and administrative expenses as a percentage of sales
was due in large part to the decrease in sales for the 36 weeks
ended September 10, 1994 as compared to the prior year. Selling
and administrative expenses decreased $613,000 for this period
compared to the prior year. Expenses have decreased during the
12 weeks and 36 weeks ended September 10, 1994 due to a reduction
in retail wages and benefits resulting from the modified
collective bargaining agreement entered into with the United Food
and Commercial Workers of North America in December 1993. In
addition, during the 12 weeks and 36 weeks ended September 10,
1994 there was a decrease in consulting expenses compared to the
corresponding periods of 1993. These decreases were offset by a
contractual increase in the monthly fees in connection with the
Company's computer services agreement and the one-time change in
the administration of the vacation policy which occurred during
the 12 weeks and 36 weeks ended September 11, 1993 which did not
recur in 1994.
Operating Income. Operating income for the 12 weeks
ended September 10, 1994 decreased to $1.9 million compared to
$3.7 million in the corresponding period of 1993, and decreased
to $13.2 million for the 36 weeks ended September 10, 1994
compared to $14.6 million in the corresponding period of 1993.
The decrease in operating income was due primarily to the
decrease in sales and for the 12 weeks ended September 10, 1994
was also due to the increase in selling and administrative
expenses.
Interest Expense. Interest expense for the 12 weeks
ended September 10, 1994 increased to $4.1 million from $4.0
million in the corresponding period of 1993 due to higher
interest rates and an increase in the average outstanding
borrowings under the Company's Revolving Credit Facility (defined
hereafter). The increase in the average outstanding borrowings
is primarily due to a $6 million prepayment made in July 1994 to
join the state workers compensation insurance program. Interest
expense for the 36 weeks ended September 10, 1994 decreased to
$12.2 million from $13.5 million in the corresponding period of
1993. The decrease was due to the redemption of the Company's
15-1/2% Subordinated Notes due November 1, 1997 (the
"Subordinated Notes") on March 1, 1993.
Income Tax Expense. There was no income tax expense
incurred for the 12 weeks ended September 10, 1994 compared to
$465,000 for the corresponding period of the prior year. The
income tax expense for the 36 weeks ended September 10, 1994 was
$1.0 million compared to $1.2 million (including the net effects
of the extraordinary items discussed below) for the corresponding
period of the prior year. The income tax expense is principally
comprised of alternative minimum tax expense.
Extraordinary Items. There were no extraordinary items
incurred during the 12 weeks or 36 weeks ended September 10,
1994. Extraordinary items for the 12 weeks ended March 27, 1993
consisted of the payment of $2.776 million in premiums on the
redemption of $47.750 million in aggregate principal amount of
the Subordinated Notes at a purchase price of 105.8% of the
outstanding principal amount and $1.148 million in unamortized
financing costs related to the redemption of the Subordinated
Notes. The extraordinary items for such 1993 period have been
shown in the financial statements net of income taxes of
$785,000.
Income or Loss. The Company recorded net loss of $2.3
million and $69,000, respectively, during the 12 weeks and 36
weeks ended September 10, 1994, compared to net loss of $819,000
and $3.9 million, respectively, for the comparable prior periods.
The increase in the net loss for the 12 weeks ended September 10,
1994 is due to the decrease in sales and the increases in selling
and administrative expenses and interest expense, offset in part
by the increase in gross profit margin. The decrease in the net
loss for the 36 weeks ended September 10, 1994 was due to the
decreases in selling and administrative expenses, interest
expense and the extraordinary items recognized in the 12 weeks
ended March 27, 1993, offset in part by the decrease in sales.
Liquidity and Capital Resources
The major sources of liquidity for the Company's
operations and expansion have been internally generated funds and
borrowings under revolving credit facilities. The Company's
Revolving Credit Agreement, dated as of March 4, 1992, as amended
(the "Revolving Credit Agreement"), among the Company, Union Bank
of Switzerland, New York Branch ("UBS"), as agent and as lender,
and other lenders and other financial institutions, provides for
a commitment of up to $50 million in secured revolving credit
loans, including a swing loan and certain letters of credit (the
"Revolving Credit Facility"). Borrowings under the Revolving
Credit Agreement bear interest at the UBS Base Rate plus 1.5% or
at an adjusted Eurodollar Rate plus 2.5%, which rates are subject
to increase upon certain conditions. At October 21, 1994, $25
million was outstanding under the Revolving Credit Facility.
At October 21, 1994, the Company had outstanding
indebtedness of $12 million of Series A Senior Secured Floating
Rate Notes due 1997, bearing interest at a floating rate of 3%
over LIBOR, $75 million of Series B Senior Secured Fixed Rate
Notes due 1999, bearing interest at 11-3/4% per annum which are
not redeemable by the Company until on or after March 1, 1997,
and $33 million of Series D Senior Secured Floating Rate Notes
due 1997. These notes were issued under an Indenture with United
States Trust Company of New York, as trustee (the "Senior Note
Indenture").
The Company has received a waiver from its lenders
through December 14, 1994, for failure to comply with certain
financial covenants under the Revolving Credit Agreement at the
end of the third quarter of 1994. The Company is in the process
of discussing with its lenders an amendment to permanently change
such covenants. In addition, based on the Company's recent
operating performance, management believes that it is probable
that the Company will not be able to comply with certain
financial covenants under the Revolving Credit Agreement at the
end of fiscal year 1994. Furthermore, the Company expects that
it will not be in compliance with one of its financial covenants
contained in the Senior Note Indenture at the end of fiscal year
1994. If the Company is not in compliance with its financial
covenants, it will seek to obtain amendments from its lenders.
Although the Company has been successful in obtaining amendments
to its Revolving Credit Agreement in the past, there is no
assurance that it will be able to do so in the future. There is
also no assurance that it would be able to obtain an amendment
under the Senior Note Indenture if one is required.
The Company has engaged outside advisors to assist with
the sale of all or a substantial portion of the operations of the
Company. Management is working toward the sale of a significant
portion of the operations of the Company. If such a sale is not
completed, management would pursue other strategic alternatives,
including but not limited to mergers, joint ventures or further
outsourcing.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1994 Annual Meeting of Stockholders was
held August 23, 1994. At the meeting, the Company's Board of
Directors was re-elected in its entirety.
Item 5. Other Information
Employment Agreements
In August 1994, Homeland entered into a three-year
employment agreement with Max E. Raydon, the Company's President
and Chief Executive Officer. The agreement provides a base
annual salary of not less than $180,000, subject to increase from
time to time at the discretion of the Board of Directors and
authorizes reimbursement for certain business-related expenses.
Under the agreement, Mr. Raydon is entitled to participate in the
Management Incentive Plan established by Homeland. Mr. Raydon is
also entitled to receive a special one-time non-recurring cash
bonus in an amount to be determined pursuant to a formula based
on the Company's stock price at the time of a transaction
(minimum amount payable of $200,000) if a Trigger Event (defined
generally as a merger, sale of more than 50% of the Company's
stock, or the sale of substantially all of the Company's assets)
occurs on or prior to December 31, 1995 (or by February 28, 1996
if a definitive agreement is in place at December 31, 1995). If
the agreement is terminated by Homeland for other than cause
prior to a change of control or is terminated by Mr. Raydon for
good reason prior to a change of control, Mr. Raydon is entitled
to receive a lump sum payment equal to three times his salary
(without regard to the 10% reduction in management salaries
effected in June 1993) plus a pro rata amount of the incentive
compensation for the portion of the incentive year that precedes
the date of termination, subject to reduction to the extent of
any compensation received from other employment. If the
agreement is terminated, whether voluntary or involuntary, within
180 days following a change of control or a Trigger Event, Mr.
Raydon is entitled to receive payment as set forth in the
preceding sentence including the amount forgone by Mr. Raydon
under the 10% reduction in management salaries effected in June
1993, and such amount would not be subject to any offset as a
result of his receiving compensation from other employment.
In August 1994, the Company entered into a two-year
employment agreement with Jack M. Lotker, the Company's Senior
Vice President of Administration. The agreement provides a base
annual salary of not less than $130,500, subject to increase from
time to time at the discretion of the Board of Directors and
authorizes reimbursement for certain business-related expenses.
Under the agreement, Mr. Lotker is entitled to participate in the
Management Incentive Plan established by Homeland. Mr. Lotker is
also entitled to receive a special one-time non-recurring cash
bonus in an amount to be determined pursuant to a formula based
on the Company's stock price at the time of a transaction if a
Trigger Event occurs on or prior to December 31, 1995 (or by
February 28, 1996 if a definitive agreement is in place at
December 31, 1995). If the agreement is terminated by Homeland
for other than cause prior to a change of control or is
terminated by Mr. Lotker for any reason prior to a change of
control, Mr. Lotker is entitled to continue to receive his
compensation until the first anniversary of such termination,
subject to reduction to the extent of any compensation received
from other employment. If the agreement is terminated, whether
voluntary or involuntary, within 180 days following a change of
control or a Trigger Event, Mr. Lotker is entitled to receive
payment equal to one year's salary, plus a pro rata amount of the
incentive compensation for the portion of the incentive year that
precedes the date of termination, plus any amount forgone by Mr.
Lotker under the 10% reduction in management salaries effected in
June 1993, and would not be subject to any offset as a result of
his receiving compensation from other employment. Furthermore,
if Mr. Lotker is entitled to receive severance benefits as
outlined or if his employment terminates due to his death or
Disability (as defined), Homeland will pay his relocation
expenses from Oklahoma to any location in the continental United
States and will reimburse him for any loss incurred on the sale
of his current home following a reasonable effort to obtain a
good sales price, subject to reduction to the extent of any
compensation received from other employment.
In August 1994, the Company entered into a two-year
employment agreement with both Steve Mason, the Company's Vice
President of Marketing and Al Fideline, the Company's Vice
President of Retail Operations. The agreements provide a base
annual salary of not less than $130,500 and $80,000,
respectively, subject to increase from time to time at the
discretion of the Board of Directors and authorizes reimbursement
for certain business-related expenses. Under the agreements,
Messrs. Mason and Fideline are entitled to participate in the
Management Incentive Plan established by Homeland. Messrs. Mason
and Fideline are also entitled to receive a special one-time non-
recurring cash bonus in an amount to be determined pursuant to a
formula based on the Company's stock price at the time of a
transaction if a Trigger Event occurs on or prior to December 31,
1995 (or by February 28, 1996 if a definitive agreement is in
place at December 31, 1995). If the agreements are terminated by
Homeland for other than cause prior to a change of control,
Messrs. Mason and Fideline are each entitled to receive severance
benefits in accordance with Homeland's generally applicable
plans, policies or procedures, subject to any offset as a result
of receiving compensation from other employment. If the
agreements are terminated, whether voluntary or involuntary,
within 180 days following a change of control or a Trigger Event,
Messrs. Mason and Fideline are each entitled to receive payment
equal to one year's salary, plus a pro rata amount of the
incentive compensation for the portion of the incentive year that
precedes the date of termination, plus any amount forgone by
Messrs. Mason or Fideline under the 10% reduction in management
salaries effected in June 1993, and would not be subject to any
offset as a result of them receiving compensation from other
employment.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: The following exhibits are filed as
part of this Report:
Exhibit No. Description
10ll (1) Employment Agreement, dated as of
August 11, 1994, between Homeland and
Max E. Raydon.
10mm (1) Employment Agreement, dated as of
August 11, 1994, between Homeland and
Jack M. Lotker.
10nn (1) Employment Agreement, dated as of
August 11, 1994, between Homeland and
Steve Mason.
10oo (1) Employment Agreement, dated as of
August 11, 1994, between Homeland and
Al Fideline.
(1) Management contract or compensatory plan.
(b) Reports on Form 8-K: No reports on Form 8-K were
filed during the quarter ended September 10,
1994.
<PAGE>
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.
HOMELAND HOLDING CORPORATION
Date: October 31, 1994 By: Max E. Raydon
Max E. Raydon, President,
Chief Executive Officer and
Director (Principal Executive
Officer)
Date: October 31, 1994 By: Mark S. Sellers
Mark S. Sellers, Executive
Vice President/Finance,
Treasurer, Chief Financial
Officer and Secretary
(Principal Financial Officer)
Date: October 31, 1994 By: Mary Mikkelson
Mary Mikkelson, Chief
Accounting Officer, Assistant
Treasurer and Assistant
Secretary (Principal
Accounting Officer)
Exhibit 10ll
August 11, 1994
Mr. Max E. Raydon
Homeland Stores, Inc.
400 N.E. 36th Street
Oklahoma City, Oklahoma 73105
Dear Max:
The purpose of this letter is to confirm, amend
and restate the terms of your employment with Homeland
Stores, Inc. ("Homeland"). This letter supersedes in all
respects all prior agreements and understandings, whether
written or oral, express or implied, between you and Home-
land and any of its affiliates relating to your employment.
1. Duties
You will be employed as the President and Chief
Executive Officer of Homeland and in such other executive
capacities for Homeland, Homeland Holding Corporation
("Holding") or any subsidiary of Homeland (the "Homeland
Group") as may be determined from time to time by or under
the authority of Homeland's Board of Directors. You will
devote all of your skill, knowledge and full working time
(reasonable vacation time and absence for sickness or dis-
ability excepted) solely and exclusively to the conscien-
tious performance of such duties.
2. Term
This letter agreement shall be effective as of
July 1, 1994 and expire as of June 30, 1997, unless sooner
terminated by reason of your death or Disability (as defined
hereinafter) or in accordance with paragraph 8 or paragraph
9 hereof. For purposes of this letter agreement,
"Disability" is defined to mean that, as a result of your
incapacity due to physical and mental illness, you shall
have been absent from your duties to the Homeland Group on a
substantially full-time basis for six consecutive months,
and within 30 days after Homeland notifies you in writing
that it intends to replace you, you shall not have returned
to the performance of your duties on a full-time basis.
3. Base Salary
As compensation for the duties to be performed by
you under the terms of this letter agreement, Homeland will
pay you a base salary in the amount of $180,000 per annum
(which amount reflects the effect of a 10% reduction in the
base salaries of all Homeland management personnel, effec-
tive as of June 1, 1993). It is contemplated that Homeland
will review your base salary from time to time and, at the
discretion of the Board of Directors, may increase your base
salary from time to time based upon your performance, then
generally prevailing industry salary scales and other rele-
vant factors. (Such annual base salary, as it may hereafter
be increased, shall be referred to as your "Actual Salary").
Notwithstanding the foregoing, several elements of your
compensation hereunder shall be based upon your "Adjusted
Salary" which shall mean the greater of (i) your Actual
Salary or (ii) $200,000 per annum.
4. Incentive Bonus
During the term of this letter agreement, you will
be entitled to participate in Homeland's annual incentive
compensation program (the "Bonus Plan") in effect from time
to time at a level commensurate with your position. Not-
withstanding the foregoing, for 1994 your annual bonus
opportunity at the target level of performance shall be 100%
of your Actual Salary and in no event shall your annual
bonus opportunity at the target level of performance for
years after 1994 be less than 50% of your Actual Salary.
5. Retention Bonus
Subject to the provisions of this paragraph 5, you
shall be entitled to receive a special one-time non-recur-
ring cash bonus in the amount of $200,000 or, if greater,
the amount determined in accordance with the schedule
attached hereto as Exhibit 1 if, on or prior to the End Date
(as defined below), there shall occur
(i) the closing of a sale (a "Stock Sale") of at
least 50% of the Class A Common Stock of Holding, par
value $.01 per share (the "Stock") to any person or
entity (a "Third Party Purchaser") other than any
partnership, fund or other investment vehicle managed
or advised by Clayton, Dubilier & Rice (an "Affiliated
Fund") and other than any affiliate of such an Affili-
ated Fund (Homeland executive officers, management or
employees shall not be deemed to be affiliates of such
an Affiliated Fund),
(ii) the effective date of a merger of Holding
with or into another corporation immediately following
which the persons or entities who were the shareholders
of Holding immediately prior to the merger (together
with any affiliates thereof, any Affiliated Fund and
any affiliates of an Affiliated Fund) own, directly or
indirectly, less than 50% of the voting power of all
voting equity securities of the surviving or resulting
entity (a "Merger") or
(iii) the adoption of a plan of liquidation of
Holding following the sale of substantially all of its
assets (including, without limitation, the common stock
of Homeland) to one or more Third Party Purchasers (a
"Liquidation").
For purposes of this paragraph 5, the End Date shall mean
the later of (i) December 31, 1995 or (ii) if a definitive
sale agreement or merger agreement has been executed prior
to December 31, 1995 and the closing of which occurs not
later than February 28, 1996 (or such later date as the
Board of Directors of Holding shall designate), the date on
which such Stock Sale, Merger or sale of assets described in
subparagraph 5(iii) above occurs.
Except as otherwise provided in this paragraph 5,
payment of the Retention Bonus shall be made at the same
time as any cash and/or other property received in connec-
tion with a Stock Sale, Merger or Liquidation (the
"Consideration") is distributed in full to shareholders,
provided that (i) in the event that any partial distribution
of the Consideration is made to the shareholders of Holding,
whether as an extraordinary dividend or otherwise, a pro-
rata payment of the Retention Bonus (based on the percentage
that the partial distribution to shareholders is of the
Consideration expected to be paid to shareholders, as deter-
mined by the Board of Directors of Holding) shall be made at
the time as such distribution, (ii) if the Consideration has
not been distributed to shareholders prior to the second
anniversary of the Trigger Event, on such date you shall be
paid the amount, if any, that the Board of Directors of
Holding shall determine to be payable as a Retention Bonus
(based on its then best estimate of the amount to be paid as
the Consideration); and (iii) the Board may authorize an
advance payment of all or any portion of the Retention Bonus
at any time after the occurrence of a Trigger Event.
Notwithstanding anything else contained in this
paragraph 5 to the contrary, no Retention Bonus shall be
payable to you under this paragraph 5 unless (i) you are
still an employee of the Homeland Group on the date on which
any Trigger Event occurs and (ii) you do not voluntarily
terminate your employment after that date without the con-
sent of the Board of Directors of Homeland; provided that if
a Trigger Event occurs within ninety (90) days after the
date, if any, on which your employment is terminated by
Homeland without Cause (as provided in paragraph 10 below)
or by reason of your death or Disability, Homeland shall pay
you, at the same time as payment is made to other Homeland
executives with respect to their retention bonuses, an
amount (in addition to any amount payable under paragraph 10
on account of such termination) equal to the product of (i)
the amount that would otherwise have been payable to you
hereunder times (ii) a fraction (not to exceed 1), the
numerator of which is the number of full or partial calendar
months during which you were employed since July 1, 1994 and
the denominator is the total number of full or partial
calendar months from July 1, 1994 to the date payment is
made to other Homeland executives with respect to their
retention bonuses.
Notwithstanding anything else contained in any
other compensation or benefit plan, program or arrangement
of Homeland to the contrary, the amount, if any, payable as
a Retention Bonus (and any amount payable under paragraph 9
below) shall (i) not be taken into account in any manner in
calculating any other benefits payable to you under any such
plan, program or arrangement and (ii) be in lieu of any
other retention compensation program in which you would be
entitled to participate under Homeland's generally appli-
cable policies or procedures. To the extent required to
satisfy the intent of this paragraph 5, this letter agree-
ment shall be deemed to be an amendment to the terms of any
such plan, program or arrangement.
6. Expenses
Homeland will furnish, insure and maintain for
your use while you are employed by Homeland an automobile of
a type commensurate with your status, selected by you and
approved by the Board of Directors. Upon termination of
your employment with Homeland, you will have the option to
purchase such automobile at its fair market (wholesale)
value. Homeland will reimburse you for reasonable travel,
lodging, meal and other appropriate expenses incurred by you
in connection with your performance of services under this
letter agreement upon submission by you of evidence, satis-
factory to Homeland, of the incurrence and purpose of each
such expense.
7. Employee Benefits
Homeland shall provide you with the same medical,
dental, vision, life and disability insurance and other
welfare benefits as it provides to its other executive offi-
cers (the "Welfare Benefits Arrangements"). During the term
of this letter agreement you will also be eligible to parti-
cipate in Homeland's retirement and profit sharing plans in
effect from time to time on the same basis as Homeland's
other executive officers, subject to the terms and provi-
sions of such plans. You shall be entitled to paid vacation
in accordance with Homeland's generally applicable plans,
policies or procedures.
8. Termination of Employment Following a Change of Control
Upon any termination of your employment, whether
voluntary or involuntary, within 180 days following a Change
of Control (as defined in the Revolving Credit Agreement,
dated as of March 4, 1992, as amended, between Homeland,
Holding and Union Bank of Switzerland, New York Branch, as
agent) or a Trigger Event, Homeland will pay you an amount
equal to the sum of
(i) three times your Adjusted Salary in effect immedi-
ately prior to the Change of Control;
(ii) an amount equal to the product of (A) your target
bonus under the Bonus Plan for the year in which
your termination occurs and (B) a fraction, the
numerator of which is the number of days during
such year prior to and including the date of your
termination of employment and the denominator of
which is 365, provided that if your termination
occurs during 1994, such amount shall be based on
target bonus without pro-ration but shall be
reduced, to the extent applicable, by any amount
paid to you under the Bonus Plan for 1994 prior to
the date on which your termination occurs; and
(iii) the amount otherwise payable to you upon a Change
of Control under Homeland's generally applicable
plan, policy or arrangement in respect of the 10%
reduction in the base salaries of all Homeland
management personnel, effective as of June 1,
1993.
Homeland will pay you the cash amounts set forth
in the immediately preceding paragraph in a lump sum payment
no later than 5 business days after the date your employment
terminates or in 36 approximately equal monthly install-
ments, as directed by you at your option. Such amounts will
not be subject to any offset, mitigation or other reduction
as a result of any amounts or benefits paid or offered to be
paid to you as a Retention Bonus. Further, the foregoing
amounts and benefits will not be subject to any offset,
mitigation or other reduction as a result of your receiving
salary or other benefits by reason of your securing other
employment.
Homeland will also continue your coverage under
the Welfare Benefit Arrangements for a period of three years
after the date your employment terminates, provided that if
Homeland is unable to or chooses not to continue any such
coverage for all or any portion of such period, it shall not
be obligated to provide such coverage and shall instead pay
you (within 15 days after such coverage is to cease) an
amount equal to (A) the remainder of (x) 36 minus (y) the
number of months that such coverage that is so provided
times (B) the monthly amount it would have paid with respect
to such coverage under the applicable the Welfare Benefit
Arrangement.
The amounts payable to you under this paragraph 8
and the amounts, if any, payable to you in accordance with
the provisions of paragraph 5 shall be paid in full
satisfaction of the liabilities of the Homeland Group to you
under this agreement and in conjunction with your termina-
tion of employment (and shall be in lieu of any severance
payments to which you would otherwise be entitled under
Homeland's generally applicable plans, policies or
procedures). Nothing in the preceding sentence shall be
interpreted to limit in any way any rights or release any
obligations that you may have with respect to your ownership
of any shares of Stock.
9. Termination of Employment Prior to a Change of Control
Upon (a) the termination of your employment by
Homeland for other than Cause (as hereinafter defined) prior
to a Change of Control or (b) the termination of your
employment by you for Good Reason (as hereinafter defined)
prior to a Change of Control, Homeland will pay you the
amounts and benefits set forth in this paragraph 9, provided
that the amounts payable hereunder shall be reduced, to the
extent applicable, by any amount paid to you under the Bonus
Plan for services rendered in the year in which your termi-
nation occurs. Except as otherwise expressly provided
herein, you shall be treated with respect to your termina-
tion of employment in the same manner as any other similarly
situated employee under Homeland's generally applicable
plans, policies and procedures.
Homeland shall pay you an amount equal to three
times your Adjusted Salary in a single lump sum payment no
later than 10 business days after the date on which your
employment terminates. Homeland shall also pay you an
amount equal to the product of (i) your target bonus under
the Bonus Plan for the year in which your termination occurs
and (ii) a fraction, the numerator of which is the number of
days during such year prior to and including the date of
your termination of employment and the denominator of which
is 365. Any amount payable in respect of the Bonus Plan
under the immediately preceding sentence shall be paid at
the normal time for payment of bonuses thereunder.
Homeland will also continue your coverage under
the Welfare Benefit Arrangements for a period of three years
after the date your employment terminates, provided that if
Homeland is unable to or chooses not to continue any such
coverage for all or any portion of such period, it shall not
be obligated to provide such coverage and shall instead pay
you (within 15 days after such coverage is to cease) an
amount equal to (A) the remainder of (x) 36 minus (y) the
number of months that such coverage is so provided times (B)
the monthly amount it would have paid with respect to such
coverage under the applicable the Welfare Benefit Arrange-
ment.
The foregoing amounts and benefits will be subject
to any offset, mitigation or other reduction as a result of
your receiving salary, similar benefits or other compensa-
tion by reason of your securing other employment. Notwith-
standing the foregoing, Homeland may at any time after the
date of your termination, pay you in a lump sum, an amount
equal to its good faith determination of the present value
of the amounts remaining to be paid to the Employee as of
the date of such lump sum payment, calculated using a
discount factor based on the prime rate of any major New
York bank plus one percent, whereupon Homeland's obligations
under this paragraph 9 shall be discharged in full and it
shall have no further obligation to you, including with
respect to the Welfare Benefit Arrangements.
The amounts payable to you under this paragraph 9
and the amounts, if any, payable to you in accordance with
the provisions of paragraph 5 shall be paid in full satis-
faction of the liabilities of the Homeland Group to you
under this agreement and in conjunction with your termina-
tion of employment (and shall be in lieu of any severance
payments to which you would otherwise be entitled under
Homeland's generally applicable plans, policies or proce-
dures). Nothing in the preceding sentence shall be inter-
preted to limit in any way any rights or release any obliga-
tions that you may have with respect to your ownership of
any shares of Stock.
For purposes of this letter agreement, "Cause" is
defined to mean (a) your willful failure to substantially
perform your duties and continuance of such failure for more
than 30 days after Homeland notifies you in writing that you
are failing to substantially perform your duties, setting
forth in reasonable detail the manner in which you are fail-
ing so to perform your duties; (b) your engaging in serious
misconduct which is injurious to Homeland; or (c) your con-
viction in a court of proper jurisdiction of a crime which
constitutes a felony. Notwithstanding the foregoing, you
shall not be deemed to have been terminated for Cause unless
and until there is delivered to you a copy of a resolution,
duly adopted by Homeland's Board of Directors, finding that
Homeland has "Cause" to terminate you as contemplated in
this paragraph. In the event that Homeland shall terminate
your employment for Cause, Homeland shall only be obligated
to pay you (a) your Actual Base Salary earned through the
date of such termination, (b) all benefits due and owing
through the date of such termination, (c) the amount neces-
sary to reimburse you for expenses incurred prior to the
date of such termination for which Homeland has agreed to
reimburse you as provided in this letter agreement and, to
the extent provided under Homeland's generally applicable
policies and procedures, any unused vacation time, plus (d)
if your employment terminates upon your death or Disability,
incentive compensation for the portion of the incentive year
that precedes the date of such termination, such incentive
compensation to be a pro rata amount of the incentive
compensation payable for the entire incentive year, and to
be paid at the normal time for payment of the incentive
compensation.
For purposes of this letter agreement, a termina-
tion by you shall be treated as having occurred for "Good
Reason" if it occurs within 120 days following the occur-
rence of any of the following events without your prior
written consent: (a) any assignment to you of any duties
which are significantly different from, and result in a
diminution of, the duties you are to assume pursuant to this
letter agreement, (b) your removal or any failure to reelect
or redesignate you to the positions of President and Chief
Executive Officer of Homeland, except in connection with a
termination of your employment by Homeland for Cause, (c) a
change in your location of employment from Oklahoma City or
(d) a material reduction in your Actual Salary.
10. Arbitration
Any dispute or controversy arising under or in
connection with this letter agreement shall be settled
exclusively by arbitration in Oklahoma City, Oklahoma, in
accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect.
11. Binding Effect
This letter agreement shall inure to the benefit
of and be enforceable by your personal or legal representa-
tives, executors, administrators, heirs, distributees,
devisees and legatees. If you should die while any amounts
would still be payable to you under this letter agreement if
you had continued to live, all such amounts, unless other-
wise provided herein, shall be paid in accordance with the
terms of this letter agreement to your personal or legal
representatives, executors, administrators, heirs, distribu-
tees, devisees, legatees or estate, as the case may be.
12. Indemnification
Homeland agrees to indemnify you to the fullest
extent permitted by applicable Delaware law as in effect
from time to time.
13. Notices
All notices and other communications required or
permitted to be given under this letter agreement shall be
in writing and shall be deemed to have been given if deliv-
ered personally or sent by certified express mail, return
receipt requested, postage prepaid, to you at 2009 Shadow
Lake Drive, Edmond, Oklahoma, 73034 or to Homeland at 400
N.E. 36th Street, Oklahoma City, OK 73105, Attention:
President, with a copy to Clayton, Dubilier & Rice, Inc.,
126 East 56th Street, New York, NY 10022, Attention: B.
Charles Ames, or to such other address as either party shall
specify by notice to the other.
14. General Provisions
No provisions of this letter agreement may be
modified, waived or discharged unless such modification,
waiver or discharge is approved by Homeland's Board of
Directors and is agreed to in a writing signed by you and
such Homeland officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with,
any condition or provision of this letter agreement to be
performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
No agreements or representations, oral or other-
wise, express or impled, with respect to the subject matter
hereof have been made by either party which are not set
forth expressly in this letter agreement. The invalidity or
unenforceability of any one or more provisions of this
letter agreement shall not affect the validity or enforce-
ability of any other provision of this letter agreement,
which shall remain in full force and effect. This letter
agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
The validity, interpretation, construction and
performance of this letter agreement shall be governed by
the laws of the State of Oklahoma, without giving effect to
its conflict of laws provisions.
* * * *
If the foregoing accurately sets forth the terms
of your employment with Homeland, please so indicate by
signing below and returning one signed copy of this letter
agreement to me.
Sincerely,
HOMELAND STORES, INC.
/s/ Mark S. Sellers
--------------------------
Mark S. Sellers, Executive
Vice President and Chief
Financial Officer
ACCEPTED AND AGREED
as of this 15th day
of August, 1994
/s/ Max E. Raydon
- - --------------------
Max E. Raydon
<PAGE>
Divestiture Proceeds
<TABLE>
<CAPTION>
Gross Per Share Range Net Per Share Range Cumulative $MM Share of Distribution
($ in Thousands)
<C> <C> <C> <C> <C> <C>
$0.00 $1.92 $0.00 $1.92 $0.70 $ 200
1.92 2.02 1.90 1.98 1.11 300
2.02 2.11 1.98 2.07 1.56 420
2.11 2.21 2.07 2.15 2.05 560
2.21 2.30 2.15 2.23 2.67 690
2.30 2.40 2.23 2.30 3.14 840
2.40 2.49 2.30 2.38 3.75 1,000
2.49 2.60 2.38 2.47 4.51 1,200
2.60 2.71 2.47 2.56 5.35 1,430
2.71 2.82 2.56 2.64 6.26 1,670
2.82 2.94 2.64 2.73 7.25 1,930
2.94 3.05 2.73 2.81 8.32 2,220
3.05 3.16 2.81 2.88 9.47 2,530
3.16 3.27 2.88 2.96 10.69 2,860
3.27 3.38 2.96 3.03 12.00 3,200
3.38 3.49 3.03 3.11 13.30 3,550
3.49 3.60 3.11 3.18 14.60 3,890
3.60 3.71 3.18 3.26 15.90 4,240
3.71 3.82 3.26 3.33 17.20 4,590
3.82 3.94 3.33 3.40 18.60 4,930
3.94 4.05 3.40 3.48 19.60 5,280
4.05 4.16 3.48 3.55 21.10 5,630
4.16 4.27 3.55 3.63 22.40 5,980
4.27 4.38 3.63 3.70 23.70 6,320
4.38 4.49 3.70 3.77 25.01 6,670
4.49 4.60 3.77 3.85 26.31 7,020
4.60 4.71 3.85 3.92 27.61 7,360
4.71 4.83 3.92 3.99 28.91 7,710
</TABLE>
Exhibit 10mm
August 11, 1994
Mr. Jack M. Lotker
Homeland Stores, Inc.
400 N.E. 36th Street
Oklahoma City, Oklahoma 73105
Dear Jack:
The purpose of this letter is to confirm, amend and restate
the terms of your employment with Homeland Stores, Inc. ("Homeland").
This letter supersedes in all respects all prior agreements and
understandings, whether written or oral, express or implied, between you
and Homeland and any of its affiliates relating to your employment.
1. Duties
You will be employed in such executive capacities for
Homeland, Homeland Holding Corporation ("Holding") or any subsidiary of
Homeland (the "Homeland Group") as may be determined from time to time
by or under the authority of Homeland's Board of Directors. You will
devote all of your skill, knowledge and full working time (reasonable
vacation time and absence for sickness or disability excepted) solely
and exclusively to the conscientious performance of such duties.
2. Term
This letter agreement shall be effective as of July 1, 1994
and expire as of June 30, 1996, unless sooner terminated by reason of
your death or Disability (as defined hereinafter) or in accordance with
paragraph 8 or paragraph 10 hereof. For purposes of this letter
agreement, "Disability" is defined to mean that, as a result of your
incapacity due to physical and mental illness, you shall have been
absent from your duties to the Homeland Group on a substantially full-
time basis for six consecutive months, and within 30 days after Homeland
notifies you in writing that it intends to replace you, you shall not
have returned to the performance of your duties on a full-time basis.
3. Base Salary
As compensation for the duties to be performed by you under
the terms of this letter agreement, Homeland will pay you a base salary
in the amount of $130,500 per annum (which amount reflects the effect of
a 10% reduction in the base salaries of all Homeland management
personnel, effective as of June 1, 1993). It is contemplated that
Homeland will review your base salary from time to time and, at the
discretion of the Board of Directors, may increase your base salary from
time to time based upon your performance, then generally prevailing
industry salary scales and other relevant factors. (Such annual base
salary, as it may hereafter be increased, shall be referred to as your
"Actual Salary"). Notwithstanding the foregoing, several elements of
your compensation hereunder shall be based upon your "Adjusted Salary"
which shall mean the greater of (i) your Actual Salary or (ii) $145,000
per annum.
4. Incentive Bonus
During the term of this letter agreement, you will be
entitled to participate in Homeland's annual incentive compensation
program (the "Bonus Plan") in effect from time to time at a level
commensurate with your position. Notwithstanding the foregoing, for
1994 your annual bonus opportunity at the target level of performance
shall be 100% of your Actual Salary and in no event shall your annual
bonus opportunity at the target level of performance for years after
1994 be less than 50% of your Actual Salary.
5. Retention Bonus
Subject to the provisions of this paragraph 5, you shall be
entitled to receive a special one-time non-recurring cash bonus in the
amount determined in accordance with the schedule attached hereto as
Exhibit 1 if, on or prior to the End Date (as defined below), there
shall occur
(i) the closing of a sale (a "Stock Sale") of at least 50%
of the Class A Common Stock of Holding, par value $.01 per share
(the "Stock") to any person or entity (a "Third Party Purchaser")
other than any partnership, fund or other investment vehicle
managed or advised by Clayton, Dubilier & Rice (an "Affiliated
Fund") and other than any affiliate of such an Affiliated Fund
(Homeland executive officers, management or employees shall not be
deemed to be affiliates of such an Affiliated Fund),
(ii) the effective date of a merger of Holding with or into
another corporation immediately following which the persons or
entities who were the shareholders of Holding immediately prior to
the merger (together with any affiliates thereof, any Affiliated
Fund and any affiliates of an Affiliated Fund) own, directly or
indirectly, less than 50% of the voting power of all voting equity
securities of the surviving or resulting entity (a "Merger") or
(iii) the adoption of a plan of liquidation of Holding
following the sale of substantially all of its assets (including,
without limitation, the common stock of Homeland) to one or more
Third Party Purchasers (a "Liquidation"); and
as a result of such Stock Sale, Merger or Liquidation (a "Trigger
Event") the shareholders of Holding receive cash and/or other property
(the "Consideration") with respect to the Stock, having an aggregate
value (as determined in good faith by the Board of Directors of Holding)
of more than $1.73 per share (the "Threshold Amount"). For purposes of
this paragraph 5, the End Date shall mean the later of (i) December 31,
1995 or (ii) if a definitive sale agreement or merger agreement has been
executed prior to December 31, 1995 and the closing of which occurs not
later than February 28, 1996 (or such later date as the Board of
Directors of Holding shall designate), the date on which such Stock
Sale, Merger or sale of assets described in subparagraph 5(iii) above
occurs.
Except as otherwise provided in this paragraph 5, payment of
the Retention Bonus shall be made at the same time as the Consideration
is distributed in full to shareholders, provided that (i) in the event
that any partial distribution of the Consideration is made to the
shareholders of Holding, whether as an extraordinary dividend or
otherwise, a pro-rata payment of the Retention Bonus (based on the
percentage that the partial distribution to shareholders is of the
Consideration expected to be paid to shareholders, as determined by the
Board of Directors of Holding) shall be made at the time of such
distribution if, and only if, the Board of Directors of Holding shall
determine that, based on its then best estimate of the amount to be paid
as the Consideration, a Retention Bonus will be payable in accordance
with this paragraph 5; (ii) if the Consideration has not been
distributed to shareholders prior to the second anniversary of the
Trigger Event, on such date you shall be paid the amount, if any, that
the Board of Directors of Holding shall determine to be payable as a
Retention Bonus (based on its then best estimate of the amount to be
paid as the Consideration); and (iii) the Board may authorize an advance
payment of all or any portion of the Retention Bonus at any time after
the occurrence of a Trigger Event, if the Board of Directors of Holding
determines in good faith that the shareholders are expected to receive
Consideration in excess of the Threshold Amount.
Notwithstanding anything else contained in this paragraph 5
to the contrary, no Retention Bonus shall be payable to you under this
paragraph 5 unless (i) you are still an employee of the Homeland Group
on the date on which any Trigger Event occurs and (ii) you do not
voluntarily terminate your employment after that date without the
consent of the Board of Directors of Homeland; provided that if a
Trigger Event occurs within ninety (90) days after the date, if any, on
which your employment is terminated by Homeland without Cause (as pro-
vided in paragraph 10 below) or by reason of your death or Disability,
Homeland shall pay you, at the same time as payment is made to other
Homeland executives with respect to their retention bonuses, an amount
(in addition to any amount payable under paragraph 10 on account of such
termination) equal to the product of (i) the amount that would otherwise
have been payable to you hereunder times (ii) a fraction (not to exceed
1), the numerator of which is the number of full or partial calendar
months during which you were employed since July 1, 1994 and the
denominator is the total number of full or partial calendar months from
July 1, 1994 to the date payment is made to other Homeland executives
with respect to their retention bonuses.
Notwithstanding anything else contained in any other
compensation or benefit plan, program or arrangement of Homeland to the
contrary, the amount, if any, payable as a Retention Bonus (and any
amount payable under paragraph 9 below) shall (i) not be taken into
account in any manner in calculating any other benefits payable to you
under any such plan, program or arrangement and (ii) be in lieu of any
other retention compensation program in which you would be entitled to
participate under Homeland's generally applicable policies or proce-
dures. To the extent required to satisfy the intent of this paragraph
5, this letter agreement shall be deemed to be an amendment to the terms
of any such plan, program or arrangement.
6. Expenses
Homeland will furnish, insure and maintain for your use
while you are employed by Homeland an automobile of a type commensurate
with your status, selected by you and approved by the Board of
Directors. Upon termination of your employment with Homeland, you will
have the option to purchase such automobile at its fair market
(wholesale) value. Homeland will reimburse you for reasonable travel,
lodging, meal and other appropriate expenses incurred by you in
connection with your performance of services under this letter agreement
upon submission by you of evidence, satisfactory to Homeland, of the
incurrence and purpose of each such expense.
7. Employee Benefits
Homeland shall provide you with the same medical, dental,
vision, life and disability insurance and other welfare benefits (the
"Welfare Benefit Arrangements") as it provides to its other executive
officers. During the term of this letter agreement you will also be
eligible to participate in Homeland's retirement and profit sharing
plans in effect from time to time on the same basis as Homeland's other
executive officers, subject to the terms and provisions of such plans.
You shall be entitled to paid vacation in accordance with Homeland's
generally applicable plans, policies or procedures.
8. Termination of Employment Following a Change of Control
Upon any termination of your employment, whether voluntary
or involuntary, within 180 days following a Change of Control (as
defined in the Revolving Credit Agreement, dated as of March 4, 1992, as
amended, between Homeland, Holding and Union Bank of Switzerland, New
York Branch, as agent) or a Trigger Event, Homeland will pay you an
amount equal to the sum of
(i) your Adjusted Salary in effect immediately prior to the
Change of Control;
(ii) an amount equal to the product of (A) your target bonus
under the Bonus Plan for the year in which your termination
occurs times (B) a fraction, the numerator of which is the
number of days during such year prior to and including the
date of your termination of employment and the denominator
of which is 365, provided that if your termination occurs
during 1994, such amount shall be based on target bonus
without pro-ration but shall be reduced, to the extent
applicable, by any amount paid to you under the Bonus Plan
for 1994 prior to the date on which your termination occurs;
(iii) the amount otherwise payable to you upon a Change of Control
under Homeland's generally applicable plan, policies or
procedures in respect of the 10% reduction in the base
salaries of all Homeland management personnel, effective as
of June 1, 1993.
Homeland will pay you the cash amounts set forth in the
immediately preceding paragraph in a lump sum payment no later than 5
business days after the date your employment terminates or in monthly
installments, as directed by you at your option. Such amounts will not
be subject to any offset, mitigation or other reduction as a result of
any amounts or benefits paid or offered to be paid to you as a Retention
Bonus. Further, the foregoing amounts and benefits will not be subject
to any offset, mitigation or other reduction as a result of your
receiving salary or other benefits by reason of your securing other
employment.
Homeland will also continue your coverage under the Welfare
Benefit Arrangements for a period of one year after the date your
employment terminates, provided that if Homeland is unable to continue
any such coverage (or discontinues such coverage for all salaried
employees) for all or any portion of such period, it shall not be
obligated to provide such coverage and shall instead pay you (within 15
days after such coverage is to cease) an amount equal to (A) the
remainder of (x) 12 minus (y) the number of months that such coverage is
actually provided times (B) the monthly amount it would have paid (or,
in the case of any self-insured arrangement, the monthly cost per person
budgeted for coverage under the applicable the Welfare Benefit Arrange-
ment).
The amounts payable to you under this paragraph 8 and the
amounts, if any, payable to you in accordance with the provisions of
paragraph 5 shall be paid in full satisfaction of the liabilities of the
Homeland Group to you under this agreement and in conjunction with your
termination of employment (and shall be in lieu of any severance
payments to which you would otherwise be entitled under Homeland's gen-
erally applicable plans, policies or procedures). Nothing in the
preceding sentence shall be interpreted to limit in any way any rights
or release any obligations that you may have with respect to your
ownership of any shares of Stock.
9. Minimum Benefit
Notwithstanding anything else in this letter agreement to
the contrary, if (i) you are entitled to receive the benefits provided
under paragraph 8 and (ii) the sum of the amounts that would have been
payable to you in conjunction with Homeland's generally applicable
special retention program and severance policy exceeds the sum of the
amounts payable to you under paragraphs 5 and 8, Homeland shall also pay
you an amount in cash equal to such excess. Any amount payable under
this paragraph 9 shall be paid as soon as practicable (but not later
than 30 days) after your termination of employment in accordance with
paragraph 8.
10. Termination of Employment Prior to a Change of Control
Upon the termination of your employment (i) by Homeland for
other than Cause (as hereinafter defined) or (ii) by you for any reason
prior to a Change of Control, Homeland will pay you your Adjusted Salary
as in effect immediately prior to your termination until the first
anniversary of such termination. In the event that you obtain other
employment during the period with respect to which severance benefits
are payable to you hereunder, such severance benefits shall be reduced
by any compensation you receive from such other employment.
The amounts payable to you under this paragraph 10 and the
amounts, if any, payable to you in accordance with the provisions of
paragraph 5 shall be paid in full satisfaction of the liabilities of the
Homeland Group to you under this agreement and in conjunction with your
termination of employment (and shall be in lieu of any severance
payments to which you would otherwise be entitled under Homeland's gen-
erally applicable plans, policies or procedures). Nothing in the
preceding sentence shall be interpreted to limit in any way any rights
or release any obligations that you may have with respect to your
ownership of any shares of Stock.
For purposes of this letter agreement, "Cause" is defined to
mean (a) your willful failure to substantially perform your duties and
continuance of such failure for more than 30 days after Homeland
notifies you in writing that you are failing to substantially perform
your duties, setting forth in reasonable detail the manner in which you
are failing so to perform your duties; (b) your engaging in serious
misconduct which is injurious to Homeland; or (c) your conviction in a
court of proper jurisdiction of a crime which constitutes a felony.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there is delivered to you a copy
of a resolution, duly adopted by Homeland's Board of Directors, finding
that Homeland has "Cause" to terminate you as contemplated in this
paragraph. In the event that Homeland shall terminate your employment
for Cause, Homeland shall only be obligated to pay you (a) your Actual
Base Salary earned through the date of such termination, (b) all
benefits due and owing through the date of such termination, and (c) the
amount necessary to reimburse you for expenses incurred prior to the
date of such termination for which Homeland has agreed to reimburse you
as provided in this letter agreement and, to the extent provided under
Homeland's generally applicable policies and procedures, any unused
vacation time.
11. Moving Expenses; Sale of Residence
If you are entitled to receive severance benefits under
Section 8 or 10, or your employment terminates due to your death or
Disability, Homeland shall pay and/or reimburse you for the reasonable
expenses of moving your residence from Oklahoma to any location in the
continental United States, including travel expenses for you and your
family and the cost of transportation of household goods and effects.
If, in connection with such move, and after reasonable efforts (not to
exceed three months) to obtain a good sales price, you are not able to
sell your Oklahoma residence without suffering a loss from your original
purchase price on such sale, Homeland (i) shall reimburse you for such
loss (on an after-tax basis) or, at Homeland's option (ii) shall
purchase, or shall arrange for a third party specializing in purchases
of residences to purchase, such residence, insuring that you suffer no
such loss (on an after-tax basis). If you are not able to sell your
residence within such three month period, Homeland shall purchase, or
shall arrange for a third party specializing in purchases of residences
to purchase, such residence, insuring that you do not suffer a loss from
your original purchase price on such sale. If you accept new
employment, any payments made under this paragraph 11 shall be reduced
by any amounts payable to you by your new employer in respect of such
expenses or the sale of your Oklahoma residence.
12. Arbitration
Any dispute or controversy arising under or in connection
with this letter agreement shall be settled exclusively by arbitration
in Oklahoma City, Oklahoma, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect.
13. Binding Effect
This letter agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you under this
letter agreement if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this letter agreement to your personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees or
estate, as the case may be.
14. Indemnification
Homeland agrees to indemnify you to the fullest extent
permitted by applicable Delaware law as in effect from time to time.
15. Notices
All notices and other communications required or permitted
to be given under this letter agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified
express mail, return receipt requested, postage prepaid, to you at 4101
Oakdale Forest Road, Edmond, OK 73013, or to Homeland at 400 N.E. 36th
Street, Oklahoma City, OK 73105, Attention: President, with a copy to
Clayton, Dubilier & Rice, Inc., 126 East 56th Street, New York, NY
10022, Attention: B. Charles Ames, or to such other address as either
party shall specify by notice to the other.
16. General Provisions
No provisions of this letter agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
approved by Homeland's Board of Directors and is agreed to in a writing
signed by you and such Homeland officer as may be specifically
designated by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any
condition or provision of this letter agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.
No agreements or representations, oral or otherwise, express
or impled, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this letter agreement.
The invalidity or unenforceability of any one or more provisions of this
letter agreement shall not affect the validity or enforceability of any
other provision of this letter agreement, which shall remain in full
force and effect. This letter
agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will
constitute one and the same instrument.
The provisions of paragraphs 10 and 11 shall survive the
expiration of the term of this agreement.
The validity, interpretation, construction and performance
of this letter agreement shall be governed by the laws of the State of
Oklahoma, without giving effect to its conflict of laws provisions.
* * * *
If the foregoing accurately sets forth the terms of your
employment with Homeland, please so indicate by signing below and
returning one signed copy of this letter agreement to me.
Sincerely,
HOMELAND STORES, INC.
/s/ Max E. Raydon
-----------------------------
Max E. Raydon, President and
Chief Executive Officer
ACCEPTED AND AGREED
as of this 31st day
of August, 1994
/s/ Jack M. Lotker
- - -------------------
Jack M. Lotker
<PAGE>
Divestiture Proceeds
<TABLE>
<CAPTION>
Gross Per Share Range Net Per Share Range Cumulative $MM Share of Distribution
($ in Thousands)
<C> <C> <C> <C> <C> <C>
$0.00 $1.73 $0.00 $1.73 $0.00 $ 0
1.73 1.83 1.73 1.82 0.33 20
1.83 1.92 1.82 1.90 0.70 50
1.92 2.02 1.90 1.98 1.11 70
2.02 2.11 1.98 2.07 1.56 100
2.11 2.21 2.07 2.15 2.05 140
2.21 2.30 2.15 2.23 2.67 170
2.30 2.40 2.23 2.30 3.14 210
2.40 2.49 2.30 2.38 3.75 250
2.49 2.60 2.38 2.47 4.51 300
2.60 2.71 2.47 2.56 5.35 360
2.71 2.82 2.56 2.64 6.26 420
2.82 2.94 2.64 2.73 7.25 480
2.94 3.05 2.73 2.81 8.32 550
3.05 3.16 2.81 2.88 9.47 630
3.16 3.27 2.88 2.96 10.69 710
3.27 3.38 2.96 3.03 12.00 800
3.38 3.49 3.03 3.11 13.30 890
3.49 3.60 3.11 3.18 14.60 970
3.60 3.71 3.18 3.26 15.90 1,060
3.71 3.82 3.26 3.33 17.20 1,150
3.82 3.94 3.33 3.40 18.60 1,230
3.94 4.05 3.40 3.48 19.60 1,320
4.05 4.16 3.48 3.55 21.10 1,410
4.16 4.27 3.55 3.63 22.40 1,490
4.27 4.38 3.63 3.70 23.70 1,580
4.38 4.49 3.70 3.77 25.01 1,670
4.49 4.60 3.77 3.85 26.31 1,750
4.60 4.71 3.85 3.92 27.61 1,840
4.71 4.83 3.92 3.99 28.91 1,930
</TABLE>
Exhibit 10nn
August 11, 1994
Mr. Steve Mason
Homeland Stores, Inc.
400 N.E. 36th Street
Oklahoma City, Oklahoma 73105
Dear Steve:
The purpose of this letter is to confirm, amend and restate
the terms of your employment with Homeland Stores, Inc. ("Homeland").
This letter supersedes in all respects all prior agreements and
understandings, whether written or oral, express or implied, between you
and Homeland and any of its affiliates relating to your employment.
1. Duties
You will be employed in such executive capacities for
Homeland, Homeland Holding Corporation ("Holding") or any subsidiary of
Homeland (the "Homeland Group") as may be determined from time to time
by or under the authority of Homeland's Board of Directors. You will
devote all of your skill, knowledge and full working time (reasonable
vacation time and absence for sickness or disability excepted) solely
and exclusively to the conscientious performance of such duties.
2. Term
This letter agreement shall be effective as of July 1, 1994
and expire as of June 30, 1996, unless sooner terminated by reason of
your death or Disability (as defined hereinafter) or in accordance with
paragraph 8 or paragraph 10 hereof. For purposes of this letter
agreement, "Disability" is defined to mean that, as a result of your
incapacity due to physical and mental illness, you shall have been
absent from your duties to the Homeland Group on a substantially full-
time basis for six consecutive months, and within 30 days after Homeland
notifies you in writing that it intends to replace you, you shall not
have returned to the performance of your duties on a full-time basis.
3. Base Salary
As compensation for the duties to be performed by you under
the terms of this letter agreement, Homeland will pay you a base salary
in the amount of $130,500 per annum. It is contemplated that Homeland
will review your base salary from time to time and, at the discretion of
the Board of Directors, may increase your base salary from time to time
based upon your performance, then generally prevailing industry salary
scales and other relevant factors. (Such annual base salary, as it may
hereafter be increased, shall be referred to as your "Actual Salary").
4. Incentive Bonus
During the term of this letter agreement, you will be
entitled to participate in Homeland's annual incentive compensation
program (the "Bonus Plan") in effect from time to time at a level
commensurate with your position. Notwithstanding the foregoing, for
1994 your annual bonus opportunity at the target level of performance
shall be 100% of your Actual Salary and in no event shall your annual
bonus opportunity at the target level of performance for years after
1994 be less than 50% of your Actual Salary.
5. Retention Bonus
Subject to the provisions of this paragraph 5, you shall be
entitled to receive a special one-time non-recurring cash bonus in the
amount determined in accordance with the schedule attached hereto as
Exhibit 1 if, on or prior to the End Date (as defined below), there
shall occur
(i) the closing of a sale (a "Stock Sale") of at least 50%
of the Class A Common Stock of Holding, par value $.01 per share
(the "Stock") to any person or entity (a "Third Party Purchaser")
other than any partnership, fund or other investment vehicle
managed or advised by Clayton, Dubilier & Rice (an "Affiliated
Fund") and other than any affiliate of such an Affiliated Fund
(Homeland executive officers, management or employees shall not be
deemed to be affiliates of such an Affiliated Fund),
(ii) the effective date of a merger of Holding with or into
another corporation immediately following which the persons or
entities who were the shareholders of Holding immediately prior to
the merger (together with any affiliates thereof, any Affiliated
Fund and any affiliates of an Affiliated Fund) own, directly or
indirectly, less than 50% of the voting power of all voting equity
securities of the surviving or resulting entity (a "Merger") or
(iii) the adoption of a plan of liquidation of Holding
following the sale of substantially all of its assets (including,
without limitation, the common stock of Homeland) to one or more
Third Party Purchasers (a "Liquidation"); and
as a result of such Stock Sale, Merger or Liquidation (a "Trigger
Event") the shareholders of Holding receive cash and/or other property
(the "Consideration") with respect to the Stock, having an aggregate
value (as determined in good faith by the Board of Directors of Holding)
of more than $1.73 per share (the "Threshold Amount"). For purposes of
this paragraph 5, the End Date shall mean the later of (i) December 31,
1995 or (ii) if a definitive sale agreement or merger agreement has been
executed prior to December 31, 1995 and the closing of which occurs not
later than February 28, 1996 (or such later date as the Board of
Directors of Holding shall designate), the date on which such Stock Sale
or Merger occurs.
Except as otherwise provided in this paragraph 5, payment of
the Retention Bonus shall be made at the same time as the Consideration
is distributed in full to shareholders, provided that (i) in the event
that any partial distribution of the Consideration is made to the
shareholders of Holding, whether as an extraordinary dividend or
otherwise, a pro-rata payment of the Retention Bonus (based on the
percentage that the partial distribution to shareholders is of the
Consideration expected to be paid to shareholders, as determined by the
Board of Directors of Holding) shall be made at the time of such
distribution if, and only if, the Board of Directors of Holding shall
determine that, based on its then best estimate of the amount to be paid
as the Consideration, a Retention Bonus will be payable in accordance
with this paragraph 5; (ii) if the Consideration has not been
distributed to shareholders prior to the second anniversary of the
Trigger Event, on such date you shall be paid the amount, if any, that
the Board of Directors of Holding shall determine to be payable as a
Retention Bonus (based on its then best estimate of the amount to be
paid as the Consideration); and (iii) the Board may authorize an advance
payment of all or any portion of the Retention Bonus at any time after
the occurrence of a Trigger Event, if the Board of Directors of Holding
determines in good faith that the shareholders are expected to receive
Consideration in excess of the Threshold Amount.
Notwithstanding anything else contained in this paragraph 5
to the contrary, no Retention Bonus shall be payable to you under this
paragraph 5 unless (i) you are still an employee of the Homeland Group
on the date on which any Trigger Event occurs and (ii) you do not
voluntarily terminate your employment after that date without the
consent of the Board of Directors of Homeland; provided that if a
Trigger Event occurs within ninety (90) days after the date, if any, on
which your employment is terminated by Homeland without Cause (as pro-
vided in paragraph 10 below) or by reason of your death or Disability,
Homeland shall pay you, at the same time as payment is made to other
Homeland executives with respect to their retention bonuses, an amount
(in addition to any amount payable under paragraph 10 on account of such
termination) equal to the product of (i) the amount that would otherwise
have been payable to you hereunder times (ii) a fraction (not to exceed
1), the numerator of which is the number of full or partial calendar
months during which you were employed since July 1, 1994 and the
denominator is the total number of full or partial calendar months from
July 1, 1994 to the date payment is made to other Homeland executives
with respect to their retention bonuses.
Notwithstanding anything else contained in any other
compensation or benefit plan, program or arrangement of Homeland to the
contrary, the amount, if any, payable as a Retention Bonus (and any
amount payable under paragraph 9 below) shall (i) not be taken into
account in any manner in calculating any other benefits payable to you
under any such plan, program or arrangement and (ii) be in lieu of any
other retention compensation program in which you would be entitled to
participate under Homeland's generally applicable policies or proce-
dures. To the extent required to satisfy the intent of this paragraph
5, this letter agreement shall be deemed to be an amendment to the terms
of any such plan, program or arrangement.
6. Expenses
Homeland will furnish, insure and maintain for your use
while you are employed by Homeland an automobile of a type commensurate
with your status, selected by you and approved by the Board of
Directors. Upon termination of your employment with Homeland, you will
have the option to purchase such automobile at its fair market
(wholesale) value. Homeland will reimburse you for reasonable travel,
lodging, meal and other appropriate expenses incurred by you in
connection with your performance of services under this letter agreement
upon submission by you of evidence, satisfactory to Homeland, of the
incurrence and purpose of each such expense.
7. Employee Benefits
Homeland shall provide you with the same medical, dental,
vision, life and disability insurance and other welfare benefits (the
"Welfare Benefit Arrangements") as it provides to its other executive
officers. During the term of this letter agreement you will also be
eligible to participate in Homeland's retirement and profit sharing
plans in effect from time to time on the same basis as Homeland's other
executive officers, subject to the terms and provisions of such plans.
You shall be entitled to paid vacation in accordance with Homeland's
generally applicable plans, policies or procedures.
8. Termination of Employment Following a Change of Control
Upon any termination of your employment, whether voluntary
or involuntary, within 180 days following a Change of Control (as
defined in the Revolving Credit Agreement, dated as of March 4, 1992, as
amended, between Homeland, Holding and Union Bank of Switzerland, New
York Branch, as agent) or a Trigger Event, Homeland will pay you an
amount equal to the sum of
(i) your Actual Salary in effect immediately prior to the Change
of Control;
(ii) an amount equal to the product of (A) your target bonus
under the Bonus Plan for the year in which your termination
occurs and (B) a fraction, the numerator of which is the
number of days during such year prior to and including the
date of your termination of employment and the denominator
of which is 365, provided that if your termination occurs
during 1994, such amount shall be based on target bonus
without pro-ration but shall be reduced, to the extent
applicable, by any amount paid to you under the Bonus Plan
for 1994 prior to the date on which your termination occurs;
and
(iii) the amount otherwise payable to you upon a Change of Control
under Homeland's generally applicable plan, policies or
procedures in respect of the 10% reduction in the base
salaries of all Homeland management personnel, effective as
of June 1, 1993 (which amount shall be reduced to the extent
that your base salary actually paid at any time after June
1, 1993 exceeded the base salary payable to you immediately
prior to such date).
Homeland will pay you the cash amounts set forth in the
immediately preceding paragraph in a lump sum payment no later than 5
business days after the date your employment terminates or in monthly
installments, as directed by you at your option. Such amounts will not
be subject to any offset, mitigation or other reduction as a result of
any amounts or benefits paid or offered to be paid to you as a Retention
Bonus. Further, the foregoing amounts and benefits will not be subject
to any offset, mitigation or other reduction as a result of your
receiving salary or other benefits by reason of your securing other
employment.
Homeland will also continue your coverage under the Welfare
Benefit Arrangements for a period of one year after the date your
employment terminates, provided that if Homeland is unable to or chooses
not to continue any such coverage for all or any portion of such period,
it shall not be obligated to provide such coverage and shall instead pay
you (within 15 days after such coverage is to cease) an amount equal to
(A) the remainder of (x) 12 minus (y) the number of months that such
coverage is actually provided times (B) the monthly amount it would have
paid (or, in the case of any self-insured arrangement, the monthly cost
per person budgeted for coverage) under the applicable the Welfare
Benefit Arrangement.
The amounts payable to you under this paragraph 8 and the
amounts, if any, payable to you in accordance with the provisions of
paragraph 5 shall be paid in full satisfaction of the liabilities of the
Homeland Group to you under this agreement and in conjunction with your
termination of employment (and shall be in lieu of any severance
payments to which you would otherwise be entitled under Homeland's gen-
erally applicable plans, policies or procedures). Nothing in the
preceding sentence shall be interpreted to limit in any way any rights
or release any obligations that you may have with respect to your
ownership of any shares of Stock.
9. Minimum Benefit
Notwithstanding anything else in this letter agreement to
the contrary, if (i) you are entitled to receive the benefits provided
under paragraph 8 and (ii) the sum of the amounts that would have been
payable to you in conjunction with Homeland's generally applicable
special retention program and severance policy exceeds the sum of the
amounts payable to you under paragraphs 5 and 8, Homeland shall also pay
you an amount in cash equal to such excess. Any amount payable under
this paragraph 9 shall be paid as soon as practicable (but not later
than 30 days) after your termination of employment in accordance with
paragraph 8.
10. Termination of Employment Prior to a Change of Control
Upon the termination of your employment by Homeland for
other than Cause (as hereinafter defined) prior to a Change of Control,
Homeland will pay you the severance benefits payable to you in
accordance with Homeland's generally applicable plans, policies or
procedures. In the event that you obtain other employment during the
period with respect to which severance benefits are payable to you
hereunder, such severance benefits shall be subject to offset or other
reduction in accordance with Homeland's generally applicable plans,
policies or procedures.
The amounts payable to you under this paragraph 10 and the
amounts, if any, payable to you in accordance with the provisions of
paragraph 5 shall be paid in full satisfaction of the liabilities of the
Homeland Group to you under this agreement and in conjunction with your
termination of employment. Nothing in the preceding sentence shall be
interpreted to limit in any way any rights or release any obligations
that you may have with respect to your ownership of any shares of Stock.
For purposes of this letter agreement, "Cause" is defined to
mean (a) your willful failure to substantially perform your duties and
continuance of such failure for more than 30 days after Homeland
notifies you in writing that you are failing to substantially perform
your duties, setting forth in reasonable detail the manner in which you
are failing so to perform your duties; (b) your engaging in serious
misconduct which is injurious to Homeland; or (c) your conviction in a
court of proper jurisdiction of a crime which constitutes a felony.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there is delivered to you a copy
of a resolution, duly adopted by Homeland's Board of Directors, finding
that Homeland has "Cause" to terminate you as contemplated in this
paragraph. In the event that Homeland shall terminate your employment
for Cause, Homeland shall only be obligated to pay you (a) your Actual
Base Salary earned through the date of such termination, (b) all
benefits due and owing through the date of such termination, and (c) the
amount necessary to reimburse you for expenses incurred prior to the
date of such termination for which Homeland has agreed to reimburse you
as provided in this letter agreement and, to the extent provided under
Homeland's generally applicable policies and procedures, any unused
vacation time.
11. Arbitration
Any dispute or controversy arising under or in connection
with this letter agreement shall be settled exclusively by arbitration
in Oklahoma City, Oklahoma, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect.
12. Binding Effect
This letter agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you under this
letter agreement if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this letter agreement to your personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees or
estate, as the case may be.
13. Indemnification
Homeland agrees to indemnify you to the fullest extent
permitted by applicable Delaware law as in effect from time to time.
14. Notices
All notices and other communications required or permitted
to be given under this letter agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified
express mail, return receipt requested, postage prepaid, to you at 4229
Northwest 144th Street, Oklahoma City, OK 73143, or to Homeland at 400
N.E. 36th Street, Oklahoma City, OK 73105, Attention: President, with a
copy to Clayton, Dubilier & Rice, Inc., 126 East 56th Street, New York,
NY 10022, Attention: B. Charles Ames, or to such other address as either
party shall specify by notice to the other.
15. General Provisions
No provisions of this letter agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
approved by Homeland's Board of Directors and is agreed to in a writing
signed by you and such Homeland officer as may be specifically
designated by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any
condition or provision of this letter agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.
No agreements or representations, oral or otherwise, express
or impled, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this letter agreement.
The invalidity or unenforceability of any one or more provisions of this
letter agreement shall not affect the validity or enforceability of any
other provision of this letter agreement, which shall remain in full
force and effect. This letter
agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will
constitute one and the same instrument.
The validity, interpretation, construction and performance
of this letter agreement shall be governed by the laws of the State of
Oklahoma, without giving effect to its conflict of laws provisions.
* * * *
If the foregoing accurately sets forth the terms of your
employment with Homeland, please so indicate by signing below and
returning one signed copy of this letter agreement to me.
Sincerely,
HOMELAND STORES, INC.
/s/ Max E. Raydon
-----------------------------
Max E. Raydon, President and
Chief Executive Officer
ACCEPTED AND AGREED
as of this 15th day
of August, 1994
/s/ Steve Mason
- - --------------------
Steve Mason
<PAGE>
Divestiture Proceeds
<TABLE>
<CAPTION>
Gross Per Share Range Net Per Share Range Cumulative $MM Share of Distribution
($ in Thousands)
<C> <C> <C> <C> <C> <C>
$0.00 $1.73 $0.00 $1.73 $0.00 $ 0
1.73 1.83 1.73 1.82 0.33 20
1.83 1.92 1.82 1.90 0.70 50
1.92 2.02 1.90 1.98 1.11 70
2.02 2.11 1.98 2.07 1.56 100
2.11 2.21 2.07 2.15 2.05 140
2.21 2.30 2.15 2.23 2.67 170
2.30 2.40 2.23 2.30 3.14 210
2.40 2.49 2.30 2.38 3.75 250
2.49 2.60 2.38 2.47 4.51 300
2.60 2.71 2.47 2.56 5.35 360
2.71 2.82 2.56 2.64 6.26 420
2.82 2.94 2.64 2.73 7.25 480
2.94 3.05 2.73 2.81 8.32 550
3.05 3.16 2.81 2.88 9.47 630
3.16 3.27 2.88 2.96 10.69 710
3.27 3.38 2.96 3.03 12.00 800
3.38 3.49 3.03 3.11 13.30 890
3.49 3.60 3.11 3.18 14.60 970
3.60 3.71 3.18 3.26 15.90 1,060
3.71 3.82 3.26 3.33 17.20 1,150
3.82 3.94 3.33 3.40 18.60 1,230
3.94 4.05 3.40 3.48 19.60 1,320
4.05 4.16 3.48 3.55 21.10 1,410
4.16 4.27 3.55 3.63 22.40 1,490
4.27 4.38 3.63 3.70 23.70 1,580
4.38 4.49 3.70 3.77 25.01 1,670
4.49 4.60 3.77 3.85 26.31 1,750
4.60 4.71 3.85 3.92 27.61 1,840
4.71 4.83 3.92 3.99 28.91 1,930
</TABLE>
Exhibit 10oo
August 11, 1994
Mr. Al Fideline
Homeland Stores, Inc.
400 N.E. 36th Street
Oklahoma City, Oklahoma 73105
Dear Al:
The purpose of this letter is to confirm, amend and restate
the terms of your employment with Homeland Stores, Inc. ("Homeland").
This letter supersedes in all respects all prior agreements and
understandings, whether written or oral, express or implied, between you
and Homeland and any of its affiliates relating to your employment.
1. Duties
You will be employed in such executive capacities for
Homeland, Homeland Holding Corporation ("Holding") or any subsidiary of
Homeland (the "Homeland Group") as may be determined from time to time
by or under the authority of Homeland's Board of Directors. You will
devote all of your skill, knowledge and full working time (reasonable
vacation time and absence for sickness or disability excepted) solely
and exclusively to the conscientious performance of such duties.
2. Term
This letter agreement shall be effective as of July 1, 1994
and expire as of June 30, 1996, unless sooner terminated by reason of
your death or Disability (as defined hereinafter) or in accordance with
paragraph 8 or paragraph 10 hereof. For purposes of this letter
agreement, "Disability" is defined to mean that, as a result of your
incapacity due to physical and mental illness, you shall have been
absent from your duties to the Homeland Group on a substantially full-
time basis for six consecutive months, and within 30 days after Homeland
notifies you in writing that it intends to replace you, you shall not
have returned to the performance of your duties on a full-time basis.
3. Base Salary
As compensation for the duties to be performed by you under
the terms of this letter agreement, Homeland will pay you a base salary
in the amount of $80,000 per annum. It is contemplated that Homeland
will review your base salary from time to time and, at the discretion of
the Board of Directors, may increase your base salary from time to time
based upon your performance, then generally prevailing industry salary
scales and other relevant factors. (Such annual base salary, as it may
hereafter be increased, shall be referred to as your "Actual Salary").
4. Incentive Bonus
During the term of this letter agreement, you will be
entitled to participate in Homeland's annual incentive compensation
program (the "Bonus Plan") in effect from time to time at a level
commensurate with your position. Notwithstanding the foregoing, for
1994 your annual bonus opportunity at the target level of performance
shall be 100% of your Actual Salary and in no event shall your annual
bonus opportunity at the target level of performance for years after
1994 be less than 50% of your Actual Salary.
5. Retention Bonus
Subject to the provisions of this paragraph 5, you shall be
entitled to receive a special one-time non-recurring cash bonus in the
amount determined in accordance with the schedule attached hereto as
Exhibit 1 if, on or prior to the End Date (as defined below), there
shall occur
(i) the closing of a sale (a "Stock Sale") of at least 50%
of the Class A Common Stock of Holding, par value $.01 per share
(the "Stock") to any person or entity (a "Third Party Purchaser")
other than any partnership, fund or other investment vehicle
managed or advised by Clayton, Dubilier & Rice (an "Affiliated
Fund") and other than any affiliate of such an Affiliated Fund
(Homeland executive officers, management or employees shall not be
deemed to be affiliates of such an Affiliated Fund),
(ii) the effective date of a merger of Holding with or into
another corporation immediately following which the persons or
entities who were the shareholders of Holding immediately prior to
the merger (together with any affiliates thereof, any Affiliated
Fund and any affiliates of an Affiliated Fund) own, directly or
indirectly, less than 50% of the voting power of all voting equity
securities of the surviving or resulting entity (a "Merger") or
(iii) the adoption of a plan of liquidation of Holding
following the sale of substantially all of its assets (including,
without limitation, the common stock of Homeland) to one or more
Third Party Purchasers (a "Liquidation"); and
as a result of such Stock Sale, Merger or Liquidation (a "Trigger
Event") the shareholders of Holding receive cash and/or other property
(the "Consideration") with respect to the Stock, having an aggregate
value (as determined in good faith by the Board of Directors of Holding)
of more than $1.73 per share (the "Threshold Amount"). For purposes of
this paragraph 5, the End Date shall mean the later of (i) December 31,
1995 or (ii) if a definitive sale agreement or merger agreement has been
executed prior to December 31, 1995 and the closing of which occurs not
later than February 28, 1996 (or such later date as the Board of
Directors of Holding shall designate), the date on which such Stock
Sale, Merger or sale of assets described in subparagraph 5(iii) above
occurs.
Except as otherwise provided in this paragraph 5, payment of
the Retention Bonus shall be made at the same time as the Consideration
is distributed in full to shareholders, provided that (i) in the event
that any partial distribution of the Consideration is made to the
shareholders of Holding, whether as an extraordinary dividend or
otherwise, a pro-rata payment of the Retention Bonus (based on the
percentage that the partial distribution to shareholders is of the
Consideration expected to be paid to shareholders, as determined by the
Board of Directors of Holding) shall be made at the time of such
distribution if, and only if, the Board of Directors of Holding shall
determine that, based on its then best estimate of the amount to be paid
as the Consideration, a Retention Bonus will be payable in accordance
with this paragraph 5; (ii) if the Consideration has not been
distributed to shareholders prior to the second anniversary of the
Trigger Event, on such date you shall be paid the amount, if any, that
the Board of Directors of Holding shall determine to be payable as a
Retention Bonus (based on its then best estimate of the amount to be
paid as the Consideration); and (iii) the Board may authorize an advance
payment of all or any portion of the Retention Bonus at any time after
the occurrence of a Trigger Event, if the Board of Directors of Holding
determines in good faith that the shareholders are expected to receive
Consideration in excess of the Threshold Amount.
Notwithstanding anything else contained in this paragraph 5
to the contrary, no Retention Bonus shall be payable to you under this
paragraph 5 unless (i) you are still an employee of the Homeland Group
on the date on which any Trigger Event occurs and (ii) you do not
voluntarily terminate your employment after that date without the
consent of the Board of Directors of Homeland; provided that if a
Trigger Event occurs within ninety (90) days after the date, if any, on
which your employment is terminated by Homeland without Cause (as pro-
vided in paragraph 10 below) or by reason of your death or Disability,
Homeland shall pay you, at the same time as payment is made to other
Homeland executives with respect to their retention bonuses, an amount
(in addition to any amount payable under paragraph 10 on account of such
termination) equal to the product of (i) the amount that would otherwise
have been payable to you hereunder times (ii) a fraction (not to exceed
1), the numerator of which is the number of full or partial calendar
months during which you were employed since July 1, 1994 and the
denominator is the total number of full or partial calendar months from
July 1, 1994 to the date payment is made to other Homeland executives
with respect to their retention bonuses.
Notwithstanding anything else contained in any other
compensation or benefit plan, program or arrangement of Homeland to the
contrary, the amount, if any, payable as a Retention Bonus (and any
amount payable under paragraph 9 below) shall (i) not be taken into
account in any manner in calculating any other benefits payable to you
under any such plan, program or arrangement and (ii) be in lieu of any
other retention compensation program in which you would be entitled to
participate under Homeland's generally applicable policies or proce-
dures. To the extent required to satisfy the intent of this paragraph
5, this letter agreement shall be deemed to be an amendment to the terms
of any such plan, program or arrangement.
6. Expenses
Homeland will furnish, insure and maintain for your use
while you are employed by Homeland an automobile of a type commensurate
with your status, selected by you and approved by the Board of
Directors. Upon termination of your employment with Homeland, you will
have the option to purchase such automobile at its fair market
(wholesale) value. Homeland will reimburse you for reasonable travel,
lodging, meal and other appropriate expenses incurred by you in
connection with your performance of services under this letter agreement
upon submission by you of evidence, satisfactory to Homeland, of the
incurrence and purpose of each such expense.
7. Employee Benefits
Homeland shall provide you with the same medical, dental,
vision, life and disability insurance and other welfare benefits (the
"Welfare Benefit Arrangements") as it provides to its other executive
officers. During the term of this letter agreement you will also be
eligible to participate in Homeland's retirement and profit sharing
plans in effect from time to time on the same basis as Homeland's other
executive officers, subject to the terms and provisions of such plans.
You shall be entitled to paid vacation in accordance with Homeland's
generally applicable plans, policies or procedures.
8. Termination of Employment Following a Change of Control
Upon any termination of your employment, whether voluntary
or involuntary, within 180 days following a Change of Control (as
defined in the Revolving Credit Agreement, dated as of March 4, 1992, as
amended, between Homeland, Holding and Union Bank of Switzerland, New
York Branch, as agent) or a Trigger Event, Homeland will pay you an
amount equal to the sum of
(i) your Actual Salary in effect immediately prior to the Change
of Control;
(ii) an amount equal to the product of (A) your target bonus
under the Bonus Plan for the year in which your termination
occurs and (B) a fraction, the numerator of which is the
number of days during such year prior to and including the
date of your termination of employment and the denominator
of which is 365, provided that if your termination occurs
during 1994, such amount shall be based on target bonus
without pro-ration but shall be reduced, to the extent
applicable, by any amount paid to you under the Bonus Plan
for 1994 prior to the date on which your termination occurs;
and
(iii) the amount otherwise payable to you upon a Change of Control
under Homeland's generally applicable plan, policies or
procedures in respect of the 10% reduction in the base
salaries of all Homeland management personnel, effective as
of June 1, 1993 (which amount shall be reduced to the extent
that your base salary actually paid at any time after June
1, 1993 exceeded the base salary payable to you immediately
prior to such date).
Homeland will pay you the cash amounts set forth in the
immediately preceding paragraph in a lump sum payment no later than 5
business days after the date your employment terminates or in monthly
installments, as directed by you at your option. Such amounts will not
be subject to any offset, mitigation or other reduction as a result of
any amounts or benefits paid or offered to be paid to you as a Retention
Bonus. Further, the foregoing amounts and benefits will not be subject
to any offset, mitigation or other reduction as a result of your
receiving salary or other benefits by reason of your securing other
employment.
Homeland will also continue your coverage under the Welfare
Benefit Arrangements for a period of one year after the date your
employment terminates, provided that if Homeland is unable to or chooses
not to continue any such coverage for all or any portion of such period,
it shall not be obligated to provide such coverage and shall instead pay
you (within 15 days after such coverage is to cease) an amount equal to
(A) the remainder of (x) 12 minus (y) the number of months that such
coverage is actually provided times (B) the monthly amount it would have
paid (or, in the case of any self-insured arrangement, the monthly cost
per person budgeted for coverage) under the applicable the Welfare
Benefit Arrangement.
The amounts payable to you under this paragraph 8 and the
amounts, if any, payable to you in accordance with the provisions of
paragraph 5 shall be paid in full satisfaction of the liabilities of the
Homeland Group to you under this agreement and in conjunction with your
termination of employment (and shall be in lieu of any severance
payments to which you would otherwise be entitled under Homeland's gen-
erally applicable plans, policies or procedures). Nothing in the
preceding sentence shall be interpreted to limit in any way any rights
or release any obligations that you may have with respect to your
ownership of any shares of Stock.
9. Minimum Benefit
Notwithstanding anything else in this letter agreement to
the contrary, if (i) you are entitled to receive the benefits provided
under paragraph 8 and (ii) the sum of the amounts that would have been
payable to you in conjunction with Homeland's generally applicable
special retention program and severance policy exceeds the sum of the
amounts payable to you under paragraphs 5 and 8, Homeland shall also pay
you an amount in cash equal to such excess. Any amount payable under
this paragraph 9 shall be paid as soon as practicable (but not later
than 30 days) after your termination of employment in accordance with
paragraph 8.
10. Termination of Employment Prior to a Change of Control
Upon the termination of your employment by Homeland for
other than Cause (as hereinafter defined) prior to a Change of Control,
Homeland will pay you the severance benefits payable to you in
accordance with Homeland's generally applicable plans, policies or
procedures. In the event that you obtain other employment during the
period with respect to which severance benefits are payable to you
hereunder, such severance benefits shall be subject to offset or other
reduction in accordance with Homeland's generally applicable plans,
policies or procedures.
The amounts payable to you under this paragraph 10 and the
amounts, if any, payable to you in accordance with the provisions of
paragraph 5 shall be paid in full satisfaction of the liabilities of the
Homeland Group to you under this agreement and in conjunction with your
termination of employment. Nothing in the preceding sentence shall be
interpreted to limit in any way any rights or release any obligations
that you may have with respect to your ownership of any shares of Stock.
For purposes of this letter agreement, "Cause" is defined to
mean (a) your willful failure to substantially perform your duties and
continuance of such failure for more than 30 days after Homeland
notifies you in writing that you are failing to substantially perform
your duties, setting forth in reasonable detail the manner in which you
are failing so to perform your duties; (b) your engaging in serious
misconduct which is injurious to Homeland; or (c) your conviction in a
court of proper jurisdiction of a crime which constitutes a felony.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there is delivered to you a copy
of a resolution, duly adopted by Homeland's Board of Directors, finding
that Homeland has "Cause" to terminate you as contemplated in this
paragraph. In the event that Homeland shall terminate your employment
for Cause, Homeland shall only be obligated to pay you (a) your Actual
Base Salary earned through the date of such termination, (b) all
benefits due and owing through the date of such termination, and (c) the
amount necessary to reimburse you for expenses incurred prior to the
date of such termination for which Homeland has agreed to reimburse you
as provided in this letter agreement and, to the extent provided under
Homeland's generally applicable policies and procedures, any unused
vacation time.
11. Arbitration
Any dispute or controversy arising under or in connection
with this letter agreement shall be settled exclusively by arbitration
in Oklahoma City, Oklahoma, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect.
12. Binding Effect
This letter agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you under this
letter agreement if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this letter agreement to your personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees or
estate, as the case may be.
13. Indemnification
Homeland agrees to indemnify you to the fullest extent
permitted by applicable Delaware law as in effect from time to time.
14. Notices
All notices and other communications required or permitted
to be given under this letter agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified
express mail, return receipt requested, postage prepaid, to you at Rural
Route 1,Box 109 I, Coweta, OK 74429, or to Homeland at 400 N.E. 36th
Street, Oklahoma City, OK 73105, Attention: President, with a copy to
Clayton, Dubilier & Rice, Inc., 126 East 56th Street, New York, NY
10022, Attention: B. Charles Ames, or to such other address as either
party shall specify by notice to the other.
15. General Provisions
No provisions of this letter agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
approved by Homeland's Board of Directors and is agreed to in a writing
signed by you and such Homeland officer as may be specifically
designated by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any
condition or provision of this letter agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.
No agreements or representations, oral or otherwise, express
or impled, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this letter agreement.
The invalidity or unenforceability of any one or more provisions of this
letter agreement shall not affect the validity or enforceability of any
other provision of this letter agreement, which shall remain in full
force and effect. This letter
agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will
constitute one and the same instrument.
The validity, interpretation, construction and performance
of this letter agreement shall be governed by the laws of the State of
Oklahoma, without giving effect to its conflict of laws provisions.
* * * *
If the foregoing accurately sets forth the terms of your
employment with Homeland, please so indicate by signing below and
returning one signed copy of this letter agreement to me.
Sincerely,
HOMELAND STORES, INC.
/s/ Max E. Raydon
----------------------------
Max E. Raydon, President and
Chief Executive Officer
ACCEPTED AND AGREED
as of this 15th day
of August, 1994
/s/ Alfred F. Fideline, Sr.
- - ----------------------------
Al Fideline
<PAGE>
Divestiture Proceeds
<TABLE>
<CAPTION>
Gross Per Share Range Net Per Share Range Cumulative $MM Share of Distribution
($ in Thousands)
<C> <C> <C> <C> <C> <C>
$0.00 $1.73 $0.00 $1.73 $0.00 $ 0
1.73 1.83 1.73 1.82 0.33 20
1.83 1.92 1.82 1.90 0.70 50
1.92 2.02 1.90 1.98 1.11 70
2.02 2.11 1.98 2.07 1.56 100
2.11 2.21 2.07 2.15 2.05 140
2.21 2.30 2.15 2.23 2.67 170
2.30 2.40 2.23 2.30 3.14 210
2.40 2.49 2.30 2.38 3.75 250
2.49 2.60 2.38 2.47 4.51 300
2.60 2.71 2.47 2.56 5.35 360
2.71 2.82 2.56 2.64 6.26 420
2.82 2.94 2.64 2.73 7.25 480
2.94 3.05 2.73 2.81 8.32 550
3.05 3.16 2.81 2.88 9.47 630
3.16 3.27 2.88 2.96 10.69 710
3.27 3.38 2.96 3.03 12.00 800
3.38 3.49 3.03 3.11 13.30 890
3.49 3.60 3.11 3.18 14.60 970
3.60 3.71 3.18 3.26 15.90 1,060
3.71 3.82 3.26 3.33 17.20 1,150
3.82 3.94 3.33 3.40 18.60 1,230
3.94 4.05 3.40 3.48 19.60 1,320
4.05 4.16 3.48 3.55 21.10 1,410
4.16 4.27 3.55 3.63 22.40 1,490
4.27 4.38 3.63 3.70 23.70 1,580
4.38 4.49 3.70 3.77 25.01 1,670
4.49 4.60 3.77 3.85 26.31 1,750
4.60 4.71 3.85 3.92 27.61 1,840
4.71 4.83 3.92 3.99 28.91 1,930
</TABLE>
