SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended February 2, 1997
Commission File Number 1-10619
PAMIDA HOLDINGS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 47-0696125
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
8800 "F" Street, Omaha, Nebraska 68127
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (402) 339-2400
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Name of Each Exchange
Class on Which Registered
------------- -----------------------
Common Stock American Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of April 15, 1997, was $10,899,162 based upon the closing
price for such stock on the American Stock Exchange on such date.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
Outstanding at
Class of Stock April 15, 1997
-------------- ----------------
Common Stock 5,004,942 shares
Documents Incorporated by Reference: Portions of the registrant's proxy
statement dated March 26, 1997, for the annual meeting of the registrant's
stockholders to be held on May 22, 1997, are incorporated by reference into Part
III.
PART I
Item 1. BUSINESS.
FORWARD-LOOKING STATEMENTS
This 10-K contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "1995 Act"). Such
statements are made in good faith by the Company pursuant to the safe-harbor
provisions of the 1995 Act. In connection with these safe-harbor provisions,
this 10-K contains certain forward-looking statements which reflect management's
current views and estimates of future economic circumstances, industry
conditions, Company performance and financial results. The statements are based
on many assumptions and factors including sales results, expense levels,
competition and interest rates as well as other risks and uncertainties inherent
in the Company's business, capital structure and the retail industry in general.
Any changes in these factors could result in significantly different results.
The Company further cautions that the forward-looking information contained
herein is not exhaustive or exclusive. The Company does not undertake to update
any forward-looking statements which may be made from time to time by or on
behalf of the Company.
GENERAL.
Pamida Holdings Corporation conducts its mass merchandise retail business
through its wholly owned subsidiary, Pamida, Inc., a Delaware corporation.
Unless the context indicates otherwise, the terms "Pamida" and "Company" refer
collectively to Pamida Holdings Corporation, its direct and indirect
subsidiaries and their predecessors, and "Holdings" refers only to Pamida
Holdings Corporation.
Holdings is a Delaware corporation incorporated in 1986 to acquire all of
the capital stock of Pamida, Inc. which, directly since 1981 and through a
predecessor prior to 1981, had been engaged in the mass merchandise retail
business since 1963. The capital stock of Pamida, Inc. is the only significant
asset of Holdings, and Holdings has no material operations of its own.
On January 19, 1996, the Company announced its intention to close 40 stores
located in unprofitable or highly competitive markets. Store closing sales began
on January 29, 1996, and the Company completed all of such store closings during
the second quarter of the fiscal year ended February 2, 1997. References in this
Form 10-K to the "40 Closed Stores" mean such 40 stores.
STORES.
At February 2, 1997, Pamida operated 148 mass merchandise retail stores
located in 148 small towns (having an average population of approximately 5,500)
in 15 Midwestern, North Central and Rocky Mountain states. Pamida's strategic
objective is to be the dominant mass merchandise retailer in the communities it
serves. The Company believes that it holds the leading market position in over
80% of the communities in which its stores are located.
Pamida stores generally are located in small towns, normally county seats,
where there often is little or no competition from another major mass
merchandise retailer and which the Company considers to be either too small to
support more than one major mass merchandise retailer (thereby creating a
potential barrier to entry by a major competitor) or too small to attract
competitors whose stores generally are designed to serve larger populations. At
February 2, 1997, 119 of the Company's 148 stores faced no direct local
competition from other major mass merchandise retailers.
The Company's stores average approximately 29,000 square feet of sales area
and range in size from approximately 6,000 to 51,000 square feet of sales area.
At February 2, 1997, Pamida's stores had an aggregate sales area of
approximately 4,348,000 square feet.
The following table indicates the states in which Pamida's stores were
located as of February 2, 1997:
STATE TOTAL
----- -----
Minnesota..................................................... 29
Iowa.......................................................... 26
Nebraska...................................................... 15
Wisconsin..................................................... 14
Michigan..................................................... 12
Ohio......................................................... 10
Wyoming....................................................... 9
North Dakota.................................................. 7
South Dakota.................................................. 7
Montana....................................................... 7
Indiana....................................................... 4
Kansas........................................................ 3
Kentucky ..................................................... 2
Illinois...................................................... 2
Missouri ..................................................... 1
---
148
===
The following tables show the number of the Company's store openings,
relocations and closings and the aggregate year-end store sales area by fiscal
year since fiscal 1993:
Fiscal Year Ended
1997 1996 1995 1994 1993
Beginning of year ... 144 184 173 178 178
Stores opened in
new markets ..... 6 7 17 8 9
Stores relocated in
existing markets 2 3 -- -- --
Stores closed ..... (4) (10) (6) (13) (9)
--- --- --- --- ---
End of year ......... 148 184 184 173 178
Less 40 Closed Stores === (40) === === ===
---
144
===
Fiscal Year Ended
1997 1996 1995 1994 1993
Square feet of
store sales area
at year-end (in
millions) 4.35 5.22 5.09 4.68 4.75
Less 40 Closed Stores (1.09)
------
4.13
Pamida regularly evaluates all of its stores and from time to time closes
stores which no longer meet its standards for sales, profitability, selling area
or other applicable criteria.
STORE EXPANSION PROGRAM.
Pamida's store expansion program is subject to the Company's ability to
negotiate satisfactory leases, to the ability of prospective landlords to obtain
financing for new store buildings and to various zoning, site acquisition,
environmental, traffic, construction and other contingencies. Three new stores,
two of which are replacement stores, are expected to commence operations this
year.
Pamida has identified numerous communities which are potential sites for
the Company's prototype stores and in which Pamida believes it can achieve a
leading market position, although there is no assurance that Pamida will open
stores in such communities or on any particular time schedule.
In October 1996 the Company agreed to lease a new 200,000 square foot
distribution facility to be located in Lebanon, Indiana. Construction of this
new facility is underway, and the facility is expected to be completed and
operational during the second quarter of the current year.
Pamida believes that its existing distribution facilities (including the
new Lebanon, Indiana facility), senior and middle management staff and corporate
infrastructure are sufficient to accommodate the Company's anticipated growth.
The Company typically invests approximately $1,450,000 to $1,750,000 in a
new prototype store. Such expenditures consist primarily of approximately
$1,000,000 to $1,200,000 for the initial store inventory, a portion of which is
financed by vendor trade credit, and approximately $450,000 to $550,000 for
store fixtures and equipment. Because of the redeployment of store fixtures and
equipment from the 40 Closed Stores to new stores, the Company expects store
fixture and equipment expense to be limited to approximately $250,000 per new
store for fiscal 1998. In most cases, building and land costs of approximately
$1,450,000 to $1,750,000 per store are financed by unaffiliated developers who
lease the real estate to Pamida. To expedite the construction process, Pamida
occasionally may construct stores on sites which it acquires, with the
expectation that it subsequently will enter into sale-leaseback transactions
with respect to such stores with unaffiliated investors.
SALES AND MERCHANDISING.
Pamida's merchandising policy is to provide customers with one-stop family
shopping convenience and to feature nationally advertised brand-name products as
well as some private-label merchandise at attractive prices. Pamida operates its
stores on a self-service, primarily cash-and-carry basis and runs weekly
advertised promotions throughout the year. All of Pamida's stores accept bank
credit cards, which accounted for 14.2% of total store sales during the fiscal
year ended February 2, 1997.
Pamida's typical customers are price-conscious families across the income
spectrum. To effectively serve such customers, the Company's stores are open
seven days a week for an average of at least 75 hours per week.
Pamida's two basic merchandise divisions are softlines and hardlines. The
softlines division includes men's, women's, children's and infants' clothing,
footwear, accessories and jewelry. The hardlines division includes categories
such as health and beauty aids, automotive accessories, housewares, cleaning
supplies, hardware, paint, sporting goods, toys, stationery, small appliances
and electronic items, videos, compact discs and tapes, lawn and garden supplies,
linens and other domestics, cameras and accessories, pet supplies and some food
and candy items.
The Company currently owns and operates pharmacies in 41 of its larger
stores, and eight of Pamida's other stores contain prescription pharmacies
leased to and operated by independent pharmacists. The pharmacies have proved to
be effective in building customer loyalty and attracting customers who are
likely to purchase other items in addition to prescription drugs. Pamida
intends, whenever feasible in light of regulatory and personnel considerations
and where space permits, to include a pharmacy in each of its new prototype
stores and to add pharmacies to existing stores.
During the fiscal year ended February 2, 1997, the hardlines division
accounted for approximately 72% of Pamida's total sales, while the apparel
division and the pharmacies accounted for 23% and 5%, respectively, of Pamida's
total sales.
Among the methods that the Company employs to build customer loyalty and
satisfaction are weekly advertised specials, competitive pricing, clean and
orderly stores, friendly well-trained personnel, a liberal return policy and a
wide variety of special customer services (such as wheelchairs for the elderly
and handicapped, restroom facilities and water fountains, seating benches,
speedy check-out lanes and expedited check cashing and raincheck and layaway
processing) offered under various customer-oriented themes such as "We Care" and
"We're Listening". Pamida places special emphasis on maintaining a strong
in-stock position in all merchandise categories, particularly with respect to
sale items.
Pamida's business, like that of most other mass merchandise retailers, is
seasonal. First quarter sales (February through April) are lower than sales
during the other three fiscal quarters, while fourth quarter sales (November
through January) in recent years have increased to approximately 30% of the full
year's sales and normally involve a greater proportion of higher margin
merchandise.
ADVERTISING AND PROMOTION.
The Company's extensive advertising primarily utilizes colorful weekly
circulars developed by a centralized advertising department at Pamida's
headquarters. Such circulars advertise brand-name and other merchandise at
significant price reductions and are inserted into local newspapers or mailed
directly to customers. Pamida also uses local shoppers publications and coupon
books. During fiscal 1997, Pamida spent approximately $11,618,000 (net of
promotional allowances provided by vendors) on advertising, which represented
approximately 1.8% of fiscal 1997 sales.
PURCHASING AND DISTRIBUTION.
Pamida maintains a centralized buying, merchandising and store planning
staff at its executive offices. The merchandising department includes two
general merchandise managers, five hardlines divisional merchandise managers and
three apparel divisional merchandise managers. Each of the divisional
merchandise managers supervises from five to seven buyers. Members of the
Company's experienced buying staff regularly attend major trade shows, visit
both domestic and overseas markets and meet with vendor representatives at the
Company's headquarters.
The merchandise in the Company's stores is purchased from over 3,000
primary manufacturers and suppliers and numerous other vendors. Centralized
purchasing enables Pamida to more effectively control inventory shrinkage and to
take advantage of promotional programs and volume discounts offered by certain
vendors. The Company continuously seeks to optimize merchandise costs, including
promotional allowances offered by its suppliers. Pamida also has centralized the
management of returned merchandise, which enables the Company to most
effectively secure vendor credits and refunds with respect to such merchandise.
The Company's point-of-sale data capture equipment located in its stores
provides current information to Pamida's buyers to assist them in managing
inventories, effecting prompt reorders of popular items, eliminating
slow-selling merchandise and reducing markdowns.
Seaway Importing Company, a wholly owned subsidiary of Pamida, Inc.,
imports a wide variety of merchandise, including sporting goods, pet supplies,
toys, electronic items, apparel, hair care items, painting supplies, automotive
items and hardware, for sale in Pamida's stores.
During fiscal 1997, approximately 76% of Pamida's merchandise was supplied
to the stores through Pamida's own distribution centers, while the remaining
merchandise was supplied directly to the stores by manufacturers or
distributors.
COMPETITION.
The mass merchandise retail business is highly competitive. The Company's
stores generally compete with supermarkets, drug and specialty stores, mail
order and catalog merchants and, in some communities, department stores and
other mass merchandise retailers. Competitors consist both of independent stores
and of regional and national chains, some of which have substantially greater
resources than the Company. The type and degree of competition and the number of
competitors which Pamida's stores face vary significantly by market.
Pamida believes that the principal areas of competition in the mass
merchandise retail industry are store location, price, merchandise variety and
quality and customer service, although numerous other factors also affect the
competitive position of any particular store. Among the methods that the Company
employs to build customer loyalty and satisfaction are weekly advertised
specials, competitive pricing, clean and orderly stores, friendly well-trained
personnel, a liberal return policy and a wide variety of special customer
services offered under themes such as "We Care" and "We're Listening".
Pamida stores generally are located in small towns, normally county seats,
where there often is little or no competition from another major mass
merchandise retailer and which may be either too small to support more than one
major mass merchandise retailer (thereby creating a potential barrier to entry
by a major competitor) or too small to attract competitors whose stores
generally are designed to serve larger populations. The Company believes that,
in terms of sales, it is the leading mass merchandise retailer in over 80% of
the communities in which its stores are located.
At February 2, 1997, 119 of Pamida's 148 stores were located in communities
in which there was no direct local competition from other major mass merchandise
retailers. As of that date, Kmart, Alco, Wal-Mart, Target and ShopKo had stores
in 16, 11, 6, 2 and 1 communities, respectively, where Pamida stores are
located; however, because some of these communities have more than one of such
competitors, only 29 Pamida stores face direct local competition from such
retail chains. In recent years the Company's business strategy has been to focus
its store expansion program on communities with less likelihood of the entry of
a new major competitor, but there can be no assurance that in the future major
competitors will not open additional stores in the Company's markets.
Merchandise prices generally are established on a zone basis at Pamida's
executive offices, although store managers are given discretion to adjust prices
of key items to meet local competition and to match a competitor's advertised
prices. Zone pricing allows the Company to establish prices at different levels
in different trade territories, based primarily on competitive conditions within
such territories, rather than having a uniform pricing structure throughout the
entire chain. Pamida conducts a continuous program of competitor price
comparisons that enables the Company to make merchandise price adjustments, when
necessary, to assure that the Company maintains a competitive position.
EMPLOYEES.
As of February 2, 1997, Pamida had approximately 5,700 employees, of whom
approximately 2,800 were full-time and 2,900 were part-time. The number of
employees varies on a seasonal basis. None of Pamida's employees are represented
by a labor union, and the Company believes that its relations with its employees
are good.
At February 2, 1997, the average length of service of the Company's
management staff was as follows:
Average
Years
Number of Service
------ ----------
Top Management 2 15.3
Senior Vice Presidents and Vice Presidents 16 5.7
District Managers 12 20.3
Pharmacy District Supervisors 3 4.9
Store Managers 148 10.7
Pharmacy Managers 41 3.1
Pamida's human resources department is responsible for company-wide salary
and wage administration, as well as all benefit-plan administration. The human
resources department works closely with store operations in the development and
administration of Pamida's store-level employee training programs. In addition,
Pamida has an ongoing program for the development of management personnel to
fill positions in all facets of the Company's operations and makes a concerted
effort to identify and train potential successors for all of its key middle and
senior managers.
Item 2. PROPERTIES.
At February 2, 1997, the Company owned 20 of its 148 store buildings, while
its remaining 128 stores operated in leased premises. A substantial majority of
the Company's leases have renewal options, with approximately 49% of the leases
having unexpired current terms of five years or more. The following table
provides information relating to the remaining lease terms for the Company's
leased stores at February 2, 1997:
Lease Expiring Number of Leased Stores
During the Period (1) 2/02/97
1/97 to 12/98 5
1/99 to 12/00 5
1/01 to 12/02 10
1/03 to 12/04 8
After 12/04 100
---
Total 128
===
- ---------------
(1) Includes renewal options.
Pamida's management believes that the physical condition of the Company's
stores generally is very good. All of the Company's stores are continuously
updated to conform to Pamida's operating and merchandising standards.
The Company's general offices and one of its two distribution centers are
located in a 215,000 square foot building in Omaha, Nebraska, owned by the
Company. This facility contains approximately 135,000 square feet of warehouse
space and approximately 80,000 square feet of office space.
Pamida's primary distribution center is a 336,000 square foot
"flow-through" facility situated on a 22-acre tract of land in Omaha
approximately one mile from the distribution center described above. This
facility, which is owned by Pamida, serves primarily as a redistribution center
for bulk shipments and promotional merchandise on which cost savings can be
realized through quantity purchasing. Pamida also owns an additional 10-acre
tract of land adjacent to such distribution center which would permit that
facility to be further expanded by almost 60%.
In October 1996, the Company agreed to lease a new 200,000 square foot
distribution facility to be located in Lebanon, Indiana. Construction of this
new facility, currently is underway, and the facility is expected to be
operational during the second quarter of the current year. This distribution
facility will replace the 100,000 square foot warehouse facility previously
operated by the Company in the Milwaukee, Wisconsin area, which was closed and
the lease terminated in December 1996 due to eminent domain action by the City
of Glendale, Wisconsin. Under the Wisconsin administrative code, Pamida has up
to two years to file a claim for "Actual and Reasonable Moving Expenses" in
connection with the Company's relocation to Lebanon, Indiana. The Lebanon
facility also will be used as a redistribution center for bulk shipments and
promotional merchandise.
Pamida also has a warehouse facility in Omaha which contains approximately
41,000 square feet of space and is located immediately adjacent to the Company's
general offices. This warehouse, which is owned by Pamida, is used for the
processing of merchandise to be returned to vendors and by the advertising
department in connection with its printing operations.
In addition to its retail stores, distribution centers and warehouse
facility, Pamida's tangible assets include inventories, warehouse and store
fixtures and equipment, merchandise handling equipment, office and data
processing equipment, motor vehicles and an airplane.
Item 3. LEGAL PROCEEDINGS.
Pamida is a party to a number of lawsuits incidental to its business, the
outcome of which, both individually and in the aggregate, is not expected to
have a material adverse effect on the Company's operations or financial
condition.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
* * *
EXECUTIVE OFFICERS OF THE REGISTRANT.
The present executive officers of Holdings are Steven S. Fishman (Chairman
of the Board, President and Chief Executive Officer) Frank A. Washburn
(Executive Vice President, Chief Operating Officer and Secretary), and George R.
Mihalko (Senior Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary). Information concerning such executive officers appears in the
following paragraphs:
Mr. Fishman, age 46, has served as President and Chief Executive Officer of
Holdings and Pamida, Inc. since April 1993 and as Chairman of the Board of
Holdings and Pamida, Inc. since August 1993. From 1988 to March 1993, Mr.
Fishman was employed by Caldor, Inc. as Senior Vice President and General
Merchandise Manager-Homelines. Mr. Fishman has been a director of Holdings since
1993 and also is a director of Pamida, Inc.
Mr. Washburn, age 48, has served as Chief Operating Officer of Holdings and
Pamida, Inc. since March 1997, Executive Vice President of Holdings since
September 1995 and Executive Vice President of Pamida, Inc. since February 1995.
Mr. Washburn previously served as Senior Vice President - Human Resources of
Pamida, Inc. from 1993 to 1995 and as Vice President - Human Resources of
Pamida, Inc. from 1987 to 1993. Mr. Washburn also serves as Secretary of
Holdings and Pamida Inc. Mr. Washburn joined Pamida's predecessor in 1965. Mr.
Washburn has been a director of Holdings since 1995 and also is a director of
Pamida, Inc.
Mr. Mihalko, age 42, has served as Senior Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary of Holdings and Pamida, Inc. since
September 1995. From February 1993 to September 1995, Mr. Mihalko was employed
by Pier 1 Imports, Inc. as Vice President and Treasurer. From July 1990 to
February 1993, Mr. Mihalko was employed by Burlington Northern Railroad as
Assistant Treasurer.
The executive officers of Holdings may be removed from their respective
positions as such officers at any time by the Board of Directors of Holdings,
subject to any rights which they may have under employment agreements with the
Company.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Common Stock of Holdings has been listed and traded on the American
Stock Exchange since September 18, 1990. Prior to that date, no market existed
for such Common Stock.
The high and low sales prices for the Common Stock of Holdings on the
American Stock Exchange for fiscal 1997 and fiscal 1996 are as follows:
Fiscal 1997: High Low
4th Quarter 2 5/16 1 1/2
3rd Quarter 2 3/8 1 5/8
2nd Quarter 3 1/4 2 1/8
1st Quarter 3 1/4 2 1/8
Fiscal 1996: High Low
4th Quarter 4 3/16 2 1/2
3rd Quarter 4 5/8 2 1/4
2nd Quarter 6 4
1st Quarter 7 3/4 6
As of March 24, 1997 there were 297 record holders of the Common Stock of
Holdings.
Holdings has never declared or paid any cash dividends on its Common Stock
and does not intend to pay any such dividends in the foreseeable future. The
obligations of Pamida, Inc. under certain of its financing arrangements are
guaranteed by Holdings. Such financing arrangements presently prohibit the
payment of dividends by Holdings on its Common Stock and also significantly
restrict the ability of Pamida, Inc. to pay dividends or make other
distributions to Holdings.
Item 6. SELECTED FINANCIAL DATA.
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollar amounts in thousands - except per share and other data)
<TABLE>
<CAPTION>
Fiscal Years Ended
----------------------------------------------------------------
February 2, January 28, January 29, January 30, January 31,
1997 (1) 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales ................................... $ 633,189 $ 736,315 $ 711,019 $ 656,910 $ 622,941
Gross profit ............................ 154,090 177,688 177,367 158,906 154,695
Selling, general and
administrative expenses .............. 125,105 151,096 143,585 133,921 124,225
--------- --------- --------- --------- ---------
Operating income ........................ 28,985 26,592 33,782 24,985 30,470
Interest expense ........................ 29,781 29,526 27,367 26,588 25,147
Long-lived asset write-off .............. -- 78,551 -- -- --
Store closing costs ..................... -- 21,397 -- -- --
--------- --------- --------- --------- ---------
(Loss) income before provision for income
taxes and extraordinary item ......... (796) (102,882) 6,415 (1,603) 5,323
Income tax (benefit) provision .......... -- (7,863) 3,500 427 3,061
--------- --------- --------- --------- ---------
(Loss) income before extraordinary item . (796) (95,019) 2,915 (2,030) 2,262
Extraordinary item ...................... -- 371 -- (4,943) --
--------- --------- --------- --------- ---------
Net (loss) income ....................... (796) (94,648) 2,915 (6,973) 2,262
Less preferred dividends
and discount amortization ............ 391 362 361 359 357
--------- --------- --------- --------- ---------
Net (loss) income available
for common shares .................... $ (1,187) $ (95,010) $ 2,554 $ (7,332) $ 1,905
========= ========= ========= ========= =========
Weighted average number of common and
common equivalent shares outstanding 5,004,942 5,034,536 5,024,745 4,999,984 4,999,984
========= ========= ========= ========= =========
Net (loss) earnings per common share:
(Loss) earnings before extraordinary
item ............................. $ (.24) $ (18.94) $ .51 $ (.48) $ .38
Extraordinary item ................. -- $ .07 -- (.99) --
--------- --------- --------- --------- ---------
Net (loss) earnings per common share $ (.24) $ (18.87) $ .51 $ (1.47) $ .38
========= ========= ========= ========= =========
BALANCE SHEET DATA:
Working capital ..................... $ 28,673 $ 34,082 $ 46,725 $ 41,323 $ 16,515
Total assets ........................ 269,188 258,525 354,367 314,621 309,629
Long-term debt ...................... 168,000 163,746 162,505 160,315 132,006
Obligations under capital leases .... 33,999 36,559 43,050 35,618 37,164
Redeemable preferred stock .......... 1,875 1,826 1,779 1,734 1,690
Common shareholders' (deficit) equity (87,303) (86,116) 8,876 6,322 13,654
OTHER DATA:
Team Members ........................ 5,700 7,200 7,200 6,100 5,900
Number of stores .................... 148 184 184 173 178
Retail square feet (in millions) .... 4.35 5.22 5.09 4.68 4.75
(1) Represents a 53 week year.
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Dollar amounts in thousands)
YEAR ENDED FEBRUARY 2, 1997 COMPARED TO YEAR ENDED JANUARY 28, 1996
SALES - As discussed in Note O to the financial statements, the Company
closed forty stores at the end of fiscal 1996 in unprofitable or highly
competitive markets which did not fit the Company's niche market strategy.
Consequently, the Company experienced a planned decrease in total sales for
fiscal 1997 of $103,126 or 14.0% compared to fiscal 1996 due primarily to the
reduced number of stores. During fiscal 1997 the Company opened eight new
prototype stores, of which six are located in new markets and two were
relocations; the Company also closed two stores, resulting in a net increase in
selling area during the fiscal year of approximately 216,000 square feet (not
including changes relating to the forty stores closed as of fiscal year end
1996) to a total of 4,348,000 square feet. As of February 2, 1997, the Company's
store base included 35 of the Company's most recent store prototype, which
represented 28.7% of the Company's total selling square feet.
Comparable store sales during the 53-week fiscal 1997 period decreased by
$8,893 or 1.5% from the 52-week fiscal 1996 period. Comparable store sales on a
53-week to 53-week basis decreased by 2.6%. Sales were affected primarily by
slowed warehouse distributions to stores as a result of the implementation of a
new warehouse inventory management system initiated in the first quarter of
fiscal 1997. The slowed distributions caused a deterioration of merchandise
in-stock positions in most of the Company's stores, resulting in lost sales.
While implementation of the warehouse system was largely completed by August
1996, and in-stock positions at the stores improved thereafter, sales remained
below management expectations due to reduced customer traffic continuing in the
third and fourth quarters. Comparable sales also were affected during much of
the year by low-margin clearance sales in fiscal 1996 which were not necessary
at the same level in fiscal 1997. However, beginning late in the holiday
shopping season and continuing through fiscal year end, sales improved as the
Company demonstrated to customers its improved in-stock position in all product
categories.
The Company experienced substantial comparable store sales increases in
fiscal 1997 in several merchandise categories, the most dramatic of which were
in the pharmacy prescription, junior apparel, grocery and ready-to-wear areas.
Comparable store sales gains also were generated in the hosiery, team sports,
camera, stationery, health aids and bath categories. The Company experienced
comparable store sales decreases in several categories. The largest dollar
decreases on a comparable store basis were in the electronics, automotive,
misses bottoms, men's shoes, electrical and appliance areas. Management believes
that subtle adjustments made to the Company's softlines strategy at the end of
fiscal 1996 to meet customer demand for a deeper selection of basic apparel had
a positive impact on sales and margins in softlines during fiscal 1997.
GROSS PROFIT - Gross profit dollars were affected by the reduced number of
stores in operation during fiscal 1997 as compared to fiscal 1996. The Company's
merchandise gross profit as a percentage of sales improved to 27.8% in fiscal
1997 from 26.8% in fiscal 1996. However, this improvement was diluted by
additional costs related to the implementation of the new warehouse inventory
management system discussed above. Warehouse costs increased to $13,457 from
$11,066 last year and increased as a percent of sales to 2.1% from 1.5% last
year. Delivery costs decreased to $7,637 in fiscal 1997 from $8,845 last year
and amounted to 1.2% of sales in both years. Accordingly, gross profit decreased
by $23,598, or 13.3%, to $154,090 in fiscal 1997 from $177,688 in fiscal 1996
but, as a percentage of sales, increased to 24.3% in fiscal 1997 from 24.1% in
fiscal 1996.
SELLING, GENERAL AND ADMINISTRATIVE expense decreased $25,991, or 17.2%, to
$125,105 in fiscal 1997 from $151,096 in fiscal 1996. As a percentage of sales,
selling, general and administrative expense decreased to 19.8% from 20.5% last
year. This reduction was largely attributable to reductions in store level
expenses. Store payroll, controllable and occupancy expenses accounted for 64.2%
of the total decrease in selling, general and administrative expense and
decreased by 14.5%, 17.5% and 13.9%, respectively. Selling, general and
administrative expense also was positively impacted by a 28.9% reduction in
advertising costs which accounted for 18.2% of the gross decrease in selling,
general and administrative expense. All of these areas of expense were impacted
by the elimination of costs related to the forty stores which were closed as of
the end of fiscal 1996. Selling, general and administrative expense also was
impacted by an 11.0% decrease in corporate general and administrative costs
which accounted for 11.3% of the gross decreases in selling, general and
administrative expense. The major components of this decrease were decreases in
the net costs of insurance, professional fees, management bonuses and related
fringe benefits.
Selling, general and administrative expense also was positively impacted by
the elimination of amortization of goodwill and favorable leasehold interests
resulting from the write-off of these items in the fourth quarter of fiscal
1996. The decreases in selling, general and administrative expense were offset
by a $1,246 reduction in other income which was attributable largely to one-time
gains realized in fiscal 1996, primarily from the sale of idle transportation
company assets.
The Company is continuing to focus on controlling selling, general and
administrative expenses. Store operating expenses as a percent of sales are
anticipated to remain relatively constant in fiscal 1998. Certain expense
categories are anticipated to increase somewhat as a percent of sales due to
more normal clearance activity and expected increases in interest expense,
information systems costs, store payroll expenses (due to federally mandated
minimum wage increases) and incentive compensation. The Company expects to begin
to realize operating efficiencies from systems enhancements in the warehouse and
distribution areas in fiscal 1998 and in the merchandising areas beginning in
the second half of fiscal 1999. Further expense leveraging is expected in future
years through internal growth as well as the addition of new stores.
INTEREST expense increased marginally by $255 or 0.9% for fiscal 1997
compared to fiscal 1996. The increase in interest expense for fiscal 1997 was
attributable primarily to higher usage of the revolving line of credit and to
the outstanding promissory notes of the Company which require quarterly
compounding interest payments to be paid in kind. These increases were largely
offset by decreased interest related to lower average outstanding capitalized
lease obligations in fiscal 1997 compared to fiscal 1996.
INCOME TAX PROVISION - No income tax benefit on losses for fiscal 1997 will
be recorded until the Company can establish with a reasonable degree of
certainty the potential utilization of certain tax loss carry forwards from
prior year store closing charges. The effective tax rate in fiscal 1996 was 7.6%
and was impacted by the non-deductible amortization and write-off of goodwill
and the reserves recorded to offset the deferred tax assets.
YEAR ENDED JANUARY 28, 1996 COMPARED TO YEAR ENDED JANUARY 29, 1995
WRITE-OFF OF LONG-LIVED ASSETS AND STORE CLOSING CHARGE.
During fiscal 1996, weak trends in the retail industry combined with
increasing competition lowered the operating results of the Company. While
operating results in the first three quarters of the year were behind plan,
management focused on strategies to achieve its plan during the important fourth
quarter season.
During the fourth quarter, management reviewed its expectations for near-
and long-term performance of the Company, revised its earnings projections and
reassessed the recoverability of the Company's long-lived assets.
As explained in Note N to the financial statements, in the fourth quarter
of fiscal 1996, the Company adopted Statement of Financial Accounting Standards
No.121 "Accounting For the Impairment of Long-Lived Assets and Long-Lived Assets
to Be Disposed Of" (SFAS 121). This financial accounting standard requires the
Company to perform an analysis of the recoverability of the net book value of
long-lived assets. The Company analyzed cash flows on an individual store basis
to assess recoverability of store level long-lived assets including allocated
goodwill. As a result of this analysis, impairment totaling $27,228 on a pre-tax
basis was indicated at certain stores.
The Company also analyzed the value of its remaining goodwill and favorable
leasehold interests not impaired under the store-level SFAS 121 analysis using
its historical method under Accounting Principles Board Opinion No. 17 (APB 17)
and determined that such remaining amounts also were impaired. The APB 17
analysis projected a fifteen-year forecast period and produced $5,186 of
aggregate undiscounted adjusted net income, including projected adjusted net
losses for fiscal 1997 of $4,522, which included interest expense of $26,242
paid in cash and interest payable `in kind' (PIK) of $4,453, and for fiscal 1998
of $2,863, which included cash interest expense of $26,581 and PIK interest of
$5,121. For fiscal 1999, the Company projected adjusted net income of
approximately $967, which included cash interest expense of approximately
$26,581 and PIK interest of $5,889. Due to the uncertainty of projections beyond
1999, this level of adjusted net income was assumed to continue for each of the
remaining fiscal years in the projection period. Accordingly, a non-cash pre-tax
charge totaling $51,323 was recorded as indicated in Note N to the financial
statements.
Also, management's fourth quarter review of individual stores' operations
and cash flows resulted in the identification of forty unprofitable or
competitive market stores which did not fit the Company's niche market strategy.
Consequently, a pre-tax charge totaling $21,397 was recorded at January 28, 1996
to cover the costs necessary to close these stores as indicated in Note O to the
financial statements.
SALES for fiscal 1996 increased $25,300 or 3.6% compared to fiscal 1995.
Comparable store sales decreased $4,160 or 0.7%. Excluding the forty stores
closed as of the end of fiscal 1996, comparable store sales increased by 0.1%.
During fiscal 1996 the Company opened ten new prototype stores of which seven
were located in new markets and three were relocations. The Company also closed
ten stores (excluding the 40 stores identified to be closed as discussed above),
resulting in a net increase in selling area of approximately 126,000 square
feet. The openings and closings of stores over the last two fiscal years has
resulted in a net increase in sales of $33,662.
The modest overall sales increases were affected by weak consumer demand
which was generally experienced throughout the retail industry. Management
believes that the Company's geographical niche market positioning combined with
its ability to distribute quality merchandise on a more timely basis tempered
these generally weak retail trends. The Company experienced substantial sales
increases in several merchandise categories, the most dramatic of which were in
the housewares, prescriptions, junior apparel and bath and floor areas.
Substantial sales gains also were generated in paper, cleaning and seasonal
categories. The Company experienced sales declines in several softlines
categories, primarily women's apparel.
The initial operating results of the seven new prototype stores and three
relocated prototype stores opened during fiscal 1996 exceeded the Company's
original sales projections and reflected the success of the Company's niche
market positioning and merchandising strategies. At fiscal year end 1996,
twenty-seven new format stores were in operation, representing 14.7% of all
stores and 18.3% of total Company selling square feet.
GROSS PROFIT increased $321 or 0.2% in fiscal 1996 compared to fiscal 1995
and, as a percentage of sales, decreased from 24.9% in fiscal 1995 to 24.1% in
fiscal 1996. The decline in gross profit percent in fiscal 1996 compared to
fiscal 1995 was attributable primarily to the increased markdown activity which
was necessary to counter sluggish customer demand during most of the year and to
meet customers' pricing expectations during this difficult period for the retail
industry. Markdown expense increased by 23.8% over such expense in fiscal 1995.
During fiscal 1996, the Company experienced margin dollar increases due to
higher sales in several merchandise categories, most notably stationery,
prescriptions, bath and floor and seasonal. While the Company experienced margin
dollar decreases in several softlines categories, they were concentrated
primarily in the women's apparel and fashion areas.
SELLING, GENERAL AND ADMINISTRATIVE expense increased $7,511 or 5.2% from
fiscal 1995. As a percentage of sales, selling, general and administrative
expense increased from 20.2% in fiscal 1995 to 20.5% in fiscal 1996.
Approximately 40% of the total gross increase in selling, general and
administrative expense was attributable to increases in corporate general
administrative costs. Payroll and fringe benefits costs increased by
approximately 13% due to the effect of a full year's salary for the
merchandising, real estate and other corporate personnel added in fiscal 1995 as
well as the costs related to information systems personnel added during fiscal
1996 to support the new systems implementations to enhance efficiencies in
warehouse, distribution and merchandising. In addition, professional fees
increased approximately 54% due primarily to information systems and strategic
planning consulting costs as well as increases in legal fees related to new
store construction and financing.
In addition to the corporate general and administrative cost changes,
advertising expenses as a percent of sales increased from 2.0% to 2.2% due to
increases in the costs of paper and postage. This accounted for approximately
25% of the gross increase in selling, general and administrative expense. Store
controllable expenses increased by 8%, which also accounted for approximately
25% of the gross increase in selling, general and administrative expense. The
change in store controllable expense was due primarily to increases in the costs
of security equipment rentals, charge card processing fees (due to increased
credit card sales volume), utilities and inventory counting (as a result of
changes in procedures to allow for detailed SKU level counts). Store
controllable costs were partially reduced by decreases in supplies, travel and
entertainment costs. Store fixed costs as a percent of sales increased from 2.8%
to 3.0% due primarily to increases in rent expense. These increases in selling,
general and administrative expense were offset in part by an increase in other
income resulting primarily from the sale of idle transportation assets.
INTEREST expense increased $2,159 or 7.9% for fiscal 1996 compared to
fiscal 1995. The increase in interest expense for fiscal 1996 was attributable
primarily to higher usage of the revolving line of credit in fiscal 1996 and to
the outstanding promissory notes of the Company which require quarterly
compounding interest payments to be paid in kind. The Company also had higher
average outstanding capitalized lease obligations in fiscal 1996 compared to
fiscal 1995.
INCOME TAX PROVISION - The effective tax rate was 7.6% in fiscal 1996
compared to 54.6% in fiscal 1995. The effective tax rate for fiscal 1996 was
impacted by the non-deductible amortization and write-off of goodwill and the
reserve recorded to offset the deferred tax assets. In fiscal 1995, the
effective tax rate was higher than the normal statutory rates primarily as a
result of non-deductible goodwill amortization.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business is seasonal with first quarter sales (February
through April) being lower than sales during the other three quarters, while
fourth quarter sales (November through January) have represented approximately
30% of the full year's retail sales in recent years and normally involve a
greater proportion of higher margin sales.
The Company has satisfied its seasonal liquidity requirements primarily
through a combination of funds provided from operations and from a revolving
credit facility. Funds used by operating activities totaled $11,577 in fiscal
1997, and funds provided from operations totaled $4,967 in fiscal 1996 and
$3,816 in fiscal 1995. The change in cash flow from operating activities from
fiscal 1996 to fiscal 1997 was primarily the result of planned net increases in
inventory and other operating assets and decreases in accounts payable and other
operating liabilities. These decreases in cash flow were offset in part by
changes in deferred income taxes. The positive change in cash flow from
operating activities from fiscal 1995 to fiscal 1996 was primarily the result of
net decreases in inventory and accounts payable. These increases in cash flow
were offset in part by current and deferred tax payable changes, principally as
a result of the store closing charge, the changes in profitability of the
continuing operations and changes in other operating assets and liabilities.
Effective March 17, 1997, the term of Pamida, Inc.'s (Pamida) committed
Loan and Security Agreement (the Agreement) was extended to March 2000 and the
maximum borrowing limit of the facility was increased to $95,000 from $70,000,
which had been the limit throughout fiscal 1997. Prior to March 17, 1997,
borrowings under the Agreement bore interest at a rate which was 0.75% per annum
greater than the applicable prime rate. Effective March 17, 1997, borrowings
under the Agreement bear interest at a rate which is tied to the applicable
prime rate or the London Interbank Offered Rate (LIBOR), generally at Pamida's
discretion. The amounts Pamida is permitted to borrow are determined by a
formula based upon the amount of Pamida's eligible inventory from time to time.
Such borrowings are secured by security interests in all of the current assets
(including inventory) of Pamida and by liens on certain real estate interests
and other property of Pamida. The Company and two subsidiaries of Pamida have
guaranteed the payment and performance of Pamida's obligations under the Loan
and Security Agreement and have pledged some or all of their respective assets,
including the stock of Pamida owned by the Company, to secure such guarantees.
The Agreement contains provisions imposing operating and financial
restrictions on the Company. Certain provisions of the Agreement require the
maintenance of specified amounts of tangible net worth (as defined) and working
capital (as defined) and the achievement of specified minimum amounts of cash
flow (as defined). Other restrictions in the Agreement and those provided under
the Indenture relating to the Senior Subordinated Notes will affect, among other
things, the ability of Pamida to incur additional indebtedness, pay dividends,
repay indebtedness prior to its stated maturity, create liens, enter into
leases, sell assets or engage in mergers or acquisitions, make capital
expenditures and make investments. These covenants currently have not had an
impact on the Company's ability to fully utilize the revolving credit facility.
However, certain of the covenants, such as those which restrict the ability of
the Company to incur indebtedness or encumber its property or which impose
restrictions on or otherwise limit the Company's ability to engage in
sale-leaseback transactions, may at some future time prevent the Company from
pursuing its store expansion program at the rate that the Company desires.
Obligations under the Agreement were $57,115 at February 2, 1997 and
$31,588 at January 28, 1996. As noted above, this facility expires in March
2000, and the Company intends to refinance any outstanding balance by such date.
Borrowings under the Agreement are senior to the Senior Subordinated Notes of
the Company. The Company had long-term debt and obligations under capital leases
of $201,999 at February 2, 1997 and $200,305 at January 28, 1996. The Company's
ability to satisfy scheduled principal and interest payments under such
obligations in the ordinary course of business is dependent primarily upon the
sufficiency of the Company's operating cash flow. At February 2, 1997, the
Company was in compliance with all covenants contained in its various financing
agreements.
On December 18, 1992, the promissory notes of the Company were amended
effective as of December 1, 1992 to provide that, until the obligations of
Pamida and the Company under certain of Pamida's credit agreements have been
repaid, the quarterly interest payments on the promissory notes of the Company
will be paid in kind. Pamida paid the Company $315 in fiscal 1996 under a
tax-sharing agreement to enable the Company to pay quarterly dividends to its
preferred stockholders. During fiscal 1996, the Company received $967 from
Pamida under a tax-sharing agreement as a reimbursement for certain tax benefits
derived by Pamida. Such remittance, along with $18 from the exercise of certain
stock options, was used by the Company to redeem Subordinated Promissory Notes
as described in Note L to the financial statements, to repay intercompany
balances totaling $29, and to pay quarterly dividends on preferred stock. Since
the Company conducts no operations of its own, the only cash requirement of the
Company relates to preferred stock dividends in the aggregate annual amount of
approximately $316; and Pamida is expressly permitted under its existing credit
facilities to pay dividends to the Company to fund such preferred stock
dividends. However, the General Corporation Law of the State of Delaware, under
which the Company and Pamida are incorporated, allows a corporation to declare
or pay a dividend only from its surplus or from the current or the prior year's
earnings. Due to the accumulated deficit resulting primarily from the store
closings and the write-off of goodwill and other long-lived assets recognized in
the fourth quarter of fiscal 1996, the Company and Pamida did not declare or pay
any cash dividends in fiscal 1997 and may pay cash dividends in ensuing years
only to the extent that the Company and Pamida satisfy the applicable statutory
standards which include the Company's having a net worth equal to at least the
aggregate par value of the preferred stock which amounts to $2. The cumulative
dividend rate on the preferred stock increases by 0.5% per quarter (with a
maximum aggregate increase of 5%) on each quarterly dividend payment date on
which the preferred stock dividends are not paid currently on a cumulative
basis. Any unpaid dividends are added to the liquidation value until paid in
cash. Such nonpayment of preferred stock dividends does not accelerate the
redemption rights of the preferred stockholders.
The Company made capital expenditures of $4,947 in fiscal 1997 compared to
$9,265 during fiscal 1996. The Company plans to open three new stores in fiscal
1998 and will consider additional opportunities for new store locations as they
arise. Total capital expenditures are expected to be approximately $9,500 in
fiscal 1998. The Company expects to fund these expenditures from cash flow from
its operations. The costs of buildings and land for new store locations are
expected to be financed by operating or capital leases with unaffiliated
landlords. The Company's expansion program also will require inventory of
approximately $1,000 to $1,200 for each new market store, which the Company
expects to finance through trade credit, borrowings under the Agreement and cash
flow from operations.
The recent changes to the Agreement, along with expected improvements in
the Company's cash flow from operations, should provide adequate resources to
meet the Company's near term liquidity requirements. On a long-term basis, the
Company's expansion will require continued investments in store locations,
working capital and distribution and infrastructure enhancements. The Company
expects to continue to finance some of these investments through leases from
unaffiliated landlords, trade credit, borrowings under the Agreement and cash
flow from operations but ultimately will need to explore additional sources of
funds which may include capital structure changes. Currently, it is not possible
for the Company to predict with any certainty either the timing or the
availability of such additional financing.
INFLATION
The Company uses the LIFO method of inventory valuation in its financial
statements; as a result, the cost of merchandise sold approximates current
costs. The Company's rental expense is generally fixed and, except for small
amounts of percentage rents and rentals adjusted by cost-of-living increases
tied to the Consumer Price Index or interest rates, has not been affected by
inflation.
FORWARD-LOOKING STATEMENTS
This management's discussion and analysis contains certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "1995 Act"). Such statements are made in good faith by the Company
pursuant to the safe-harbor provisions of the 1995 Act. In connection with these
safe-harbor provisions, this management's discussion and analysis contains
certain forward-looking statements which reflect management's current views and
estimates of future economic circumstances, industry conditions, company
performance and financial results. The statements are based on many assumptions
and factors including sales results, expense levels, competition and interest
rates as well as other risks and uncertainties inherent in the Company's
business, capital structure and the retail industry in general. Any changes in
these factors could result in significantly different results. The Company
further cautions that the forward-looking information contained herein is not
exhaustive or exclusive. The Company does not undertake to update any
forward-looking statements which may be made from time to time by or on behalf
of the Company.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
INDEPENDENT AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
Board of Directors
Pamida Holdings Corporation
Omaha, Nebraska
We have audited the consolidated balance sheet of Pamida Holdings
Corporation and subsidiary as of February 2, 1997, and the related consolidated
statements of operations, common stockholders' equity and cash flows for each of
the years ended February 2, 1997 and January 29, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The consolidated balance sheet of Pamida Holdings Corporation and
subsidiary as of January 28, 1996, and the related consolidated statements of
operations, common stockholders' equity and cash flows for the year ended
January 28, 1996, were audited by other auditors, whose report, dated March 26,
1996, expressed an unqualified opinion on those statements and included an
explanatory paragraph that described the adoption of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Pamida
Holdings Corporation and subsidiary as of February 2, 1997, and the results of
their operations and their cash flows for each of the years ended February 2,
1997 and January 29, 1995 in conformity with generally accepted accounting
principles.
/s/ DELOITTE & TOUCHE LLP
Omaha, Nebraska
March 7, 1997
(March 17, 1997 as to Note E)
16
<PAGE>
REPORT OF INDENPENDENT ACCOUNTANTS
Board of Directors
Pamida Holdings Corporation
Omaha, Nebraska
We have audited the accompanying consolidated balance sheet of Pamida Holdings
Corporation and Subsidiary as of January 28, 1996, and the related consolidated
statements of operations, common stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pamida Holdings
Corporation and Subsidiary as of January 28, 1996, and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles.
As discussed in Note N to the consolidated financial statements, the Company
adopted Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of."
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
March 26, 1996
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------
February 2, January 28, January 29,
1997 1996 1995
(53 Weeks) (52 Weeks) (52 Weeks)
----------- ----------- -----------
<S> <C> <C> <C>
Sales ......................................... $ 633,189 $ 736,315 $ 711,019
Cost of goods sold ............................ 479,099 558,627 533,652
----------- ----------- -----------
Gross profit .................................. 154,090 177,688 177,367
----------- ----------- -----------
Expenses:
Selling, general and administrative ....... 125,105 151,096 143,585
Interest .................................. 29,781 29,526 27,367
Long-lived asset write-off ................ -- 78,551 --
Store closing costs ....................... -- 21,397 --
----------- ----------- -----------
154,886 280,570 170,952
----------- ----------- -----------
(Loss) income before provision for income
taxes and extraordinary item .............. (796) (102,882) 6,415
Income tax (benefit) provision ................ -- (7,863) 3,500
----------- ----------- -----------
(Loss) income before extraordinary item ....... (796) (95,019) 2,915
Extraordinary item ............................ -- 371 --
----------- ----------- -----------
Net (loss) income ............................. (796) (94,648) 2,915
Less provision for preferred dividends and
discount amortization ..................... 391 362 361
----------- ----------- -----------
Net (loss) income available for
common shares ............................. $ (1,187) $ (95,010) $ 2,554
=========== =========== ===========
Net (loss) earnings per common share:
(Loss) earnings before extraordinary item. $ (.24) $ (18.94) $ 0.51
Extraordinary item......................... -- .07 --
----------- ----------- -----------
Net (loss) earnings per common share....... $ (.24) $ (18.87) $ 0.51
----------- ----------- -----------
</TABLE>
17
<PAGE>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
February 2, January 28,
ASSETS 1997 1996
---------- -----------
<S> <C> <C>
Current assets:
Cash ......................................................................... $ 6,973 $ 7,298
Accounts receivable, less allowance for doubtful accounts of $50 in both years 6,919 9,049
Merchandise inventories ...................................................... 157,490 150,837
Prepaid expenses ............................................................. 2,993 2,953
Property held for sale ....................................................... 1,748 2,218
----------- -----------
Total current assets ...................................................... $ 176,123 $ 172,355
Property, buildings and equipment, (net) ......................................... 42,403 44,153
Leased property under capital leases, less accumulated
amortization of $14,604 and $13,496, respectively ............................ 27,713 30,977
Deferred financing costs ......................................................... 3,176 3,809
Other assets ..................................................................... 19,773 7,231
----------- -----------
$ 269,188 $ 258,525
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................. $ 54,245 $ 63,087
Loan and security agreement .................................................. 57,115 31,588
Accrued compensation ......................................................... 3,860 5,923
Accrued interest ............................................................. 7,668 6,992
Store closing reserve ........................................................ 4,521 7,818
Other accrued expenses ....................................................... 10,112 10,823
Income taxes - deferred and current payable .................................. 8,101 8,861
Current maturities of long-term debt ......................................... 47 1,334
Current obligations under capital leases ..................................... 1,781 1,847
----------- -----------
Total current liabilities ................................................. 147,450 138,273
Long-term debt, less current maturities .......................................... 168,000 163,746
Obligations under capital leases, less current obligations ....................... 33,999 36,559
Reserve for dividends ............................................................ 342 --
Other long-term liabilities ...................................................... 4,825 4,237
Commitments and contingencies .................................................... -- --
Preferred stock subject to mandatory redemption:
16-1/4% senior cumulative preferred stock, $1 par value;
514 shares authorized, issued and outstanding ............................. 514 514
14-1/4% junior cumulative preferred stock, $1 par value;
6,986 shares authorized; 1,627 shares issued and outstanding;
redemption amount of $1,627, less unamortized discount .................... 1,361 1,312
Common shareholders' equity:
Common stock, $.01 par value; 10,000,000 shares authorized; 5,004,942
shares issued and outstanding in both years ............................... 50 50
Additional paid-in capital ................................................... 968 968
Accumulated deficit .......................................................... (88,321) (87,134)
----------- -----------
Total common shareholders' deficit ........................................ (87,303) (86,116)
----------- -----------
$ 269,188 $ 258,525
=========== ===========
</TABLE>
18
<PAGE>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Retained
Nonvoting Additional Earnings
Common Common Paid-in (Accumulated
Shares Stock Capital Deficit)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at January 30, 1994 ........... $ 41 $ 9 $ 950 $ 15,322
Net income ........................ -- -- -- 2,915
Amortization of discount on 14-1/4%
junior cumulative preferred .... -- -- -- (45)
Cash dividends to preferred
stockholders ................... -- -- -- (316)
Conversion of nonvoting common
stock to common shares ......... 9 (9) -- --
---------- ---------- ---------- ----------
Balance at January 29, 1995 ........... 50 -- 950 7,876
Net loss .......................... -- -- -- (94,648)
Amortization of discount on 14-1/4%
junior cumulative preferred .... -- -- -- (47)
Cash dividends to preferred
stockholders ................... -- -- -- (315)
Stock sold under incentive stock
option plan .................... -- -- 18 --
---------- ----------- --------- ----------
Balance at January 28, 1996 ........... 50 -- 968 (87,134)
Net loss .......................... -- -- -- (796)
Amortization of discount on 14-1/4%
junior cumulative preferred .... -- -- -- (49)
Accrued dividends for preferred
stockholders ................... -- -- -- (342)
---------- ---------- ---------- ----------
Balance at February 2, 1997 ........... $ 50 $ -- $ 968 $ (88,321)
========== ========== ========== ==========
</TABLE>
19
<PAGE>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------
February 2, January 28, January 29,
1997 1996 1995
(53 Weeks) (52 Weeks) (52 Weeks)
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income ................................................. $ (796) $ (94,648) $ 2,915
Adjustments to reconcile net (loss) income to net cash
from operating activities:
Depreciation and amortization .......................... 11,658 15,345 14,962
Provision (credit) for LIFO inventory valuation ........ 874 (585) (675)
Provision (credit) for deferred income taxes ........... 3,305 (6,647) (1,555)
Noncash interest expense ............................... 4,313 3,756 3,315
Accretion of original issue debt discount .............. 160 154 149
Gain on disposal of assets ............................. (56) (982) (58)
Stock incentive benefits ............................... -- -- 84
Deferred retirement benefits ........................... (125) 13 37
Extraordinary item ..................................... -- (371) --
Long-lived assets write-off ............................ -- 78,551 --
Store closing costs .................................... (3,726) 21,397 --
(Increase) decrease in merchandise inventories ......... (7,527) 4,532 (30,951)
Increase in other operating assets ..................... (5,622) (3,847) (486)
Increase (decrease) in accounts payable ................ (8,842) (6,749) 8,153
Increase (decrease) in income taxes payable ............ (3,250) (4,607) 3,942
Increase (decrease) in other operating liabilities...... (1,943) (345) 3,984
----------- ----------- -----------
Total adjustments .......................................... (10,781) 99,615 901
----------- ----------- -----------
Net cash from operating activities ......................... (11,577) 4,967 3,816
Cash flows from investing activities:
Proceeds from disposal of assets .............................. 917 1,163 980
Principal payments received on notes receivable ............... 16 15 14
Assets acquired for sale ...................................... (391) -- --
Capital expenditures .......................................... (4,947) (9,265) (12,888)
Construction notes receivable ................................. (5,845) (4,412) --
----------- ----------- -----------
Net cash from investing activities ......................... (10,250) (12,499) (11,894)
----------- ----------- -----------
Cash flows from financing activities:
Borrowings under loan and security agreement net .............. 25,527 10,986 12,417
Principal payments on other long-term debt .................... (1,335) (193) (177)
Dividends paid on preferred stock ............................. -- (315) (316)
Principal payments on promissory notes ........................ -- (641) (1,029)
Payments for deferred finance costs ........................... (54) (13) (200)
Principal payments on capital lease obligations ............... (2,636) (2,071) (1,894)
Proceeds from sale of stock ................................... -- 18 --
----------- ----------- -----------
Net cash from financing activities ..................... 21,502 7,771 8,801
----------- ----------- -----------
Net (decrease) increase in cash ............................... (325) 239 723
Cash at beginning of year ..................................... 7,298 7,059 6,336
----------- ----------- -----------
Cash at end of year ........................................... $ 6,973 $ 7,298 $ 7,059
=========== =========== ===========
20
<PAGE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest..................................................... $ 24,804 $ 25,691 $ 24,021
Income taxes:
Payments to taxing authorities........................... 386 3,622 1,785
Refunds received from taxing authorities................. (442) (231) (672)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Capital lease obligations incurred when the Company entered
into lease agreements for new store facilities and equipment. $ 11 $ 620 $ 9,721
Capital lease obligations terminated............................ -- 154 --
Amortization of discount on junior cumulative preferred stock
recorded as a direct charge to retained earnings............. 49 47 45
Payment of interest in kind by increasing the
principal amount of the notes................................ 4,313 3,702 3,263
Provision for dividends payable................................. 342 -- --
Conversion of 919,587 shares of nonvoting common
stock, $.01 par value, to common stock
Common stock............................................. -- -- 9
Nonvoting common stock................................... -- -- (9)
</TABLE>
21
<PAGE>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands - except per share data)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Pamida Holdings Corporation (the "Company") was formed for the sole purpose
of acquiring Pamida, Inc. ("Pamida") through a merger in a leveraged buy-out
transaction which was consummated on July 29, 1986.
CONSOLIDATION - The consolidated financial statements include the results
of operations, account balances and cash flows of the Company and its
wholly-owned subsidiary, Pamida, and of Seaway Importing Company ("Seaway") and
Pamida Transportation Company, wholly-owned subsidiaries of Pamida. All material
intercompany accounts and transactions have been eliminated in consolidation.
FISCAL YEAR - All references in these financial statements to fiscal years
are to the calendar year in which the fiscal year ends.
LINE OF BUSINESS - Through Pamida, the Company is engaged in the operation
of retail discount stores in a fifteen-state Midwestern, North Central and Rocky
Mountain area. Seaway imports primarily seasonal merchandise for sale to Pamida.
Pamida Transportation Company operated as a contract carrier for Pamida until
July 1995, at which time independent contractors were engaged to provide all
transportation needs of the Company. Due to the similarity in nature of the
Company's businesses, the Company considers itself to be a single business
segment.
CASH FLOW REPORTING - For purposes of the statement of cash flows, the
Company considers all temporary cash investments purchased with a maturity of
three months or less to be cash equivalents. There were no temporary investments
at February 2, 1997 and January 28, 1996.
MERCHANDISE INVENTORIES - Substantially all of the Company's inventory is
stated at the lower of cost (last-in, first-out) or market.
PROPERTY, BUILDINGS AND EQUIPMENT - Property, buildings and equipment are
stated at cost and depreciated on the straight-line method over the estimated
useful lives. Buildings and building improvements are generally depreciated over
8-40 years, while store, warehouse and office equipment, vehicles and aircraft
equipment are generally depreciated over 3-10 years. Leasehold improvements are
depreciated over the life of the lease or the estimated life of the asset,
whichever is shorter.
LEASED PROPERTY UNDER CAPITAL LEASES - Noncancellable financing leases are
capitalized at the estimated fair value of the leasehold interest and are
amortized on the straight-line method over the terms of the leases.
LONG-LIVED ASSETS - When facts and circumstances indicated potential
impairment, the Company evaluates the recoverability of assets carrying values,
including goodwill, using estimates of future cash flows over remaining assets
lives. When impairment is indicated, any impairment loss in measured by the
excess of carrying values over fair values.
DEFERRED FINANCING COSTS AND ORIGINAL ISSUE DEBT DISCOUNT - Deferred
financing costs are being amortized using the straight-line method over the
terms of the issues which approximates the effective interest method. Original
issue debt discount is being amortized using the effective interest method over
the terms of the issues.
PRE-OPENING EXPENSES - Costs related to opening new stores are expensed as
incurred.
EARNINGS PER SHARE - Earnings per share were calculated using the weighted
average common shares and dilutive common share equivalents outstanding during
the year using the treasury stock method.
MANAGEMENT'S USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
STOCK-BASED COMPENSATION - The Company accounts for its stock-based
compensation under the provisions of Accounting Principles Board Opinion 25,
"Accounting for Stock Issued to Employees" (APB 25).
RECLASSIFICATIONS - Certain reclassifications have been made to prior
years' financial statements to conform to the current year presentation.
22
<PAGE>
B. MERCHANDISE INVENTORIES
Total inventories would have been higher at February 2, 1997 and January
28, 1996 by $6,574 and $5,700, respectively, had the FIFO (first-in, first-out)
method been used to determine the cost of all inventories. On a FIFO basis, net
income (loss) before extraordinary item would have been $78, $(95,604) and
$2,666, respectively, for fiscal years 1997, 1996, and 1995. During fiscal years
1997, 1996, and 1995, certain inventory quantities were reduced resulting in a
liquidation of certain LIFO layers carried at costs which were lower than the
cost of current purchases, the effect of which increased net income by $116,
$125, and $102, respectively.
C. PROPERTY, BUILDINGS AND EQUIPMENT
Property, buildings and equipment consists of:
Feb. 2, Jan. 28,
1997 1996
-------- --------
Land and land improvements .. $ 4,013 $ 3,943
Buildings and building
improvements............... 22,076 21,578
Store, warehouse and office
equipment.................. 59,668 55,638
Vehicles and aircraft
equipment.................. 1,513 1,578
Leasehold improvements ...... 16,497 15,362
103,767 98,099
Less accumulated depreciation
and amortization .......... 61,364 53,946
-------- --------
$ 42,403 $ 44,153
======== ========
D. OTHER ASSETS
Other assets consist of:
Feb. 2, Jan. 28,
1997 1996
-------- --------
Construction notes receivable. $ 10,257 $ 2,767
Unamortized software
costs, net ................. 7,541 3,357
Other ........................ 1,975 1,107
-------- --------
$ 19,773 $ 7,231
======== ========
E. FINANCING AGREEMENTS
Effective March 17, 1997, the term of Pamida's committed Loan and Security
Agreement (the Agreement) was extended to March 2000 and the maximum borrowing
limit of the facility was increased to $95,000 from $70,000, which had been the
limit throughout fiscal 1997. Prior to March 17, 1997, borrowings under the
Agreement bore interest at a rate which was 0.75% per annum greater than the
applicable prime rate. Effective March 17, 1997, borrowings under the Agreement
bear interest at a rate which is tied to the applicable prime rate or the London
Interbank Offered Rate (LIBOR), generally at Pamida's discretion. The amounts
Pamida is permitted to borrow under the Agreement are determined by a formula
based upon the amount of Pamida's eligible inventory from time to time. Such
borrowings of Pamida under the Agreement are secured by security interests in
substantially all of the current assets (including inventory) of Pamida and by
liens on certain real estate interests and other property of Pamida. The Company
and two subsidiaries of Pamida have guaranteed payment and performance of
Pamida's obligations under the Agreement and have pledged some or all of their
respective assets, including the stock of Pamida owned by the Company, to secure
such guarantees.
The Agreement contains provisions imposing operating and financial
restrictions on the Company. Certain provisions of the Agreement require the
maintenance of specified amounts of tangible net worth (as defined) and working
capital (as defined) and the achievement of specified minimum amounts of cash
flow (as defined). Other restrictions in the Agreement and those provided under
the Indenture relating to the Senior Subordinated Notes will affect, among other
things, the ability of Pamida to incur additional indebtedness, pay dividends,
repay indebtedness prior to its stated maturity, create liens, enter into
leases, sell assets or engage in mergers or acquisitions, make capital
expenditures and make investments.
The maximum amount of borrowings under the Agreement during fiscal 1997 and
1996 was $69,256 and $63,884, respectively. The weighted average amounts of
borrowings under the Agreement for fiscal 1997 and 1996 were $43,002 and
$35,544, respectively; and the weighted average interest rates were 10.0% and
10.4%, respectively.
23
<PAGE>
Long-term debt consists of:
Feb. 2, Jan. 28,
1997 1996
------- --------
Senior Subordinated Notes,
11.75%, due March 2003 ...... $140,000 $140,000
Industrial development bonds,
8.5%, due in monthly install-
ments through 2005 .......... 411 1,745
Senior promissory notes, 15.5%,
due in 2003, interest paid
in kind quarterly ........... 4,926 4,231
Subordinated promissory notes,
16%, due in 2003, interest
paid in kind quarterly ...... 13,454 11,500
Junior subordinated promissory
notes, 16.25%, net of
unamortized discount of $878
and $1,038, due in 2003,
interest paid in kind quarterly 9,256 7,604
-------- -------
168,047 165,080
Less current maturities ....... 47 1,334
-------- --------
$168,000 $163,746
======== ========
As of February 2, 1997, the fair value of long-term debt was $153,900
compared to its recorded value of $168,000. The fair value of long-term debt was
estimated based on quoted market values for the same or similar debt issues or
rates currently available for debt with similar terms. The aggregate maturities
of long-term debt in each of the next five fiscal years are as follows: 1998 -
$47; 1999 - $47; 2000 - $47; 2001 - $47; and 2002 - $47.
The Senior Subordinated Notes and the promissory notes are unsecured and
are subordinate borrowings under the Agreement. Presently, under the most
restrictive debt covenants, the Company is not permitted to pay dividends on its
common stock.
The senior subordinated and junior subordinated promissory notes of the
Company were amended to provide that until the obligations of the Company and
Pamida under certain loan agreements have been paid in full, the quarterly
interest payments on the notes will be paid in kind by increasing the principal
amount of each note on the applicable quarterly payment date by the amount of
accrued interest then being paid in kind. Interest on the notes paid in kind
accrues at a rate which, in each case, is two percentage points higher than the
applicable cash interest rate.
F. INCOME TAXES
Components of the income tax provision (benefit) are as follows:
Years Ended
--------------------------------
Feb. 2, Jan. 28, Jan. 29,
1997 1996 1995
-------- -------- --------
Current:
Federal .... $ (3,155) $ (993) $ 4,048
State ...... (150) (223) 1,007
-------- -------- --------
(3,305) (1,216) 5,055
-------- -------- --------
Deferred:
Federal ..... 3,189 (5,865) (679)
State ....... 116 (782) (876)
-------- -------- --------
3,305 (6,647) (1,555)
-------- -------- --------
Total (benefit)
provision ... $ -- $ (7,863) $ 3,500
======== ======== ========
The differences between the U.S. Federal statutory tax rate and the
Company's effective tax rate are as follows:
Years Ended
---------------------------
Feb. 2, Jan. 28, Jan. 29,
1997 1996 1995
-------- -------- --------
Statutory rate ......... (34.0)% (34.0)% 34.0%
State income tax effect. (2.8) (1.3) 5.5
Amortization of the excess
of cost over net assets
acquired ............. -- 23.9 12.2
Valuation allowance ....... 25.1 3.6 0.1
Accretion of discount on
junior subordinated debt 6.8 0.1 0.8
Other ..................... 4.9 0.1 2.0
-------- -------- --------
0.0% (7.6)% 54.6%
======== ======== ========
24
<PAGE>
Significant temporary differences between reported and taxable earnings
that give rise to deferred tax assets and liabilities were as follows:
Feb. 2, Jan. 28,
1997 1996
--------- --------
Net current deferred tax liabilities:
Inventories ......................... $ 15,302 $ 13,681
Valuation allowance ................. -- 3,869
Prepaid insurance ................... 210 514
Other ............................... 453 366
Supplier allowances ................. (41) --
Post employment health costs ........ (189) (237)
Accrued expenses .................... (941) (1,300)
Store closing costs ................. (2,570) (7,159)
--------- ---------
Net current deferred
tax liabilities ................ 12,224 9,734
--------- ---------
Net long-term deferred tax liabilities:
Property, buildings and
equipment ...................... 2,862 3,109
Other ............................. 1,436 438
Valuation allowance ............... 4,069 5
Capital loss carryforward ......... -- (5)
Capital leases .................... (3,089) (2,602)
Tax benefit carryforward .......... (3,518) --
--------- ---------
Net long-term deferred
tax liabilities ..................... 1,760 945
--------- ---------
Net total deferred tax
liabilities ...................... $ 13,984 $ 10,679
========= =========
Net long-term deferred tax liabilities are classified with other long-term
liabilities in the consolidated balance sheets of the Company. As of February 2,
1997 the Company had net operating loss carryforwards totaling $4,034 which
expire in 2012 and the Company had tax credit carryforwards totaling $1,973
which expire in 2006 through 2011.
G. LEASES
The majority of store facilities are leased under noncancelable leases.
Substantially all of the leases are net leases which require the payment of
property taxes, insurance and maintenance costs in addition to rental payments.
Certain leases provide for additional rentals based on a percentage of sales and
have renewal options for one or more periods totaling from one to twenty years.
Leases have been categorized as capital or operating leases in conformity with
the definition in Statement of Financial Accounting Standards No. 13, Accounting
for Leases.
At February 2, 1997 the future minimum lease payments under capital and
operating leases with rental terms of more than one year amounted to:
Fiscal Year Ending Capital Operating
Leases Leases
--------- ---------
1998..................... $ 5,802 $ 10,010
1999..................... 5,659 8,800
2000..................... 5,442 6,879
2001..................... 5,352 5,639
2002..................... 5,267 5,103
Later years.............. 41,384 46,069
--------- ---------
Total minimum obligations $ 68,906 $ 82,500
--------- ---------
Less amount representing
interest................ 33,126
---------
Present value of net minimum
lease payments.......... 35,780
Less current portion..... 1,781
---------
Long-term obligations..... $ 33,999
=========
The minimum rentals under operating leases have not been reduced by minimum
sublease rentals of $191 due in the future under noncancelable subleases.
Total rental expense related to all operating leases (including those with
terms less than one year) is as follows:
Years Ended
-------------------------------
Feb. 2, Jan. 28, Jan. 29,
1997 1996 1995
-------- -------- --------
Minimum rentals ..... $ 10,938 $ 11,715 $ 9,585
Contingent rentals .. 258 399 477
Less sublease rentals (735) (852) (918)
-------- -------- --------
$ 10,461 $ 11,262 $ 9,144
======== ======== ========
H. SAVINGS AND OTHER POSTEMPLOYMENT BENEFIT PLANS
Pamida has adopted a 401(k) savings plan that covers all employees who are
21 years of age with one or more years of service. Participants can contribute
from 1% to 15% of their pre-tax compensation. Pamida has currently elected to
match 50% of the participant's contribution up to 5% of compensation. Pamida's
savings plan contribution expenses for fiscal years 1997, 1996, and 1995 were
$770, $749, and $716, respectively.
Prior to December 1993, the Company had agreed to continue to provide
health insurance coverage and pay a portion of the health insurance premiums
until age 65 for individuals who retire if the individual was eligible to
participate in the plan, had attained age 55, had completed ten or more
consecutive years of service and
25
<PAGE>
elected to continue on the Company plan. The plan is unfunded, and the Company
had the right to modify or terminate these benefits. In December 1993, the
Company amended the Plan to no longer offer postretirement health benefits for
employees retiring after February 1, 1994.
The components of periodic expense for postretirement benefits in fiscal
1997, 1996 and 1995 were as follows:
Feb. 2, Jan. 28, Jan. 29,
1997 1996 1995
-------- -------- --------
Annual postretirement benefit expense:
Interest cost ....................... 16 32 42
Amortization of
unrecognized
net obligations ...................... (44) (6) --
-------- -------- --------
Annual postretirement
benefit expense ...................... $ (28) $ 26 $ 42
======== ======== ========
The accumulated postretirement benefit obligation consists of:
Feb. 2, Jan. 28,
1997 1996
-------- --------
Accumulated postretirement
benefit obligation ......... $ 194 $ 395
Unrecognized gain ............ 299 223
-------- --------
Accrued expense .............. $ 493 $ 618
======== ========
A 5% and a 10% increase in the cost of covered health care benefits was
assumed for fiscal 1997 and 1996, respectively. The rate of 5% used as of
February 2, 1997 is assumed to remain level after fiscal 1997. At January 28,
1996, the 10% was assumed to decrease incrementally to 5% after five years and
remain level thereafter. Assuming a 1% increase in the health care trend rate,
the annual postretirement benefit expense would remain the same for fiscal 1997
and increase by $1 for fiscal 1996, and the unfunded accumulated postretirement
benefit obligation would increase by $4 and $13 for fiscal 1997 and 1996,
respectively. The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.0% for both fiscal 1997 and
1996.
I. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
The Company is obligated to redeem all outstanding shares of senior
cumulative and junior cumulative preferred stock on December 31, 2001, at a
price not to exceed the liquidation value which is $1,000 per share plus any
accrued dividends. Subject to certain loan restrictions, the Company may, at any
time, redeem all or any portion of the preferred shares outstanding at a price
of $1,000 per share plus any accrued dividends.
Each share of senior cumulative and junior cumulative preferred stock
entitles its holder to receive a quarterly dividend of 16.25% and 14.25% per
annum, respectively, of the liquidation value from the date of issuance until
redeemed. Both series of preferred stock are non-voting, and any unpaid
dividends are added to the liquidation value until paid.
The General Corporation Law of the State of Delaware, under which the
Company and Pamida are incorporated, allows a corporation to declare or pay a
dividend only from its surplus or from the current or the prior year's earnings.
Due to the accumulated deficit resulting primarily from the store closings and
the write-off of goodwill and other long-lived assets recognized in the fourth
quarter of fiscal 1996, the Company and Pamida did not declare or pay any cash
dividends in fiscal 1997 and may pay cash dividends in ensuing years only to the
extent that the Company and Pamida satisfy the applicable statutory standards
which include the Company's having a net worth equal to at least the aggregate
par value of the preferred stock which amounts to $2. A liability and provision
for preferred stock dividends have been recorded in the fiscal 1997 financial
statements. The cumulative dividend rate on the preferred stock increases by
0.5% per quarter (with a maximum aggregate increase of 5%) on each quarterly
dividend payment date on which the preferred stock dividends are not paid
currently on a cumulative basis.
The difference between the fair value of the junior cumulative preferred
stock at issuance and the mandatory redemption value is being recorded through
periodic accretions, using the effective interest method with a related charge
to retained earnings.
J. STOCK OPTIONS
On November 24, 1992, the Board of Directors of the Company adopted the
Pamida Holdings Corporation 1992 Stock Option Plan (the "Plan"), which was
approved by the Company's stockholders in May 1993. The Plan, administered by a
Committee of the Board of
26
<PAGE>
Directors, provides for the granting of options to key employees of the Company
and its subsidiaries to purchase up to an aggregate of 350,000 shares of Common
Stock of the Company. Options granted under the Plan may be either incentive
stock options, within the meaning of Section 422 of the Internal Revenue Code,
or non-qualified options. Options granted under the Plan will be exercisable
during the period fixed by the Committee for each option; however, in general,
no option will be exercisable earlier than one year after the date of its grant,
and no incentive stock option will be exercisable more than ten years after the
date of its grant. The option exercise price must be at least 100% of the fair
market value of the Common Stock on the date of the option grant. No
compensation expense related to stock options was recorded during fiscal 1997,
1996 or 1995.
The Company accounts for its stock-based compensation under the provisions
of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB Opinion No. 25), which utilizes the intrinsic value method. The
effect on 1997 and 1996 net income and earnings per share of accounting for
stock-based compensation using the fair value method required by Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
(SFAS 123) is immaterial.
The weighted average fair value of options granted during the year was
$0.70 and $2.86 per option for fiscal 1997 and 1996, respectively. The fair
value of options granted under the Plan was estimated at the date of grant using
a binomial options pricing model with the following assumptions:
Feb. 2, Jan. 28,
1997 1996
-------- --------
Risk-free interest rate............... 6.0% 7.0%
Dividend yield........................ 0.0% 0.0%
Expected Volatility................... 8.1% 8.1%
Expected life (years) ................ 6.6 years 6.7 years
A summary of the Company's stock-based compensation activity related to
stock options for the last three fiscal years is as follows:
<TABLE>
<CAPTION>
February 2, 1997 January 28, 1996 January 29, 1995
-------------------- -------------------- --------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Number Price Number Price Number Price
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Outstanding-beginning of year 296,546 $ 5.05 227,545 $ 4.33 171,750 $ 3.63
Granted ..................... 86,800 2.37 122,205 6.80 75,000 5.75
Expired/terminated .......... (80,530) 4.66 (48,246) 6.22 (19,205) 3.63
Exercised ................... -- -- (4,958) 3.63 -- --
Outstanding-end of year ..... 302,816 $ 4.39 296,546 $ 5.05 227,545 $ 4.33
</TABLE>
There were 123,616, 85,474 and 61,681 options exercisable at February 2,
1997, January 28, 1996 and Janaury 29, 1995, respectively.
The following table summarizes information about stock options outstanding
as at February 2, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ------------------------------------------------------ -------------------------------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Excercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$1.94-$2.78 83,800 9.5 Years $ 2.36 -- $ --
3.63-5.75 171,016 7.3 Years 4.60 114,016 4.20
7.19 48,000 8.1 Years 7.19 9,600 7.19
----------- ----------- ----------- ----------- ----------- -----------
Totals $1.94-$7.19 302,816 8.0 Years $ 4.39 123,616 $ 4.43
</TABLE>
27
<PAGE>
K. CAPITAL STOCK
In October 1994, 919,587 shares of nonvoting common stock of the Company
were converted into the same number of shares of common stock. After giving
effect to such conversion, the Company had 5,004,942 shares of common stock and
no shares of nonvoting common stock outstanding at the end of fiscal 1997 and
1996.
L. EXTRAORDINARY ITEMS
On July 31, 1995, the Company made an offer to purchase for cash 39.5% of
the aggregate outstanding principal amount of 14% Subordinated Promissory Notes
(Notes) of Pamida Holdings Corporation. The offered purchase price was 50% of
the principal amount to be purchased. In the third quarter of fiscal 1996, the
Company redeemed Notes tendered in the aggregate principal amount of $1,281 and
made cash payments of $641, resulting in an after-tax gain of $371.
M. COMMITMENTS AND CONTINGENCIES
Pamida has employment agreements with three key executive officers which
expire in 2000 and 2001. In addition to a base salary, the agreements provide
for a bonus to be paid if certain Company performance goals are achieved. Also,
in March 1997, the Board of Directors approved a long-term incentive
compensation program in order to enhance retention of certain key members of
management. Payout is tied to continued employment and future Company common
stock price appreciation.
The terms of the senior and junior preferred stock and the senior,
subordinated and junior subordinated promissory notes provide that, upon the
occurrence of an event of noncompliance with respect to the preferred stock or
event of default with respect to the promissory notes, the Company is required
to pay higher dividend and interest rates with the amount of the increase
depending on the nature of the event of noncompliance or default.
During fiscal 1996, the Company received $967 from Pamida as a
reimbursement for certain tax benefits derived by Pamida. Such remittance, along
with $18 from the exercise of certain stock options, was used by the Company to
redeem Subordinated Promissory Notes as described in Note L, to repay to Pamida
intercompany balances totaling $29, and to pay quarterly dividends on preferred
stock totaling $315.
In June 1994, the Company received $1,316 from Pamida as a reimbursement
for certain tax benefits derived by Pamida. Such remittance was used by the
Company to make a principal payment on its outstanding promissory notes of
$1,029 and to repay Pamida certain intercompany advances aggregating $287.
In connection with the Company's self insured retention of worker's
compensation liabilities and future rental payments on a warehouse, on February
2, 1997, the Company had standby letters of credit outstanding totaling
approximately $1,188.
N. IMPAIRMENT OF LONG-LIVED ASSETS RECORDED IN FISCAL 1996
During fiscal 1996, weak trends in the retail industry combined with
increasing competition lowered the operating results of the Company.
Therefore, during the fourth quarter of fiscal 1996, management reviewed
its expectations for near- and long-term performance of the Company and revised
its earnings projections to reflect developing and projected trends, primarily
in comparable-store-sales growth, gross margins, operating expenses and interest
expenses. Consequently, the recoverability of the Company's long-lived assets
was also reassessed.
In the fourth quarter of fiscal 1996, the Company adopted Statement of
Financial Accounting Standards No. 121 "Accounting For the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of" (SFAS 121). This
financial accounting standard requires the Company to perform an analysis of the
recoverability of the net book value of long-lived assets. The Company analyzed
cash flows on an individual store basis to assess recoverability of store level
long-lived assets including allocated goodwill.
As a result of this analysis, impairment was indicated at certain stores,
and a noncash pre-tax charge was recorded as illustrated in the table below. The
impairment losses were based on fair value which was determined through
discounted cash flows for the particular stores utilizing a rate commensurate
with the associated risks. The effect of this accounting change was to increase
the net loss for the year by $24,693 or $4.90 per common share.
The Company also analyzed the value of its remaining goodwill and favorable
leasehold interests not impaired
28
<PAGE>
under the store-level SFAS 121 analysis using its historical method under
Accounting Principles Board Opinion No. 17 (APB 17) and determined that such
remaining amounts also were impaired. For this analysis the value of the
goodwill and favorable leasehold interests was determined by projecting
aggregate net income and adjusting it by adding back amortization of intangible
assets. With respect to the projections of net income used to evaluate
intangible assets impairment, management made several assumptions in projecting
their best estimate of the results of future operations of the Company. The most
significant assumptions were an estimated remaining useful life of goodwill of
fifteen years, modest annual comparable store sales growth, gross margin rates
consistent with those experienced over the past fiscal year in the stores not
being closed, an annual expense escalation consistent with recent inflation
trends and the ability to refinance debt maturities as they come due.
These assumptions resulted in aggregate undiscounted adjusted net income
for the fifteen-year forecast period of approximately $5,186, which reflects
aggregate pre-tax interest expense of approximately $398,000 payable in cash and
$86,000 payable "in kind" (PIK). The $5,186 of aggregate adjusted net income for
the fifteen-year forecast period also reflected projected adjusted net losses
for fiscal 1997 of $4,522, which included cash interest expense of $26,242 and
PIK interest of $4,453, and for fiscal 1998 of $2,863, which included cash
interest expense of $26,581 and PIK interest of $5,121. For fiscal 1999, the
Company projected adjusted net income of approximately $967, which included cash
interest expense of approximately $26,581 and PIK interest of $5,889. Due to the
uncertainty of projections beyond 1999, this level of adjusted net income was
assumed to continue for each of the remaining fiscal years in the projection
period. As a result of this evaluation in fiscal 1996, management concluded that
the remaining goodwill and favorable leasehold interests were fully impaired.
Pre-Tax Components of Long-Lived Asset Write-Off As Reflected in the
Statement of Operations for the year ended January 28, 1996:
SFAS APB
121 17 Total
-------- -------- --------
Goodwill $ 20,607 $ 49,406 $ 70,013
Favorable leasehold
interests 4,245 1,917 6,162
Property, buildings
and equipment 2,376 -- 2,376
-------- -------- --------
Total $ 27,228 $ 51,323 $ 78,551
======== ======== ========
The goodwill was originally recorded in July 1986 when Pamida Holdings
Corporation acquired Pamida, Inc. through a leveraged buy-out and represented
the excess of the purchase price over the fair value of the net assets acquired.
Goodwill had been amortized on a straight-line basis over a forty-year period
but, due to the trends cited above, its estimated remaining useful life was
adjusted to fifteen years during the fourth quarter of fiscal 1996.
29
<PAGE>
O. STORE CLOSINGS IN FISCAL 1996
As discussed in Note N above, the Company's operating performance during
fiscal 1996 was below plan. Management's analysis of individual stores'
operations and cash flows resulted in the identification of forty unprofitable
or competitive market stores which did not fit the Company's niche market
strategy. Consequently, a charge was recorded at January 28, 1996 as indicated
below to cover the costs necessary to close these stores. The Company received
positive net cash flow from closing the stores due to cash generated from the
disposition of related inventories. The amounts the Company will ultimately
realize from the disposal of assets or pay on the resolution of liabilities may
differ from the estimated amounts utilized in arriving at the income statement
effect.
Pre-Tax Income
Components of fiscal 1996 Statement
Store Closing Costs Effect
--------
Real estate exit costs and
write-off of property,
buildings, and equipment ........... $ 11,455
Inventory liquidation ................ 9,080
Professional charges ................. 314
Severance and other costs and fees ... 548
--------
Totals ............................... $ 21,397
========
The store closing reserve balance as of January 28, 1996 included amounts
related to real estate, inventory, severance, professional fees and other costs
of closing the forty stores. The liquidation of the closing stores inventory was
completed in the second quarter of fiscal 1997. All known ancillary costs of the
store closings have been paid except those related to the remaining real estate.
During fiscal 1997, the Company negotiated settlements on twenty closed store
properties which had been leased, two which have been subleased, and sold four
closed store properties which had been owned. As of February 2, 1997, the
Company remains liable for lease obligations on twelve closed store properties
and owns four closed store properties. The Company anticipates that final
disposition of the remaining obligations and properties will be completed in
fiscal 1999. There were no adjustments made during fiscal 1997 to the store
closing reserve other than cash inflows and outflows related to the store
closings.
The store closing reserve is presented in the balance sheets as follows:
Feb. 2, Jan. 28,
1997 1996
-------- --------
Store closing reserve
(short-term) $ 4,521 $ 7,818
Amount included in other
long-term liabilities 2,190 2,619
-------- --------
Total $ 6,711 $ 10,437
======== ========
30
<PAGE>
P. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended February 2, 1997 and January 28, 1996:
<TABLE>
<CAPTION>
April 28, July 28, October 27, February 2,
Fiscal 1997 1996 1996 1996 1997 Year
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sales ................................. $ 131,786 $ 155,817 $ 151,980 $ 193,606 $ 633,189
Gross profit .......................... 31,575 37,096 36,446 48,973 154,090
Net (loss) income ..................... (4,742) (1,294) 189 5,051 (796)
Less provision for preferred
dividends and discount
amortization ..................... 93 97 99 102 391
----------- ----------- ----------- ----------- -----------
Net (loss) income available
for common shares ................ $ (4,835) $ (1,391) $ 90 $ 4,949 $ (1,187)
=========== =========== =========== =========== ===========
Net (loss) earnings
per common share .................. $ (.97) $ (.28) $ .02 $ .99 $ (.24)
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
April 30, July 30, October 29, January 28,
Fiscal 1996 1995 1995 1995 1996 Year
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sales................................... $ 153,961 $ 186,953 $ 176,206 $ 219,195 $ 736,315
Gross profit............................ 36,813 44,638 42,802 53,435 177,688
Net (loss) income before
Extraordinary item.................. (2,179) 608 130 (93,578) (95,019)
Extraordinary item...................... -- -- 371 -- 371
----------- ----------- ----------- ----------- -----------
Net (loss) income....................... (2,179) 608 501 (93,578) (94,648)
Less preferred dividends and
discount amortization............... 91 90 90 91 362
----------- ----------- ----------- ----------- -----------
Net (loss) income available
for common shares................... $ (2,270) $ 518 $ 411 $ (93,669) $ (95,010)
=========== =========== =========== =========== ===========
Net (loss) earnings
per common share $ (.45) $ .10 $ .08 $ (18.60) $ (18.87)
=========== =========== =========== =========== ===========
</TABLE>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
INDEPENDENT AUDITORS' REPORT
Board of Directors
Pamida Holdings Corporation
Omaha, Nebraska
We have audited the consolidated balance sheet of Pamida Holdings Corporation
and subsidiary as of February 2, 1997, and the related consolidated statements
of operations, stockholders' equity and cash flows for each of the years ended
February 2, 1997 and January 29, 1995 and have issued our report thereon dated
March 7, 1997 (March 17, 1997 as to Note E). Such financial statements and
report are included in this Annual Report on Form 10-K. Our audits also included
the financial statement schedule of Pamida Holdings Corporation and subsidiary
as of February 2, 1997, and for each of the years ended February 2, 1997 and
January 29, 1995 listed in Item 14(a)2. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Omaha, Nebraska
March 7, 1997
PAMIDA HOLDINGS CORPORATION
(Parent Company Only)
(Dollar amounts in thousands)
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS - FEBRUARY 2, 1997 AND JANUARY 28, 1996
ASSETS 1997 1996
Current assets: -------- --------
Refundable income taxes ............................ $ 855 $ 855
Investment in subsidiary ........................... (57,531) (61,226)
Deferred financing costs ........................... 52 63
-------- --------
$(56,624) $(60,308)
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $ -- $ 8
Accrued interest ................................... 811 639
Payable to Pamida, Inc. ............................ 16 --
-------- --------
Total current liabilities ...................... 827 647
Long-term debt ....................................... 27,636 23,335
Dividends payable .................................... 342 --
Preferred stock subject to mandatory redemption:
16-1/4% senior cumulative preferred stock, $1
par value; 514 shares authorized, issued and
outstanding ...................................... 514 514
14-1/4% junior cumulative preferred stock, $1
par value; 6,986 shares authorized;
1,627 shares issued and outstanding;
redemption amount of $1,627 less
unamortized discount ............................. 1,360 1,312
Common stockholders' equity:
Common stock, $.01 par value; 10,000,000 shares
authorized; 5,004,942 shares issued and
outstanding, in both years ....................... 50 50
Additional paid-in capital ......................... 968 968
Accumulated deficit ................................ (88,321) (87,134)
-------- --------
Total common stockholders' equity .............. (87,303) (86,116)
-------- --------
$(56,624) $(60,308)
======== ========
PAMIDA HOLDINGS CORPORATION
(Parent Company Only)
(Dollar amount in thousands except for per share data)
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS AND RETAINED (DEFICIT) EARNINGS
YEARS ENDED FEBRUARY 2, 1997, JANUARY 28, 1996 AND JANUARY 29, 1995
1997 1996 1995
-------- -------- --------
Equity in earnings (loss) of subsidiary .... $ 3,696 $(92,527) $ 5,130
Expenses:
General and administrative ............... 19 33 34
Interest ................................. 4,473 3,910 3,463
-------- -------- --------
4,492 3,943 3,497
-------- -------- --------
(Loss) income before income tax benefit
and extraordinary item ................... (796) (96,470) 1,633
Extraordinary item ......................... -- 371 --
-------- -------- --------
(Loss) income before income tax benefit .... (796) (96,099) 1,633
Income tax benefit ......................... -- 1,451 1,282
-------- -------- --------
Net (loss) income .......................... (796) (94,648) 2,915
Amortization of discount on 14-1/4%
junior cumulative preferred .............. (49) (47) (45)
Cash dividends paid to preferred
stockholders ............................. -- (315) (316)
Accrued dividends for
preferred stockholders .................. (342) -- --
Retained earnings (accumulated deficit) -
beginning of year ....................... (87,134) 7,876 5,322
-------- -------- --------
Retained earnings (accumulated deficit) -
end of year ............................. $(88,321) $(87,134) $ 7,876
======== ======== ========
(Loss) earnings per common share ........... $ (.24) $ (18.87) $ .51
======== ======== ========
<TABLE>
<CAPTION>
PAMIDA HOLDINGS CORPORATION
(Parent Company Only)
(Dollar amounts in thousands)
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 2, 1997, JANUARY 28, 1996 AND JANUARY 29, 1995
1997 1996 1995
Cash flows from operating activities: -------- -------- --------
<S> <C> <C> <C>
Net (loss) income ........................................ $ (796) $(94,648) $ 2,915
-------- -------- --------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Equity in (earnings) loss of subsidiary .............. (3,696) 92,527 (5,130)
Noncash interest expense ............................. 4,313 3,756 3,315
Accretion of original issue debt discount ............ 160 154 149
Amortization of intangible assets .................... 11 10 11
Extraordinary item related to retirement of debt ..... -- (371) --
(Increase) decrease in refundable income tax ......... -- (483) 349
Increase (decrease) in operating liabilities ......... 8 (7) (264)
-------- -------- --------
Total adjustments ............................... 796 95,586 (1,570)
-------- -------- --------
Net cash provided by operating activities ....... -- 938 1,345
-------- -------- --------
Cash flows from investing activities:
Dividends received from subsidiary ....................... -- -- --
Cash flows from financing activities:
Proceeds from sale of stock .............................. -- 18 --
Principal payments on promissory notes ................... -- -- (1,029)
Payments to redeem subordinated notes .................... -- (641) --
Dividends paid to preferred stockholders ................. -- (315) (316)
-------- -------- --------
Net cash used in financing activities ........... -- (938) (1,345)
-------- -------- --------
Net change in cash ......................................... -- -- --
Cash at beginning of year .................................. -- -- --
-------- -------- --------
Cash at end of year ........................................ $ -- $ -- $ --
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for interest ................. $ -- $ -- $ --
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING
ACTIVITY:
Amortization of discount on junior cumulative preferred
stock recorded as a direct charge to retained earnings $ 49 $ 47 $ 45
Payment of interest in kind by increasing the
principal amount of the notes ........................ 4,141 3,702 3,263
Conversion on nonvoting common stock to common stock:
Common stock ......................................... -- -- 9
Nonvoting stock ...................................... -- -- (9)
</TABLE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The information required by this item has been previously reported in the
Form 8-K Current Report of the registrant dated October 16, 1996.
PART III
The information required by this Part III is incorporated by reference from
the registrant's definitive proxy statement for the 1997 annual meeting of the
registrant's stockholders to be held on May 22, 1997, which involves the
election of directors. Such definitive proxy statement will be filed with the
Securities and Exchange Commission not later than 120 days after the end of the
fiscal year covered by this Form 10-K. However, information concerning the
registrant's executive officers will be omitted from such proxy statement and is
furnished in a separate item captioned "Executive Officers of the Registrant"
included in Part I of this Form 10-K.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report in Item
8 of Part II:
1. FINANCIAL STATEMENTS.
Pamida Holdings Corporation and Subsidiary
- Independent Auditors' Report
- Consolidated Statements of Operations for the Years Ended February
2, 1997, January 28, 1996 and January 29, 1995
- Consolidated Balance Sheets at February 2, 1997 and January 28, 1996
- Consolidated Statements of Common Stockholders' Equity for the
Years Ended February 2, 1997, January 28, 1996 and January 29,
1995
- Consolidated Statements of Cash Flows for the Years Ended February
2, 1997, January 28, 1996 and January 29, 1995
- Notes to Consolidated Financial Statements for the Years Ended
February 2, 1997, January 28, 1996 and January 29, 1995
2. FINANCIAL STATEMENT SCHEDULES.
- Independent Auditors' Report on Schedule
- Schedule I - Condensed Financial Information of Registrant
All other schedules of the registrant for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission are
not required under the related instructions, are inapplicable or have been
disclosed in the Notes to Consolidated Financial Statements and, therefore, have
been omitted.
3. EXHIBITS.
(1) 3.1 - Restated Certificate of Incorporation of Pamida Holdings
Corporation, as amended.
(2) 3.2 - Revised By-Laws of Pamida Holdings Corporation.
(1) 3.3 - Certificate of Amendment of Certificate of Incorporation
of Pamida Holdings Corporation (amends Exhibit 3.1).
(9) 3.4 - Certificate of Amendment of Certificate of Incorporation
of Pamida Holdings Corporation (amends Exhibit 3.1).
(2) 4.1 - Form of certificate representing shares of the Common Stock
of Pamida Holdings Corporation.
(6) 4.2 - Indenture dated as of March 15, 1993, among Pamida, Inc. as
Issuer, Pamida Holdings Corporation as Guarantor, and State
Street Bank and Trust Company as Trustee relating to 11 3/4%
Senior Subordinated Notes due 2003 of Pamida, Inc.
(6) 4.3 - Specimen form of 11 3/4% Senior Subordinated Note due 2003 of
Pamida, Inc.
(3) 10.1 - Stock and Note Purchase Agreement dated as of July 29, 1986,
among Pamida Holdings Corporation, Citicorp Venture Capital,
Ltd., Citicorp Capital Investors, Ltd., and the individual
purchasers who are parties thereto.
(1) 10.2 - Amendment to Stock and Note Purchase Agreement, dated July 31,
1990 (amends Exhibit 10.1).
(1) 10.3 - Second Amendment to Stock and Note Purchase Agreement, dated
August 10, 1990 (amends Exhibit 10.1).
(1) 10.4 - Third Amendment to Stock and Note Purchase Agreement, dated
September 13, 1990 (amends Exhibit 10.1).
(1) 10.5 - Registration Agreement dated July 29, 1986, among Pamida Holdings
Corporation and the persons listed on the signature pages
thereof.
(1) 10.6 - Amendment No.1 to Registration Agreement, dated August 10, 1990,
among Pamida Holdings Corporation, Citicorp Venture Capital,
Ltd. and C. Clayton Burkstrand (amends Exhibit 10.5).
(1) 10.7 - Exchange Agreement dated August 10, 1990, among Pamida Holdings
Corporation, Citicorp Venture Capital, Ltd. and Court Square
Capital Limited.
(1) 10.8 - Agreement dated September 13, 1990, among Pamida Holdings
Corporation, Citicorp Venture Capital, Ltd. and Court Square
Capital Limited.
(2) 10.9 - Agreement dated September 20, 1990, among Pamida Holdings
Corporation, Citicorp Venture Capital, Ltd. and Court Square
Capital Limited.
(4) 10.10 - Exchange Agreement dated as of December 1, 1990 between Pamida
Holdings Corporation, Citicorp Venture Capital, Ltd. and
Court Square Capital Limited.
(4) 10.11 - Form of 14.25% Junior Subordinated Promissory Note of Pamida
Holdings Corporation.
(4) 10.12 - Form of Indemnification Agreement between Pamida Holdings
Corporation and its officers and directors.
(5) 10.13 - Note Amendment Agreement dated as of December 18, 1992, between
Pamida Holdings Corporation and Court Square Capital Limited.
(5) 10.14 - Note Amendment Agreement No. 2 dated as of March 1, 1993, between
Pamida Holdings Corporation and Citicorp Investments Inc.
(5) 10.15 - Tax-Sharing Agreement dated as of February 2, 1992, among Pamida
Holdings Corporation, Pamida, Inc., Seaway Importing company,
and Pamida Transportation Company.
(6) 10.16 - Loan and Security Agreement dated March 30, 1993, by and among
Congress Financial Corporation (Southwest) and BA Business
Credit, Inc. as Lenders, Congress Financial Corporation
(Southwest)as Agent for the Lenders, and Pamida, Inc. and
Seaway Importing Company as Borrowers.
(12) 10.17 - Amendment No. 1 to Loan and Security Agreement, dated January 23,
1995, among Pamida, Inc. and Seaway Importing Company as
Borrowers, Congress Financial Corporation (Southwest) as a
Lender and Agent, and BA Business Credit Inc. as a Lender
(amends Exhibit 10.16).
(13) 10.18 - Amendment No. 2 to Loan and Security Agreement, dated January 28,
1996, among Pamida, Inc. and Seaway Importing Company as
Borrowers, Congress Financial Corporation (Southwest) as a
Lender and Agent, and BankAmerica Business Credit as a Lender
(amends Exhibit 10.16).
(14) 10.19 - Amendment No. 3 to Loan and Security Agreement among Pamida,
Inc. and Seaway Importing Company, as Borrowers, Congress
Financial Corporation (Southwest) and BankAmerica Business
Credit, Inc., as Lenders, and Congress Financial Corporation
(Southwest), as Agent, dated September 16, 1996 (amends
Exhibit 10.16).
10.20 - Amendment No. 4 to Loan and Security Agreement among Pamida,
Inc. and Seaway Importing Company, as Borrowers, Congress
Financial Corporation (Southwest) and BankAmerica Business
Credit, Inc., as Lenders, and Congress Financial Corporation
(Southwest), as Agent, dated January 31, 1997 (amends
Exhibit 10.16).
10.21 - Amendment No. 5 to Loan and Security Agreement among Pamida,
Inc. and Seaway Importing Company, as Borrowers, Congress
Financial Corporation (Southwest) and BankAmerica Business
Credit, Inc., as Lenders, and Congress Financial Corporation
(Southwest), as Agent, dated March 17, 1997 (amends
Exhibit 10.16).
(8) 10.22 - Pamida Holdings Corporation 1992 Stock Option Plan.
(7) 10.23 - Employment Agreement dated April 19, 1993, between
Pamida, Inc. and Steven S. Fishman.
(10) 10.24 - Amendment No. 1 to Employment Agreement, dated January 3, 1994,
between Pamida, Inc. and Steven S. Fishman (amends Exhibit
10.23).
(11) 10.25 - Amendment No. 2 to Employment Agreement, dated January 23, 1995,
between Pamida, Inc. and Steven S. Fishman (amends Exhibit
10.23).
(12) 10.26 - Employment Agreement dated September 22, 1995, among Pamida
Holdings Corporation, Pamida, Inc. and Steven S. Fishman.
(14) 10.27 - Amendment No. 1 to Employment Agreement among Pamida Holdings
Corporation, Pamida, Inc., and Steve S. Fishman dated August
29, 1996 (amends Exhibit 10.26).
10.28 - Amendment No. 2 to Employment Agreement among Pamida Holdings
Corporation, Pamida, Inc., and Steven S. Fishman dated March 6,
1997 (amends Exhibit 10.26).
(11) 10.29 - Pamida, Inc. 1995 Deferred Compensation Plan.
10.30 - Employment Agreement dated as of March 6, 1997, among Pamida
Holdings Corporation, Pamida, Inc., and Frank A. Washburn.
10.31 - Employment Agreement dated as of March 6, 1997, among Pamida
Holdings Corporation, Pamida, Inc., and George R. Mihalko.
10.32 - Long-Term Incentive Award Agreement dated as of March 6, 1997,
between Pamida, Inc. and, Steven S. Fishman.
10.33 - Long-Term Incentive Award Agreement dated as of March 6, 1997,
between Pamida, Inc., and Frank A. Washburn.
10.34 - Long-Term Incentive Award Agreement dated as of March 6, 1997,
between Pamida, Inc., and George R. Mihalko.
(1) 22.1 - Subsidiaries of Pamida Holdings Corporation.
23.1 - Consent of Deloitte & Touche LLP.
23.2 - Consent of Coopers & Lybrand L.L.P.
24.1 - Power of Attorney
27.1 - Financial Data Schedule (EDGAR filing only)
- -------------------------
(1) Previously filed as an exhibit to Registration Statement of Pamida Holdings
Corporation on Form S-1 (Registration No. 33-35324) and incorporated herein
by this reference.
(2) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended October 28, 1990, and
incorporated herein by this reference.
(3) Previously filed as an exhibit to Registration Statement of Pamida, Inc. on
Form S-l (Registration No. 33-10980) and incorporated herein by this
reference.
(4) Previously filed as an exhibit to Form 10-K Annual Report of Pamida
Holdings Corporation for the fiscal year ended February 3, 1991, and
incorporated herein by this reference.
(5) Previously filed as an exhibit to Registration Statement of Pamida, Inc.
and Pamida Holdings Corporation on Form S-1 (Registration No. 33-57990) and
incorporated herein by this reference.
(6) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended May 2, 1993, and incorporated
herein by this reference.
(7) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida,
Inc. (File No. 33-57990) for the period ended August 1, 1993, and
incorporated herein by this reference.
(8) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended August 1, 1993, and incorporated
herein by this reference.
(9) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended July 31, 1994, and incorporated
herein by this reference.
(10) Previously filed as an exhibit to Form 10-K Annual Report of Pamida
Holdings Corporation for the fiscal year ended January 30, 1994, and
incorporated herein by this reference.
(11) Previously filed as an exhibit to Form 10-K Annual Report of Pamida
Holdings Corporation for the fiscal year ended January 29, 1995, and
incorporated herein by this reference.
(12) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended October 29, 1995, and
incorporated herein by this reference.
(13) Previously filed as an exhibit to Form 10-K Annual Report of Pamida
Holdings Corporation for the fiscal year ended January 28, 1996, and
incorporated herein by this reference.
(14) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended October 27, 1996, and
incorporated herein by this reference.
* * *
(b) No reports on Form 8-K were filed by the registrant during the last quarter
of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: April 15, 1997 PAMIDA HOLDINGS CORPORATION
By:/s/ Steven S. Fishman
Steven S. Fishman, Chairman
of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Steven S. Fishman Chairman of the Board, April 15, 1997
Steven S. Fishman President, Chief Executive
Officer and Director
/s/ George R. Mihalko Senior Vice President, April 15, 1997
George R. Mihalko Chief Financial Officer
and Treasurer
/s/ Todd D. Weyhrich Principal Accounting April 15, 1997
Todd D. Weyhrich Officer
/s/ Frank A. Washburn Director April 15, 1997
Frank A. Washburn
* Director April 15, 1997
L. David Callaway, III
* Director April 15, 1997
Stuyvesant P. Comfort
* Director April 15, 1997
M. Saleem Muqaddam
* Director April 15, 1997
Peter J. Sodini
* By: /s/ George R. Mihalko
George R. Mihalko,
Attorney-in-Fact
PAMIDA HOLDINGS CORPORATION
FORM 10-K -- FEBRUARY 2, 1997
EXHIBIT INDEX
Exhibit
Number Description
-------- ------------------------------------------------
(1) 3.1 Restated Certificate of Incorporation of
Pamida Holdings Corporation, as amended.
(2) 3.2 Revised By-Laws of Pamida Holdings
Corporation.
(1) 3.3 Certificate of Amendment of Certificate of
Incorporation of Pamida Holdings Corporation
(amends Exhibit 3.1).
(9) 3.4 Certificate of Amendment of Certificate of
Incorporation of Pamida Holdings Corporation
(amends Exhibit 3.1).
(2) 4.1 Form of certificate representing shares of
the Common Stock of Pamida Holdings
Corporation.
(6) 4.2 Indenture dated as of March 15, 1993, among
Pamida, Inc. as Issuer, Pamida Holdings
Corporation as Guarantor, and State Street
Bank and Trust Company as Trustee relating
to 11 3/4% Senior Subordinated Notes due
2003 of Pamida, Inc.
(6) 4.3 Specimen form of 11 3/4% Senior Subordinated
Note due 2003 of Pamida, Inc.
(3) 10.1 Stock and Note Purchase Agreement dated as
of July 29, 1986, among Pamida Holdings
Corporation, Citicorp Venture Capital, Ltd.,
Citicorp Capital Investors, Ltd., and the
individual purchasers who are parties
thereto.
(1) 10.2 Amendment to Stock and Note Purchase
Agreement, dated July 31, 1990 (amends
Exhibit 10.1).
(1) 10.3 Second Amendment to Stock and Note Purchase
Agreement, dated August 10, 1990 (amends
Exhibit 10.1).
(1) 10.4 Third Amendment to Stock and Note Purchase
Agreement, dated September 13, 1990 (amends
Exhibit 10.1).
(1) 10.5 Registration Agreement dated July 29, 1986,
among Pamida Holdings Corporation and the
persons listed on the signature pages
thereof.
(1) 10.6 Amendment No. 1 to Registration Agreement,
dated August 10, 1990, among Pamida Holdings
Corporation, Citicorp Venture Capital, Ltd.
and C. Clayton Burkstrand (amends
Exhibit 10.5).
(1) 10.7 Exchange Agreement dated August 10, 1990,
among Pamida Holdings Corporation, Citicorp
Venture Capital, Ltd. and Court Square
Capital Limited.
(1) 10.8 Agreement dated September 13, 1990, among
Pamida Holdings Corporation, Citicorp
Venture Capital, Ltd. and Court Square
Capital Limited.
(2) 10.9 Agreement dated September 20, 1990, among
Pamida Holdings Corporation, Citicorp
Venture Capital, Ltd. and Court Square
Capital Limited.
(4) 10.10 Exchange Agreement dated as of December 1,
1990 between Pamida Holdings Corporation,
Citicorp Venture Capital, Ltd. and Court
Square Capital Limited.
(4) 10.11 Form of 14.25% Junior Subordinated
Promissory Note of Pamida Holdings
Corporation.
(4) 10.12 Form of Indemnification Agreement between
Pamida Holdings Corporation and its officers
and directors.
(5) 10.13 Note Amendment Agreement dated as of
December 18, 1992, between Pamida Holdings
Corporation and Court Square Capital Limited.
(5) 10.14 Note Amendment Agreement No. 2 dated as of
March 1, 1993, between Pamida Holdings
Corporation and Citicorp Investments Inc.
(5) 10.15 Tax-Sharing Agreement dated as of February
2, 1992, among Pamida Holdings Corporation,
Pamida, Inc., Seaway Importing company, and
Pamida Transportation Company.
(6) 10.16 Loan and Security Agreement dated March 30,
1993, by and among Congress Financial
Corporation (Southwest) and BA Business
Credit, Inc. as Lenders, Congress Financial
Corporation (Southwest) as Agent for the
Lenders, and Pamida, Inc. and Seaway
Importing Company as Borrowers.
(12) 10.17 Amendment No. 1 to Loan and Security
Agreement, dated January 23, 1995, among
Pamida, Inc. and Seaway Importing Company as
Borrowers, Congress Financial Corporation
(Southwest) as a Lender and Agent, and BA
Business Credit Inc. as a Lender (amends
Exhibit 10.16).
(13) 10.18 Amendment No. 2 to Loan and Security
Agreement, dated January 28, 1996, among
Pamida, Inc. and Seaway Importing Company as
Borrowers, Congress Financial Corporation
(Southwest) as a Lender and Agent, and
BankAmerica Business Credit as a Lender
(amends Exhibit 10.16).
(14) 10.19 Amendment No. 3 to Loan and Security
Agreement among Pamida, Inc. and Seaway
Importing Company, as Borrowers, Congress
Financial Corporation (Southwest) and
BankAmerica Business Credit, Inc., as
Lenders, and Congress Financial Corporation
(Southwest), as Agent, dated September 16,
1996 (amends Exhibit 10.16).
10.20 Amendment No. 4 to Loan and Security
Agreement among Pamida, Inc. and Seaway
Importing Company, as Borrowers, Congress
Financial Corporation (Southwest) and
BankAmerica Business Credit, Inc., as
Lenders, and Congress Financial Corporation
(Southwest), as Agent, dated January 31,
1997 (amends Exhibit 10.16).
10.21 Amendment No. 5 to Loan and Security
Agreement among Pamida, Inc. and Seaway
Importing Company, as Borrowers, Congress
Financial Corporation (Southwest) and
BankAmerica Business Credit, Inc., as
Lenders, and Congress Financial Corporation
(Southwest), as Agent, dated March 17, 1997
(amends Exhibit 10.16).
(8) 10.22 Pamida Holdings Corporation 1992 Stock
Option Plan.
(7) 10.23 Employment Agreement dated April 19, 1993,
between Pamida, Inc. and Steven S. Fishman.
(10) 10.24 Amendment No. 1 to Employment Agreement,
dated January 3, 1994, between Pamida, Inc.
and Steven S. Fishman (amends Exhibit 10.23).
(11) 10.25 Amendment No. 2 to Employment Agreement,
dated January 23, 1995, between Pamida, Inc.
and Steven S. Fishman (amends Exhibit 10.23).
(12) 10.26 Employment Agreement dated September 22,
1995, among Pamida Holdings Corporation,
Pamida, Inc. and Steven S. Fishman.
(14) 10.27 Amendment No. 1 to Employment Agreement
among Pamida Holdings Corporation, Pamida,
Inc., and Steven S. Fishman dated August 29,
1996 (amends Exhibit 10.26).
10.28 Amendment No. 2 to Employment Agreement
among Pamida Holdings Corporation, Pamida,
Inc., and Steven S. Fishman dated March 6,
1997 (amends Exhibit 10.26).
(11) 10.29 Pamida, Inc. 1995 Deferred Compensation
Plan.
10.30 Employment Agreement dated as of March 6,
1997, among Pamida Holdings Corporation,
Pamida, Inc., and Frank A. Washburn.
10.31 Employment Agreement dated as of March 6,
1997, among Pamida Holdings Corporation,
Pamida, Inc., and George R. Mihalko.
10.32 Long-Term Incentive Award Agreement dated as
of March 6, 1997, between Pamida, Inc. and,
Steven S. Fishman.
10.33 Long-Term Incentive Award Agreement dated as
of March 6, 1997, between Pamida, Inc., and
Frank A. Washburn.
10.34 Long-Term Incentive Award Agreement dated as
of March 6, 1997, between Pamida, Inc., and
George R. Mihalko.
(1) 22.1 Subsidiaries of Pamida Holdings Corporation.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Coopers & Lybrand L.L.P.
24.1 Power of Attorney.
27.1 Financial Data Schedule (EDGAR filing only)
- -------------------------
(1) Previously filed as an exhibit to Registration Statement of Pamida Holdings
Corporation on Form S-1 (Registration No. 33-35324) and incorporated herein
by this reference.
(2) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended October 28, 1990, and
incorporated herein by this reference.
(3) Previously filed as an exhibit to Registration Statement of Pamida, Inc. on
Form S-l (Registration No. 33-10980) and incorporated herein by this
reference.
(4) Previously filed as an exhibit to Form 10-K Annual Report of Pamida
Holdings Corporation for the fiscal year ended February 3, 1991, and
incorporated herein by this reference.
(5) Previously filed as an exhibit to Registration Statement of Pamida, Inc.
and Pamida Holdings Corporation on Form S-1 (Registration No. 33-57990) and
incorporated herein by this reference.
(6) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended May 2, 1993, and incorporated
herein by this reference.
(7) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida,
Inc. (File No. 33-57990) for the period ended August 1, 1993, and
incorporated herein by this reference.
(8) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended August 1, 1993, and incorporated
herein by this reference.
(9) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended July 31, 1994, and incorporated
herein by this reference.
(10) Previously filed as an exhibit to Form 10-K Annual Report of Pamida
Holdings Corporation for the fiscal year ended January 30, 1994, and
incorporated herein by this reference.
(11) Previously filed as an exhibit to Form 10-K Annual Report of Pamida
Holdings Corporation for the fiscal year ended January 29, 1995, and
incorporated herein by this reference.
(12) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended October 29, 1995, and
incorporated herein by this reference.
(13) Previously filed as an exhibit to Form 10-K Annual Report of Pamida
Holdings Corporation for the fiscal year ended January 28, 1996, and
incorporated herein by this reference.
(14) Previously filed as an exhibit to Form 10-Q Quarterly Report of Pamida
Holdings Corporation for the period ended October 27, 1996, and
incorporated herein by this reference.
AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT
PAMIDA, INC.
8800 F Street
Omaha, Nebraska 68127
SEAWAY IMPORTING COMPANY
8800 F Street
Omaha, Nebraska 68127
January 31, 1997
Congress Financial Corporation (Southwest)
1201 Main Street
Dallas, Texas 75250
BankAmerica Business Credit, Inc.
40 East 52nd Street
New York, New York 10017
Gentlemen:
Congress Financial Corporation (Southwest), a Texas corporation in its
individual capacity ("Congress"), BankAmerica Business Credit, Inc., formerly
known as BA Business Credit Inc., a Delaware corporation ("BABC," together with
Congress each individually a "Lender" and collectively, "Lenders"), Pamida,
Inc., a Delaware corporation ("Pamida"), Seaway Importing Company, a Nebraska
corporation ("Seaway," together with Pamida, collectively, "Borrowers") and
Congress Financial Corporation (Southwest), a Texas corporation, as Agent for
Lenders (in such capacity, "Agent") have entered into certain financing
arrangements pursuant to the Loan and Security Agreement, dated March 30, 1993,
by and among Agent, Lenders and Borrowers (as amended by Amendment No. 1 to Loan
and Security Agreement dated as of January 23, 1995, and Amendment No. 2 to Loan
and Security Agreement dated as of January 28, 1996 and Amendment No. 3 to Loan
and Security Agreement dated as of September 16, 1996 and as amended hereby, the
"Loan Agreement", and together with all agreements, documents and instruments at
any time executed and/or delivered in connection therewith or related thereto,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, collectively, the "Financing
Agreements").
Borrowers have requested that the advance rate provisions of the Financing
Agreement be amended, and Agent and Lenders are willing to amend such provisions
of the Financing Agreements, subject to the terms and conditions contained
herein. By this Amendment, Agent, Lenders and Borrowers desire and intend to
evidence such amendments.
In consideration of the foregoing and the agreements and covenants
contained herein, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein shall have the meanings
assigned thereto in the other Financing Agreements, unless otherwise defined
herein.
2. Revolving Loans; Advance Rate. Section 2.1(a) of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:
(a) Subject to, and upon the terms and conditions contained herein and in the
other Financing Agreements, at the request of Borrowers, each of Lenders
severally, but not jointly, agrees to lend to Borrowers and authorizes and
appoints Agent to make Revolving Loans to Borrowers, for the account of and
as Agent for Lenders, in such amounts from time to time as Agent shall
determine, in its discretion, at Borrowers' request during the periods
indicated below of up to the percent of the value of Eligible Inventory of
Borrowers indicated for such period (or such greater or lesser percentage
thereof as Agent may determine from time to time), in any year:
Period Percent
---------------------------------- -------
(i) from February 1 through and 45%
including April 30
(ii) from October 1 through and 45%
including November 30
(iii) at all other times 40%
3. Representations, Warranties and Covenants. In addition to the continuing
representations, warranties and covenants heretofore or hereafter made by
Borrowers to Agent and Lenders pursuant to the Financing Agreements, Borrowers
hereby represent, warrant and covenant with and to Agent and Lenders as follows
(which representations, warranties and covenant are continuing and shall survive
the execution and delivery hereof and shall be incorporated into and made a part
of the Financing Agreements):
(a) No Event of Default exists on the date of this Amendment (after giving
effect to the amendments to the Financing Agreements made by this
Amendment).
(b) This Amendment and the other amendment agreements delivered in connection
herewith, have been duly authorized, executed and delivered by each of
Borrowers and are in full force and effect as of the date hereof, and the
agreements and obligations of each of Borrowers contained herein and
therein constitute legal, valid and binding obligations of each of
Borrowers enforceable against each of Borrowers in accordance with their
respective terms.
- 2 -
<PAGE>
(c) All required consents or approvals of any persons other than Lenders and
Agent to the authorization, execution and delivery of this Amendment and
the other amendment agreements delivered in connection herewith have been
obtained by each of Borrowers and Guarantors, and the authorization,
execution and delivery hereof does not violate or breach any provision of
or constitute a default under any material indenture, mortgage, deed of
trust, agreement or instrument to which any of Borrowers or Guarantors is
or may be bound, including, without limitation, the Note Indenture.
4. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of each of the following conditions
precedent in a manner satisfactory to Agent on behalf of Lenders:
(a) Agent shall have received, in form and substance satisfactory to Agent, an
executed original of this Amendment, duly authorized, executed and
delivered by each of Borrowers and Guarantors; and
(b) no Event of Default shall have occurred and be continuing and no event
shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default.
5. Effect of this Amendment.Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied and
in all other respects the Financing Agreements are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date hereof. To
the extent of any conflict between the terms of this Amendment and the other
Financing Agreements, the terms of this Amendment shall control.
6. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
7. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
8. Binding Effect.This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
9. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
- 3 -
<PAGE>
Please sign the enclosed counterpart of this Amendment in the space
provided below, whereupon this Amendment, as so accepted by Agent and Lenders,
shall become a binding agreement among Borrowers, Agent and Lenders.
Very truly yours,
PAMIDA, INC.
By: /s/ George R. Mihalko
Title: Sr. V.P.
SEAWAY IMPORTING COMPANY
By: /s/ George R. Mihalko
Title: Sr. V.P.
AGREED:
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST), individually and as Agent
By: /s/ Edward Franco
Title: Sr. Vice President
BANKAMERICA BUSINESS CREDIT, INC., formerly known as BA Business Credit Inc.
By: /s/ Patrick J. Wilson
Title: Vice President
ACKNOWLEDGED AND AGREED:
PAMIDA HOLDINGS CORPORATION
By: /s/ George R. Mihalko
Title: Sr. V.P.
PAMIDA TRANSPORTATION COMPANY
By: /s/ George R. Mihalko
Title: Sr. V.P.
- 4 -
AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT
PAMIDA, INC.
8800 F Street
Omaha, Nebraska 68127
SEAWAY IMPORTING COMPANY
8800 F Street
Omaha, Nebraska 68127
March 17, 1997
Congress Financial Corporation (Southwest)
1201 Main Street
Dallas, Texas 75250
BankAmerica Business Credit, Inc.
40 East 52nd Street
New York, New York 10017
Gentlemen:
Congress Financial Corporation (Southwest), a Texas corporation in its
individual capacity ("Congress"), BankAmerica Business Credit, Inc., formerly
known as BA Business Credit Inc., a Delaware corporation ("BABC," together with
Congress each individually a "Lender" and collectively, "Lenders"), Pamida,
Inc., a Delaware corporation ("Pamida"), Seaway Importing Company, a Nebraska
corporation ("Seaway," together with Pamida, collectively, "Borrowers") and
Congress Financial Corporation (Southwest), a Texas corporation, as Agent for
Lenders (in such capacity, "Agent") have entered into certain financing
arrangements pursuant to the Loan and Security Agreement, dated March 30, 1993,
by and among Agent, Lenders and Borrowers (as amended by Amendment No. 1 to Loan
and Security Agreement dated as of January 23, 1995, Amendment No. 2 to Loan and
Security Agreement dated as of January 28, 1996, Amendment No. 3 to Loan and
Security Agreement dated as of September 16, 1996 and Amendment No. 4 to Loan
and Security Agreement dated as of January 31, 1997 and as amended hereby, the
"Loan Agreement", and together with all agreements, documents and instruments at
any time executed and/or delivered in connection therewith or related thereto,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, collectively, the "Financing
Agreements").
Borrowers have requested that the "Maximum Credit" provided for in the
Financing Agreements be increased, that the term of the Loan Agreement be
extended and that certain other provisions of the Financing Agreements be
amended, and Agent and Lenders are willing to increase the Maximum Credit,
extend the Loan Agreement term and amend such other provisions of the Financing
Agreements, subject to the terms and conditions contained herein. By this
Amendment, Agent, Lenders and Borrowers desire and intend to evidence such
amendments.
- 1 -
<PAGE>
In consideration of the foregoing and the agreements and covenants
contained herein, the parties hereto agree as follows:
1. Amendments to Definitions.
(a) All references to the term "Maximum Credit" in any of the Financing
Agreements shall be deemed, and each such reference is hereby amended, to
mean $95,000,000.
(b) All references to the term "Renewal Date" in any of the Financing
Agreements shall be deemed, and each such reference is hereby amended, to
mean March 31, 2000.
(c) All references to the term "Interest Rate" in any of the Financing
Agreements shall be deemed, and each such reference is hereby amended, to
mean, as to Prime Rate Loans, a rate of one half of one (1/2%) percent per
annum in excess of the Prime Rate and, as to Eurodollar Rate Loans, a rate
of three and one-quarter (3 1/4%) percent per annum in excess of the
Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable for the
Interest Period selected by Borrowers as in effect three (3) Business Days
after the date of receipt by Agent of the request of Borrowers for such
Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to Borrowers),
provided, that:
(i) as to Eurodollar Rate Loans, the rate shall be reduced to or, if
previously reduced, continued at three (3%) percent per annum in
excess of the Adjusted Eurodollar Rate during any Rate Adjustment
Period, effective as of the first day of such Rate Adjustment Period,
if the average of the Excess Availability as of the close of business
on each of the Fridays in the immediately preceding Rate Adjustment
Period or, in the case of the initial Rate Adjustment Period, in the
immediately preceding period from the date hereof through April 30,
1997 shall have been greater than $10,000,000, provided, that, the
rate shall increase to or continue at three and one-quarter (3 1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate during any
subsequent Rate Adjustment Period, effective as of the first day of
such Rate Adjustment Period, if the average of the Excess Availability
as of the close of business on each of the Fridays in the immediately
preceding Rate Adjustment Period or, in the case of the initial Rate
Adjustment Period, in the immediately preceding period from the date
hereof through April 30, 1997 shall not have been greater than
$10,000,000; and
(ii) notwithstanding anything to the contrary contained in this Section
1(c) or otherwise, at Agent's option, without notice, the rate shall
be, as to Prime Rate Loans, two and one half (2 1/2%) percent per
annum in excess of the Prime Rate and, as to Eurodollar Rate Loans,
five and one-quarter (5 1/4%) percent per annum in excess of the
Adjusted Eurodollar Rate, (A) for the period on and after (1) the date
of termination or non-renewal hereof and until such time as all
obligations are indefeasibly paid in full (nothwithstanding entry of
any judgment against Borrowers) or (2) the date of the occurrence of
any Event of Default and for so long as such Event of Default is
continuing
- 2 -
<PAGE>
as determined by Agent and (B) on the Revolving Loans at any time
outstanding in excess of the amounts available to Borrowers under
Section 2 of the Loan Agreement (whether or not such excess(es) arise
or are made with or without Agent's knowledge or consent and whether
made before or after an Event of Default).
2. Additional Definitions. As used herein and in the Financing Agreements,
the following terms shall have the following definitions, and the Loan Agreement
is hereby amended to include these defined terms and definitions:
"Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per
annum(rounded upwards, if necessary, to the next one-sixteenth (1/16)
of one (1%) percent) determined by dividing (A) the Eurodollar Rate
for such Interest Period by (B) a percentage equal to: (i) one (1)
minus (ii) the Reserve Percentage. For purposes hereof, "Reserve
Percentage" shall mean the maximum reserve percentage, expressed as a
decimal (rounded upwards, if necessary, to the next one-sixteenth
(1/16) of one (1%) percent), prescribed by any United States or
foreign banking authority for determining the reserve requirement
which is or would be applicable to deposits of United States dollars
in a non-United States or an international banking office of Reference
Bank (or, if greater, in a non-United States or an international
banking office of any Lender, provided, that Agent shall have received
from such Lender prior written notice of such greater reserve
percentage) used to fund a Eurodollar Rate Loan or any Eurodollar Rate
Loan made with the proceeds of such deposit, whether or not the
Reference Bank (or such other Lender) actually holds or has made any
such deposits or loans. The Adjusted Eurodollar Rate shall be adjusted
on and as of the effective day of any change in the Reserve Percentage
(or, if later, upon the receipt by Agent of written notice from any
Lender of such greater reserve percentage).
"Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to
close under the laws of the State of New York or the Commonwealth of
Pennsylvania, and a day on which the Reference Bank, Agent and Lenders
are open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate
Loans, the term Business Day shall also exclude any day on which banks
are closed for dealings in dollar deposits in the London interbank
market or other applicable Eurodollar Rate market.
"Eurodollar Rate" shall mean, with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the
arithmetic average of the rates of interest per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%)
percent) at which Reference Bank is offered deposits of United States
dollars in the London interbank market on or about 9:00 a.m. (New York
time) two (2) Business Days prior to the commencement of such Interest
Period in amounts substantially
- 3 -
<PAGE>
equal to the principal amount of the Eurodollar Rate Loans
requested by and available to Borrowers in accordance with this
Agreement, with a maturity of comparable duration to the Interest
Period selected by Borrowers.
"Eurodollar Rate Loans" shall mean any Loans or portion
thereof on which interest is payable based on the Adjusted
Eurodollar Rate in accordance with the terms hereof.
"Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1) or two (2) months duration as
Borrowers may elect, the exact duration to be determined in
accordance with the customary practice in the applicable
Eurodollar Rate market; provided, that, Borrowers may not elect
an Interest Period which will end after the last day of the
then-current term of this Agreement.
"Loans" shall mean any Revolving Loans and shall, without
limitation, include any Revolving Loans that may from time to
time have been made as or converted to Eurodollar Rate Loans
pursuant to the terms of this Agreement.
"Prime Rate Loans" shall mean any Loans or portion thereof
on which interest is payable based on the Prime Rate in
accordance with the terms thereof.
"Rate Adjustment Period" shall mean any consecutive three
(3) calendar month period ending on April 30, July 31, October 31
or January 31 of any calendar year, commencing with such period
commencing on May 1, 1997 and ending on July 31, 1997.
"Reference Bank" Shall mean CoreStates Bank, N.A., or such
other bank as Agent may from time to time designate.
3. Other Defined Terms. All other capitalized terms used herein shall have
the meanings assigned thereto in the other Financing Agreements, unless
otherwise defined herein.
4. Loans. Section 2.1(a) of the Loan Agreement is hereby deleted in its
entirety and the following substituted therefor:
(a) Subject to, and upon the terms and conditions contained herein and in the
other Financing Agreements, at the request of Borrowers, each of Lenders
severally, but not jointly, agrees to lend to Borrowers and authorizes and
appoints Agent to make Revolving Loans to Borrowers, for the account of and
as Agent for Lenders, in such amounts from time to time as Agent shall
determine, in its discretion, at Borrowers' request up to fifty-five (55%)
percent of the Value of Eligible Inventory (or such greater or lesser
percentage thereof as Agent may determine from time to time)."
5. Facility Fee. In addition to any other fees provided for herein, in
Section 2.5 of the Loan Agreement or otherwise in the
- 4 -
<PAGE>
Financing Agreements, while the Loan Agreement is in effect, Borrowers shall pay
to Agent for the account of Lenders an annual facility fee in the amount of
$50,000, which amount shall be fully earned and payable on March 31 of each
calendar year, commencing with March 31, 1998.
6. Interest. Section 2.6 of the Loan Agreement is hereby deleted in its
entirety and the following substituted therefor:
2.6 Interest.
(a) Borrowers shall pay to Agent for the account of Lenders interest on the
outstanding principal amount of Revolving Loans and other the
non-contingent Obligations at the Interest Rate. All interest accruing
hereunder on and after the date of any Event of Default or termination or
non-renewal hereof shall be payable on demand.
(b) Borrowers may from time to time request that Prime Rate Loans be converted
to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans
continue for an additional Interest Period. Such request from Borrowers
shall specify the amount of the Prime Rate Loans to be converted to
Eurodollar Rate Loans (subject to the limits set forth below) and the
Interest Period to be applicable to such Eurodollar Rate Loans. Subject to
the terms and conditions contained herein, three (3) Business Days after
receipt by Agent of such a request from Borrowers, such Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans
shall continue, as the case may be, provided, that, (i) no Event of
Default, or event which with notice or passage of time or both would
constitute an Event of Default exists or has occurred and is continuing,
(ii) no party hereto shall have sent any notice of termination or
non-renewal of this Agreement, (iii) Borrowers shall have complied with
such customary procedures as are established by Agent and specified by
Agent to Borrowers from time to time for requests by Borrowers for
Eurodollar Rate Loans (that are not inconsistent with the procedures
otherwise set forth herein for such requests), (iv) no more than four (4)
Interest Periods may be in effect at any one time, (v) the aggregate amount
of the Eurodollar Rate Loans must be in an amount not less than $5,000,000
or an integral multiple of $1,000,000 in excess thereof, (vi) after giving
effect to the requested conversion(s) and/or continuance(s), the maximum
principal amount of the Eurodollar Rate Loans at any time outstanding
during the applicable Interest Period shall not exceed the amount equal to
the lesser of (A) the principal amount of $35,000,000 and (B) fifty (50%)
percent of the daily average of the principal amount of all Loans which it
is anticipated will be outstanding at any time during the applicable
Interest Period, in each case as determined by Agent (but with no
obligation of Agent or Lenders to make any such Loans) and (vii) the
Interest Period and Adjusted Eurodollar Rate are available to Agent and
Lenders and can be readily determined as of the Business Date immediately
- 5 -
<PAGE>
following the date of the request for such Eurodollar Rate Loan by
Borrowers, provided, that, in the event such Interest Period and Adjusted
Eurodollar Rate are not available to any Lender, such Lender shall give
Agent two (2) Business Days prior written notice, and Agent shall so notify
Borrowers, and Agent and Lenders shall not be required to provide such
requested Eurodollar Rate Loan. Any request by Borrowers to convert Prime
Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar
Rate Loans shall be irrevocable. Notwithstanding anything to the contrary
contained herein Agent, Lenders and Reference Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or
other applicable Eurodollar rate market to fund any Eurodollar Rate Loans,
but the provisions hereof shall be deemed to apply as if Agent, Lenders and
Reference Bank had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans
upon the last day of the applicable Interest Period, unless Agent shall
have received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with
the terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon
notice by Agent to Borrowers, convert to Prime Rate Loans in the event that
(i) an Event of Default or event which with the notice or passage of time
or both would constitute an Event of Default, shall exist, (ii) this
Agreement shall terminate or not be renewed, or (iii) the aggregate
principal amount of the Prime Rate Loans which have previously been
converted to Eurodollar Rate Loans or existing Eurodollar Rate Loans
continued, as the case may be, at the beginning of an Interest Period shall
at any time during such Interest Period exceed either (A) fifty (50%)
percent of the aggregate principal amount of the Loans then outstanding, or
(B) the principal amount of the Loans then available to Borrowers under
Section 2 hereof. Borrowers shall pay to Agent for the accounts of Lenders,
upon demand by Agent (or Agent may, at its option, charge any loan account
of Borrowers) any amounts required to compensate Agent, Lenders, the
Reference Bank or any participant with any Lenders for any loss (including
loss of anticipated profits), cost or expense incurred by such person, as a
result of the conversion of Eurodollar Rate Loans to Prime Rate Loans
pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Agent for the accounts of Lenders
monthly in arrears not later than the first day of each calendar month and
shall be calculated on the basis of a three hundred sixty (360) day year
and actual days elapsed. The interest rate on noncontingent Obligations
(other than Eurodollar Rate Loans) shall increase or decrease by an amount
equal to each increase or decrease in the Prime Rate effective on the first
day of the month after any change in such Prime Rate is announced based on
the Prime Rate in effect on the last day of the month in which any such
change occurs. In no
- 6 -
<PAGE>
event shall charges constituting interest payable by Borrowers to Agent
exceed the maximum amount or the rate permitted under any applicable law or
regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall
be deemed amended to conform thereto.
7. Changes in Laws and Increased Costs of Loans. A new Section 2.10 to the
Loan Agreement is hereby added, as follows:
2.10 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all Eurodollar
Rate Loans shall, upon notice by Agent to Borrowers, convert to Prime Rate
Loans in the event that (i) any change in applicable law or regulation (or
the interpretation or administration thereof) (A) shall make it unlawful
for Agent, any of Lenders, Reference Bank or any participant to make or
maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans or (B) shall result in the
increase in the costs to Agent, any of Lenders, Reference Bank or any
participant of making or maintaining any Eurodollar Rate Loans or (C) shall
reduce the amounts received or receivable by Agent, any of Lenders,
Reference Bank or any participants in respect thereof, by an amount deemed
by Agent or such Lender to be material, provided, that, in the event of any
such change of law, regulation, interpretation or administration applicable
to any Lender, such Lender shall have notified Agent and Borrowers, or (ii)
the cost to Agent, any of Lenders, Reference Bank or any participant of
making or maintaining any Eurodollar Rate Loans shall otherwise increase by
an amount deemed by Agent or any Lender to be material to it, other than,
with respect to any Eurodollar Rate Loan, an increase of cost arising
solely as the result of an increase in the rate at which Reference Bank (or
any other bank used by any Lender) is offered deposits of United States
dollars in the London interbank market after the date that is two (2)
Business Days prior to the commencement of the Interest Period applicable
to such Eurodollar Rate Loan, provided, that, in the event of any such
increase in cost applicable to any Lender, such Lender shall have notified
Agent and Borrower. Borrowers shall pay to Agent, upon demand by Agent (or
Agent may, at its option, charge any loan account of Borrowers) any amounts
required to compensate Agent, any of Lenders, the Reference Bank or any
participant with Lenders for any loss (including loss of anticipated
profits), cost or expense incurred by such person as a result of the
foregoing, including, without limitation, any such loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such person to make or maintain the Eurodollar Rate Loans
or any portion thereof. A certificate of Agent setting forth the basis for
the determination of such amount necessary to compensate Agent, any of
Lenders, Reference Bank of any participant with Lenders as aforesaid shall
be delivered to Borrowers and shall be conclusive, absent manifest error.
- 7 -
<PAGE>
(b) If any payments or prepayments in respect of the Eurodollar Rate Loans are
received by Agent other than on the last day of the applicable Interest
Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under
Section 8 or any other payments made with the proceeds of Collateral,
Borrowers shall pay to Agent upon demand by Agent (or Agent may, at its
option, charge any loan account of Borrowers) any amounts required to
compensate Agent, and of Lenders, the Reference Bank or any participant
with any of Lenders for any additional loss (including loss of anticipated
profits), cost or expense incurred by such person as a result of such
prepayment or payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such person to make or maintain such Eurodollar
Rate Loans or any portion thereof."
8. Consolidated Working Capital. Section 6.18 of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:
6.18 Consolidated Working Capital. Pamida and its Subsidiaries shall
have Consolidated Working Capital of not less than the following amounts at the
end of each fiscal quarter during the period indicated below:
Period Amount
------------------------------- -----------
(a) From the date of Amendment
No. 5 to this Agreement
through May 3, 1998 $22,500,000
(b) From May 4, 1998 through
May 2, 1999 $27,500,000
(c) From May 3, 1999 and at
all times thereafter $32,500,000
9. Consolidated Tangible Net Worth. Section 6.19 of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:
"6.19 Consolidated Tangible Net Worth. Pamida and its Subsidiaries
shall have Consolidated Tangible Net Worth of not less than the following
amounts at the end of each fiscal quarter during the period indicated
below:
Period Amount
------------------------------- -----------
(a) From the date of Amendment
No. 5 to this Agreement
through May 3, 1998 $70,000,000
(b) From May 4, 1998 through
May 2, 1999 $75,000,000
(c) From May 3, 1999 and at
all times thereafter $80,000,000
- 8 -
<PAGE>
10. Consolidated Adjusted Cash Flow. Section 6.21 of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:
"6.21 Consolidated Adjusted Cash Flow. Pamida and its Subsidiaries
shall not permit Consolidated Adjusted Cash Flow to be less than the amount
indicated for the following periods of any fiscal year ending on the Sunday
nearest January 31 of each calendar year:
Date Amount
------------------------------------- -------------
(i) The fiscal quarter ending
on or about April 30 ($10,000,000)
(ii) The two (2) fiscal quarters,
cumulatively, ending on or
about July 31 ($ 8,500,000)
(iii)The three (3) fiscal quarters,
cumulatively, ending on or
about October 31 ($ 5,000,000)
(iv) The four (4) fiscal quarters,
cumulatively, ending on or
about January 31 $ 5,000,000
11. Calculation of Financial Covenants.
(a) Section 2 of Amendment No. 2 to Loan Agreement is hereby deleted in its
entirety and the effects of the one-time special charges referred to
therein shall not be excluded from any calculations required by Sections
6.18, 6.19, 6.20 or 6.21 of the Loan Agreement.
(b) Notwithstanding anything to the contrary contained in Section 1.28 of the
Loan Agreement, for purposes of any calculations required by Sections 6.18,
6.19, 6.20 or 6.21 of the Loan Agreement, GAAP shall be determined, in each
case, on the basis of generally accepted accounting principles in the
United States of America as in effect on the date of this Amendment, as set
forth in the applicable opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board issued on or prior to the date of this Amendment, and consistent with
those used in the preparation of the most recent audited financial
statements delivered to Agent and Lenders prior to the date of this
Amendment and the debt compliance calculation sheet attached hereto as
Exhibit A, and Section 1.28 of the Loan Agreement shall be deemed, and is
hereby so amended.
- 9 -
<PAGE>
(c) For purposes of calculating Consolidated Working Capital, as provided for
in Section 1.19 of the Loan Agreement, and notwithstanding anything to the
contrary stated therein, all Indebtedness of Borrowers under the Financing
Agreements shall at all times be deemed to be classified as "current
liabilities" as that term is used in Section 1.19(b), and shall be included
as such in such Section 1.19(b) notwithstanding any other classification or
the reclassification of such Indebtedness for any other purpose, and
Section 1.19(b) of the Loan Agreement shall be deemed, and is hereby, so
amended.
12. Termination Fee. Sections 9.2(e) (i), (ii) and (iii) of the Loan
Agreement are hereby deleted in their entirety and the following substituted
therefor:
(i) three (3%) percent of the Maximum Credit if such termination is effective
after the fourth anniversary of this Agreement but on or prior to the fifth
anniversary of this Agreement; or
(ii) two (2%) percent of the Maximum Credit if such termination is effective
after the fifth anniversary of this Agreement but on or prior to the sixth
anniversary of this Agreement; or
(iii)one-half (1/2%) percent of the Maximum Credit if such termination is
effective after the sixth anniversary of this Agreement but prior to the
Renewal Date then in effect."
13. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrowers to Agent and Lenders pursuant to the Financing Agreements,
Borrowers hereby represent, warrant and covenant with and to Agent and Lenders
as follows (which representations, warranties and covenant are continuing and
shall survive the execution and delivery hereof and shall be incorporated into
and made a part of the Financing Agreements):
(a) No Event of Default exists on the date of this Amendment (after giving
effect to the amendments to the Financing Agreements made by this
Amendment).
(b) This Amendment and the other amendment agreements delivered in connection
herewith, have been duly authorized, executed and delivered by each of
Borrowers and are in full force and effect as of the date hereof, and the
agreements and obligations of each of Borrowers contained herein and
therein constitute legal, valid and binding obligations of each of
Borrowers enforceable against each of Borrowers in accordance with their
respective terms.
(c) All required consents or approvals of any persons other than Lenders and
Agent to the authorization, execution and delivery of this Amendment and
the other amendment agreements delivered in connection herewith have been
obtained by each of Borrowers and Guarantors, and the authorization,
execution and delivery hereof does not violate or breach any provision of
or constitute a default under any material indenture, mortgage, deed of
trust,
- 10 -
<PAGE>
agreement or instrument to which any of Borrowers or Guarantors is or may
be bound, including, without limitation, the Note Indenture.
14. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of each of the following conditions
precedent in a manner satisfactory to Agent on behalf of Lenders:
(a) Agent shall have received, in form and substance satisfactory to Agent, an
executed original of this Amendment, duly authorized, executed and
delivered by each of Borrowers, Guarantors and BABC;
(b) Agent shall have received, in form and substance satisfactory to Agent, an
executed original of Amendment No. 4 to Deed of Trust, Security Agreement
and Assignment of Leases and Rents by Pamida in favor of Old Republic
National Title Insurance Company, as trustee, for the benefit of Agent and
Lenders, duly authorized, executed and delivered by the parties thereto;
(c) Agent shall have received, in form and substance satisfactory to Agent, an
executed original of Amendment No. 4 to Leasehold Deed of Trust, Security
Agreement and Assignment of Leases and Rents by Pamida in favor of Old
Republic National Title Insurance Company, as trustee, for the benefit of
Agent and Lenders, duly authorized, executed and delivered by the parties
thereto;
(d) Agent shall have received, in form and substance satisfactory to Agent, an
executed original of Amendment No. 4 to Co-Lending and Agency Agreement,
duly authorized, executed and delivered by each of Agent and Lenders;
(e) Agent shall have received, in form and substance satisfactory to Agent, a
secretary's certificates for each of Borrowers and Guarantors with respect
to directors' resolutions, incumbency and other matters as Agent may
require; and
(f) no Event of Default shall have occurred and be continuing and no event
shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default.
15. Amendment and Line Increase Fee. Borrowers shall pay to Agent for the
account of Lenders an amendment fee in an amount equal to $200,000, which fee
shall be fully earned and payable as of the date hereof, shall be in addition to
all other amounts payable under the Financing Agreements, shall constitute part
of the Obligations and may, at Agent's option, be charged directly to any
account(s) of Borrowers maintained with Agent or Lenders.
16. Effect of this Amendment. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied and
in all other respects the Financing Agreements are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date hereof. To
the extent of any conflict between the terms of this Amendment and the other
Financing Agreements, the terms of this Amendment shall control.
- 11 -
<PAGE>
17. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
18. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
19. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
20. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
- 12 -
<PAGE>
Please sign the enclosed counterpart of this Amendment in the space
provided below, whereupon this Amendment, as so accepted by Agent and Lenders,
shall become a binding agreement among Borrowers, Agent and Lenders.
Very truly yours,
PAMIDA, INC.
By: /s/ George R. Mihalko
Title: Senior Vice President & CFO
SEAWAY IMPORTING COMPANY
By: /s/ George R. Mihalko
Title: Senior Vice President & CFO
AGREED:
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST), individually and as Agent
By: /s/ Edward Franco
Title: Senior Vice President
BANKAMERICA BUSINESS CREDIT, INC., formerly known as BA Business Credit Inc.
By: /s/ Walter T. Shellman
Title: Vice President
ACKNOWLEDGED AND AGREED:
PAMIDA HOLDINGS CORPORATION
By: /s/ George R. Mihalko
Title: Senior Vice President & CFO
PAMIDA TRANSPORTATION COMPANY
By: /s/ George R. Mihalko
Title: Senior Vice President & CFO
- 13 -
<PAGE>
Pamida, Inc.
Exhibit A
Debt Compliance Calculations
Per Amendment
No. 5 Requirements
Fiscal Year End 1997
-----------
Preliminary
FYE 1997
Actuals
-----------
Section 6.18 Cash flow requirement
Net income (loss) after taxes: $ 3,696
Depr & amort 11,319
Amort of def finance costs 676
Provision for LIFO 874
Post employment health (125)
Stock incentive benefit 0
-----------
Sub total 16,440
Capital expenditures (4,947)
Principal payments non-revolver debt (1,334)
Principal payments captial leases (2,637)
-----------
Adjusted cash flow as defined 7,522
Adjusted cumulative cash flow as defined 7,522
Proposed minimum 3,500
-----------
Excess (deficit) $ 4,022
===========
Section 6.19 Consolidated working capital requirement
Total current assets $ 176,139
LIFO reserve 6,574
-----------
Current assets as adjusted 182,713
Total current liabilities 148,309
-----------
Working capital as defined 34,404
Proposed minimum 22,500
-----------
Excess (deficit) $ 11,904
===========
Section 6.21 Consolidated tangible net worth
requirement
SH equity $ (57,531)
LIFO reserve 6,574
-----------
Adjusted shareholders' equity (50,957)
Subordinated indebtedness 140,000
Deferred finance costs (3,124)
-----------
85,919
Minimum required/proposed 70,000
-----------
Excess (deficit) $ 15,919
===========
- 14 -
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
This Amendment No. 2 to Employment Agreement is made and entered into on
the 6th day of March , 1997, among PAMIDA HOLDINGS CORPORATION ("Holdings"), a
Delaware corporation, PAMIDA, INC. ("Pamida"), a Delaware corporation, and
STEVEN S. FISHMAN (the "Executive"). Holdings and Pamida collectively are
referred to in this Amendment No. 2 as the "Companies".
* * *
WHEREAS, the Companies and the Executive are parties to an Employment
Agreement dated September 22, 1995 (the "Employment Agreement"); and
WHEREAS, the Companies and the Executive now desire to amend the Employment
Agreement as more particularly set forth below;
NOW, THEREFORE, the Companies and the Executive agree as follows:
1. Pursuant to Paragraph 6 of the Employment Agreement, the Companies and
the Executive agree that the Executive's incentive bonus program for the fiscal
year of Holdings ending February 1, 1998 ("Fiscal 1998") shall be the following:
(a) If the consolidated earnings of Holdings and its subsidiaries (on a
first-in, first-out basis with respect to merchandise inventories) before
interest, taxes, depreciation, and amortization for Fiscal 1998 (the
"EBITDA") is less than $42,000,000 or the percentage increase in the
comparable store sales of Pamida for Fiscal 1998 compared with the fiscal
year ended February 2, 1997, is less than 3%, then the Executive shall not
be entitled to any incentive bonus for Fiscal 1998.
(b) If the EBITDA equals or exceeds $42,000,000, then the Executive's incentive
bonus for Fiscal 1998 shall be determined as a percentage of the
Executive's base salary from the matrix attached to this Amendment No. 2
taking into account (i) the EBITDA and (ii) the percentage increase in the
comparable store sales of Pamida for Fiscal 1998 compared with the fiscal
year ended February 2, 1997. Comparable store sales percentage increases
shall be determined in accordance with Pamida's historical practices.
(c) For purposes of such matrix, comparable store sales percentage increases of
more than 9% shall be treated as increases of 9%, and EBITDA of more than
$52,000,000 shall be treated as EBITDA of $52,000,000.
(d) For purposes of applying such matrix, the Executive's base salary shall be
the Executive's base salary in effect on February 1, 1998.
2
<PAGE>
(e) The maximum incentive bonus that the Executive shall have the opportunity
to earn for Fiscal 1998 is 110% of the Executive's applicable base salary.
(f) EBITDA amounts between whole millions of dollars and comparable store sales
percentage increases between whole percentages shall be interpolated on a
straight-line basis for purposes of applying such matrix.
(g) Solely by way of illustration of the application of such matrix, if the
EBITDA is $44,250,000 and the comparable store sales percentage increase
for Fiscal 1998 is 4.6%, then the Executive's incentive bonus for Fiscal
1998 would be 45.66875% of the Executive's applicable base salary.
The Executive's incentive bonus for Fiscal 1998 (if any) shall be paid to the
Executive as soon as practicable after Holdings has received the final audit
report with respect to Fiscal 1998 from its independent accountants.
2. The provisions of this Amendment No. 2 are intended to satisfy the
requirements of Paragraph 6 of the Employment Agreement for the fiscal year of
Holdings ending in 1998.
3. This Amendment No. 2 shall be effective as of February 3, 1997.
4. As hereby amended, the Employment Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the Companies and the Executive have executed this
Amendment No. 2 to Employment Agreement on the day and year first above written.
PAMIDA HOLDINGS CORPORATION,
a Delaware corporation
By: /s/ Frank A. Washburn
Frank A. Washburn, Executive
Vice President
PAMIDA, INC., a Delaware corporation
By: /s/ Frank A. Washburn
Frank A. Washburn, Executive
Vice President
By: /s/ Steven S. Fishman
Steven S. Fishman
<TABLE>
<CAPTION>
Attachment to Exhibit 10.28 - Executive Bonus Matrix
Bonus as % of Pay - FYE98 - Fishman
Comp store sales increase
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EBITDA <3% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
=========================================================================================
<42 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------
42 29.750% 42.500% 43.250% 44.000% 44.750% 49.750% 54.750% 59.750%
- -----------------------------------------------------------------------------------------
43 30.625% 43.375% 44.125% 44.875% 45.625% 50.625% 55.625% 60.625%
- -----------------------------------------------------------------------------------------
44 31.500% 44.250% 45.000% 45.750% 46.500% 51.500% 56.500% 61.500%
- -----------------------------------------------------------------------------------------
45 32.375% 45.125% 45.875% 46.625% 47.375% 52.375% 57.375% 62.375%
- -----------------------------------------------------------------------------------------
46 33.250% 46.000% 46.750% 47.500% 48.250% 53.250% 58.250% 63.250%
- -----------------------------------------------------------------------------------------
47 34.125% 46.875% 47.625% 48.375% 49.125% 54.125% 59.125% 64.125%
- -----------------------------------------------------------------------------------------
48 35.000% 47.750% 48.500% 49.250% 50.000% 55.000% 60.000% 65.000%
- -----------------------------------------------------------------------------------------
49 40.000% 52.750% 53.500% 54.250% 55.000% 60.000% 65.000% 70.000%
- -----------------------------------------------------------------------------------------
50 50.000% 62.750% 63.500% 64.250% 65.000% 70.000% 75.000% 80.000%
- -----------------------------------------------------------------------------------------
51 65.000% 77.750% 78.500% 79.250% 80.000% 85.000% 90.000% 95.000%
- -----------------------------------------------------------------------------------------
52 80.000% 92.750% 93.500% 94.250% 95.000% 100.000% 105.000% 110.000%
=========================================================================================
</TABLE>
EXHIBIT A
"OTHER BENEFITS" RELATED TO
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
DATED MARCH 6, 1997 AMONG PAMIDA HOLDINGS CORPORATION
AND STEVEN S. FISHMAN, CEO
Company paid Exec-U-Care insurance
Company paid life insurance - $600,000
Financial, legal counseling services - up to $15,000 annually
Company car - up to $20,000 allowance
Annual physical examination
Car phone
Use of company plane
Interest free loans - up to $50,000 approved by Board of Directors
Spousal travel - where appropriate
Minimum vacation accrual - 5 weeks
Athletic/Recreational membership
Supplemental disability insurance
Deferred compensation
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of the 6th day of
March, 1997, among PAMIDA HOLDINGS CORPORATION ("Holdings"), a Delaware
corporation, PAMIDA, INC. ("Pamida"), a Delaware corporation, and FRANK A.
WASHBURN (the "Executive"). Holdings and Pamida collectively are referred to in
this Employment Agreement as the "Companies".
* * *
WHEREAS, Pamida is a wholly-owned subsidiary of Holdings; and
WHEREAS, the Executive currently is employed by Pamida and serves as
Executive Vice President and Chief Operating Officer of both Holdings and
Pamida; and
WHEREAS, the Executive is actively involved in all aspects of the
management and operations of the Companies; and
WHEREAS, the Companies desire to provide for the continued services of the
Executive; and
WHEREAS, the Companies desire concurrently to retain and employ the
Executive as Executive Vice President and Chief Operating Officer for an
extended period of time; and
WHEREAS, the Executive desires to accept such concurrent and extended
employment;
NOW, THEREFORE, in consideration of the foregoing recitals and the
respective covenants and agreements of the parties contained in this document,
the Companies and the Executive agree as follows:
1. EMPLOYMENT AND DUTIES. Each of the Companies hereby employs the
Executive as Executive Vice President and Chief Operating Officer throughout the
term of this agreement and agrees to cause the Executive from time to time to be
elected or appointed to such corporate offices (or such other more senior
corporate offices as the Boards of Directors of the Companies may specify) or
positions. The duties and responsibilities of the Executive shall include the
duties and responsibilities of the Executive's corporate offices and positions
referred to above which are set forth in the respective bylaws of the Companies
from time to time, responsibility for the day-to-day business operations of the
Companies (subject to the direction of the Chief Executive Officer of the
Companies), and such other duties and responsibilities consistent with the
Executive's corporate offices and positions referred to above and this agreement
which the Board of Directors of Holdings (the "Board") or the Chief Executive
Officer of the Companies from time to time may assign to the Executive. If the
Executive is elected or appointed as a director of Pamida or Holdings or as an
officer or director of any of the respective subsidiaries of the Companies
during the term of this agreement, then he also shall serve in such capacity or
capacities but without additional compensation.
2. TERM. The term of this agreement shall begin on the date of this
agreement and shall continue thereafter through March 5, 2000, unless sooner
terminated in accordance with this agreement.
3. PLACE OF EMPLOYMENT. The executive offices of the Companies shall be
located in Omaha, Nebraska, during the term of this agreement, and the Executive
will not be required to relocate or transfer his principal residence from the
immediate vicinity of Omaha, Nebraska.
4. BASE SALARY. For all services to be rendered by the Executive pursuant
to this agreement, the Companies agree to pay the Executive a base salary at an
annual rate of Two Hundred Seventy-Five Thousand Dollars ($275,000.00) during
the term of this agreement (the "Base Salary"). The Base Salary shall be paid in
periodic installments in accordance with the Companies' regular payroll
practices. The Board or the Compensation Committee of the Board shall review the
Base Salary at least annually as of the payroll payment date nearest to May 1
(beginning in 1998); and the Companies agree to make such increases in the Base
Salary as the Board may approve from time to time. Once established at a
specific increased annual rate, the Base Salary thereafter may not be reduced by
the Companies without the Executive's written consent.
5. INCENTIVE BONUS FOR FISCAL 1998. In addition to the Executive's Base
Salary and any other benefits to which the Executive is entitled under this
agreement but subject to all of the provisions of this paragraph, the Executive
also shall be entitled to receive an incentive bonus (the "Incentive Bonus")
from the Companies for the fiscal year of Holdings ending February 1, 1998
("Fiscal 1998"), in accordance with the following provisions of this paragraph:
(a) If the consolidated earnings of Holdings and its subsidiaries (on a
first-in, first-out basis with respect to merchandise inventories) before
interest, taxes, depreciation, and amortization for Fiscal 1998 (the
"EBITDA") are less than $42,000,000, then the Executive shall not be
entitled to any incentive bonus for Fiscal 1998.
(b) If the EBITDA equals or exceeds $42,000,000, then the Executive's incentive
bonus for Fiscal 1998 shall be determined as a percentage of the
Executive's base salary from the matrix attached to this agreement taking
into account (i) the EBITDA and (ii) the percentage increase in the
comparable store sales of Pamida for Fiscal 1998 compared with the fiscal
year ended February 2, 1997. Comparable store sales percentage increases
shall be determined in accordance with Pamida's historical practices.
(c) For purposes of such matrix, comparable store sales percentage increases of
more than 9% shall be treated as increases of 9%, and EBITDA of more than
$52,000,000 shall be treated as EBITDA of $52,000,000.
(d) For purposes of applying such matrix, the Executive's base salary shall be
the Executive's base salary in effect on February 1, 1998.
(e) The maximum incentive bonus that the Executive shall have the opportunity
to earn for Fiscal 1998 is 110% of the Executive's applicable base salary.
(f) EBITDA amounts between whole millions of dollars and comparable store sales
percentage increases between whole percentages shall be interpolated on a
straight-line basis for purposes of applying such matrix.
(g) Solely by way of illustration of the application of such matrix, if the
EBITDA is $44,250,000 and the comparable store sales percentage increase
for Fiscal 1998 is 4.6%, then the Executive's incentive bonus for Fiscal
1998 would be 45.66875% of the Executive's applicable base salary.
The Executive's incentive bonus for Fiscal 1998 (if any) shall be paid to the
Executive as soon as practicable after Holdings has received the final audit
report with respect to Fiscal 1998 from its independent accountants.
6. INCENTIVE BONUS FOR LATER FISCAL YEARS. In addition to the Executive's
Base Salary and any other benefits to which the Executive is entitled under this
agreement but subject to all of the provisions of this paragraph, the Executive
also shall be entitled to earn an incentive bonus from the Companies for the
fiscal years of Holdings ending in 1999, 2000, and 2001. On or before December
31, 1997, 1998, and 1999, the Executive and the Board shall agree upon an
incentive bonus program for the Executive for the fiscal years of Holdings
ending in 1999, 2000, and 2001, respectively. Each such incentive bonus program
shall be reflected in a written amendment to this agreement. The Executive and
the Companies understand and acknowledge that, among other things, such annual
incentive bonus programs will involve the achievement by the Companies of
various financial objectives, which may include but are not limited to sales and
earnings, and also may include the achievement by the Companies of various
non-financial objectives. Each such incentive bonus program shall provide the
Executive with an opportunity to earn (but no guarantee that he will earn) an
incentive bonus at least equal to the Incentive Bonus which the Executive has
the opportunity to earn under the incentive bonus program for fiscal 1998 set
forth in Paragraph 5.
7. EXPENSES. During the term of this agreement, the Executive shall be
entitled to prompt reimbursement by the Companies of all reasonable ordinary and
necessary travel, entertainment, and other expenses incurred by the Executive
(in accordance with the policies and procedures established by the Companies for
their respective senior executive officers) in the performance of his duties and
responsibilities under this agreement; provided, that the Executive shall
properly account for such expenses in accordance with the policies and
procedures of the Companies.
8. OTHER BENEFITS. During the term of this agreement, the Executive shall
be entitled to receive from the Companies all of the fringe benefits which
Pamida was providing or was obligated to provide to the Executive as of the date
of this agreement, including but not limited to (i) medical, hospital, dental,
disability, and life insurance plans and coverages, (ii) unreimbursed medical
expense reimbursement plans (Exec-U-Care), (iii) a cash automobile allowance up
to the annual amount set forth in Exhibit A to this agreement, (iv) professional
financial, tax, and estate planning services up to the annual amount set forth
in Exhibit A to this agreement, and (v) such other fringe benefits as may be
reflected in Exhibit A attached to this agreement. During the term of this
agreement, the Executive also shall be entitled to participate in such other
benefit plans or programs which the Companies from time to time may make
available either to their respective employees generally or to some or all of
their respective senior executive officers, such as but not limited to Pamida's
401(k) plan and Pamida's 1995 Deferred Compensation Plan.
9. VACATIONS AND HOLIDAYS. The Executive shall be entitled to paid
vacations and holidays in accordance with the policies of the Companies in
effect from time to time for their respective senior executive officers, but not
less than four (4) weeks of vacation during each fiscal year.
10. OTHER ACTIVITIES. The Executive shall devote substantially all of his
working time and efforts during the normal business hours of the Companies to
the business and affairs of the Companies and to the diligent and faithful
performance of the duties and responsibilities assigned to him pursuant to this
agreement, except for vacations, holidays, and sick days. However, the Executive
may devote a reasonable amount of his time to civic, community, or charitable
activities, to service on the governing bodies or committees of trade
associations of which either or both of the Companies are members, and, with the
prior approval of the Chief Executive Officer of the Companies, to service as a
director of other corporations and to other types of activities not expressly
mentioned in this paragraph, so long as the activities referred to in this
sentence do not materially interfere with the proper performance of the
Executive's duties and responsibilities under this agreement. The Executive also
shall be free to manage and invest his assets in such manner as will not require
any substantial services by the Executive in the conduct of the businesses or
affairs of the entities or in the management of the properties in which such
investments are made, so long as such activities do not materially interfere
with the proper performance of the Executive's duties and responsibilities under
this agreement.
11. TERMINATION.
(a) TERMINATION BECAUSE OF DEATH. The Executive's employment by the
Companies under this agreement shall terminate upon his death. If the
Executive's employment under this agreement terminates because of his death,
then the Executive's estate or his beneficiaries (as the case may be) shall be
entitled to receive the following compensation and benefits from the Companies:
(i) The Base Salary (as then may be applicable) through the date of
the Executive's death;
(ii) Continued payment of the Base Salary (as then may be applicable)
for a period of ninety (90) days after the date of the
Executive's death;
(iii)A pro rata portion of the Executive's annual incentive bonus for
the fiscal year in which his death occurs (computed as if the
Executive were employed by the Companies throughout such fiscal
year), based upon the number of days in such fiscal year elapsed
through the date of the Executive's death as a proportion of the
total number of days in such fiscal year, to be paid at the same
time that such incentive bonus would have been paid had the
Executive's death not occurred;
(iv) Any other amounts earned, accrued, or owed to the Executive under
this agreement but not paid as of the date of the Executive's
death; and
(v) Any other benefits payable by reason of the Executive's death
under any benefit plans or programs of the Companies in effect on
the date of the Executive's death.
(b) TERMINATION BECAUSE OF DISABILITY. If the Executive becomes incapable
by reason of physical injury, disease, or mental illness of substantially
performing his duties and responsibilities under this agreement for a continuous
period of six (6) months or more, then at any time after the elapse of such
six-month period and while such disability is continuing Holdings may terminate
the Executive's employment by the Companies under this agreement. If the
Executive's employment under this agreement is terminated by Holdings because of
such disability on the part of the Executive, then the Executive shall be
entitled to receive the following compensation and benefits from the Companies:
(i) The Base Salary (as then may be applicable) through the effective
date of such termination;
(ii) A pro rata portion of the Executive's annual incentive bonus for
the fiscal year of the Companies in which such termination occurs
(computed as if the Executive were employed by the Companies
throughout such fiscal year), based upon the number of days in
such fiscal year elapsed through the effective date of such
termination as a proportion of the total number of days in such
fiscal year, to be paid at the same time that such incentive
bonus would have been paid if such termination had not occurred;
(iii)Any other amounts earned, accrued, or owed to the Executive under
this agreement but not paid as of the effective date of such
termination;
(iv) Continued participation in the following benefit plans or
programs of the Companies which may be in effect from time to
time, to the extent that such continued participation by the
Executive is permitted under the terms and conditions of such
plans (unless such continued participation is restricted or
prohibited by applicable governmental regulations governing such
plans), until the first to occur of the cessation of such
disability, the Executive's death, the Executive's attainment of
age sixty-five (65), or (separately with respect to the
termination of each benefit) the provision of a substantially
equivalent benefit to the Executive by another employer of the
Executive:
(1) Group medical/hospital insurance, (2) Group dental insurance,
(3) Group life insurance, (4) Executive life insurance, (5) Group
long-term disability insurance, (6) Executive long-term
disability insurance, (7) Exec-U-Care medical expense
reimbursement insurance, (8) Professional financial, tax, and
estate planning services, (9) Automobile allowance, (10) Annual
physical examination, (11) Business club membership; and
(v) Any other benefits payable by reason of the Executive's
disability under any benefit plans or programs of the Companies
in effect on the effective date of such termination.
(c) TERMINATION FOR CAUSE. Holdings may terminate the Executive's
employment by the Companies under this agreement for cause; however, for
purposes of this agreement "cause" shall mean only (i) the Executive's
confession or conviction of theft, fraud, embezzlement, or any other crime
involving dishonesty with respect to the Companies or any parent, subsidiary, or
affiliate of the Companies, (ii) the Executive's excessive absenteeism (other
than by reason of physical injury, disease, or mental illness) without
reasonable cause, (iii) material violation by the Executive of the provisions of
Paragraph 13, (iv) habitual and material negligence by the Executive in the
performance of his duties and responsibilities under or pursuant to this
agreement and failure to cure such negligence within thirty (30) days after his
receipt of a written notice from the Board setting forth in reasonable detail
the particulars of such negligence, (v) material non-compliance by the Executive
with his obligations under Paragraph 10 and failure to correct such
non-compliance within thirty (30) days after his receipt of a written notice
from the Board setting forth in reasonable detail the particulars of such
non-compliance, or (vi) material failure by the Executive to comply with a
lawful directive of the Board and failure to cure such non-compliance within
thirty (30) days after his receipt of a written notice from the Board setting
forth in reasonable detail the particulars of such non-compliance. In no event
shall the results of the Companies' operations or any business judgment made in
good faith by the Executive constitute an independent basis for termination for
cause of the Executive's employment under this agreement. Any termination of the
Executive's employment for cause must be authorized by a majority vote of the
Board taken not later than twelve (12) months after a majority of the members of
the Board (other than the Executive) have actual knowledge of the occurrence of
the event or conduct constituting the cause for such termination. If the
Executive's employment under this agreement is terminated by Holdings for cause,
then the Executive shall be entitled to receive the following compensation and
benefits from the Companies:
(i) The Base Salary (as then may be applicable) through the effective
date of such termination;
(ii) A pro rata portion of the Executive's annual incentive bonus for
the fiscal year of the Companies in which such termination occurs
(computed as if the Executive were employed by the Companies
throughout such fiscal year), based upon the number of days in
such fiscal year elapsed through the effective date of such
termination as a proportion of the total number of days in such
fiscal year, to be paid at the same time that such incentive
bonus would have been paid if such termination had not occurred;
(iii)Any other amounts earned, accrued, or owed to the Executive under
this agreement but not paid as of the effective date of such
termination; and
(iv) Any other benefits payable to the Executive upon his termination
for cause under any benefit plans or programs of the Companies in
effect on the effective date of such termination.
(d) TERMINATION WITHOUT CAUSE PRIOR TO A SIGNIFICANT CORPORATE EVENT. If,
prior to the occurrence of a Significant Corporate Event, Holdings or Pamida
terminates the Executive's employment under this agreement for any reason other
than cause or the Executive's death or disability, then (without limiting any
other rights or claims which the Executive may have for breach of this agreement
by the Companies or otherwise) the Executive shall be entitled to receive the
following compensation, benefits, and other payments from the Companies:
(i) The Base Salary (as then may be applicable) through March 5,
2000, to be paid at the same times that the Base Salary (as then
may be applicable) would have been paid if such termination had
not occurred; provided, that if the Executive commences
employment with another employer, whether as an employee or as a
consultant, prior to March 5, 2000 (for purposes of this
subparagraph (d), the "Other Employment"), then such payments of
the Base Salary shall be reduced from time to time by the
aggregate amount of salary or consulting fees received or
receivable by the Executive from the Other Employment for
services performed by him during the period from the commencement
of the Other Employment through March 5, 2000, but in no event
shall the Executive be required to repay to the Companies any
portion of any payments made to the Executive pursuant to this
subparagraph (i) for any periods prior to the periods during
which the Executive earned such salary or consulting fees from
the Other Employment;
(ii) A pro rata portion of the Executive's annual incentive bonus for
the fiscal year of the Companies in which such termination occurs
(computed as if the Executive were employed by the Companies
throughout such fiscal year), based upon the number of days in
such fiscal year elapsed through the effective date of such
termination as a proportion of the total number of days in such
fiscal year, to be paid at the same time that such incentive
bonus would have been paid if such termination had not occurred;
(iii)Any other amounts earned, accrued, or owed to the Executive under
this agreement but not paid as of the effective date of such
termination;
(iv) Continued participation in the following benefit plans or
programs of the Companies which may be in effect from time to
time, to the extent that such continued participation by the
Executive is permitted under the terms and conditions of such
plans (unless such continued participation is restricted or
prohibited by applicable governmental regulations governing such
plans), until the first to occur of March 5, 2000, or (separately
with respect to the termination of each benefit) the provision of
a substantially equivalent benefit to the Executive by another
employer of the Executive:
(1) Group medical/hospital insurance, (2) Group dental insurance,
(3) Group life insurance, (4) Executive life insurance, (5) Group
long-term disability insurance, (6) Executive long-term
disability insurance, (7) Exec-U-Care medical expense
reimbursement insurance, (8) Professional financial, tax, and
estate planning services, (9) Automobile allowance, (10) Annual
physical examination, (11) Business club membership;
however, if continued participation by the Executive in any of
the foregoing benefit plans or programs of the Companies is not
permitted under the terms and conditions of any of such plans or
programs, then in lieu of continued participation in such plan or
program the Companies shall pay to the Executive in cash an
amount equal to the cost that the Companies would have incurred
with respect to the Executive if the Executive were permitted to
continue as a participant in such plan or program during the
applicable period; and the Companies agree not to unilaterally
take any action which would prevent the Executive from continuing
to participate in any of such plans or programs unless such
action similarly affects all other participants in such plans or
programs;
(v) An amount equal to the non-vested Employer Credits and Earnings
Credits under the Pamida, Inc. 1995 Deferred Compensation Plan
(the "Deferred Compensation Plan") which are forfeited by the
Executive as a result of such termination and which would not
have been forfeited by the Executive as of March 5, 2000, if his
employment by the Companies had not been terminated prior to
March 5, 2000, such amount to be paid on March 5, 2000;
(vi) An amount equal to the Employer Credits and Earnings Credits
under the Deferred Compensation Plan that would have been
credited to the Executive's Deferral Account under such Plan for
the period from the effective date of such termination through
March 5, 2000, and become vested as of March 5, 2000, if the
Executive's employment by the Companies had not been terminated
prior to March 5, 2000, and the Executive had deferred the same
percentage of his Base Salary during such period as he was
deferring pursuant to such Plan on the effective date of such
termination, such amount to be paid on March 5, 2000;
(vii)An amount equal to the Matching Contributions that would have
been made by the Companies under the Pamida, Inc. Savings Plus
Plan (401(k) plan) for the benefit of the Executive in respect of
the Basic Contributions to such Plan that would have been made by
the Companies on behalf of the Executive during the period from
the effective date of such termination through March 5, 2000, if
the Executive's employment by the Companies had not been
terminated prior to March 5, 2000, and the Companies had
contributed to such Plan on behalf of the Executive during such
period (pursuant to a compensation reduction agreement with the
Executive) the maximum Basic Contribution then permitted under
such Plan, such amount to be paid on March 5, 2000; and
(viii)Any other benefits payable to the Executive upon his termination
without cause under any benefit plans or programs of the
Companies in effect on the effective date of such termination,
except that the Executive shall not be entitled to any severance
pay or severance benefits unless such termination occurs after
March 5, 1999, in which latter case the effective date of the
Executive's termination shall be deemed to be the date on which
he received a Notice pursuant to Paragraph 12, and the provisions
of Paragraph 12 shall apply.
The Companies agree that they will not terminate the Executive's employment
under this agreement without cause solely for the purpose of avoiding the
obligations of the Companies to pay or provide any bonus or other compensation
or benefits to the Executive the payment or provision of which is conditioned
upon the Executive's continuing in the employ of the Companies for a particular
period of time. Notwithstanding the foregoing provisions of this subparagraph
(d), in the event of the Executive's death subsequent to the termination of his
employment for a reason other than cause or the Executive's disability and prior
to March 5, 2000, then (1) the compensation, benefits, and other payments to
which the Executive is entitled under this subparagraph (d) shall terminate
(and, when applicable, be computed) as of the date of the Executive's death and
(2) the Executive's estate or beneficiaries (as the case may be) shall be
entitled to receive any other benefits payable by reason of the Executive's
death under any benefit plans or programs of the Companies in effect and in
which the Executive was participating on the date of his death.
(e) CONSTRUCTIVE TERMINATION. If at any time during the term of this
agreement the Board materially alters the duties and responsibilities of the
Executive provided for in Paragraph 1 without the Executive's written consent,
then, at the election of the Executive (such election to be made by written
notice from the Executive to the Board), (i) such action by the Board shall
constitute a constructive termination of the Executive's employment by the
Companies without cause, (ii) the Executive may resign from his offices and
positions with the Companies and shall not be obligated to perform any further
services of any kind to or for the Companies, and (iii) the Executive shall be
entitled to receive from the Companies all of the compensation, benefits, and
other payments described in subparagraph (d) of this Paragraph 11 (as if the
effective date of the Executive's resignation were the effective date of his
termination for purposes of determining such compensation, benefits, and other
payments), subject to all of the provisions and conditions of such subparagraph
(d).
(f) TERMINATION WITHOUT CAUSE AFTER A SIGNIFICANT CORPORATE EVENT. If,
after the occurrence of a Significant Corporate Event, Holdings, Pamida, or any
Permitted Assignee of this agreement under Paragraph 16 terminates the
Executive's employment under this agreement for any reason other than cause or
the Executive's death or disability, then the Executive shall be entitled to
receive the following compensation, benefits, and other payments (without
duplication) from the Companies and the Permitted Assignee, if any (all of whom
shall be jointly and severally liable therefor):
(i) All of the compensation, benefits, and other payments from the
Companies which are described in subparagraph (d) of this
Paragraph 11, subject to the final sentence of such subparagraph
(d); and
(ii) An annual incentive bonus for each of the two (2) successive
twelve-month periods following the effective date of such
termination in an amount equal to the average amount of the
incentive bonuses received by the Executive from the Companies
for the three fiscal years of the Companies ending prior to the
fiscal year in which such termination occurs, such annual
incentive bonuses to be paid on the first and second
anniversaries of the effective date of such termination;
provided, that (1) if such termination occurs after March 5,
1998, and before March 6, 1999, then the annual bonus for the
second of such two twelve-month periods shall be prorated based
upon the number of days from the first anniversary of the
effective date of such termination through March 5, 2000, as a
proportion of 365, (2) if such termination occurs after March 5,
1999, and before March 6, 2000, then the annual bonus for the
first of such two twelve-month periods shall be prorated based
upon the number of days from the first anniversary of the
effective date of such termination through March 6, 2000, as a
proportion of 365, and no annual bonus shall be payable for the
second of such two twelve-month periods, (3) each such annual
bonus shall be reduced by any bonuses received or receivable by
the Executive from the Other Employment (if any) referred to in
subparagraph (d)(i) of this Paragraph 11 for services performed
by him during the twelve-month period corresponding to a
twelve-month period referred to in this subparagraph (ii); and
(4) in the event of the Executive's death during either of such
two twelve-month periods, any incentive bonus to which the
Executive would be entitled for the twelve-month period in which
his death occurred shall be prorated and paid to the Executive's
estate or beneficiaries (as the case may be) in the manner set
forth in subparagraph (a)(iii) of this Paragraph 11, and no
incentive bonus shall be payable for the subsequent twelve-month
period (if any).
The Executive agrees to accept the compensation, benefits, and other payments
provided for in this subparagraph (f) as full and complete liquidated damages
for any breach of this agreement resulting from the termination of the
Executive's employment under this agreement, after the occurrence of a
Significant Corporate Event, for a reason other than cause or the Executive's
death or disability; and the Executive shall not have any other rights or claims
in respect of such breach.
(g) NOTICE OF OTHER EMPLOYMENT AND OF BENEFITS. The Executive promptly
shall notify the Companies in writing of (i) his acceptance of the Other
Employment referred to in subparagraph (d) of this Paragraph 11, (ii) the
effective date of such Other Employment, and (iii) the amount of salary or
consulting fees and the amount of any bonuses which the Executive receives or is
entitled to receive from the Other Employment for services performed by him
during the period from the commencement of the Other Employment through March 5,
2000. Whenever relevant for purposes of this Paragraph 11, the Executive also
promptly shall notify the Companies of his receipt from another employer of any
benefits of the types referred to in subparagraphs (b)(iv) and (d)(iv) of this
Paragraph 11. Such information shall be updated by the Executive whenever
necessary to keep the Companies informed on a current basis.
12. NOTICE OF NONRENEWAL. If the Companies determine not to continue the
employment of the Executive after the expiration of the term of this agreement
at a base salary at least equal to the Base Salary which is in effect as of the
last day of the term of this agreement and with fringe benefits and an incentive
bonus program reasonably comparable to those in effect as of the last day of the
term of this agreement, then the Companies shall so notify the Executive in
writing (the "Notice") promptly after such determination has been made. If the
Executive receives the Notice at a time when there are less than twelve (12)
months left in the term of this agreement and if the Executive does not remain
in the employ of the Companies after the expiration of the term of this
agreement, then after the expiration of the term of this agreement the Executive
shall be entitled to receive the following payments and benefits from the
Companies:
(a) Continued payment of the Executive's Base Salary, at the annual rate in
effect on the last day of the term of this agreement, until that date (the
"Extended Payment Date") which is twelve (12) months after the date on
which the Executive received the Notice; provided, that such payments shall
be reduced by the aggregate amount of salary or consulting fees which the
Executive derives from employment with another employer (for purposes of
this Paragraph 12, the "Other Employment"), whether as an employee or as a
consultant, during the period from March 6, 2000, through the Extended
Payment Date (the "Extended Payment Period"). In no event, however, shall
the Executive be required to repay to the Companies any portion of any
payments made to the Executive pursuant to this subparagraph 12(a) for any
periods prior to the periods during which the Executive earned such salary
or consulting fees from the Other Employment.
(b) An incentive bonus in an amount equal to (i) the average amount of the
incentive bonuses received by the Executive from the Companies for the
three fiscal years of the Companies ended prior to March 5, 2000,
multiplied by (ii) a fraction whose numerator is the number of days in the
Extended Payment Period and whose denominator is 365, such incentive bonus
to be paid on the last day of the Extended Payment Period; provided, that
such incentive bonus shall be reduced by any bonuses received or receivable
by the Executive from the Other Employment (if any) for services performed
by him during the Extended Payment Period.
(c) Continued participation in the following benefit plans or programs of the
Companies which may be in effect from time to time, to the extent that
continued participation by the Executive is permitted under the terms and
conditions of such plans or programs (unless such continued participation
is restricted or prohibited by applicable governmental regulations
governing such plans or programs), until the first to occur of the
expiration of the Extended Payment Period or (separately with respect to
the termination of each benefit) the provision of a substantially
equivalent benefit to the Executive by another employer of the Executive:
(1) Group medical/hospital insurance, (2) Group dental insurance,
(3) Group life insurance, (4) Executive life insurance, (5) Group
long-term disability insurance, (6) Executive long-term
disability insurance, (7) Exec-U-Care medical expense
reimbursement insurance, (8) Professional financial, tax, and
estate planning services, (9) Automobile allowance, (10) Annual
physical examination, (11) Business club membership.
If continued participation by the Executive in any of the foregoing benefit
plans or programs of the Companies is not permitted under the terms and
conditions of any of such plans or programs, then in lieu of continued
participation in such plan or program the Companies shall pay to the Executive
in cash an amount equal to the cost that the Companies would have incurred with
respect to the Executive if the Executive were permitted to continue as a
participant in such plan or program during the applicable period. The Companies
agree not to unilaterally take any action which would prevent the Executive from
continuing to participate in any of such plans or programs unless such action
similarly affects all other participants in such plans or programs.
The Executive promptly shall notify the Companies of his acceptance of the Other
Employment and of the amount of compensation and benefits which the Executive
receives or is entitled to receive from the Other Employment during the Extended
Payment Period. In the event of the Executive's death prior to the end of the
Extended Payment Period, the payments and benefits provided for in this
Paragraph 12 shall cease and terminate as of the date of the Executive's death,
except as otherwise required by applicable law.
13. NONDISCLOSURE. During the term of this agreement and thereafter, the
Executive shall not, without the prior written consent of the Board or a person
(other than the Executive) so authorized by the Board, disclose or use for any
purpose (except in the course of his employment under this agreement and in
furtherance of the business of the Companies or any of their respective
subsidiaries) any confidential information or proprietary data of the Companies
or any of their respective subsidiaries; provided, however, that confidential
information shall not include any information then known generally to the public
or ascertainable from public or published information (other than as a result of
unauthorized disclosure by the Executive) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by the Companies or their respective
subsidiaries, as the case may be.
14. SUCCESSORS AND ASSIGNS. This agreement and all rights under this
agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees, successors,
and assigns. This agreement is personal in nature, and none of the parties to
this agreement shall, without the written consent of the others, assign or
transfer this agreement or any right or obligation under this agreement to any
other person or entity, except as permitted by Paragraph 16.
15. NOTICES. For purposes of this agreement, notices and other
communications provided for in this agreement shall be deemed to be properly
given if delivered personally or sent by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive: Frank A. Washburn
c/o Pamida, Inc.
8800 "F" Street
Omaha, Nebraska 68127
If to the Companies: Pamida, Inc. and Pamida
Holdings Corporation
Post Office Box 3856
Omaha, Nebraska 68103
Attn: Chief Executive Officer
or to such other address as either party may have furnished to the other party
in writing in accordance with this paragraph. Such notices or other
communications shall be effective only upon receipt.
16. MERGER, CONSOLIDATION, SALE OF ASSETS. In the event of (a) a merger of
Pamida with another corporation in a transaction in which Pamida is not the
surviving corporation, (b) the consolidation of Pamida into a new corporation
resulting from such consolidation, (c) the sale or other disposition of all or
substantially all of the assets of Pamida, the Companies may assign this
agreement and all of the rights and obligations of the Companies under this
agreement to the surviving, resulting, or acquiring entity (a "Permitted
Assignee"); provided, that such surviving, resulting, or acquiring entity shall
in writing assume and agree to perform all of the obligations of the Companies
under this agreement; and provided further, that the Companies shall remain
jointly and severally liable for the performance of their obligations under this
agreement in the event of a failure of the Permitted Assignee to perform its
obligations under this agreement.
17. SIGNIFICANT CORPORATE EVENT. For purposes of this agreement, a
"Significant Corporate Event" shall be deemed to have occurred upon the earlier
of (i) the happening of any of the following events or (ii) the first public
announcement of the anticipated happening of any of the following events: (a)
Holdings ceases to own a majority of the outstanding Voting Shares of Pamida
(unless such event results from the merger of Pamida into Holdings, with no
change in the ownership of the Voting Shares of Holdings), (b) Pamida is merged
or consolidated into a corporation other than Holdings, and at any time after
such merger or consolidation becomes effective Holdings does not own a majority
of the outstanding Voting Shares of the surviving or resulting corporation in
such merger or consolidation, (c) Holdings is merged or consolidated into
another corporation, and immediately after such merger or consolidation becomes
effective the holders of a majority of the outstanding Voting Shares of Holdings
immediately prior to the effectiveness of such merger or consolidation do not
own a majority of the outstanding Voting Shares of the surviving or resulting
corporation in such merger, (d) any person, entity, or group of persons within
the meaning of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934
(the "1934 Act") and the rules promulgated thereunder, other than 399 Venture
Partners, Inc. or any of its affiliates (as defined in Rule 12b-2 under the 1934
Act), becomes the beneficial owner (within the meaning of Rule 13d-3 of the 1934
Act) of thirty percent (30%) or more of the outstanding Voting Shares of
Holdings, or (e) the stockholders of Pamida vote (or act by written consent) to
dissolve Pamida or to sell or otherwise dispose of all or substantially all of
the property and assets of Pamida. For purposes of this Paragraph 17, "Voting
Shares" of a corporation means the outstanding shares of capital stock of such
corporation entitled to vote generally in the election of directors of such
corporation.
18. MISCELLANEOUS. No provision of this agreement may be modified, waived,
or discharged unless such waiver, modification, or discharge is agreed to in
writing and is signed by the Executive and an officer of Holdings (other than
the Executive) so authorized by the Board of Directors of Holdings. No waiver by
any party to this agreement at any time of any breach by any other party of, or
compliance by any other party with, any condition or provision of this agreement
to be performed by such other party shall be deemed to be a waiver of similar or
dissimilar provisions or conditions at the same or any prior or subsequent time.
No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter of this agreement have been made by any party that
are not expressly set forth in this agreement.
19. REPRESENTATIONS OF COMPANIES. The Companies severally represent and
warrant to the Executive that they have full legal power and authority to enter
into this agreement and that the performance of their respective obligations
under this agreement will not violate any agreement between the Companies, or
either of them, and any other person, firm, or organization.
20. NON-SOLICITATION OF EMPLOYEES. Until the later of (i) twelve (12)
months after the effective date of the termination of the Executive's employment
under this agreement or (ii) twelve (12) months after the last payment of Base
Salary to the Executive pursuant to Paragraph 11 or Paragraph 12 (as the case
may be), without the prior written consent of Holdings, the Executive agrees not
to employ, solicit for employment, assist any other person in employing or
soliciting for employment, or advise or recommend to any other person that such
other person employ or solicit for employment any person who then is, or during
any portion of the twelve (12) months prior to such employment or solicitation
for employment was, an employee of the Companies (or either of them) or any of
the Companies' respective subsidiaries.
21. JOINT AND SEVERAL OBLIGATIONS. All of the obligations of the Companies
under this agreement are joint and several; and neither the bankruptcy,
insolvency, dissolution, merger, consolidation, reorganization, nor cessation of
business or corporate existence of one of the Companies shall affect, impair, or
diminish the obligations under this agreement of the other of the Companies. The
compensation and benefits to which the Executive is entitled under this
agreement are aggregate compensation and benefits, and the payment of such
compensation or the provision of such benefits by one of the Companies shall to
the extent of such payment or provision satisfy the obligations of the other of
the Companies. The Companies may agree between themselves as to which of them
will be responsible for some or all of the Executive's compensation and benefits
under this agreement, but any such agreement between the Companies shall not
diminish to any extent the joint and several liability of the Companies to the
Executive for all of such compensation and benefits.
22. TERMINATION OF PRIOR AGREEMENT. The Retention and Confidentiality
Agreement dated January 12, 1995, between the Executive and Pamida, as amended
on February 21, 1996, hereby is terminated, effective as of the date of this
agreement.
23. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this agreement shall not affect the validity or enforceability of
any other provision of this agreement, which other provision shall remain in
full force and effect; nor shall the invalidity or unenforceability of a portion
of any provision of this agreement affect the validity or enforceability of the
balance of such provision.
24. COUNTERPARTS. This document may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
25. HEADINGS. The headings of the paragraphs contained in this document are
for reference purposes only and shall not in any way affect the meaning or
interpretation of any provision of this agreement.
26. APPLICABLE LAW. This agreement shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of Nebraska.
IN WITNESS WHEREOF, the Companies and the Executive have executed this
agreement on the day and year first above written.
PAMIDA HOLDINGS CORPORATION, a
Delaware corporation
By: /S/ STEVEN S. FISHMAN
Steven S. Fishman, Chairman of the
Board and Chief Executive Officer
PAMIDA, INC., a Delaware corporation
By: /S/ STEVEN S. FISHMAN
Steven S. Fishman, Chairman of the
Board and Chief Executive Officer
/S/ FRANK A. WASHBURN
Frank A. Washburn
<TABLE>
<CAPTION>
Attachment to Exhibit 10.30 - Executive Bonus Matrix
Bonus as % of Pay - FYE98 - Washburn
Comp store sales increase
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EBITDA <3% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
=========================================================================================
<42 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------
42 29.750% 42.500% 43.250% 44.000% 44.750% 49.750% 54.750% 59.750%
- -----------------------------------------------------------------------------------------
43 30.625% 43.375% 44.125% 44.875% 45.625% 50.625% 55.625% 60.625%
- -----------------------------------------------------------------------------------------
44 31.500% 44.250% 45.000% 45.750% 46.500% 51.500% 56.500% 61.500%
- -----------------------------------------------------------------------------------------
45 32.375% 45.125% 45.875% 46.625% 47.375% 52.375% 57.375% 62.375%
- -----------------------------------------------------------------------------------------
46 33.250% 46.000% 46.750% 47.500% 48.250% 53.250% 58.250% 63.250%
- -----------------------------------------------------------------------------------------
47 34.125% 46.875% 47.625% 48.375% 49.125% 54.125% 59.125% 64.125%
- -----------------------------------------------------------------------------------------
48 35.000% 47.750% 48.500% 49.250% 50.000% 55.000% 60.000% 65.000%
- -----------------------------------------------------------------------------------------
49 40.000% 52.750% 53.500% 54.250% 55.000% 60.000% 65.000% 70.000%
- -----------------------------------------------------------------------------------------
50 50.000% 62.750% 63.500% 64.250% 65.000% 70.000% 75.000% 80.000%
- -----------------------------------------------------------------------------------------
51 65.000% 77.750% 78.500% 79.250% 80.000% 85.000% 90.000% 95.000%
- -----------------------------------------------------------------------------------------
52 80.000% 92.750% 93.500% 94.250% 95.000% 100.000% 105.000% 110.000%
=========================================================================================
</TABLE>
EXHIBIT A
"OTHER BENEFITS" RELATED TO
EMPLOYMENT AGREEMENT DATED MARCH 6, 1997
AMONG PAMIDA HOLDINGS CORPORATION
AND FRANK A. WASHBURN, EXECUTIVE VICE PRESIDENT
Company paid Exec-U-Care insurance
Company paid life insurance - $500,000
Financial, legal counseling services - up to $10,000 annually
Company car - up to $12,000 allowance
Annual physical examination
Car phone
Use of company plane
Interest free loans - up to $50,000 approved by Chairman
Spousal travel - where appropriate and approved
Minimum vacation accrual * - 4 weeks
Athletic/Recreational membership
Supplemental disability insurance
Deferred compensation
*The greater of general employee vacation schedule or this list will be granted
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of the 6th day of
March, 1997, among PAMIDA HOLDINGS CORPORATION ("Holdings"), a Delaware
corporation, PAMIDA, INC. ("Pamida"), a Delaware corporation, and GEORGE R.
MIHALKO (the "Executive"). Holdings and Pamida collectively are referred to in
this Employment Agreement as the "Companies".
* * *
WHEREAS, Pamida is a wholly-owned subsidiary of Holdings; and
WHEREAS, the Executive currently is employed by Pamida and serves as Senior
Vice President and Chief Financial Officer of both Holdings and Pamida; and
WHEREAS, the Executive is actively involved in all aspects of the financial
management of the Companies; and
WHEREAS, the Companies desire to provide for the continued services of the
Executive; and
WHEREAS, the Companies desire concurrently to retain and employ the
Executive as Senior Vice President and Chief Financial Officer for an extended
period of time; and
WHEREAS, the Executive desires to accept such concurrent and extended
employment;
NOW, THEREFORE, in consideration of the foregoing recitals and the
respective covenants and agreements of the parties contained in this document,
the Companies and the Executive agree as follows:
1. EMPLOYMENT AND DUTIES. Each of the Companies hereby employs the
Executive as Senior Vice President and Chief Financial Officer throughout the
term of this agreement and agrees to cause the Executive from time to time to be
elected or appointed to such corporate offices (or such other more senior
corporate offices as the Boards of Directors of the Companies may specify) or
positions. The duties and responsibilities of the Executive shall include the
duties and responsibilities of the Executive's corporate offices and positions
referred to above which are set forth in the respective bylaws of the Companies
from time to time, responsibility for the financial management of the Companies
(subject to the direction of the Chief Executive Officer of the Companies), and
such other duties and responsibilities consistent with the Executive's corporate
offices and positions referred to above and this agreement which the Board of
Directors of Holdings (the "Board") or the Chief Executive Officer of the
Companies from time to time may assign to the Executive. If the Executive is
elected or appointed as a director of Pamida or Holdings or as an officer or
director of any of the respective subsidiaries of the Companies during the term
of this agreement, then he also shall serve in such capacity or capacities but
without additional compensation.
2. TERM. The term of this agreement shall begin on the date of this
agreement and shall continue thereafter through March 5, 2000, unless sooner
terminated in accordance with this agreement.
3. PLACE OF EMPLOYMENT. The executive offices of the Companies shall be
located in Omaha, Nebraska, during the term of this agreement, and the Executive
will not be required to relocate or transfer his principal residence from the
immediate vicinity of Omaha, Nebraska.
4. BASE SALARY. For all services to be rendered by the Executive pursuant
to this agreement, the Companies agree to pay the Executive a base salary at an
annual rate of Two Hundred Ten Thousand Dollars ($210,000.00) during the term of
this agreement (the "Base Salary"). The Base Salary shall be paid in periodic
installments in accordance with the Companies' regular payroll practices. The
Board or the Compensation Committee of the Board shall review the Base Salary at
least annually as of the payroll payment date nearest to May 1 (beginning in
1998); and the Companies agree to make such increases in the Base Salary as the
Board may approve from time to time. Once established at a specific increased
annual rate, the Base Salary thereafter may not be reduced by the Companies
without the Executive's written consent.
5. INCENTIVE BONUS FOR FISCAL 1998. In addition to the Executive's Base
Salary and any other benefits to which the Executive is entitled under this
agreement but subject to all of the provisions of this paragraph, the Executive
also shall be entitled to receive an incentive bonus (the "Incentive Bonus")
from the Companies for the fiscal year of Holdings ending February 1, 1998
("Fiscal 1998"), in accordance with the following provisions of this paragraph:
(a) If the consolidated earnings of Holdings and its subsidiaries (on a
first-in, first-out basis with respect to merchandise inventories) before
interest, taxes, depreciation, and amortization for Fiscal 1998 (the
"EBITDA") are less than $42,000,000, then the Executive shall not be
entitled to any incentive bonus for Fiscal 1998.
(b) If the EBITDA equals or exceeds $42,000,000, then the Executive's incentive
bonus for Fiscal 1998 shall be determined as a percentage of the
Executive's base salary from the matrix attached to this agreement taking
into account (i) the EBITDA and (ii) the percentage increase in the
comparable store sales of Pamida for Fiscal 1998 compared with the fiscal
year ended February 2, 1997. Comparable store sales percentage increases
shall be determined in accordance with Pamida's historical practices.
(c) For purposes of such matrix, comparable store sales percentage increases of
more than 9% shall be treated as increases of 9%, and EBITDA of more than
$52,000,000 shall be treated as EBITDA of $52,000,000.
(d) For purposes of applying such matrix, the Executive's base salary shall be
the Executive's base salary in effect on February 1, 1998.
(e) The maximum incentive bonus that the Executive shall have the opportunity
to earn for Fiscal 1998 is 57.5% of the Executive's applicable base salary.
(f) EBITDA amounts between whole millions of dollars and comparable store sales
percentage increases between whole percentages shall be interpolated on a
straight-line basis for purposes of applying such matrix.
(g) Solely by way of illustration of the application of such matrix, if the
EBITDA is $44,250,000 and the comparable store sales percentage increase
for Fiscal 1998 is 4.6%, then the Executive's incentive bonus for Fiscal
1998 would be 19.5% of the Executive's applicable base salary.
The Executive's incentive bonus for Fiscal 1998 (if any) shall be paid to the
Executive as soon as practicable after Holdings has received the final audit
report with respect to Fiscal 1998 from its independent accountants.
6. INCENTIVE BONUS FOR LATER FISCAL YEARS. In addition to the Executive's
Base Salary and any other benefits to which the Executive is entitled under this
agreement but subject to all of the provisions of this paragraph, the Executive
also shall be entitled to earn an incentive bonus from the Companies for the
fiscal years of Holdings ending in 1999, 2000, and 2001. On or before December
31, 1997, 1998, and 1999, the Executive and the Board shall agree upon an
incentive bonus program for the Executive for the fiscal years of Holdings
ending in 1999, 2000, and 2001, respectively. Each such incentive bonus program
shall be reflected in a written amendment to this agreement. The Executive and
the Companies understand and acknowledge that, among other things, such annual
incentive bonus programs will involve the achievement by the Companies of
various financial objectives, which may include but are not limited to sales and
earnings, and also may include the achievement by the Companies of various
non-financial objectives.
7. EXPENSES. During the term of this agreement, the Executive shall be
entitled to prompt reimbursement by the Companies of all reasonable ordinary and
necessary travel, entertainment, and other expenses incurred by the Executive
(in accordance with the policies and procedures established by the Companies for
their respective senior executive officers) in the performance of his duties and
responsibilities under this agreement; provided, that the Executive shall
properly account for such expenses in accordance with the policies and
procedures of the Companies.
8. OTHER BENEFITS. During the term of this agreement, the Executive shall
be entitled to receive from the Companies all of the fringe benefits which
Pamida was providing or was obligated to provide to the Executive as of the date
of this agreement, including but not limited to (i) medical, hospital, dental,
disability, and life insurance plans and coverages, (ii) unreimbursed medical
expense reimbursement plans (Exec-U-Care), (iii) a cash automobile allowance up
to the annual amount set forth in Exhibit A to this agreement, (iv) professional
financial, tax, and estate planning services up to the annual amount set forth
in Exhibit A to this agreement, and (v) such other fringe benefits as may be
reflected in Exhibit A attached to this agreement. During the term of this
agreement, the Executive also shall be entitled to participate in such other
benefit plans or programs which the Companies from time to time may make
available either to their respective employees generally or to some or all of
their respective senior executive officers, such as but not limited to Pamida's
401(k) plan and Pamida's 1995 Deferred Compensation Plan.
9. VACATIONS AND HOLIDAYS. The Executive shall be entitled to paid
vacations and holidays in accordance with the policies of the Companies in
effect from time to time for their respective senior executive officers, but not
less than four (4) weeks of vacation during each fiscal year.
10. OTHER ACTIVITIES. The Executive shall devote substantially all of his
working time and efforts during the normal business hours of the Companies to
the business and affairs of the Companies and to the diligent and faithful
performance of the duties and responsibilities assigned to him pursuant to this
agreement, except for vacations, holidays, and sick days. However, the Executive
may devote a reasonable amount of his time to civic, community, or charitable
activities, to service on the governing bodies or committees of trade
associations of which either or both of the Companies are members, and, with the
prior approval of the Chief Executive Officer of the Companies, to service as a
director of other corporations and to other types of activities not expressly
mentioned in this paragraph, so long as the activities referred to in this
sentence do not materially interfere with the proper performance of the
Executive's duties and responsibilities under this agreement. The Executive also
shall be free to manage and invest his assets in such manner as will not require
any substantial services by the Executive in the conduct of the businesses or
affairs of the entities or in the management of the properties in which such
investments are made, so long as such activities do not materially interfere
with the proper performance of the Executive's duties and responsibilities under
this agreement.
11. TERMINATION.
(a) TERMINATION BECAUSE OF DEATH. The Executive's employment by the
Companies under this agreement shall terminate upon his death. If the
Executive's employment under this agreement terminates because of his death,
then the Executive's estate or his beneficiaries (as the case may be) shall be
entitled to receive the following compensation and benefits from the Companies:
(i) The Base Salary (as then may be applicable) through the date of
the Executive's death;
(ii) A pro rata portion of the Executive's annual incentive bonus for
the fiscal year in which his death occurs (computed as if the
Executive were employed by the Companies throughout such fiscal
year), based upon the number of days in such fiscal year elapsed
through the date of the Executive's death as a proportion of the
total number of days in such fiscal year, to be paid at the same
time that such incentive bonus would have been paid had the
Executive's death not occurred;
(iii)Any other amounts earned, accrued, or owed to the Executive under
this agreement but not paid as of the date of the Executive's
death; and
(iv) Any other benefits payable by reason of the Executive's death
under any benefit plans or programs of the Companies in effect on
the date of the Executive's death.
(b) TERMINATION BECAUSE OF DISABILITY. If the Executive becomes incapable
by reason of physical injury, disease, or mental illness of substantially
performing his duties and responsibilities under this agreement for a continuous
period of six (6) months or more, then at any time after the elapse of such
six-month period and while such disability is continuing Holdings may terminate
the Executive's employment by the Companies under this agreement. If the
Executive's employment under this agreement is terminated by Holdings because of
such disability on the part of the Executive, then the Executive shall be
entitled to receive the following compensation and benefits from the Companies:
(i) The Base Salary (as then may be applicable) through the effective
date of such termination;
(ii) A pro rata portion of the Executive's annual incentive bonus for
the fiscal year of the Companies in which such termination occurs
(computed as if the Executive were employed by the Companies
throughout such fiscal year), based upon the number of days in
such fiscal year elapsed through the effective date of such
termination as a proportion of the total number of days in such
fiscal year, to be paid at the same time that such incentive
bonus would have been paid if such termination had not occurred;
(iii)Any other amounts earned, accrued, or owed to the Executive under
this agreement but not paid as of the effective date of such
termination; and
(iv) Any other benefits payable by reason of the Executive's
disability under any benefit plans or programs of the Companies
in effect on the effective date of such termination.
(c) TERMINATION FOR CAUSE. Holdings may terminate the Executive's
employment by the Companies under this agreement for cause; however, for
purposes of this agreement "cause" shall mean only (i) the Executive's
confession or conviction of theft, fraud, embezzlement, or any other crime
involving dishonesty with respect to the Companies or any parent, subsidiary, or
affiliate of the Companies, (ii) the Executive's excessive absenteeism (other
than by reason of physical injury, disease, or mental illness) without
reasonable cause, (iii) material violation by the Executive of the provisions of
Paragraph 13, (iv) habitual and material negligence by the Executive in the
performance of his duties and responsibilities under or pursuant to this
agreement and failure to cure such negligence within thirty (30) days after his
receipt of a written notice from the Board setting forth in reasonable detail
the particulars of such negligence, (v) material non-compliance by the Executive
with his obligations under Paragraph 10 and failure to correct such
non-compliance within thirty (30) days after his receipt of a written notice
from the Board setting forth in reasonable detail the particulars of such
non-compliance, or (vi) material failure by the Executive to comply with a
lawful directive of the Board and failure to cure such non-compliance within
thirty (30) days after his receipt of a written notice from the Board setting
forth in reasonable detail the particulars of such non-compliance. In no event
shall the results of the Companies' operations or any business judgment made in
good faith by the Executive constitute an independent basis for termination for
cause of the Executive's employment under this agreement. Any termination of the
Executive's employment for cause must be authorized by a majority vote of the
Board taken not later than twelve (12) months after a majority of the members of
the Board (other than the Executive) have actual knowledge of the occurrence of
the event or conduct constituting the cause for such termination. If the
Executive's employment under this agreement is terminated by Holdings for cause,
then the Executive shall be entitled to receive the following compensation and
benefits from the Companies:
(i) The Base Salary (as then may be applicable) through the effective
date of such termination;
(ii) Any other amounts earned, accrued, or owed to the Executive under
this agreement but not paid as of the effective date of such
termination; and
(iii)Any other benefits payable to the Executive upon his termination
for cause under any benefit plans or programs of the Companies in
effect on the effective date of such termination.
(d) TERMINATION WITHOUT CAUSE PRIOR TO A SIGNIFICANT CORPORATE Event. If,
prior to the occurrence of a Significant Corporate Event, Holdings or Pamida
terminates the Executive's employment under this agreement for any reason other
than cause or the Executive's death or disability, then (without limiting any
other rights or claims which the Executive may have for breach of this agreement
by the Companies or otherwise) the Executive shall be entitled to receive the
following compensation, benefits, and other payments from the Companies:
(i) The Base Salary (as then may be applicable) through March 5,
2000, to be paid at the same times that the Base Salary (as then
may be applicable) would have been paid if such termination had
not occurred; provided, that if the Executive commences
employment with another employer, whether as an employee or as a
consultant, prior to March 5, 2000 (for purposes of this
subparagraph (d), the "Other Employment"), then such payments of
the Base Salary shall be reduced from time to time by the
aggregate amount of salary or consulting fees received or
receivable by the Executive from the Other Employment for
services performed by him during the period from the commencement
of the Other Employment through March 5, 2000, but in no event
shall the Executive be required to repay to the Companies any
portion of any payments made to the Executive pursuant to this
subparagraph (i) for any periods prior to the periods during
which the Executive earned such salary or consulting fees from
the Other Employment;
(ii) A pro rata portion of the Executive's annual incentive bonus for
the fiscal year of the Companies in which such termination occurs
(computed as if the Executive were employed by the Companies
throughout such fiscal year), based upon the number of days in
such fiscal year elapsed through the effective date of such
termination as a proportion of the total number of days in such
fiscal year, to be paid at the same time that such incentive
bonus would have been paid if such termination had not occurred;
(iii)Any other amounts earned, accrued, or owed to the Executive under
this agreement but not paid as of the effective date of such
termination;
(iv) Continued participation in the following benefit plans or
programs of the Companies which may be in effect from time to
time, to the extent that such continued participation by the
Executive is permitted under the terms and conditions of such
plans (unless such continued participation is restricted or
prohibited by applicable governmental regulations governing such
plans), until the first to occur of March 5, 2000, or (separately
with respect to the termination of each benefit) the provision of
a substantially equivalent benefit to the Executive by another
employer of the Executive:
(1) Group medical/hospital insurance, (2) Group dental insurance,
(3) Group life insurance, (4) Executive life insurance, (5) Group
long-term disability insurance, (6) Exec-U-Care medical expense
reimbursement insurance, (7) Professional financial, tax, and
estate planning services, (8) Automobile allowance, (9) Annual
physical examination;
however, if continued participation by the Executive in any of
the foregoing benefit plans or programs of the Companies is not
permitted under the terms and conditions of any of such plans or
programs, then in lieu of continued participation in such plan or
program the Companies shall pay to the Executive in cash an
amount equal to the cost that the Companies would have incurred
with respect to the Executive if the Executive were permitted to
continue as a participant in such plan or program during the
applicable period; and the Companies agree not to unilaterally
take any action which would prevent the Executive from continuing
to participate in any of such plans or programs unless such
action similarly affects all other participants in such plans or
programs; and
(v) Any other benefits payable to the Executive upon his termination
without cause under any benefit plans or programs of the
Companies in effect on the effective date of such termination,
except that the Executive shall not be entitled to any severance
pay or severance benefits unless such termination occurs after
March 5, 1999, in which latter case the effective date of the
Executive's termination shall be deemed to be the date on which
he received a Notice pursuant to Paragraph 12, and the provisions
of Paragraph 12 shall apply.
The Companies agree that they will not terminate the Executive's employment
under this agreement without cause solely for the purpose of avoiding the
obligations of the Companies to pay or provide any bonus or other compensation
or benefits to the Executive the payment or provision of which is conditioned
upon the Executive's continuing in the employ of the Companies for a particular
period of time. Notwithstanding the foregoing provisions of this subparagraph
(d), in the event of the Executive's death subsequent to the termination of his
employment for a reason other than cause or the Executive's disability and prior
to March 5, 2000, then (1) the compensation, benefits, and other payments to
which the Executive is entitled under this subparagraph (d) shall terminate
(and, when applicable, be computed) as of the date of the Executive's death and
(2) the Executive's estate or beneficiaries (as the case may be) shall be
entitled to receive any other benefits payable by reason of the Executive's
death under any benefit plans or programs of the Companies in effect and in
which the Executive was participating on the date of his death.
(e) CONSTRUCTIVE TERMINATION. If at any time during the term of this
agreement the Board materially alters the duties and responsibilities of the
Executive provided for in Paragraph 1 without the Executive's written consent,
then, at the election of the Executive (such election to be made by written
notice from the Executive to the Board), (i) such action by the Board shall
constitute a constructive termination of the Executive's employment by the
Companies without cause, (ii) the Executive may resign from his offices and
positions with the Companies and shall not be obligated to perform any further
services of any kind to or for the Companies, and (iii) the Executive shall be
entitled to receive from the Companies all of the compensation, benefits, and
other payments described in subparagraph (d) of this Paragraph 11 (as if the
effective date of the Executive's resignation were the effective date of his
termination for purposes of determining such compensation, benefits, and other
payments), subject to all of the provisions and conditions of such subparagraph
(d).
(f) TERMINATION WITHOUT CAUSE AFTER A SIGNIFICANT CORPORATE EVENT. If,
after the occurrence of a Significant Corporate Event, Holdings, Pamida, or any
Permitted Assignee of this agreement under Paragraph 16 terminates the
Executive's employment under this agreement for any reason other than cause or
the Executive's death or disability, then the Executive shall be entitled to
receive the following compensation, benefits, and other payments (without
duplication) from the Companies and the Permitted Assignee, if any (all of whom
shall be jointly and severally liable therefor):
(i) All of the compensation, benefits, and other payments from the
Companies which are described in subparagraph (d) of this
Paragraph 11, subject to the final sentence of such subparagraph
(d); and
(ii) An annual incentive bonus for each of the two (2) successive
twelve-month periods following the effective date of such
termination in an amount equal to the average amount of the
incentive bonuses received by the Executive from the Companies
for the three fiscal years of the Companies ending prior to the
fiscal year in which such termination occurs, such annual
incentive bonuses to be paid on the first and second
anniversaries of the effective date of such termination;
provided, that (1) if such termination occurs after March 5,
1998, and before March 6, 1999, then the annual bonus for the
second of such two twelve-month periods shall be prorated based
upon the number of days from the first anniversary of the
effective date of such termination through March 5, 2000, as a
proportion of 365, (2) if such termination occurs after March 5,
1999, and before March 6, 2000, then the annual bonus for the
first of such two twelve-month periods shall be prorated based
upon the number of days from the first anniversary of the
effective date of such termination through March 6, 2000, as a
proportion of 365, and no annual bonus shall be payable for the
second of such two twelve-month periods, (3) each such annual
bonus shall be reduced by any bonuses received or receivable by
the Executive from the Other Employment (if any) referred to in
subparagraph (d)(i) of this Paragraph 11 for services performed
by him during the twelve-month period corresponding to a
twelve-month period referred to in this subparagraph (ii); and
(4) in the event of the Executive's death during either of such
two twelve-month periods, any incentive bonus to which the
Executive would be entitled for the twelve-month period in which
his death occurred shall be prorated and paid to the Executive's
estate or beneficiaries (as the case may be) in the manner set
forth in subparagraph (a)(iii) of this Paragraph 11, and no
incentive bonus shall be payable for the subsequent twelve-month
period (if any).
The Executive agrees to accept the compensation, benefits, and other payments
provided for in this subparagraph (f) as full and complete liquidated damages
for any breach of this agreement resulting from the termination of the
Executive's employment under this agreement, after the occurrence of a
Significant Corporate Event, for a reason other than cause or the Executive's
death or disability; and the Executive shall not have any other rights or claims
in respect of such breach.
(g) NOTICE OF OTHER EMPLOYMENT AND OF BENEFITS. The Executive promptly
shall notify the Companies in writing of (i) his acceptance of the Other
Employment referred to in subparagraph (d) of this Paragraph 11, (ii) the
effective date of such Other Employment, and (iii) the amount of salary or
consulting fees and the amount of any bonuses which the Executive receives or is
entitled to receive from the Other Employment for services performed by him
during the period from the commencement of the Other Employment through March 5,
2000. Whenever relevant for purposes of this Paragraph 11, the Executive also
promptly shall notify the Companies of his receipt from another employer of any
benefits of the types referred to in subparagraph (d)(iv) of this Paragraph 11.
Such information shall be updated by the Executive whenever necessary to keep
the Companies informed on a current basis.
12. NOTICE OF NONRENEWAL. If the Companies determine not to continue the
employment of the Executive after the expiration of the term of this agreement
at a base salary at least equal to the Base Salary which is in effect as of the
last day of the term of this agreement and with fringe benefits and an incentive
bonus program reasonably comparable to those in effect as of the last day of the
term of this agreement, then the Companies shall so notify the Executive in
writing (the "Notice") promptly after such determination has been made. If the
Executive receives the Notice at a time when there are less than twelve (12)
months left in the term of this agreement and if the Executive does not remain
in the employ of the Companies after the expiration of the term of this
agreement, then after the expiration of the term of this agreement the Executive
shall be entitled to receive the following payments and benefits from the
Companies:
(a) Continued payment of the Executive's Base Salary, at the annual rate in
effect on the last day of the term of this agreement, until that date (the
"Extended Payment Date") which is twelve (12) months after the date on
which the Executive received the Notice; provided, that such payments shall
be reduced by the aggregate amount of salary or consulting fees which the
Executive derives from employment with another employer (for purposes of
this Paragraph 12, the "Other Employment"), whether as an employee or as a
consultant, during the period from March 6, 2000, through the Extended
Payment Date (the "Extended Payment Period"). In no event, however, shall
the Executive be required to repay to the Companies any portion of any
payments made to the Executive pursuant to this subparagraph 12(a) for any
periods prior to the periods during which the Executive earned such salary
or consulting fees from the Other Employment.
(b) Continued participation in the following benefit plans or programs of the
Companies which may be in effect from time to time, to the extent that
continued participation by the Executive is permitted under the terms and
conditions of such plans or programs (unless such continued participation
is restricted or prohibited by applicable governmental regulations
governing such plans or programs), until the first to occur of the
expiration of the Extended Payment Period or (separately with respect to
the termination of each benefit) the provision of a substantially
equivalent benefit to the Executive by another employer of the Executive:
(1) Group medical/hospital insurance, (2) Group dental insurance,
(3) Group life insurance, (4) Executive life insurance, (5) Group
long-term disability insurance, (6) Exec-U-Care medical expense
reimbursement insurance, (7) Professional financial, tax, and
estate planning services, (8) Automobile allowance, (9) Annual
physical examination.
If continued participation by the Executive in any of the
foregoing benefit plans or programs of the Companies is not
permitted under the terms and conditions of any of such plans or
programs, then in lieu of continued participation in such plan or
program the Companies shall pay to the Executive in cash an
amount equal to the cost that the Companies would have incurred
with respect to the Executive if the Executive were permitted to
continue as a participant in such plan or program during the
applicable period. The Companies agree not to unilaterally take
any action which would prevent the Executive from continuing to
participate in any of such plans or programs unless such action
similarly affects all other participants in such plans or
programs.
The Executive promptly shall notify the Companies of his acceptance of the Other
Employment and of the amount of compensation and benefits which the Executive
receives or is entitled to receive from the Other Employment during the Extended
Payment Period. In the event of the Executive's death prior to the end of the
Extended Payment Period, the payments and benefits provided for in this
Paragraph 12 shall cease and terminate as of the date of the Executive's death,
except as otherwise required by applicable law.
13. NONDISCLOSURE. During the term of this agreement and thereafter, the
Executive shall not, without the prior written consent of the Board or a person
(other than the Executive) so authorized by the Board, disclose or use for any
purpose (except in the course of his employment under this agreement and in
furtherance of the business of the Companies or any of their respective
subsidiaries) any confidential information or proprietary data of the Companies
or any of their respective subsidiaries; provided, however, that confidential
information shall not include any information then known generally to the public
or ascertainable from public or published information (other than as a result of
unauthorized disclosure by the Executive) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by the Companies or their respective
subsidiaries, as the case may be.
14. SUCCESSORS AND ASSIGNS. This agreement and all rights under this
agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees, successors,
and assigns. This agreement is personal in nature, and none of the parties to
this agreement shall, without the written consent of the others, assign or
transfer this agreement or any right or obligation under this agreement to any
other person or entity, except as permitted by Paragraph 16.
15. NOTICES. For purposes of this agreement, notices and other
communications provided for in this agreement shall be deemed to be properly
given if delivered personally or sent by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive: George R. Mihalko
c/o Pamida, Inc.
8800 "F" Street
Omaha, Nebraska 68127
If to the Companies: Pamida, Inc. and Pamida
Holdings Corporation
Post Office Box 3856
Omaha, Nebraska 68103
Attn: Chief Executive Officer
or to such other address as either party may have furnished to the other party
in writing in accordance with this paragraph. Such notices or other
communications shall be effective only upon receipt.
16. MERGER, CONSOLIDATION, SALE OF ASSETS. In the event of (a) a merger of
Pamida with another corporation in a transaction in which Pamida is not the
surviving corporation, (b) the consolidation of Pamida into a new corporation
resulting from such consolidation, (c) the sale or other disposition of all or
substantially all of the assets of Pamida, the Companies may assign this
agreement and all of the rights and obligations of the Companies under this
agreement to the surviving, resulting, or acquiring entity (a "Permitted
Assignee"); provided, that such surviving, resulting, or acquiring entity shall
in writing assume and agree to perform all of the obligations of the Companies
under this agreement; and provided further, that the Companies shall remain
jointly and severally liable for the performance of their obligations under this
agreement in the event of a failure of the Permitted Assignee to perform its
obligations under this agreement.
17. SIGNIFICANT CORPORATE EVENT. For purposes of this agreement, a
"Significant Corporate Event" shall be deemed to have occurred upon the earlier
of (i) the happening of any of the following events or (ii) the first public
announcement of the anticipated happening of any of the following events: (a)
Holdings ceases to own a majority of the outstanding Voting Shares of Pamida
(unless such event results from the merger of Pamida into Holdings, with no
change in the ownership of the Voting Shares of Holdings), (b) Pamida is merged
or consolidated into a corporation other than Holdings, and at any time after
such merger or consolidation becomes effective Holdings does not own a majority
of the outstanding Voting Shares of the surviving or resulting corporation in
such merger or consolidation, (c) Holdings is merged or consolidated into
another corporation, and immediately after such merger or consolidation becomes
effective the holders of a majority of the outstanding Voting Shares of Holdings
immediately prior to the effectiveness of such merger or consolidation do not
own a majority of the outstanding Voting Shares of the surviving or resulting
corporation in such merger, (d) any person, entity, or group of persons within
the meaning of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934
(the "1934 Act") and the rules promulgated thereunder, other than 399 Venture
Partners, Inc. or any of its affiliates (as defined in Rule 12b-2 under the 1934
Act), becomes the beneficial owner (within the meaning of Rule 13d-3 of the 1934
Act) of thirty percent (30%) or more of the outstanding Voting Shares of
Holdings, or (e) the stockholders of Pamida vote (or act by written consent) to
dissolve Pamida or to sell or otherwise dispose of all or substantially all of
the property and assets of Pamida. For purposes of this Paragraph 17, "Voting
Shares" of a corporation means the outstanding shares of capital stock of such
corporation entitled to vote generally in the election of directors of such
corporation.
18. MISCELLANEOUS. No provision of this agreement may be modified, waived,
or discharged unless such waiver, modification, or discharge is agreed to in
writing and is signed by the Executive and an officer of Holdings (other than
the Executive) so authorized by the Board of Directors of Holdings. No waiver by
any party to this agreement at any time of any breach by any other party of, or
compliance by any other party with, any condition or provision of this agreement
to be performed by such other party shall be deemed to be a waiver of similar or
dissimilar provisions or conditions at the same or any prior or subsequent time.
No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter of this agreement have been made by any party that
are not expressly set forth in this agreement.
19. REPRESENTATIONS OF COMPANIES. The Companies severally represent and
warrant to the Executive that they have full legal power and authority to enter
into this agreement and that the performance of their respective obligations
under this agreement will not violate any agreement between the Companies, or
either of them, and any other person, firm, or organization.
20. NON-SOLICITATION OF EMPLOYEES. Until the later of (i) twelve (12)
months after the effective date of the termination of the Executive's employment
under this agreement or (ii) twelve (12) months after the last payment of Base
Salary to the Executive pursuant to Paragraph 11 or Paragraph 12 (as the case
may be), without the prior written consent of Holdings, the Executive agrees not
to employ, solicit for employment, assist any other person in employing or
soliciting for employment, or advise or recommend to any other person that such
other person employ or solicit for employment any person who then is, or during
any portion of the twelve (12) months prior to such employment or solicitation
for employment was, an employee of the Companies (or either of them) or any of
the Companies' respective subsidiaries.
21. JOINT AND SEVERAL OBLIGATIONS. All of the obligations of the Companies
under this agreement are joint and several; and neither the bankruptcy,
insolvency, dissolution, merger, consolidation, reorganization, nor cessation of
business or corporate existence of one of the Companies shall affect, impair, or
diminish the obligations under this agreement of the other of the Companies. The
compensation and benefits to which the Executive is entitled under this
agreement are aggregate compensation and benefits, and the payment of such
compensation or the provision of such benefits by one of the Companies shall to
the extent of such payment or provision satisfy the obligations of the other of
the Companies. The Companies may agree between themselves as to which of them
will be responsible for some or all of the Executive's compensation and benefits
under this agreement, but any such agreement between the Companies shall not
diminish to any extent the joint and several liability of the Companies to the
Executive for all of such compensation and benefits.
22. TERMINATION OF PRIOR AGREEMENT. The Retention and Confidentiality
Agreement dated February 21, 1996, between the Executive and Pamida hereby is
terminated, effective as of the date of this agreement.
23. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this agreement shall not affect the validity or enforceability of
any other provision of this agreement, which other provision shall remain in
full force and effect; nor shall the invalidity or unenforceability of a portion
of any provision of this agreement affect the validity or enforceability of the
balance of such provision.
24. COUNTERPARTS. This document may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
25. HEADINGS. The headings of the paragraphs contained in this document are
for reference purposes only and shall not in any way affect the meaning or
interpretation of any provision of this agreement.
26. APPLICABLE LAW. This agreement shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of Nebraska.
IN WITNESS WHEREOF, the Companies and the Executive have executed this
agreement on the day and year first above written.
PAMIDA HOLDINGS CORPORATION, a
Delaware corporation
By: /S/ STEVEN S. FISHMAN
Steven S. Fishman, Chairman of the
Board and Chief Executive Officer
PAMIDA, INC., a Delaware corporation
By: /S/ STEVEN S. FISHMAN
Steven S. Fishman, Chairman of the
Board and Chief Executive Officer
/S/ GEORGE R. MIHALKO
George R. Mihalko
Attachment to Exhibit 10.31 - Executive Bonus Matrix
Bonus as % of Pay - FYE98 Bonus Plan - George R. Mihalko
Comp store sales increase
EBITDA <3% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
===============================================================================
<42 0 0 0 0 0 0 0 0
- -------------------------------------------------------------------------------
42 9.8% 11.9% 12.6% 13.3% 14.0% 14.7% 15.4% 16.1%
- -------------------------------------------------------------------------------
43 11.2% 13.6% 14.4% 15.2% 16.0% 16.8% 17.6% 18.4%
- -------------------------------------------------------------------------------
44 14.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0%
- -------------------------------------------------------------------------------
45 16.8% 20.4% 21.6% 22.8% 24.0% 25.2% 26.4% 27.6%
- -------------------------------------------------------------------------------
46 20.3% 24.7% 26.1% 27.6% 29.0% 30.5% 31.9% 33.4%
- -------------------------------------------------------------------------------
47 23.8% 28.9% 30.6% 32.3% 34.0% 35.7% 37.4% 39.1%
- -------------------------------------------------------------------------------
48 28.0% 34.0% 36.0% 38.0% 40.0% 42.0% 44.0% 46.0%
- -------------------------------------------------------------------------------
49 31.5% 38.3% 40.5% 42.8% 45.0% 47.3% 49.5% 51.8%
- -------------------------------------------------------------------------------
50 35.0% 42.5% 45.0% 47.5% 50.0% 52.5% 55.0% 57.5%
- -------------------------------------------------------------------------------
51 35.0% 42.5% 45.0% 47.5% 50.0% 52.5% 55.0% 57.5%
- -------------------------------------------------------------------------------
52 35.0% 42.5% 45.0% 47.5% 50.0% 52.5% 55.0% 57.5%
===============================================================================
EXHIBIT A
"OTHER BENEFITS" RELATED TO
EMPLOYMENT AGREEMENT DATED MARCH 6, 1997
AMONG PAMIDA HOLDINGS CORPORATION
AND GEORGE R. MIHALKO, SENIOR VICE PRESIDENT
Company paid Exec-U-Care insurance
Company paid life insurance - $200,000
Financial, legal counseling services - up to $10,000 annually
Company car - combined with financial services maximum
Annual physical examination
Car phone - as needed
Interest free loans - up to $50,000 approved by Chairman
Spousal travel - where appropriate and approved
Minimum vacation accrual * - 3 weeks
Deferred compensation
*The greater of general employee vacation schedule or this list will be granted
LONG-TERM INCENTIVE AWARD AGREEMENT
This Long-Term Incentive Award Agreement is made and entered into as of the
6th day of March, 1997, between PAMIDA, INC. (the "Company"), a Delaware
corporation, and STEVEN S. FISHMAN (the "Executive").
* * *
WHEREAS, the Company is a wholly owned subsidiary of Pamida Holdings
Corporation ("Holdings"), a Delaware corporation; and
WHEREAS, the Executive is employed by the Company in an executive capacity;
and
WHEREAS, the Company desires to provide an incentive to the Executive to
remain in the employ of the Company and to put forth his best efforts on behalf
of the Company; and
WHEREAS, the Company desires to align the interests of the Executive with
the interests of the stockholders of Holdings by basing such incentive upon
possible future appreciation in the market price of the Common Stock of
Holdings;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. GRANT OF LONG-TERM INCENTIVE AWARD. The Company hereby grants to the
Executive a Long-Term Incentive Award consisting of 125,000 Appreciation Units.
The Company makes no representation or warranty to the Executive with respect to
the possible future value of the Long-Term Incentive Award.
2. LONG-TERM INCENTIVE AWARD PAYMENT. If the Executive is a regular
full-time employee of the Company at the close of business on March 5, 2000, and
at the close of business on that date has been continuously employed by the
Company on a regular full-time basis since the date of this agreement, then the
Company agrees to pay to the Executive in cash or before April 15, 2000, an
amount equal to the product of (a) the number of Appreciation Units set forth in
Paragraph 1 multiplied by (b) the positive difference, if any, resulting from
the subtraction of (I) $3.0625 from (II) the lesser of (i) the Average Price or
(ii) $9.0625. If there is no positive difference resulting from the subtraction
referred to in the preceding sentence, then no payment shall be due or made to
the Executive under this Paragraph 2. For purposes of this Paragraph 2, "Average
Price" means the arithmetic average of the closing prices of the Common Stock of
Holdings on the American Stock Exchange on the first twenty (20) trading days
subsequent to March 5, 2000, on which the Common Stock of Holdings is traded on
such Exchange. If the Common Stock of Holdings is not listed on the American
Stock Exchange during the relevant period subsequent to March 5, 2000, then such
closing prices shall be determined by reference to the principal market or
exchange in or on which the Common Stock of Holdings is traded during the
relevant period. If the Executive is not a regular full-time employee of the
Company at the close of business on March 5, 2000, or if the Executive has not
been continuously employed by the Company on a regular full-time basis during
the period from March 6, 1997, through March 5, 2000, then the Executive shall
not be entitled to receive any Long-Term Incentive Award payment pursuant to
this Paragraph 2.
3. DEATH OR DISABILITY OF THE EXECUTIVE. If the Executive dies prior to the
close of business on March 5, 2000, or if the Executive ceases to be a regular
full-time employee of the Company prior to such time by reason of a Disability,
then the Board of Directors of Holdings shall have the authority, exercisable in
its sole and absolute discretion, to approve the payment to the Executive (or to
the Executive's estate, in the event of the Executive's death) of all or any
portion of the Long-Term Incentive Award payment which the Executive would have
received on March 6, 2000, pursuant to Paragraph 2 if the Executive had
satisfied the conditions set forth in Paragraph 2 for the receipt of such
payment; but the Executive shall have no right to receive any amount pursuant to
this Paragraph 3 unless a discretionary payment is so approved by the Board of
Directors of Holdings. If a discretionary payment pursuant to this Paragraph 3
is approved by the Board of Directors of Holdings, then such payment shall be
made at such time as the Board of Directors of Holdings may specify. For
purposes of this agreement, "Disability" means a physical or mental illness or
incapacity of the Executive which has resulted in a determination that the
Executive is entitled to receive benefits (a) under a long-term disability
insurance policy maintained by the Company for the Executive or (b) if no such
insurance policy is then in existence, under the federal social security
disability insurance program.
4. CHANGE OF CONTROL OF HOLDINGS. If, after a Holdings Change of Control
but prior to March 6, 2000, (a) the Executive ceases to be a regular full-time
employee of the Company (a "Termination"), (b) on the date of the Termination
(the "Termination Date") the Executive had been continuously employed by the
Company on a regular full-time basis since the date of this agreement, (c) the
Termination occurred other than as a result of the Executive's death, voluntary
resignation or retirement, or Disability, and (d) on the Termination Date (i)
Holdings owned at least a majority of the then outstanding voting capital stock
of the Company and (ii) the Common Stock of Holdings was publicly traded on the
American Stock Exchange or another recognized United States securities market,
then the Company agrees to pay to the Executive in cash within twenty (20) days
after the Termination Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 4.
For purposes of this Paragraph 4, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Termination
Date on which the Common Stock of Holdings was traded on such Exchange. If the
Common Stock of Holdings is not listed on the American Stock Exchange during the
relevant period prior to the Termination Date, then such closing prices shall be
determined by reference to the principal market or exchange in or on which the
Common Stock of Holdings is traded during the relevant period. For purposes of
this Paragraph 4, "Holdings Change of Control" means the happening of either of
the following events:
(a) Any person, entity, or group of persons within the meaning of Sections
13(d) or 14(d) of the Securities Exchange Act of 1934 (the "1934 Act") and
the rules promulgated thereunder, other than 399 Venture Partners, Inc. or
any of its affiliates (as defined in Rule 12b-2 under the 1934 Act),
becomes the beneficial owner (within the meaning of Rule 13d-3 of the 1934
Act) of thirty percent (30%) or more of the outstanding voting capital
stock of Holdings, or
(b) during any period of two consecutive years or less, individuals who at the
beginning of such period constituted the Board of Directors of Holdings
cease, for any reason, to constitute at least a majority of the Board of
Directors of Holdings, unless the election or nomination for election of
each new director of Holdings who took office during such period was
approved by a vote of at least two-thirds of the directors of Holdings
still in office at the time of such election or nomination for election who
were directors of Holdings at the beginning of such period.
5. CHANGE OF CONTROL OF THE COMPANY. If, prior to March 6, 2000, there is a
Company Change of Control and on the effective date of such Company Change of
Control (the "Effective Date") the Executive is a regular full-time employee of
the Company (and has been so employed continuously since the date of this
agreement), then the Company shall pay to the Executive within twenty (20) days
after the Effective Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 5.
For purposes of this Paragraph 5, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Effective Date
on which the Common Stock of Holdings was traded on such Exchange; provided,
that if there are fewer than twenty (20) trading days between the date of the
first public announcement of a proposed Company Change of Control (the
"Announcement Date") and the Effective Date, then only the trading days
following the Announcement Date shall be taken into account for purposes of
determining the Average Price; provided, further, that if the Effective Date
occurs on or before the Announcement Date, then the Average Price shall be the
fair market value of the consideration received or to be received by Holdings or
the stockholders of Holdings, as the case may be, in connection with or by
reason of the transaction resulting or which will result in the Company Change
of Control, in either case determined on a per share basis with respect to the
shares of Common Stock of Holdings then outstanding (including, to the extent
applicable, shares of Common Stock issuable upon the exercise of outstanding
options to purchase shares of the Common Stock of Holdings); and provided
further, that if the company Change of Control involves an issuer tender offer
or other "going private" transaction, then the Average Price shall be the amount
per outstanding share of Common Stock of Holdings paid or to be paid by the
purchaser in such issuer tender offer or other "going private" transaction. If
the Common Stock of Holdings is not listed on the American Stock Exchange during
the relevant period prior to the Effective Date, then such closing prices shall
be determined by reference to the principal market or exchange in or on which
the Common Stock of Holdings is traded during the relevant period. For purposes
of this Paragraph 5, "Company Change of Control" means the happening of any of
the following events:
(a) Holdings is merged or consolidated into another corporation, and
immediately after such merger or consolidation becomes effective the
holders of a majority of the outstanding shares of voting capital stock of
Holdings immediately prior to the effectiveness of such merger or
consolidation do not own a majority of the outstanding shares of voting
capital stock of the surviving or resulting corporation in such merger,
(b) Holdings ceases to own a majority of the outstanding shares of voting
capital stock of the Company (unless such event results from the merger of
the Company into Holdings, with no change in the ownership of the voting
capital stock of Holdings),
(c) the Company is merged or consolidated into a corporation other than
Holdings, and at any time after such merger or consolidation becomes
effective Holdings does not own a majority of the outstanding shares of
voting capital stock of the surviving or resulting corporation in such
merger or consolidation,
(d) the stockholders of the Company vote (or act by written consent) to
dissolve the Company or to sell or otherwise dispose of all or
substantially all of the property and assets of the Company, or
(e) the Common Stock of Holdings ceases to be publicly traded because of an
issuer tender offer or other "going private" transaction.
6. TERMINATION WITHOUT CAUSE. If (a) the Company terminates the employment
of the Executive without Cause (a "Discharge"), including but not limited to a
constructive Discharge arising from a material reduction in the Executive's
duties or a material reduction in the Executive's rank or base salary, (b) on
the effective date of the Discharge (the "Discharge Date") the Executive had
been continuously employed by the Company on a regular full-time basis since the
date of this agreement, and (c) the Discharge occurred other than as a result of
the Executive's death, voluntary resignation or retirement, or Disability, then
the Company agrees to pay to the Executive in cash within twenty (20) days after
the Discharge Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 6.
For purposes of this Paragraph 6, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Discharge Date
on which the Common Stock of Holdings was traded on such Exchange. If the Common
Stock of Holdings is not listed on the American Stock Exchange during the
relevant period prior to the Discharge Date, then such closing prices shall be
determined by reference to the principal market or exchange in or on which the
Common Stock of Holdings is traded during the relevant period. For purposes of
this Paragraph 6, "Cause" shall mean only (i) the Executive's confession or
conviction of theft, fraud, embezzlement, or any other crime involving
dishonesty with respect to the Company or any parent, subsidiary, or affiliate
of the Company, (ii) the Executive's excessive absenteeism (other than by reason
of physical injury, disease, or mental illness) without reasonable cause, (iii)
habitual and material negligence by the Executive in the performance of his
duties and responsibilities as an executive of the Company and his failure to
cure such negligence within thirty (30) days after his receipt of a written
notice from the Company setting forth in reasonable detail the particulars of
such negligence, or (iv) material failure by the Executive to comply with a
lawful directive of the Company and his failure to cure such non-compliance
within thirty (30) days after his receipt of a written notice from the Company
setting forth in reasonable detail the particulars of such non-compliance.
7. NATURE OF INCENTIVE AWARD. Although the value, if any, of the Long-Term
Incentive Award will be derived from the market price of the Common Stock of
Holdings, neither the Long-Term Incentive Award nor the Appreciation Units
constitute or shall be deemed for any purpose to be or represent capital stock
of or equity interests of any kind in Holdings or the Company. Nothing contained
in this agreement shall be construed for any purpose to constitute the Executive
a stockholder of Holdings or the Company at any time or to give the Executive
any of the rights of a stockholder of Holdings or the Company at any time.
8. NONASSIGNABILITY. Neither the Long-Term Incentive Award nor the
Appreciation Units nor any interest in the Long-Term Incentive Award or the
Appreciation Units nor any of the Executive's rights and interests under this
agreement may be assigned or transferred by the Executive in whole or in part
either directly or by operation of law or otherwise; and neither the Long-Term
Incentive Award nor the Appreciation Units nor any interest in the Long-Term
Incentive Award or the Appreciation Units nor any of the Executive's rights and
interests under this agreement may be pledged, encumbered, or otherwise
subjected to any obligation or liability of the Executive. However, in the event
of the death of the Executive after the applicable preconditions to his right to
receive a payment under this agreement have been fully satisfied but prior to
his receipt of such payment, the Executive's estate shall succeed to such right
and shall be entitled to receive such payment.
9. RIGHT OF DISCHARGE RESERVED. This agreement is not, and shall not for
any purpose be deemed to constitute, an employment agreement between the Company
and the Executive. Nothing contained in this agreement, including but not
limited to the grant of a Long-Term Incentive Award to the Executive, confers
upon the Executive the right to continue in the employ of the Company or any
parent or subsidiary of the Company for any particular period of time or in any
particular capacity or affects any right which the Company or any parent or
subsidiary of the Company may have to terminate the employment of the Executive.
10. CAPITAL STOCK ADJUSTMENT. In the event that the number of outstanding
shares of Common Stock of Holdings is increased by reason of a stock dividend or
a stock split, the number of Appreciation Units granted to the Executive in
Paragraph 1 shall be proportionately increased and the dollar amounts set forth
in clauses (b)(I) and (II) of Paragraphs 2, 4, 5, and 6 shall be proportionately
decreased for the purpose of computing the amount, if any, payable to the
Executive pursuant to this agreement. In the event that the number of
outstanding shares of Common Stock of Holdings is reduced by reason of a reverse
stock split or a combination of shares of the Common Stock of Holdings, the
number of Appreciation Units granted to the Executive in Paragraph 1 shall be
proportionately decreased and the dollar amounts set forth in clauses (b)(I) and
(II) of Paragraphs 2, 4, 5, and 6 shall be proportionately increased for the
purpose of computing the amount, if any, payable to the Executive pursuant to
this agreement. The purpose of this Paragraph 10 is to maintain the same
economic position for the Executive and the Company immediately after such stock
dividend, stock split, reverse stock split, or combination of shares as the
Executive and the Company had immediately before such stock dividend, stock
split, reverse stock split, or combination of shares; and this Paragraph 10
shall be construed and applied so as to achieve such objective. Any adjustments
required pursuant to this Paragraph 10 shall be made and communicated to the
Executive and the Company by the Board of Directors of Holdings promptly after
the occurrence of the event that necessitates such adjustment (or in advance of
such event, effective upon the occurrence of such event).
11. CAPTIONS. The captions of the various paragraphs of this agreement are
for the purpose of convenient reference only and are not intended to define or
limit the contents of such paragraphs.
12. CREDITOR STATUS. The Executive shall have no legal or equitable rights,
interests, or claims in or to any particular property or assets of the Company,
all of which shall be and remain the general unrestricted assets of the Company.
If any amount becomes payable to the Executive under this agreement, including
but not limited to a discretionary payment to the Executive's estate in the
event of the Executive's death, the Executive or his estate, as the case may be,
shall be and have the status of a general unsecured creditor of the Company; and
this agreement constitutes a mere unfunded and unsecured contingent promise of
the Company to make a certain payment in the future if all of the preconditions
to such payment are fully satisfied.
13. WITHHOLDING; PAYROLL TAXES. To the extent required by applicable laws
in effect at the time a payment, if any, is made under this agreement, the
Company shall withhold from such payment any taxes or other obligations required
to be withheld from such payment by federal, state, or local laws.
14. UNFUNDED PLAN. This agreement and any similar agreements concurrently
being entered into with other executives of the Company together are and shall
be an unfunded plan within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA") for purposes of Title I of ERISA and for income
tax purposes.
15. GOVERNING LAW. All rights and obligations under this agreement shall be
construed and interpreted in accordance with the laws of Delaware.
16.BINDING EFFECT. This agreement shall be binding upon the Company, the
Executive, and their respective heirs, personal representatives, successors, and
assigns. However, nothing contained in this paragraph shall be construed to
allow the Executive to make any assignment which is otherwise prohibited by this
agreement.
IN WITNESS WHEREOF, the Company and the Executive have duly executed this
agreement as of the date first above written.
PAMIDA, INC., a Delaware corporation
By: /S/ FRANK A. WASHBURN
Frank A. Washburn, Executive
Vice President
/S/ STEVEN S. FISHMAN
Steven S. Fishman
LONG-TERM INCENTIVE AWARD AGREEMENT
This Long-Term Incentive Award Agreement is made and entered into as of the
6th day of March, 1997, between PAMIDA, INC. (the "Company"), a Delaware
corporation, and FRANK A. WASHBURN (the "Executive").
* * *
WHEREAS, the Company is a wholly owned subsidiary of Pamida Holdings
Corporation ("Holdings"), a Delaware corporation; and
WHEREAS, the Executive is employed by the Company in an executive capacity;
and
WHEREAS, the Company desires to provide an incentive to the Executive to
remain in the employ of the Company and to put forth his best efforts on behalf
of the Company; and
WHEREAS, the Company desires to align the interests of the Executive with
the interests of the stockholders of Holdings by basing such incentive upon
possible future appreciation in the market price of the Common Stock of
Holdings;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. GRANT OF LONG-TERM INCENTIVE AWARD. The Company hereby grants to the
Executive a Long-Term Incentive Award consisting of 68,750 Appreciation Units.
The Company makes no representation or warranty to the Executive with respect to
the possible future value of the Long-Term Incentive Award.
2. LONG-TERM INCENTIVE AWARD PAYMENT. If the Executive is a regular
full-time employee of the Company at the close of business on March 5, 2000, and
at the close of business on that date has been continuously employed by the
Company on a regular full-time basis since the date of this agreement, then the
Company agrees to pay to the Executive in cash or before April 15, 2000, an
amount equal to the product of (a) the number of Appreciation Units set forth in
Paragraph 1 multiplied by (b) the positive difference, if any, resulting from
the subtraction of (I) $3.0625 from (II) the lesser of (i) the Average Price or
(ii) $9.0625. If there is no positive difference resulting from the subtraction
referred to in the preceding sentence, then no payment shall be due or made to
the Executive under this Paragraph 2. For purposes of this Paragraph 2, "Average
Price" means the arithmetic average of the closing prices of the Common Stock of
Holdings on the American Stock Exchange on the first twenty (20) trading days
subsequent to March 5, 2000, on which the Common Stock of Holdings is traded on
such Exchange. If the Common Stock of Holdings is not listed on the American
Stock Exchange during the relevant period subsequent to March 5, 2000, then such
closing prices shall be determined by reference to the principal market or
exchange in or on which the Common Stock of Holdings is traded during the
relevant period. If the Executive is not a regular full-time employee of the
Company at the close of business on March 5, 2000, or if the Executive has not
been continuously employed by the Company on a regular full-time basis during
the period from March 6, 1997, through March 5, 2000, then the Executive shall
not be entitled to receive any Long-Term Incentive Award payment pursuant to
this Paragraph 2.
3. DEATH OR DISABILITY OF THE EXECUTIVE. If the Executive dies prior to the
close of business on March 5, 2000, or if the Executive ceases to be a regular
full-time employee of the Company prior to such time by reason of a Disability,
then the Board of Directors of Holdings shall have the authority, exercisable in
its sole and absolute discretion, to approve the payment to the Executive (or to
the Executive's estate, in the event of the Executive's death) of all or any
portion of the Long-Term Incentive Award payment which the Executive would have
received on March 6, 2000, pursuant to Paragraph 2 if the Executive had
satisfied the conditions set forth in Paragraph 2 for the receipt of such
payment; but the Executive shall have no right to receive any amount pursuant to
this Paragraph 3 unless a discretionary payment is so approved by the Board of
Directors of Holdings. If a discretionary payment pursuant to this Paragraph 3
is approved by the Board of Directors of Holdings, then such payment shall be
made at such time as the Board of Directors of Holdings may specify. For
purposes of this agreement, "Disability" means a physical or mental illness or
incapacity of the Executive which has resulted in a determination that the
Executive is entitled to receive benefits (a) under a long-term disability
insurance policy maintained by the Company for the Executive or (b) if no such
insurance policy is then in existence, under the federal social security
disability insurance program.
4. CHANGE OF CONTROL OF HOLDINGS. If, after a Holdings Change of Control
but prior to March 6, 2000, (a) the Executive ceases to be a regular full-time
employee of the Company (a "Termination"), (b) on the date of the Termination
(the "Termination Date") the Executive had been continuously employed by the
Company on a regular full-time basis since the date of this agreement, (c) the
Termination occurred other than as a result of the Executive's death, voluntary
resignation or retirement, or Disability, and (d) on the Termination Date (i)
Holdings owned at least a majority of the then outstanding voting capital stock
of the Company and (ii) the Common Stock of Holdings was publicly traded on the
American Stock Exchange or another recognized United States securities market,
then the Company agrees to pay to the Executive in cash within twenty (20) days
after the Termination Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 4.
For purposes of this Paragraph 4, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Termination
Date on which the Common Stock of Holdings was traded on such Exchange. If the
Common Stock of Holdings is not listed on the American Stock Exchange during the
relevant period prior to the Termination Date, then such closing prices shall be
determined by reference to the principal market or exchange in or on which the
Common Stock of Holdings is traded during the relevant period. For purposes of
this Paragraph 4, "Holdings Change of Control" means the happening of either of
the following events:
(a) Any person, entity, or group of persons within the meaning of Sections
13(d) or 14(d) of the Securities Exchange Act of 1934 (the "1934 Act") and
the rules promulgated thereunder, other than 399 Venture Partners, Inc. or
any of its affiliates (as defined in Rule 12b-2 under the 1934 Act),
becomes the beneficial owner (within the meaning of Rule 13d-3 of the 1934
Act) of thirty percent (30%) or more of the outstanding voting capital
stock of Holdings, or
(b) during any period of two consecutive years or less, individuals who at the
beginning of such period constituted the Board of Directors of Holdings
cease, for any reason, to constitute at least a majority of the Board of
Directors of Holdings, unless the election or nomination for election of
each new director of Holdings who took office during such period was
approved by a vote of at least two-thirds of the directors of Holdings
still in office at the time of such election or nomination for election who
were directors of Holdings at the beginning of such period.
5. CHANGE OF CONTROL OF THE COMPANY. If, prior to March 6, 2000, there is a
Company Change of Control and on the effective date of such Company Change of
Control (the "Effective Date") the Executive is a regular full-time employee of
the Company (and has been so employed continuously since the date of this
agreement), then the Company shall pay to the Executive within twenty (20) days
after the Effective Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 5.
For purposes of this Paragraph 5, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Effective Date
on which the Common Stock of Holdings was traded on such Exchange; provided,
that if there are fewer than twenty (20) trading days between the date of the
first public announcement of a proposed Company Change of Control (the
"Announcement Date") and the Effective Date, then only the trading days
following the Announcement Date shall be taken into account for purposes of
determining the Average Price; provided, further, that if the Effective Date
occurs on or before the Announcement Date, then the Average Price shall be the
fair market value of the consideration received or to be received by Holdings or
the stockholders of Holdings, as the case may be, in connection with or by
reason of the transaction resulting or which will result in the Company Change
of Control, in either case determined on a per share basis with respect to the
shares of Common Stock of Holdings then outstanding (including, to the extent
applicable, shares of Common Stock issuable upon the exercise of outstanding
options to purchase shares of the Common Stock of Holdings); and provided
further, that if the company Change of Control involves an issuer tender offer
or other "going private" transaction, then the Average Price shall be the amount
per outstanding share of Common Stock of Holdings paid or to be paid by the
purchaser in such issuer tender offer or other "going private" transaction. If
the Common Stock of Holdings is not listed on the American Stock Exchange during
the relevant period prior to the Effective Date, then such closing prices shall
be determined by reference to the principal market or exchange in or on which
the Common Stock of Holdings is traded during the relevant period. For purposes
of this Paragraph 5, "Company Change of Control" means the happening of any of
the following events:
(a) Holdings is merged or consolidated into another corporation, and
immediately after such merger or consolidation becomes effective the
holders of a majority of the outstanding shares of voting capital stock of
Holdings immediately prior to the effectiveness of such merger or
consolidation do not own a majority of the outstanding shares of voting
capital stock of the surviving or resulting corporation in such merger,
(b) Holdings ceases to own a majority of the outstanding shares of voting
capital stock of the Company (unless such event results from the merger of
the Company into Holdings, with no change in the ownership of the voting
capital stock of Holdings),
(c) the Company is merged or consolidated into a corporation other than
Holdings, and at any time after such merger or consolidation becomes
effective Holdings does not own a majority of the outstanding shares of
voting capital stock of the surviving or resulting corporation in such
merger or consolidation,
(d) the stockholders of the Company vote (or act by written consent) to
dissolve the Company or to sell or otherwise dispose of all or
substantially all of the property and assets of the Company, or
(e) the Common Stock of Holdings ceases to be publicly traded because of an
issuer tender offer or other "going private" transaction.
6. TERMINATION WITHOUT CAUSE. If (a) the Company terminates the employment
of the Executive without Cause (a "Discharge"), including but not limited to a
constructive Discharge arising from a material reduction in the Executive's
duties or a material reduction in the Executive's rank or base salary, (b) on
the effective date of the Discharge (the "Discharge Date") the Executive had
been continuously employed by the Company on a regular full-time basis since the
date of this agreement, and (c) the Discharge occurred other than as a result of
the Executive's death, voluntary resignation or retirement, or Disability, then
the Company agrees to pay to the Executive in cash within twenty (20) days after
the Discharge Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 6.
For purposes of this Paragraph 6, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Discharge Date
on which the Common Stock of Holdings was traded on such Exchange. If the Common
Stock of Holdings is not listed on the American Stock Exchange during the
relevant period prior to the Discharge Date, then such closing prices shall be
determined by reference to the principal market or exchange in or on which the
Common Stock of Holdings is traded during the relevant period. For purposes of
this Paragraph 6, "Cause" shall mean only (i) the Executive's confession or
conviction of theft, fraud, embezzlement, or any other crime involving
dishonesty with respect to the Company or any parent, subsidiary, or affiliate
of the Company, (ii) the Executive's excessive absenteeism (other than by reason
of physical injury, disease, or mental illness) without reasonable cause, (iii)
habitual and material negligence by the Executive in the performance of his
duties and responsibilities as an executive of the Company and his failure to
cure such negligence within thirty (30) days after his receipt of a written
notice from the Company setting forth in reasonable detail the particulars of
such negligence, or (iv) material failure by the Executive to comply with a
lawful directive of the Company and his failure to cure such non-compliance
within thirty (30) days after his receipt of a written notice from the Company
setting forth in reasonable detail the particulars of such non-compliance.
7. NATURE OF INCENTIVE AWARD. Although the value, if any, of the Long-Term
Incentive Award will be derived from the market price of the Common Stock of
Holdings, neither the Long-Term Incentive Award nor the Appreciation Units
constitute or shall be deemed for any purpose to be or represent capital stock
of or equity interests of any kind in Holdings or the Company. Nothing contained
in this agreement shall be construed for any purpose to constitute the Executive
a stockholder of Holdings or the Company at any time or to give the Executive
any of the rights of a stockholder of Holdings or the Company at any time.
8. NONASSIGNABILITY. Neither the Long-Term Incentive Award nor the
Appreciation Units nor any interest in the Long-Term Incentive Award or the
Appreciation Units nor any of the Executive's rights and interests under this
agreement may be assigned or transferred by the Executive in whole or in part
either directly or by operation of law or otherwise; and neither the Long-Term
Incentive Award nor the Appreciation Units nor any interest in the Long-Term
Incentive Award or the Appreciation Units nor any of the Executive's rights and
interests under this agreement may be pledged, encumbered, or otherwise
subjected to any obligation or liability of the Executive. However, in the event
of the death of the Executive after the applicable preconditions to his right to
receive a payment under this agreement have been fully satisfied but prior to
his receipt of such payment, the Executive's estate shall succeed to such right
and shall be entitled to receive such payment.
9. RIGHT OF DISCHARGE RESERVED. This agreement is not, and shall not for
any purpose be deemed to constitute, an employment agreement between the Company
and the Executive. Nothing contained in this agreement, including but not
limited to the grant of a Long-Term Incentive Award to the Executive, confers
upon the Executive the right to continue in the employ of the Company or any
parent or subsidiary of the Company for any particular period of time or in any
particular capacity or affects any right which the Company or any parent or
subsidiary of the Company may have to terminate the employment of the Executive.
10. CAPITAL STOCK ADJUSTMENT. In the event that the number of outstanding
shares of Common Stock of Holdings is increased by reason of a stock dividend or
a stock split, the number of Appreciation Units granted to the Executive in
Paragraph 1 shall be proportionately increased and the dollar amounts set forth
in clauses (b)(I) and (II) of Paragraphs 2, 4, 5, and 6 shall be proportionately
decreased for the purpose of computing the amount, if any, payable to the
Executive pursuant to this agreement. In the event that the number of
outstanding shares of Common Stock of Holdings is reduced by reason of a reverse
stock split or a combination of shares of the Common Stock of Holdings, the
number of Appreciation Units granted to the Executive in Paragraph 1 shall be
proportionately decreased and the dollar amounts set forth in clauses (b)(I) and
(II) of Paragraphs 2, 4, 5, and 6 shall be proportionately increased for the
purpose of computing the amount, if any, payable to the Executive pursuant to
this agreement. The purpose of this Paragraph 10 is to maintain the same
economic position for the Executive and the Company immediately after such stock
dividend, stock split, reverse stock split, or combination of shares as the
Executive and the Company had immediately before such stock dividend, stock
split, reverse stock split, or combination of shares; and this Paragraph 10
shall be construed and applied so as to achieve such objective. Any adjustments
required pursuant to this Paragraph 10 shall be made and communicated to the
Executive and the Company by the Board of Directors of Holdings promptly after
the occurrence of the event that necessitates such adjustment (or in advance of
such event, effective upon the occurrence of such event).
11. CAPTIONS. The captions of the various paragraphs of this agreement are
for the purpose of convenient reference only and are not intended to define or
limit the contents of such paragraphs.
12. CREDITOR STATUS. The Executive shall have no legal or equitable rights,
interests, or claims in or to any particular property or assets of the Company,
all of which shall be and remain the general unrestricted assets of the Company.
If any amount becomes payable to the Executive under this agreement, including
but not limited to a discretionary payment to the Executive's estate in the
event of the Executive's death, the Executive or his estate, as the case may be,
shall be and have the status of a general unsecured creditor of the Company; and
this agreement constitutes a mere unfunded and unsecured contingent promise of
the Company to make a certain payment in the future if all of the preconditions
to such payment are fully satisfied.
13. WITHHOLDING; PAYROLL TAXES. To the extent required by applicable laws
in effect at the time a payment, if any, is made under this agreement, the
Company shall withhold from such payment any taxes or other obligations required
to be withheld from such payment by federal, state, or local laws.
14. UNFUNDED PLAN. This agreement and any similar agreements concurrently
being entered into with other executives of the Company together are and shall
be an unfunded plan within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA") for purposes of Title I of ERISA and for income
tax purposes.
15. GOVERNING LAW. All rights and obligations under this agreement shall be
construed and interpreted in accordance with the laws of Delaware.
16. BINDING EFFECT. This agreement shall be binding upon the Company, the
Executive, and their respective heirs, personal representatives, successors, and
assigns. However, nothing contained in this paragraph shall be construed to
allow the Executive to make any assignment which is otherwise prohibited by this
agreement.
IN WITNESS WHEREOF, the Company and the Executive have duly executed this
agreement as of the date first above written.
PAMIDA, INC., a Delaware corporation
By: /S/ STEVEN S. FISHMAN
Chairman of the Board and
Chief Executive Officer
/S/ FRANK A. WASHBURN
Frank A. Washburn
LONG-TERM INCENTIVE AWARD AGREEMENT
This Long-Term Incentive Award Agreement is made and entered into as of the
6th day of March, 1997, between PAMIDA, INC. (the "Company"), a Delaware
corporation, and GEORGE R. MIHALKO (the "Executive").
* * *
WHEREAS, the Company is a wholly owned subsidiary of Pamida Holdings
Corporation ("Holdings"), a Delaware corporation; and
WHEREAS, the Executive is employed by the Company in an executive capacity;
and
WHEREAS, the Company desires to provide an incentive to the Executive to
remain in the employ of the Company and to put forth his best efforts on behalf
of the Company; and
WHEREAS, the Company desires to align the interests of the Executive with
the interests of the stockholders of Holdings by basing such incentive upon
possible future appreciation in the market price of the Common Stock of
Holdings;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. GRANT OF LONG-TERM INCENTIVE AWARD. The Company hereby grants to the
Executive a Long-Term Incentive Award consisting of 42,000 Appreciation Units.
The Company makes no representation or warranty to the Executive with respect to
the possible future value of the Long-Term Incentive Award.
2. LONG-TERM INCENTIVE AWARD PAYMENT. If the Executive is a regular
full-time employee of the Company at the close of business on March 5, 2000, and
at the close of business on that date has been continuously employed by the
Company on a regular full-time basis since the date of this agreement, then the
Company agrees to pay to the Executive in cash or before April 15, 2000, an
amount equal to the product of (a) the number of Appreciation Units set forth in
Paragraph 1 multiplied by (b) the positive difference, if any, resulting from
the subtraction of (I) $3.0625 from (II) the lesser of (i) the Average Price or
(ii) $9.0625. If there is no positive difference resulting from the subtraction
referred to in the preceding sentence, then no payment shall be due or made to
the Executive under this Paragraph 2. For purposes of this Paragraph 2, "Average
Price" means the arithmetic average of the closing prices of the Common Stock of
Holdings on the American Stock Exchange on the first twenty (20) trading days
subsequent to March 5, 2000, on which the Common Stock of Holdings is traded on
such Exchange. If the Common Stock of Holdings is not listed on the American
Stock Exchange during the relevant period subsequent to March 5, 2000, then such
closing prices shall be determined by reference to the principal market or
exchange in or on which the Common Stock of Holdings is traded during the
relevant period. If the Executive is not a regular full-time employee of the
Company at the close of business on March 5, 2000, or if the Executive has not
been continuously employed by the Company on a regular full-time basis during
the period from March 6, 1997, through March 5, 2000, then the Executive shall
not be entitled to receive any Long-Term Incentive Award payment pursuant to
this Paragraph 2.
3. DEATH OR DISABILITY OF THE EXECUTIVE. If the Executive dies prior to the
close of business on March 5, 2000, or if the Executive ceases to be a regular
full-time employee of the Company prior to such time by reason of a Disability,
then the Board of Directors of Holdings shall have the authority, exercisable in
its sole and absolute discretion, to approve the payment to the Executive (or to
the Executive's estate, in the event of the Executive's death) of all or any
portion of the Long-Term Incentive Award payment which the Executive would have
received on March 6, 2000, pursuant to Paragraph 2 if the Executive had
satisfied the conditions set forth in Paragraph 2 for the receipt of such
payment; but the Executive shall have no right to receive any amount pursuant to
this Paragraph 3 unless a discretionary payment is so approved by the Board of
Directors of Holdings. If a discretionary payment pursuant to this Paragraph 3
is approved by the Board of Directors of Holdings, then such payment shall be
made at such time as the Board of Directors of Holdings may specify. For
purposes of this agreement, "Disability" means a physical or mental illness or
incapacity of the Executive which has resulted in a determination that the
Executive is entitled to receive benefits (a) under a long-term disability
insurance policy maintained by the Company for the Executive or (b) if no such
insurance policy is then in existence, under the federal social security
disability insurance program.
4. CHANGE OF CONTROL OF HOLDINGS. If, after a Holdings Change of Control
but prior to March 6, 2000, (a) the Executive ceases to be a regular full-time
employee of the Company (a "Termination"), (b) on the date of the Termination
(the "Termination Date") the Executive had been continuously employed by the
Company on a regular full-time basis since the date of this agreement, (c) the
Termination occurred other than as a result of the Executive's death, voluntary
resignation or retirement, or Disability, and (d) on the Termination Date (i)
Holdings owned at least a majority of the then outstanding voting capital stock
of the Company and (ii) the Common Stock of Holdings was publicly traded on the
American Stock Exchange or another recognized United States securities market,
then the Company agrees to pay to the Executive in cash within twenty (20) days
after the Termination Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 4.
For purposes of this Paragraph 4, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Termination
Date on which the Common Stock of Holdings was traded on such Exchange. If the
Common Stock of Holdings is not listed on the American Stock Exchange during the
relevant period prior to the Termination Date, then such closing prices shall be
determined by reference to the principal market or exchange in or on which the
Common Stock of Holdings is traded during the relevant period. For purposes of
this Paragraph 4, "Holdings Change of Control" means the happening of either of
the following events:
(a) Any person, entity, or group of persons within the meaning of Sections
13(d) or 14(d) of the Securities Exchange Act of 1934 (the "1934 Act") and
the rules promulgated thereunder, other than 399 Venture Partners, Inc. or
any of its affiliates (as defined in Rule 12b-2 under the 1934 Act),
becomes the beneficial owner (within the meaning of Rule 13d-3 of the 1934
Act) of thirty percent (30%) or more of the outstanding voting capital
stock of Holdings, or
(b) during any period of two consecutive years or less, individuals who at the
beginning of such period constituted the Board of Directors of Holdings
cease, for any reason, to constitute at least a majority of the Board of
Directors of Holdings, unless the election or nomination for election of
each new director of Holdings who took office during such period was
approved by a vote of at least two-thirds of the directors of Holdings
still in office at the time of such election or nomination for election who
were directors of Holdings at the beginning of such period.
5. CHANGE OF CONTROL OF THE COMPANY. If, prior to March 6, 2000, there is a
Company Change of Control and on the effective date of such Company Change of
Control (the "Effective Date") the Executive is a regular full-time employee of
the Company (and has been so employed continuously since the date of this
agreement), then the Company shall pay to the Executive within twenty (20) days
after the Effective Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 5.
For purposes of this Paragraph 5, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Effective Date
on which the Common Stock of Holdings was traded on such Exchange; provided,
that if there are fewer than twenty (20) trading days between the date of the
first public announcement of a proposed Company Change of Control (the
"Announcement Date") and the Effective Date, then only the trading days
following the Announcement Date shall be taken into account for purposes of
determining the Average Price; provided, further, that if the Effective Date
occurs on or before the Announcement Date, then the Average Price shall be the
fair market value of the consideration received or to be received by Holdings or
the stockholders of Holdings, as the case may be, in connection with or by
reason of the transaction resulting or which will result in the Company Change
of Control, in either case determined on a per share basis with respect to the
shares of Common Stock of Holdings then outstanding (including, to the extent
applicable, shares of Common Stock issuable upon the exercise of outstanding
options to purchase shares of the Common Stock of Holdings); and provided
further, that if the company Change of Control involves an issuer tender offer
or other "going private" transaction, then the Average Price shall be the amount
per outstanding share of Common Stock of Holdings paid or to be paid by the
purchaser in such issuer tender offer or other "going private" transaction. If
the Common Stock of Holdings is not listed on the American Stock Exchange during
the relevant period prior to the Effective Date, then such closing prices shall
be determined by reference to the principal market or exchange in or on which
the Common Stock of Holdings is traded during the relevant period. For purposes
of this Paragraph 5, "Company Change of Control" means the happening of any of
the following events:
(a) Holdings is merged or consolidated into another corporation, and
immediately after such merger or consolidation becomes effective the
holders of a majority of the outstanding shares of voting capital stock of
Holdings immediately prior to the effectiveness of such merger or
consolidation do not own a majority of the outstanding shares of voting
capital stock of the surviving or resulting corporation in such merger,
(b) Holdings ceases to own a majority of the outstanding shares of voting
capital stock of the Company (unless such event results from the merger of
the Company into Holdings, with no change in the ownership of the voting
capital stock of Holdings),
(c) the Company is merged or consolidated into a corporation other than
Holdings, and at any time after such merger or consolidation becomes
effective Holdings does not own a majority of the outstanding shares of
voting capital stock of the surviving or resulting corporation in such
merger or consolidation,
(d) the stockholders of the Company vote (or act by written consent) to
dissolve the Company or to sell or otherwise dispose of all or
substantially all of the property and assets of the Company, or
(e) the Common Stock of Holdings ceases to be publicly traded because of an
issuer tender offer or other "going private" transaction.
6. TERMINATION WITHOUT CAUSE. If (a) the Company terminates the employment
of the Executive without Cause (a "Discharge"), including but not limited to a
constructive Discharge arising from a material reduction in the Executive's
duties or a material reduction in the Executive's rank or base salary, (b) on
the effective date of the Discharge (the "Discharge Date") the Executive had
been continuously employed by the Company on a regular full-time basis since the
date of this agreement, and (c) the Discharge occurred other than as a result of
the Executive's death, voluntary resignation or retirement, or Disability, then
the Company agrees to pay to the Executive in cash within twenty (20) days after
the Discharge Date an amount equal to the product of (a) the number of
Appreciation Units set forth in Paragraph 1 multiplied by (b) the positive
difference, if any, resulting from the subtraction of (I) $3.0625 from (II) the
lesser of (i) the Average Price or (ii) $9.0625. If there is no positive
difference resulting from the subtraction referred to in the preceding sentence,
then no payment shall be due or made to the Executive under this Paragraph 6.
For purposes of this Paragraph 6, "Average Price" means the arithmetic average
of the closing prices of the Common Stock of Holdings on the American Stock
Exchange on the twenty (20) most recent trading days prior to the Discharge Date
on which the Common Stock of Holdings was traded on such Exchange. If the Common
Stock of Holdings is not listed on the American Stock Exchange during the
relevant period prior to the Discharge Date, then such closing prices shall be
determined by reference to the principal market or exchange in or on which the
Common Stock of Holdings is traded during the relevant period. For purposes of
this Paragraph 6, "Cause" shall mean only (i) the Executive's confession or
conviction of theft, fraud, embezzlement, or any other crime involving
dishonesty with respect to the Company or any parent, subsidiary, or affiliate
of the Company, (ii) the Executive's excessive absenteeism (other than by reason
of physical injury, disease, or mental illness) without reasonable cause, (iii)
habitual and material negligence by the Executive in the performance of his
duties and responsibilities as an executive of the Company and his failure to
cure such negligence within thirty (30) days after his receipt of a written
notice from the Company setting forth in reasonable detail the particulars of
such negligence, or (iv) material failure by the Executive to comply with a
lawful directive of the Company and his failure to cure such non-compliance
within thirty (30) days after his receipt of a written notice from the Company
setting forth in reasonable detail the particulars of such non-compliance.
7. NATURE OF INCENTIVE AWARD. Although the value, if any, of the Long-Term
Incentive Award will be derived from the market price of the Common Stock of
Holdings, neither the Long-Term Incentive Award nor the Appreciation Units
constitute or shall be deemed for any purpose to be or represent capital stock
of or equity interests of any kind in Holdings or the Company. Nothing contained
in this agreement shall be construed for any purpose to constitute the Executive
a stockholder of Holdings or the Company at any time or to give the Executive
any of the rights of a stockholder of Holdings or the Company at any time.
8. NONASSIGNABILITY. Neither the Long-Term Incentive Award nor the
Appreciation Units nor any interest in the Long-Term Incentive Award or the
Appreciation Units nor any of the Executive's rights and interests under this
agreement may be assigned or transferred by the Executive in whole or in part
either directly or by operation of law or otherwise; and neither the Long-Term
Incentive Award nor the Appreciation Units nor any interest in the Long-Term
Incentive Award or the Appreciation Units nor any of the Executive's rights and
interests under this agreement may be pledged, encumbered, or otherwise
subjected to any obligation or liability of the Executive. However, in the event
of the death of the Executive after the applicable preconditions to his right to
receive a payment under this agreement have been fully satisfied but prior to
his receipt of such payment, the Executive's estate shall succeed to such right
and shall be entitled to receive such payment.
9. RIGHT OF DISCHARGE RESERVED. This agreement is not, and shall not for
any purpose be deemed to constitute, an employment agreement between the Company
and the Executive. Nothing contained in this agreement, including but not
limited to the grant of a Long-Term Incentive Award to the Executive, confers
upon the Executive the right to continue in the employ of the Company or any
parent or subsidiary of the Company for any particular period of time or in any
particular capacity or affects any right which the Company or any parent or
subsidiary of the Company may have to terminate the employment of the Executive.
10. CAPITAL STOCK ADJUSTMENT. In the event that the number of outstanding
shares of Common Stock of Holdings is increased by reason of a stock dividend or
a stock split, the number of Appreciation Units granted to the Executive in
Paragraph 1 shall be proportionately increased and the dollar amounts set forth
in clauses (b)(I) and (II) of Paragraphs 2, 4, 5, and 6 shall be proportionately
decreased for the purpose of computing the amount, if any, payable to the
Executive pursuant to this agreement. In the event that the number of
outstanding shares of Common Stock of Holdings is reduced by reason of a reverse
stock split or a combination of shares of the Common Stock of Holdings, the
number of Appreciation Units granted to the Executive in Paragraph 1 shall be
proportionately decreased and the dollar amounts set forth in clauses (b)(I) and
(II) of Paragraphs 2, 4, 5, and 6 shall be proportionately increased for the
purpose of computing the amount, if any, payable to the Executive pursuant to
this agreement. The purpose of this Paragraph 10 is to maintain the same
economic position for the Executive and the Company immediately after such stock
dividend, stock split, reverse stock split, or combination of shares as the
Executive and the Company had immediately before such stock dividend, stock
split, reverse stock split, or combination of shares; and this Paragraph 10
shall be construed and applied so as to achieve such objective. Any adjustments
required pursuant to this Paragraph 10 shall be made and communicated to the
Executive and the Company by the Board of Directors of Holdings promptly after
the occurrence of the event that necessitates such adjustment (or in advance of
such event, effective upon the occurrence of such event).
11. CAPTIONS. The captions of the various paragraphs of this agreement are
for the purpose of convenient reference only and are not intended to define or
limit the contents of such paragraphs.
12. CREDITOR STATUS. The Executive shall have no legal or equitable rights,
interests, or claims in or to any particular property or assets of the Company,
all of which shall be and remain the general unrestricted assets of the Company.
If any amount becomes payable to the Executive under this agreement, including
but not limited to a discretionary payment to the Executive's estate in the
event of the Executive's death, the Executive or his estate, as the case may be,
shall be and have the status of a general unsecured creditor of the Company; and
this agreement constitutes a mere unfunded and unsecured contingent promise of
the Company to make a certain payment in the future if all of the preconditions
to such payment are fully satisfied.
13. WITHHOLDING; PAYROLL TAXES. To the extent required by applicable laws
in effect at the time a payment, if any, is made under this agreement, the
Company shall withhold from such payment any taxes or other obligations required
to be withheld from such payment by federal, state, or local laws.
14. UNFUNDED PLAN. This agreement and any similar agreements concurrently
being entered into with other executives of the Company together are and shall
be an unfunded plan within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA") for purposes of Title I of ERISA and for income
tax purposes.
15. GOVERNING LAW. All rights and obligations under this agreement shall be
construed and interpreted in accordance with the laws of Delaware.
16. BINDING EFFECT. This agreement shall be binding upon the Company, the
Executive, and their respective heirs, personal representatives, successors, and
assigns. However, nothing contained in this paragraph shall be construed to
allow the Executive to make any assignment which is otherwise prohibited by this
agreement.
IN WITNESS WHEREOF, the Company and the Executive have duly executed this
agreement as of the date first above written.
PAMIDA, INC., a Delaware corporation
By: /S/ STEVEN S. FISHMAN
Chairman of the Board and
Chief Executive Officer
/S/ GEORGE R. MIHALKO
George R. Mihalko
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-83708 of Pamida Holdings Corporation on Form S-8 of our reports dated March
7, 1997 (March 17, 1997 as to Note E) appearing in this Annual Report on Form
10-K of Pamida Holdings Corporation for the year ended February 2, 1997.
/s/ DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 29, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Pamida Holdings Corporation and Subsidiary on Form S-8 (File No. 33-83708) of
our report dated March 26, 1996, on our audit of the fiscal 1996 consolidated
financial statements and financial statement schedule of Pamida Holdings
Corporation and Subsidiary as of January 28, 1996 and for the year then ended,
which report is included in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
April 29, 1997
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I do hereby constitute and appoint
Steven S. Fishman, Frank A. Washburn, and George R. Mihalko, and each of them
individually, as my true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for me and in my name, place, and
stead in my capacity as a director of Pamida Holdings Corporation to sign the
Annual Report on Form 10-K of Pamida Holdings Corporation for the fiscal year
ended February 2, 1997, and to file such Annual Report, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto such attorneys-in-fact and agents, and each
of them individually and their substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises in connection with such Annual Report as fully to all intents
and purposes as I might or could do in person, hereby ratifying and confirming
all that such attorneys-in-fact and agents or any of them, or their or his
substitutes or substitute, lawfully may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 23rd day
of March, 1997.
/s/ L. David Callaway, III
L. David Callaway, III
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I do hereby constitute and appoint
Steven S. Fishman, Frank A. Washburn, and George R. Mihalko, and each of them
individually, as my true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for me and in my name, place, and
stead in my capacity as a director of Pamida Holdings Corporation to sign the
Annual Report on Form 10-K of Pamida Holdings Corporation for the fiscal year
ended February 2, 1997, and to file such Annual Report, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto such attorneys-in-fact and agents, and each
of them individually and their substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises in connection with such Annual Report as fully to all intents
and purposes as I might or could do in person, hereby ratifying and confirming
all that such attorneys-in-fact and agents or any of them, or their or his
substitutes or substitute, lawfully may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 24th day
of March, 1997.
/s/ Stuyvesant P. Comfort
Stuyvesant P. Comfort
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I do hereby constitute and appoint
Steven S. Fishman, Frank A. Washburn, and George R. Mihalko, and each of them
individually, as my true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for me and in my name, place, and
stead in my capacity as a director of Pamida Holdings Corporation to sign the
Annual Report on Form 10-K of Pamida Holdings Corporation for the fiscal year
ended February 2, 1997, and to file such Annual Report, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto such attorneys-in-fact and agents, and each
of them individually and their substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises in connection with such Annual Report as fully to all intents
and purposes as I might or could do in person, hereby ratifying and confirming
all that such attorneys-in-fact and agents or any of them, or their or his
substitutes or substitute, lawfully may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 11th day
of April, 1997.
/s/ M. Saleem Muqaddam
M. Saleem Muqaddam
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I do hereby constitute and appoint
Steven S. Fishman, Frank A. Washburn, and George R. Mihalko, and each of them
individually, as my true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for me and in my name, place, and
stead in my capacity as a director of Pamida Holdings Corporation to sign the
Annual Report on Form 10-K of Pamida Holdings Corporation for the fiscal year
ended February 2, 1997, and to file such Annual Report, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto such attorneys-in-fact and agents, and each
of them individually and their substitutes, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises in connection with such Annual Report as fully to all intents
and purposes as I might or could do in person, hereby ratifying and confirming
all that such attorneys-in-fact and agents or any of them, or their or his
substitutes or substitute, lawfully may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 21st day
of March, 1997.
/s/ Peter J. Sodine
Peter J. Sodini
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Balance Sheet of Pamida Holdings Corporation and Subsidiary as of
February 2, 1997 and the related Consolidated Statement of Operations for the 53
weeks then ended and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000864760
<NAME> Pamida Holdings Corporation
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-02-1997
<PERIOD-END> FEB-02-1997
<CASH> 6,973
<SECURITIES> 0
<RECEIVABLES> 6,969
<ALLOWANCES> 50
<INVENTORY> 157,490
<CURRENT-ASSETS> 176,123
<PP&E> 42,403
<DEPRECIATION> 0
<TOTAL-ASSETS> 269,188
<CURRENT-LIABILITIES> 147,450
<BONDS> 201,999
1,875
0
<COMMON> 50
<OTHER-SE> (87,353)
<TOTAL-LIABILITY-AND-EQUITY> 269,188
<SALES> 633,189
<TOTAL-REVENUES> 633,189
<CGS> 479,099
<TOTAL-COSTS> 604,204
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,781
<INCOME-PRETAX> (796)
<INCOME-TAX> 0
<INCOME-CONTINUING> (796)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,187)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
