Employment Agreement [Amendment No. 2] - Kmart Corp. and Charles C. Conaway
SECOND AMENDMENT
TO
EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO THE EMPLOYMENT AGREEMENT, made and entered
into by and between KMART CORPORATION, a Michigan corporation (together with its
successors and assigned permitted under this Agreement, the Company"), and
CHARLES C. CONAWAY (the "executive") effective as of the _____ day of November
2001.
WHEREAS, the Executive has entered into an employment agreement with
the Company, dated as of May 30, 2000, and amended as of May 15, 2001
(collectively, the "Employment Agreement"), pursuant to which the Executive
serves the Company as it Chief Executive Office and Chairman;
WHEREAS, the Company has determined that it is appropriate and in
the best interest of the shareholders of the Company to further amend the
Employment Agreement with the Executive in order to clarify certain provisions
of the Employment Agreement and to provide for consistency of benefits between
the Executive and other senior executives of the Company; and
WHEREAS, the Executive desires to amend the Employment Agreement as
set forth herein to reflect such clarifications and modifications.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties do hereby amend the Employment
Agreement as follows, effective as of the date hereof:
1. Section 8(C)of the Employment Agreement is hereby amended to read
in its entirety as follows:
"(c) The Company acknowledges its obligation to provide the
Executive with transportation during the Employment Period that
provides him with security to address bona fide business-oriented
security concerns, and shall, at Company expense, make available to
the Executive (and his family when traveling with him), Company or
other private aircraft for business and personal use at his
discretion, provided that any such personal use shall be limited to
travel within the United States. It is recognized that the
Executive's travel by Company or other private aircraft is required
for security purposes and, as such, all uses by the Executive
(including uses with his family) will constitute business use of the
aircraft and shall not be subject to reimbursement by the Executive.
The Company shall provide additional payments to the Executive on a
fully grossed up basis to cover applicable federal, state and local
income and excise taxes, when and to the extent, if any, that such
taxes are payable by the Executive, including, without limitation,
any tax imposed
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by Section 4999 of the Code or any similar tax, with respect to the
foregoing aircraft usage."
2. The fourth and fifth paragraphs of Section 6(c) of the Employment
Agreement are deleted and replaced by the following paragraphs:
"The Company shall provide additional payments to the Executive on a
fully grossed up basis to cover applicable federal, state and local
income and excise taxes, when and to the extent, if any, that such
taxes are payable by the Executive upon the forgiveness of principal
or interest under the Loan, including, without limitation, any tax
imposed by Section 4999 of the Code or any similar tax and any
related interest and penalties in the event that the Internal
Revenue Service determines at any time that principal or interest
under the Loan should be taken into account as taxable income by the
Executive at the time the Loan is entered into.
In the event that the Internal Revenue Service determines at any
time that principal or interest under the Loan should be taken into
account as taxable income by the Executive at the time it is entered
into, any resulting tax, including any resulting state and local
taxes (collectively "Associated Taxes"), and any related interest
and penalties, will be either paid by the Company directly to the
IRS or to the Executive, at his election, when due. In addition, the
Company shall make additional payments to the Executive to hold him
harmless from: (I) any tax liabilities attributable to its payment
of any related interest and penalties, and (ii) any imputed income
associated with interest-free component of the Executive's repayment
obligation referred to in this Agreement (the "Hold Harmless
Payments").
Should the Company wish to contest with the IRS the accelerated
inclusion of such income or any related to penalties, interest or
the Hold Harmless Payments, then the Executive shall reasonably
cooperate with the Company as to such contest, and at the time they
are then due, Company shall pay to the IRS (or at his election to
the Executive) the Associated Taxes, and any related interest and
penalties, and to the Executive, the Hold Harmless Payments. Any
such Associated Taxes shall be repaid by the Executive to the
Company (without interest), if and when the Loan is otherwise
repayable by the Executive."
3. Defined Terms used herein and not otherwise defined in this
Amendment shall have the same meaning as when used under the Employment
Agreement.
4. Except as amended and modified hereby, the terms of the
Employment Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have entered into the First
Amendment to Employment to Agreement as of the day and year first written above.
EXECUTIVE
/s/ Charles C. Conaway
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Charles C. Conaway
KMART CORPORATION
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By:
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Title:
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