Ronald M. Lamb

                              AMENDED AND RESTATED

                              EMPLOYMENT AGREEMENT

 

 

     THIS AMENDED AND RESTATED  EMPLOYMENT  AGREEMENT (the  "Agreement") is made

and entered  into as of the 24th day of October,  1997,  by and between  Casey's

General Stores,  Inc., an Iowa corporation  (the "Company"),  and Ronald M. Lamb

("Lamb").

 

         WHEREAS,  the  Board  of  Directors  of  the  Company  (the  "Board  of

Directors") recognizes that the dedication of Lamb as an officer and director to

the affairs and welfare of the Company since its  organization has resulted in a

long and successful association; and

 

         WHEREAS, the Board of Directors further recognizes that the Company has

grown and prospered as a result of its association with Lamb, and has determined

that it is in the best interests of the Company and its shareholders to preserve

this  association  so as to enable the  Company to further  benefit  from Lamb's

superior  knowledge  and  expertise  in all of its present  and future  business

endeavors; and

 

         WHEREAS,  the Company and Lamb are parties to an  Employment  Agreement

dated as of  March 2,  1992,  as  amended  by a First  Amendment  to  Employment

Agreement  dated as of January 16, 1997  (together,  the "Original  Agreement"),

providing  for the  employment  of Lamb to  serve  as the  President  and  Chief

Operating  Officer  of the  Company  under the terms  and  conditions  set forth

therein; and

 

         WHEREAS,  the Board of  Directors  has  further  determined  that it is

appropriate  and in the best  interests of the Company and its  shareholders  to

modify the existing  contractual  arrangements with respect to Lamb's employment

by the  Company,  with the  concurrence  of Lamb,  and to amend and  restate the

Original Agreement to reflect the same; and

 

         WHEREAS,  the Board of Directors has further  determined  that it is in

the best interest of the Company and its shareholders to assure that the Company

will have the continued  dedication of Lamb,  notwithstanding  the  possibility,

threat or occurrence  of a Change of Control (as defined  below) of the Company,

and to further  encourage  Lamb's full  attention and  dedication to the Company

currently and in the event of any threatened or pending  Change of Control,  and

to provide Lamb with  compensation  arrangements  upon a Change of Control which

provide him with  compensation  for expected  losses that he would suffer in the

event of a Change of Control and which are competitive with those

 

 

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of other  corporations,  and,  in  order to  accomplish  these  objectives,  has

determined to cause the Company to enter into this Agreement.

 

         NOW, THEREFORE, in consideration of the mutual covenants and agreements

set forth in this Agreement, the parties hereto agree as follows:

 

          1.      CERTAIN DEFINITIONS.  For purposes of this Agreement, and in

addition to the other definitions set forth herein, the following terms shall

have the following meanings:

 

         a)       "Change of Control" shall mean:

 

                  (i) the  acquisition  (other  than  from the  Company)  by any

Person (as hereinafter defined), entity or "group" within the meaning of Section

13(d)(3) or  14(d)(2)  of the  Securities  Exchange  Act of 1934 (the  "Exchange

Act"),  (excluding for this purpose, the Company or any employee benefit plan of

the Company,  which acquires  beneficial  ownership of voting  securities of the

Company) of beneficial  ownership  (within the meaning of Rule 13d-3 promulgated

under the  Exchange  Act) of  twenty  percent  (20%) or more of either  the then

outstanding shares of Common Stock, no par value, of the Company or the combined

voting power of the Company's then  outstanding  voting  securities  entitled to

vote  generally  in the election of  directors  (hereinafter  referred to as the

"Common Stock"), unless such beneficial ownership was acquired as a result of an

acquisition  of shares of Common  Stock by the Company  which,  by reducing  the

number of  shares  outstanding,  increases  the  proportionate  number of shares

beneficially owned by such Person,  entity or "group" to twenty percent (20%) or

more of the Common Stock of the Company  then  outstanding;  provided,  however,

that if a Person,  entity or "group" shall become the beneficial owner of twenty

percent  (20%) or more of the Common  Stock of the Company then  outstanding  by

reason of share  purchases by the Company and shall,  after such share purchases

by the Company,  become the beneficial owner of any additional  shares of Common

Stock of the  Company,  then such Person,  entity or "group"  shall be deemed to

have met the conditions hereof; or

 

                  (ii)  individuals  who, as of the date hereof,  constitute the

Board of Directors (as of the date hereof,  the "Incumbent Board") cease for any

reason to  constitute  at least a majority of the Board of  Directors,  provided

that  any  person  becoming  a  director  subsequent  to the date  hereof  whose

election, or nomination for election by the Company's shareholders, was approved

by a vote of at least a majority of the directors then  comprising the Incumbent

Board  (other than an election or  nomination  of an  individual  whose  initial

assumption  of office is in  connection  with an actual or  threatened  election

contest relating to the election of the directors of the Company,  as such terms

are used in Rule 14a-11 of Regulation  14A  promulgated  under the Exchange Act)

shall be, for purposes of this Agreement considered as though such person were a

member of the

 

 

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Incumbent Board; or

 

                  (iii)  approval  by  the  shareholders  of  the  Company  of a

reorganization,  merger,  consolidation  (in each  case,  with  respect to which

persons  who were the  shareholders  of the  Company  immediately  prior to such

reorganization, merger or consolidation do not, immediately thereafter, own more

than fifty percent (50%) of the combined voting power entitled to vote generally

in  the  election  of  directors  of the  reorganized,  merged  or  consolidated

company's then outstanding voting securities) or a liquidation or dissolution of

the  Company  or of the sale of all or  substantially  all of the  assets of the

Company.

 

         (b) "Annual Increase" shall take effect on each January 1 for which the

benefit at issue is payable  and shall  mean fifty  percent  (50%) of the annual

increase in the National Consumer Price Index for the City of Des Moines,  Iowa,

as published by the United States Bureau of Labor Statistics.

 

         (c) "Annual  Bonus" shall mean any bonus  payable at the  discretion of

the Board of Directors  of the Company,  on such terms and in such amounts as it

shall determine.

 

         (d) "Employment  Period" shall mean the term of Lamb's employment under

this Agreement, as set forth in Section 2 hereof.

 

         (e)      "Code" shall mean the Internal Revenue Code of 1986, as

amended.

 

         (f) "Accrued Obligations" shall mean (i) Lamb's Salary through the Date

of  Termination  at the  rate in  effect  on the Date of  Termination,  (ii) the

product of the Annual  Bonus  paid to Lamb for the last full  fiscal  year and a

fraction,  the  numerator  of which is the number of days in the current  fiscal

year through the Date of  Termination,  and the  denominator of which is 365 and

(iii) any compensation  previously  deferred (together with any accrued interest

thereon)  and not yet paid by the Company and any accrued  vacation  pay not yet

paid by the Company.

 

         (g) "Person"  shall mean any  individual,  firm,  corporation  or other

entity,  and shall  include  any  successor  (by  merger or  otherwise)  and all

"affiliates" and "associates" of such entity (as those terms are defined in Rule

12b-2 of the General Rules and Regulations under the Exchange Act).

 

     2.  EMPLOYMENT AND TERM. The Company agrees to employ Lamb, and Lamb agrees

to serve the Company, as Chief Operating Officer and President of the Company on

the terms and under the conditions set forth in this Agreement. The initial term

of employment under this Agreement shall commence on the date hereof and shall

 

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terminate on April 30, 2000 (the "Initial Term"), after which this Agreement and

the Employment Period hereunder shall be automatically  renewed and extended for

successive  periods of three years  (each of which  shall be a "Renewal  Term"),

subject to the right of the Company and Lamb to terminate this Agreement  during

the  Initial  Term or any such  Renewal  Term in  accordance  with the terms and

conditions  set forth in  subsequent  sections  of this  Agreement,  and further

subject to the right of the  Company  and Lamb to cause this  Agreement  and the

Employment  Period  hereunder  to expire at the end of the  Initial  Term or any

Renewal Term by giving written notice thereof at least one year prior to the end

of the Initial Term or the then current  Renewal Term, as applicable;  provided,

however, that in the event of a Change of Control during the Initial Term or any

Renewal Term, this Agreement and the Employment  Period hereunder  automatically

shall  continue  in full force and effect for the  greater of (i) the  remaining

term of employment  then in progress or (ii) three years from the effective date

of the Change of Control. References herein to the Employment Period shall refer

to both the Initial Term and any successive Renewal Term.

 

         3. DUTIES OF LAMB.  During the period of his employment in the capacity

of Chief  Operating  Officer and President,  Lamb will perform his duties to the

best of his  ability,  subject to the control of the Board of  Directors.  It is

agreed and understood that the position  (including  status,  office,  title and

reporting requirements), authority, duties and responsibilities of Lamb shall be

substantially the same as those performed by Lamb as Chief Operating Officer and

President  of the  Company  prior to the date of this  Agreement,  and that Lamb

shall at all times serve the best  interests of the Company.  The Company agrees

that Lamb shall at all times have such  authority and  discretion as is required

in the carrying out of Lamb's duties in a proper and efficient  manner,  subject

to review by the Board of Directors.

 

         During the period of his  employment,  it shall not be a  violation  of

this Agreement for Lamb to (i) serve on corporate, civil or charitable boards or

committees,  (ii) deliver  lectures or fulfill  speaking  engagements  and (iii)

manage personal  investments,  so long as such  activities do not  significantly

interfere with the performance of Lamb's  responsibilities as an employee of the

Company in accordance with this Agreement. It is expressly understood and agreed

that to the extent that any such activities have been conducted by Lamb prior to

the date hereof,  the continued  conduct of such  activities  (or the conduct of

activities  similar in nature and scope  thereto)  subsequent to the date hereof

shall not  thereafter  be deemed to  interfere  with the  performance  of Lamb's

responsibilities to the Company.

 

     4.  COMPENSATION.  The Company  shall pay to Lamb an annual salary of Three

Hundred  and  Fifty  Thousand  Dollars  ($350,000),  payable  in  equal  monthly

installments,  or such  other  amount as shall be  mutually  agreed  upon by the

Company and Lamb (the "Salary"). In addition, Lamb and/or Lamb's family shall be

entitled to receive

 

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all  benefits  presently  provided or those  which may  hereafter  be  generally

provided  by the Company to its  employees,  officers  or  directors,  including

health  insurance  and life  insurance.  With  respect to such health  insurance

benefits,  the Company agrees that at all times the health  insurance  coverages

available  to Lamb and his  spouse  under such plans  shall  include  provisions

providing for lifetime  benefits payable on behalf of Lamb and his spouse of not

less than One Million  Dollars  ($1,000,000)  each,  or such other amount as the

Company and Lamb may specifically agree upon in writing,  subject,  however,  to

any  limitations,  restrictions  or  conditions  that shall from time to time be

necessary to satisfy the  requirements  of applicable  federal or state laws and

regulations.

 

         5.  TERMINATION  OF  EMPLOYMENT.   (a)  Death  or  Disability.   Lamb's

employment under this Agreement shall terminate automatically upon Lamb's death.

If the Company determines in good faith that the Disability of Lamb has occurred

(pursuant to the  definition of  "Disability"  set forth below),  it may give to

Lamb written  notice of its  intention to terminate  Lamb's  employment as Chief

Operating  Officer and  President.  In such event,  Lamb's  employment  with the

Company shall terminate  effective on the thirtieth  (30th) day after receipt of

such notice by Lamb (the "Disability Effective Date"), provided that, within the

thirty (30) days after such  receipt,  Lamb shall not have returned to full-time

performance of his duties.  For purposes of this Agreement,  "Disability"  means

disability or incapacity of Lamb which, at least twenty-six (26) weeks after its

commencement,  is determined by the Board of Directors  upon  competent  medical

advice to be such as to prevent Lamb from  performing  substantially  all of the

duties of Chief Operating Officer and President of the Company.

 

         (b) Cause. The Company may terminate Lamb's employment for "Cause." For

purposes  of this  Agreement,  "Cause"  means  (i) an act or  acts  of  personal

dishonesty  taken  by Lamb  and  intended  to  result  in  substantial  personal

enrichment of Lamb at the expense of the Company,  (ii)  repeated  violations by

Lamb  of  Lamb's  obligations  under  Section  3 of  this  Agreement  which  are

demonstrably willful and deliberate on Lamb's part and which are not remedied in

a reasonable  period of time after receipt of written notice from the Company or

(iii)  the  conviction  of Lamb of a felony  when such  conviction  is no longer

subject to direct appeal.

 

         (c)      Good Reason.  Lamb's employment may be terminated by Lamb for

Good Reason.  For purposes of this Agreement, "Good Reason" means:

 

                  (i) the assignment to Lamb of any duties  inconsistent  in any

respect with Lamb's position  (including  status,  office,  titles and reporting

requirements),  authority, duties or responsibilities as contemplated by Section

3 of this  Agreement,  or any other  action by the  Company  which  results in a

diminution in such position,  authority,  duties or responsibilities,  excluding

for this purpose an isolated,  insubstantial and inadvertent action not taken in

bad faith and which is remedied by the Company promptly

 

 

<PAGE>

 

 

 

after receipt of notice thereof given by Lamb;

 

                  (ii) Any failure by the Company to comply with the  provisions

of  Section 4 of this  Agreement,  other  than an  isolated,  insubstantial  and

inadvertent  failure  not  occurring  in bad faith and which is  remedied by the

Company promptly after receipt of notice thereof given by Lamb;

 

                  (iii) the Company's  requiring  Lamb to be based at any office

or location other than the Company's Corporate  Headquarters facility in Ankeny,

Iowa,  except  for  travel  reasonably  required  in the  performance  of Lamb's

responsibilities;

 

                  (iv)     any purported termination by the Company of Lamb's

employment otherwise than for death, Disability or Cause as expressly permitted

by this Agreement; or

 

                  (v)      any failure by the Company to comply with and satisfy

Section 13(c) of this Agreement.

 

         For  purposes of this Section  5(c),  any good faith  determination  of

"Good Reason" made by Lamb shall be conclusive.

 

         (d) Notice of Termination.  Any termination by the Company for Cause or

by Lamb for Good Reason shall be  communicated  by Notice of  Termination to the

other party hereto given in accordance with Section 14(b) of this Agreement. For

purposes of this  Agreement,  a "Notice of  Termination"  means a written notice

which (i) indicates the specific termination  provision in this Agreement relied

upon, (ii) sets forth in reasonable detail the facts and  circumstances  claimed

to provide a basis for termination of Lamb's  employment  under the provision so

indicated and (iii) if the Date of Termination  (as defined below) is other than

the date of receipt of such notice,  specifies the termination  date (which date

shall be not more than fifteen (15) days after the giving of such  notice).  The

failure  of  Lamb  to set  forth  in the  Notice  of  Termination  any  fact  or

circumstance  which  contributes to a showing of Good Reason shall not waive any

right  of  Lamb   hereunder  or  preclude  Lamb  from  asserting  such  fact  or

circumstance in enforcing his rights hereunder.

 

         (e)  Date of  Termination.  "Date  of  Termination"  means  the date of

receipt of the Notice of Termination or any later date specified therein, as the

case may be; provided,  however,  that (i) if Lamb's employment is terminated by

the Company other than for Cause or Disability, the Date of Termination shall be

the date on which the  Company  notifies  Lamb of such  termination  and (ii) if

Lamb's  employment is terminated by reason of death or  Disability,  the Date of

Termination shall be the date of death of Lamb or the Disability Effective Date,

as the case may be.

 

 

 

<PAGE>

 

 

 

         6. OBLIGATIONS OF THE COMPANY UPON TERMINATION OF EMPLOYMENT. (a) Death

of Lamb.  In the event of the death of Lamb during the term hereof,  the Company

shall pay to Lamb's spouse,  commencing on the first day of the month  following

his death and  continuing for a period of  twenty-four  (24) months  thereafter,

benefits equal to the monthly  installments  of Salary which was then being paid

to Lamb  pursuant  to  Section 4 herein.  Immediately  following  such  two-year

period,  the Company  shall  commence the payment of monthly  benefits to Lamb's

spouse equal in amount to one-fourth (1/4) of the monthly installments of Salary

which was being  paid to Lamb at the time of his death  under  Section 4 herein,

which monthly  benefits shall be paid for a period of twenty (20) years or until

the death of Lamb's spouse,  whichever  occurs first.  In addition,  the Company

shall  continue at all times to offer and provide health  insurance  coverage to

Lamb's spouse,  in accordance with the plans,  programs,  practices and policies

provided by the Company under the terms of this  Agreement at the time of Lamb's

death,  until the death of Lamb's spouse,  except to the extent such coverage is

or otherwise  becomes  available to Lamb's spouse under the Medicare  program of

benefits.

 

         (b) Disability of Lamb. If Lamb's employment is terminated by reason of

the Disability of Lamb,  Lamb's  employment under this Agreement shall terminate

without further  obligations to Lamb,  other than those  obligations  accrued or

earned  and  vested  (if  applicable)  by  Lamb as of the  Date of  Termination,

including for this purpose,  all Accrued Obligations and those set forth herein.

All such Accrued  Obligations shall be paid to Lamb in a lump sum in cash within

thirty (30) days of the Date of  Termination.  Anything in this Agreement to the

contrary notwithstanding,  Lamb shall be entitled after the Disability Effective

Date to receive  disability  and other  benefits in an amount  equal to one-half

(1/2) of his  Salary  (adjusted  on an annual  basis by the amount of the Annual

Increase),  which shall be payable in equal monthly installments until the close

of the calendar year during which Lamb attains  sixty-five  (65) years of age or

until  the last day of the  month in which  Lamb is no  longer  deemed  disabled

pursuant to this Agreement, or until Lamb's death, whichever shall first occur.

 

         If Lamb  shall  receive  any  disability  payments  from any  insurance

policies  paid  for by the  Company,  the  payments  to  Lamb  pursuant  to this

provision shall be reduced by the amount of disability payments received by Lamb

under any such insurance policy or policies.

 

         If,  following  the  termination  of  Lamb's  employment  by  reason of

Disability,  the Board of Directors  determines,  upon competent medical advice,

that  Lamb  is  no  longer   prevented  by  said   Disability   from  performing

substantially  all of the duties as Chief Operating Officer and President of the

Company,  the Company  shall give Lamb not less than  thirty  (30) days  written

notice of its  election  to cease the  payment  of  Disability  benefits  to him

pursuant to this Section 6(b), following which (i) the Company shall have

 

 

<PAGE>

 

 

 

no further  obligations  to Lamb to make said  Disability  payments  as provided

herein and (ii) Lamb  thereafter  shall be entitled to retire and  terminate his

employment  with the Company,  without further action or notice on his part, and

to receive the benefits payable under the Non-Qualified  Supplemental  Executive

Retirement  Plan of the Company (the "SERP") (or any successor  plan), as and to

the extent set forth therein,  and shall hold himself  available to the Board of

Directors for consultation as provided in Section 10 hereof.

 

         Notwithstanding  any  Disability on the part of Lamb, the Company shall

continue at all times to offer and provide  health  insurance  coverages to Lamb

and his spouse, in accordance with the most favorable plans, programs, practices

and  policies  provided  by the  Company  during the 90-day  period  immediately

preceding the  Disability  Effective  Date or, if more  favorable to Lamb, as in

effect at any time  thereafter  with  respect to other key  employees  and their

families,  until the death of Lamb and his  spouse,  except to the  extent  such

coverage is or  otherwise  becomes  available  to Lamb and his spouse  under the

Medicare program of benefits.

 

         (c) Cause;  Other than for Good Reason.  If Lamb's  employment shall be

terminated for Cause,  Lamb's  employment  under this Agreement  shall terminate

without  further  obligations  to Lamb (other than the obligation to pay to Lamb

his Salary through the Date of Termination  plus the amount of any  compensation

previously  deferred by Lamb,  together with accrued interest thereon).  If Lamb

terminates employment other than for Good Reason, this Agreement shall terminate

without further  obligations to Lamb,  other than those  obligations  accrued or

earned and vested  (if  applicable)  by Lamb  through  the Date of  Termination,

including  for  this  purpose,  all  Accrued   Obligations.   All  such  Accrued

Obligations  shall be paid to Lamb in a lump sum in cash within thirty (30) days

of the Date of Termination.

 

         (d) Good  Reason;  Other than for Cause or  Disability.  If the Company

shall terminate Lamb's employment other than for Cause, Disability,  or death or

if Lamb shall  terminate his  employment  for Good Reason at any time during the

Employment  Period,  except during a three-year  period  following any Change of

Control (in which case the provisions of Section 6(e) shall apply), then in such

event:

 

                  (i) the Company shall pay to Lamb in a lump sum in cash within

thirty (30) days after the Date of  Termination  the  aggregate of the following

amounts:

 

                           A.       to the extent not theretofore paid, Lamb's

Salary through the Date of Termination; and

 

                           B.       the product of (x) the highest Annual Bonus

paid to Lamb during the three (3) fiscal years preceding the fiscal year in

which the Date of

 

 

<PAGE>

 

 

 

Termination  occurs (the "Recent  Bonus") and (y) a fraction,  the  numerator of

which is the  number of days in the  current  fiscal  year  through  the date of

Termination and the denominator of which is 365; and

 

                           C.       the product of (x) two (2.0) and (y) the sum

of (i) the Salary and (ii) the Recent Bonus; and

 

                           D.       in the case of compensation previously

deferred by Lamb, all amounts previously deferred (together with any accrued

interest thereon) and not yet  paid by the  Company,  and any  accrued  vacation

pay not yet  paid by the Company; and

 

                  (ii) for a two-year period  following the Date of Termination,

the Company shall continue  benefits to Lamb and/or Lamb's family at least equal

to those which would have been  provided to them in  accordance  with the plans,

programs,  practices  and  policies  provided  under  this  Agreement  if Lamb's

employment  had  not  been  terminated,  including  health  insurance  and  life

insurance, in accordance with the most favorable plans,  practices,  programs or

policies  provided by the Company and its subsidiaries  during the 90-day period

immediately  preceding the Date of Termination or, if more favorable to Lamb, as

in effect at any time  thereafter  with respect to other key employees and their

families.  Notwithstanding the foregoing, however, the Company shall continue at

all times to offer and provide the above-described health insurance coverages to

Lamb and his spouse until their respective dates of death,  except to the extent

such coverage is or otherwise becomes available to Lamb and his spouse under the

Medicare program of benefits.

 

         (e) Good Reason; Other than for Cause or Disability, following a Change

of Control.  If, during a three year period following any Change of Control, the

Company shall terminate Lamb's employment other than for Cause,  Disability,  or

death or if Lamb shall terminate his employment for Good Reason:

 

                  (i) the Company shall pay to Lamb in a lump sum in cash on the

thirtieth  (30th) day  following  the Date of  Termination  the aggregate of the

following amounts:

 

           A.       to the extent not theretofore paid, Lamb's

Salary through the Date of Termination; and

 

           B.       the product of (x) the Recent Bonus and (y)

a fraction, the numerator of which is the number of days in the current fiscal

year through the date of Termination and the denominator of which is 365; and

 

           C.       the product of (x) three (3.0) and (y) the sum of (i) the

Salary

 

 

<PAGE>

 

 

 

                  and (ii) the Recent Bonus; and

 

            D.       in the case of compensation previously deferred by Lamb,

all amounts previously deferred (together with any accrued interest thereon)

and not yet  paid by the  Company,  and any  accrued  vacation  pay not yet

paid by the Company; and

 

                  (ii)  for  a   three-year   period   following   the  Date  of

Termination, the Company shall continue benefits to Lamb and/or Lamb's family at

least equal to those which would have been provided to them in  accordance  with

the plans,  programs,  practices and policies  provided  under this Agreement if

Lamb's  employment had not been terminated,  including health insurance and life

insurance, in accordance with the most favorable plans,  practices,  programs or

policies  provided by the Company and its subsidiaries  during the 90-day period

immediately  preceding the Date of Termination or, if more favorable to Lamb, as

in effect at any time  thereafter  with respect to other key employees and their

families.  Notwithstanding the foregoing, however, the Company shall continue at

all times to offer and provide the above-described health insurance coverages to

Lamb and his spouse until their respective dates of death,  except to the extent

such coverage is or otherwise becomes available to Lamb and his spouse under the

Medicare program of benefits.

 

         (f)  Alternative  Excise Tax Cap.  Notwithstanding  the  provisions  of

Section 6(e) hereof,  if any payments or benefits  received or to be received by

Lamb  (whether  pursuant  to the  terms of this  Agreement  or any  other  plan,

arrangement or agreement with the Company,  any person whose actions result in a

Change of Control  or any person  affiliated  with the  Company or such  person)

constitute  "parachute payments" within the meaning of Section  280G(b)(2)(A) of

the Code and the value  thereof  exceeds  2.99 times  Lamb's  "base  amount," as

defined in Section  280G(b)(3) of the Code,  then, in lieu thereof,  the Company

shall pay to Lamb, as soon as practicable  following the Date of Termination but

in no event  later than  thirty (30) days  thereafter,  a lump sum cash  payment

equal to 2.99 times his "base  amount" (the  "Alternative  Severance  Payment"),

reduced as provided  below.  The value of the payments to be made under  Section

6(e) and Lamb's base amount shall be determined in accordance  with temporary or

final regulations,  if any, promulgated under Section 280G of the Code and based

upon the advice of the tax counsel referred to below.

 

         The Alternative Severance Payment shall be reduced by the amount of any

other payment or the value of any benefit  received or to be received by Lamb in

connection  with a Change  of  Control  of the  Company  or his  termination  of

employment  unless  (i) Lamb  shall  have  effectively  waived  his  receipt  or

enjoyment  of such  payment  or  benefit  prior  to the date of  payment  of the

Alternative  Severance  Payment,  (ii) in the opinion of tax counsel selected by

the  Company's  independent  auditors,  such other  payment or benefit  does not

constitute a "parachute payment" within the meaning of Section

 

 

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280G(b)(2)  of the  Code,  or (iii) in the  opinion  of such  tax  counsel,  the

Alternative  Severance  Payment  plus  all  other  payments  or  benefits  which

constitute  "parachute payments" within the meaning of Section 280G(b)(2) of the

Code are  reasonable  compensation  for services  actually  rendered  within the

meaning  of  Section  280G(b)(4)  of the Code or are  otherwise  not  subject to

disallowance  as a deduction by reason of Section 280G of the Code. The value of

any non-cash  benefit or any deferred  payment or benefit shall be determined in

accordance with the principles of Section 280G(d)(3) and (4) of the Code.

 

         (g) Section  162(m)  Limitation.  In the event that the payments due to

Lamb under this Section 6 exceed the  "reasonable  compensation"  limitations of

Section 162(m) of the Code, that portion thereof that would not be deductible by

the Company in the taxable year in which the payment is due shall be deferred by

the Company and paid to Lamb on the date that is sixteen  (16) months  following

the Date of Termination,  together with interest thereon at the rate provided in

Section 7872(f)(2) of the Code.

 

         7.  NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement shall prevent

or limit  Lamb's  continuing  or future  participation  in any  benefit,  bonus,

incentive  or other  plans,  programs,  policies or  practices,  provided by the

Company and for which Lamb may qualify,  including  but not limited to the SERP,

nor shall anything herein limit or otherwise affect such rights as Lamb may have

under the SERP or any stock option or other agreements with the Company. Amounts

which are vested  benefits or which Lamb is otherwise  entitled to receive under

any plan,  policy,  practice or program of the Company at or  subsequent  to the

Date of Termination,  including but not limited to the SERP, shall be payable in

accordance with the SERP or such plan, policy, practice or program.

 

         8. FULL  SETTLEMENT.  The  Company's  obligation  to make the  payments

provided  for in  this  Agreement  and  otherwise  to  perform  its  obligations

hereunder  shall  not be  affected  by any  set-off,  counterclaim,  recoupment,

defense or other claim,  right or action which the Company may have against Lamb

or others.  In no event shall Lamb be obligated to seek other employment or take

any other action by way of mitigation  of the amounts  payable to Lamb under any

of the provisions of this  Agreement,  but such payments shall be reduced to the

extent of Lamb's other earned  income (if any) during any  remaining  portion of

the Employment  Period.  Following any Change of Control,  the Company agrees to

pay, to the full extent permitted by law, all legal fees and expenses which Lamb

may  reasonably  incur as a result of any  contest  (regardless  of the  outcome

thereof)  by  the  Company  or  others  (including  Lamb)  of  the  validity  or

enforceability  of, or liability  under,  any provision of this Agreement or any

guarantee of performance  thereof,  plus in each case interest at the applicable

Federal rate provided for in Section 7872(f)(2) of the Code.

 

 

 

<PAGE>

 

 

 

         9.  RETIREMENT OF LAMB. It is understood  that Lamb shall retire on the

last day of the calendar year during which he reaches  sixty-five  (65) years of

age. The Board of Directors  of the  Company,  at its sole option,  may offer to

extend  Lamb's  employment  on a  year-to-year  basis after the calendar year in

which Lamb reaches age  sixty-five  (65). At the conclusion of each year it will

be presumed  that Lamb will retire  unless the Board of Directors  determines to

offer to extend Lamb's employment for an additional year.

 

         Following  the  retirement of Lamb,  the Company shall  continue at all

times to offer and provide health insurance coverages to Lamb and his spouse, in

accordance  with the most  favorable  plans,  programs,  practices  and policies

provided by the  Company  during the 90-day  period  immediately  preceding  the

effective date of Lamb's  retirement or, if more favorable to Lamb, as in effect

at any time  thereafter  with respect to other key employees and their families,

until the death of Lamb and his spouse, except to the extent such coverage is or

otherwise becomes available to Lamb and his spouse under the Medicare program of

benefits.

 

         10.  AVAILABILITY OF LAMB AFTER  RETIREMENT.  Following his retirement,

Lamb shall at reasonable times and insofar as his physical condition may permit,

hold himself  available at the written  request of the Board of Directors of the

Company  to  consult  with  and  advise  the  officers,   directors,  and  other

representatives of the Company. Such requests for Lamb's service shall, however,

be  structured  so that  reasonable  allowances  are made for  Lamb's  needs for

vacation time and for other considerations of his physical well-being.  All such

services  shall be provided by Lamb at his place of residence  unless  otherwise

agreed to by Lamb. Lamb shall not be required to devote any prescribed  hours to

consulting  with  and  giving  advice  to the  officers,  directors,  and  other

representatives  of the  Company  in  order  to be  entitled  to the  retirement

benefits as set out in the SERP,  but all such  benefits  shall be considered as

earned in return for the  consulting  service and advice that Lamb may give from

time to time to the Company, its officers, directors, and other representatives.

 

         If Lamb's  physical  condition  shall prevent him from  consulting  and

advising with the officers,  directors or other  representatives of the Company,

the retirement  benefits  provided  under the SERP shall  nonetheless be paid as

therein provided.

 

         Lamb shall be  reimbursed  by the Company for all  reasonable  expenses

incurred  as  a  consultant   and  advisor,   including   expenses  for  travel,

communication,  entertainment  and similar items,  upon presentation of itemized

accounts of such expenditures.

 

     11.  DISCRETION  OF BOARD OF DIRECTORS.  Notwithstanding  any other term or

provision of this  Agreement to the contrary,  nothing stated herein is intended

to,  nor  shall  it be  construed,  to  abrogate,  limit,  alter or  affect  the

authority, rights and

 

<PAGE>

 

 

 

privileges  of the Board of  Directors  of the  Company to remove  Lamb as Chief

Operating  Officer and President of the Company,  without  Cause,  or during the

term of this Agreement to elect as Chief Operating  Officer and President of the

Company a person other than Lamb,  as provided by the laws of the State of Iowa;

provided,  however,  it is expressly agreed and understood that in the event any

one or any  combination  of such events  occurs,  unless Lamb is terminated  for

Cause as defined in Section 5(b) hereof,  Lamb may terminate his  employment for

Good Reason, in which case the Company shall pay Lamb the benefits  described in

either  Section  6(d) or  Section  6(e) of this  Agreement,  as  applicable,  in

consideration thereof.

 

         12.  CONFIDENTIAL  INFORMATION;  RESTRICTIVE  COVENANT.  (a) During the

period of his employment,  Lamb shall hold in fiduciary capacity for the benefit

of the  Company  all  secret  or  confidential  information,  knowledge  or data

relating  to  the  Company  or any of its  subsidiaries,  and  their  respective

businesses,  which shall have been obtained by Lamb during Lamb's  employment by

the Company or any of its  subsidiaries  and which shall not be or become public

knowledge  (other than by acts by Lamb or his  representatives  in  violation of

this Agreement).  During a three (3) year period following termination of Lamb's

employment with the Company,  Lamb shall not,  without the prior written consent

of the Company,  communicate or divulge any such information,  knowledge or data

to anyone other than the Company and those designated by it.

 

         (b) While this  Agreement  remains in effect  and Lamb is  entitled  to

compensation  or  benefits  pursuant  to Sections 4 through 6 hereof (or, in the

event of termination  of his  employment for Good Reason,  for a period of three

(3) years  thereafter),  Lamb shall not directly or indirectly  associate  with,

participate in or render service to, whether as an employee,  officer, director,

consultant,  independent  contractor  or  otherwise,  any  organization  that is

engaged in business in  competition  with the Company,  and he shall not himself

engage in any such business on his own account.

 

         (c) In the event of a  demonstrated  breach  of this  Section  12,  the

parties agree that the Company shall be entitled to seek  equitable  relief in a

court of competent  jurisdiction to prevent any anticipated continuing breach of

the terms and  conditions  of this  Section  12 and to  secure  the  enforcement

thereof. The foregoing remedy shall be exclusive and in lieu of any other remedy

otherwise available to the Company under law.

 

     13.  SUCCESSORS.  (a) This  Agreement  is  personal to Lamb and without the

prior written  consent of the Company shall not be assignable by Lamb  otherwise

than by will or the laws of descent and distribution. This Agreement shall inure

to the benefit of and be enforceable by Lamb's legal representatives.

 

         (b)      This Agreement shall inure to the benefit of and be binding

upon the

 

<PAGE>

 

 

 

Company and its successors and assigns.

 

         (c) The Company  agrees and  covenants to require (i) any  successor or

assignee  (whether direct or indirect,  by purchase,  merger,  consolidation  or

otherwise)  to all or  substantially  all of the business  and/or  assets of the

Company  through a Change of Control or  otherwise,  and, (ii) within its lawful

power to do so, any party  effecting or taking  steps to  accomplish a Change of

Control,  to assume  expressly  and agree to perform this  Agreement in the same

manner and to the same extent  that the Company  would be required to perform it

if no such  succession  or Change of Control  had taken  place.  As used in this

Agreement,  "Company"  shall mean the  Company as  hereinbefore  defined and any

successor to its business and/or assets as aforesaid which assumes and agrees to

perform this Agreement by operation of law, or otherwise.

 

     14. MISCELLANEOUS. (a) This Agreement shall be governed by and construed in

accordance with the laws of the State of Iowa,  without  reference to principles

of  conflict  of  laws.  The  captions  of this  Agreement  are not  part of the

provisions  hereof and shall have no force or effect.  This Agreement may not be

amended  or  modified  otherwise  than by a written  agreement  executed  by the

parties hereto or their respective successors and legal representatives.

 

         (b) All notices and other communications  hereunder shall be in writing

and shall be given by hand  delivery  to the  other  party or by  registered  or

certified mail, return receipt requested, postage prepaid, addressed as follows:

If the Company, to Casey's General Stores, Inc., P. O. Box 3001, One Convenience

Blvd., Ankeny, Iowa 50021, Attention:  President; and if to Lamb, to his address

appearing on the books of the  Company,  or to his  residence,  or to such other

address  as  either  party  shall  have  furnished  to the other in  writing  in

accordance herewith.  Notice and communications shall be effective when actually

received by the addressee.

 

         (c)  The  invalidity  or  unenforceability  of any  provision  of  this

Agreement shall not affect the validity or enforceability of any other provision

of this Agreement.

 

         (d) The  Company  may  withhold  from any  amounts  payable  under this

Agreement such Federal, state or local taxes as shall be required to be withheld

pursuant to any applicable law or regulation.

 

         (e) The  Company's or Lamb's  failure to insist upon strict  compliance

with any provision  hereof shall not be deemed to be a waiver of such  provision

or any other provision thereof.

 

         (f) This  Agreement  contains the entire  understanding  of the

Company and Lamb with respect to the subject matter hereof.  The Original

Agreement between Lamb

 

<PAGE>

 

 

 

and the Company,  as defined in the preambles  hereof,  is hereby terminated and

shall be of no further force or effect.

 

         (g) No change,  amendment or  modification  of this Agreement  shall be

valid unless the same be in writing and signed by the Company and Lamb.

 

         (h) This Agreement may be executed in any number of counterparts,  each

of which shall be deemed to be an original and all of which taken together shall

constitute one and the same  instrument with the same force and effect as if all

the parties had executed the same document.

 

         IN WITNESS WHEREOF,  the respective  parties have caused this Agreement

to be executed as of the day and year first above written.

 

                                     CASEY'S GENERAL STORES, INC.

 

 

                            By:      /s/ Donald F. Lamberti

                                     ----------------------------

                                     Donald F. Lamberti, Chief

                                     Executive Officer

 

ATTEST:

 

 

/s/ John G. Harmon

- --------------------------------

John G. Harmon, Secretary

 

 

 

 

                                     /s/ Ronald M. Lamb

                                     ---------------------------

                                     Ronald M. Lamb