EXHIBIT 4.2
THE KROGER CO.
1994 LONG-TERM INCENTIVE PLAN
1. Definitions
In this Plan the following definitions shall apply:
1.1 "Agreement" means a written agreement implementing a
grant of an Option, Right or Performance Unit or an award of
Restricted Stock or Incentive Shares.
1.2 "Board" means the Board of Directors of the Company.
1.3 "Code" means the Internal Revenue Code of 1986, as
amended.
1.4 "Committee" means the committee appointed to administer
each of the Programs under the Plan. For purposes of the Insider
Program and the Outside Director Program the Committee shall be a
committee of the Board meeting the standards of Rule 16b-
3(c)(2)(i) under the Exchange Act, or any similar successor rule,
appointed by the Board to administer the Insider Program and the
Outside Director Program, which initially shall be composed of
those members of the Compensation Committee of the Board who
qualify as "outside directors" under Section 162(m) of the Code.
For purposes of the Non-Insider Program, the Committee shall be
the Stock Option Committee.
1.5 "Common Stock" means the common stock, par value $1.00
per Share, of the Company.
1.6 "Company" means THE KROGER CO.
1.7 "Date of Exercise" means the date on which the Company
receives notice of the exercise of an Option, Right or
Performance Unit in accordance with the terms of Article 10.
1.8 "Date of Grant" means the date on which an Option,
Right or Performance Unit is granted or Restricted Stock or
Incentive Shares are awarded by the Committee.
1.9 "Director" means a member of the Board of the Company.
1.10 "Employee" means any person determined by the Committee
to be an employee of the Company or a Subsidiary.
1.11 "Employee Director" means a Director who is an Employee
of the Company.
1.12 "Exchange Act" means the Securities Exchange Act of
1934, as amended.
1.13 "Fair Market Value" of a Share of Common Stock means
the amount equal to the fair market value of a Share of Common
Stock determined pursuant to a reasonable method adopted by the
Committee in good faith for such purpose. Unless otherwise
provided in an Agreement to the contrary, the Fair Market Value
of a Share shall be the mean between the highest and lowest
selling price on the date of determination on the New York Stock
Exchange--Composite Transactions, or if no sales are made on such
date, on the most recent prior date for which sales are reported.
1.14 "Grantee" means an Employee to whom Restricted Stock
has been awarded pursuant to Article 12 or to whom Incentive
Shares have been awarded pursuant to Article 13.
1.15 "Incentive Share" means a Share awarded pursuant to
Article 13.
1.16 "Incentive Stock Option" means an Option granted under
the Plan that qualifies as an incentive stock option under
Section 422 of the Code and that the Company designates as such
in the Agreement granting the Option.
1.17 "Insider" means an officer of the Company subject to
Section 16(a) of the Exchange Act.
1.18 "Insider Program" means that portion of the Plan under
which grants or awards are made to Insiders, including Employee
Directors.
1.19 "Non-Insider Program" means that portion of the Plan
under which grants or awards are made to Employees, excluding
Insiders and Employee Directors.
1.20 "Nonstatutory Stock Option" means an Option granted
under the Plan that is not an Incentive Stock Option.
1.21 "Option" means an option to purchase Shares granted
under the Plan in accordance with Article 6 or Article 7.
1.22 "Option Period" means the period during which an Option
may be exercised.
1.23 "Option Price" means the price per Share at which an
Option may be exercised. The Option Price shall be determined by
the Committee, but in no event shall the Option Price of an
Incentive Stock Option be less than the greater of the Fair
Market Value per Share determined as of the Date of Grant or the
par value of a Share.
1.24 "Optionee" means an Employee or Director to whom an
Option, Right or Performance Unit has been granted.
1.25 "Outside Director Program" means that portion of the
Plan under which grants are made to Directors, other than
Employee Directors.
1.26 "Performance Goals" means performance goals established
by the Committee which may be based on earnings or earnings
growth, sales, return on assets, equity or investment, regulatory
compliance, satisfactory internal or external audits, improvement
of financial ratings, achievement of balance sheet, income
statement or other financial statement objectives, or any other
objective goals established by the Committee, and may be absolute
in their terms or measured against or in relationship to other
companies similarly or otherwise situated. Such performance
goals may be particular to an employee or the department, branch,
Subsidiary or other division in which he or she works, or may be
based on the performance of the Company generally, and may cover
such period as may be specified by the Committee.
1.27 "Performance Unit" means a performance unit granted
under the Plan in accordance with Article 9.
1.28 "Performance Unit Period" means the period during which
a Performance Unit may be exercised.
1.29 "Plan" means THE KROGER CO. 1994 Long-Term Incentive
Plan.
1.30 "Related Option" means the Option in connection with
which, or by amendment to which, a specified Right or Performance
Unit is granted.
1.31 "Related Performance Unit" means the Performance Unit
granted in connection with, or by amendment to, a specified
Option.
1.32 "Related Right" means the Right granted in connection
with, or by amendment to, a specified Option.
1.33 "Restricted Stock" means Shares awarded pursuant to
Article 12.
1.34 "Right" means a stock appreciation right granted under
the Plan pursuant to Article 8.
1.35 "Right Period" means the period during which a Right
may be exercised.
1.36 "Share" means a share of authorized but unissued Common
Stock or a reacquired share of issued Common Stock.
1.37 "Stock Option Committee" means a committee of three or
more members appointed by the Chief Executive Officer of the
Company to administer the Non-Insider Program, each of whom shall
be ineligible to receive grants or awards under the Non-Insider
Program, and shall have been so ineligible for at least one year.
1.38 "Subsidiary" means a corporation at least 50% of the
total combined voting power of all classes of stock of which is
owned by the Company, either directly or through one or more
other Subsidiaries.
2. Purpose
The Plan is intended to assist in attracting and
retaining Employees and Directors of outstanding ability and to
promote the identification of their interests with those of the
shareholders of the Company.
3. Administration
The Plan shall be administered by the Committee. In
addition to any other powers granted to the Committee, it shall
have the following powers, subject to the express provisions of
the Plan:
3.1 to determine in its discretion the Employees to whom
Options, Performance Units or Rights shall be granted and to whom
Restricted Stock and Incentive Shares shall be awarded, the
number of Shares to be subject to each Option, Right, Performance
Unit, Restricted Stock or Incentive Share award, and the terms
upon which Options, Rights or Performance Units may be acquired
and exercised and the terms and conditions of Restricted Stock
and Incentive Share awards;
3.2 to determine all other terms and provisions of each
Agreement, which need not be identical;
3.3 without limiting the generality of the foregoing, to
provide in its discretion in an Agreement:
(a) for an agreement by the Optionee or Grantee to
render services to the Company or a Subsidiary upon such terms
and conditions as may be specified in the Agreement, provided
that the Committee shall not have the power to commit the Company
or any Subsidiary to employ or otherwise retain any Optionee or
Grantee;
(b) for restrictions on the transfer, sale or other
disposition of Shares issued to the Optionee upon the exercise of
an Option, Right or Performance Unit, for other restrictions
permitted by Article 12 with respect to Restricted Stock or for
conditions with respect to the issuance of Incentive Shares;
(c) for an agreement by the Optionee or Grantee to
resell to the Company, under specified conditions, Shares issued
upon the exercise of an Option, Right or Performance Unit or
awarded as Restricted Stock or Incentive Shares;
(d) for the payment of the Option Price upon the
exercise by an Employee of an Option otherwise than in cash,
including without limitation by delivery of shares of Common
Stock (other than Restricted Stock) valued at Fair Market Value
on the Date of Exercise of the Option, or a combination of cash
and shares of Common Stock, or for the payment in part of the
Option Price with a promissory note in accordance with the terms
of Section 10.2; and
(e) for the deferral of receipt of amounts that
otherwise would be distributed upon exercise of a Performance
Unit, the terms and conditions of any such deferral and any
interest or dividend equivalent or other payment that shall
accrue with respect to deferred distributions;
3.4 to construe and interpret the Agreements and the Plan;
3.5 to require, whether or not provided for in the
pertinent Agreement, of any person exercising an Option, Right or
Performance Unit or acquiring Restricted Stock or Incentive
Shares, at the time of such exercise or acquisition, the making
of any representations or agreements which the Committee may deem
necessary or advisable in order to comply with the securities
laws of the United States or of any state;
3.6 to provide for satisfaction of an Optionee's or
Grantee's tax liabilities arising in connection with the Plan
through, without limitation, retention by the Company of shares
of Common Stock otherwise issuable on the exercise of a
Nonstatutory Stock Option, Right or Performance Unit or pursuant
to an award of Incentive Shares or through delivery of Common
Stock to the Company by the Optionee or Grantee under such terms
and conditions as the Committee deems appropriate; and
3.7 to make all other determinations and take all other
actions necessary or advisable for the administration of the
Plan.
Any determinations or actions made or taken by the Committee
pursuant to this Article shall be binding and final.
4. Eligibility
Options, Rights, Performance Units, Restricted Stock and
Incentive Shares may be granted or awarded only to Employees and
Directors, provided that a non-Employee Director (i) who directly
holds fewer than 1,000 Shares of Common Stock at the time of a
grant may not participate in the Plan, (ii) may not receive
Rights, Performance Units, Incentive Shares or Restricted Stock,
and (iii) may not receive Options except in accordance with
Article 6. In no event shall any participant receive awards and
grants totaling more than 200,000 Shares in the aggregate under
this Plan.
5. Stock Subject to the Plan
5.1 The maximum number of Shares that may be issued under
the Plan is 8,000,000 Shares. In addition to the decisions which
it makes in administering the Insider Program, annually the
Committee for the Insider Program shall approve the number of
Shares to be granted under the Non-Insider Program for that
fiscal year.
5.2 If an Option, Right or Performance Unit expires or
terminates for any reason (other than termination by virtue of
the exercise of a Related Option, Related Right or a Related
Performance Unit, as the case may be) without having been fully
exercised, if Shares of Restricted Stock are forfeited or if
Incentive Shares are not issued or are forfeited, the unissued or
forfeited Shares which had been subject to the Agreement relating
thereto shall become available for the grant of other Options,
Rights and Performance Units or for the award of additional
Restricted Stock or Incentive Shares, provided that in the case
of forfeited Shares, the Grantee has received no dividends prior
to forfeiture with respect to such Shares.
5.3 The Shares issued upon the exercise of a Right or
Performance Unit (or, if cash is payable in connection with such
exercise, that number of Shares having a Fair Market Value equal
to the cash payable upon such exercise), shall be charged against
the number of Shares issuable under the Plan and shall not become
available for the grant of other Options, Rights and Performance
Units or for the award of Restricted Stock or Incentive Shares.
If the Right referred to in the preceding sentence is a Related
Right, or if the Performance Unit referred to in the preceding
sentence is a Related Performance Unit, the Shares subject to the
Related Option, to the extent not charged against the number of
Shares subject to the Plan in accordance with this Section 5.3,
shall become available for the grant of other Options, Rights and
Performance Units or for the award of additional Restricted Stock
or Incentive Shares.
6. Special Conditions to Outside Director Program
6.1 The Outside Director Program shall be a formula plan
under which Directors, excluding Employee Directors, shall be
granted Options, but only in accordance with the provisions set
forth in this Article 6. For purposes of this Article 6 only,
the term Director shall exclude any member of the Board who does
not at the time of the relevant grant then own a minimum of 1,000
Shares of Common Stock and shall also exclude Employee Directors.
6.2 Nonstatutory Stock Options shall be granted to
Directors as follows:
(a) Upon approval of this Plan by shareholders, each
Director shall be granted a Nonstatutory Stock Option to purchase
2,000 Shares at an Option Price equal to the Fair Market Value of
the Shares on such date, which date shall be the Date of Grant;
(b) Commencing in fiscal year 1995, on the date of the
Annual Meeting of Shareholders in such year and each succeeding
year (or the next business day if such date is a non-business
day), each Director shall be granted a Nonstatutory Stock Option
to purchase 2,000 Shares at an Option Price equal to the Fair
Market Value of the Shares on such date, which date shall be the
Date of Grant; and
(c) Options granted under this Article 6 shall vest in
666, 667 and 667 share amounts, respectively, on the first,
second and third annual anniversary dates, respectively, of the
Date of Grant and may be exercised by the Optionee at any time
after vesting and prior to the termination of the Option.
Options shall terminate one year from the date on which such
Optionee ceases to be a member of the Board (for all reasons
other than retirement) or 10 years from the Date of Grant,
whichever first occurs. Options are not transferable other than
by will or the laws of descent and distribution. Exercise of
Options may be made only in writing delivered to the Company
accompanied by payment of the Option Price.
6.3 If on any Date of Grant there is an insufficient number
of Shares available for a grant, the number of Shares subject to
such grant shall be reduced to the greatest whole number of
Shares arrived at by dividing the remaining Shares available for
such grant by the number of Directors eligible for such grant.
7. Options
7.1 The Committee is hereby authorized to grant
Nonstatutory Stock Options and Incentive Stock Options to
Employees, including Employee Directors. Options also may be
granted to Directors, excluding Employee Directors, pursuant to
Article 6.
7.2 All Agreements granting Options to Employees, including
Employee Directors, shall contain a statement that the Option is
intended to be either (i) a Nonstatutory Stock Option or (ii) an
Incentive Stock Option, as the case may be.
7.3 The Option Period for Options granted to Employees,
including Employee Directors, shall be determined by the
Committee and specifically set forth in the Agreement; provided,
however, that an Option shall not be exercisable before six
months from the Date of Grant (except that this limitation need
not apply in the event of the death or disability of the Optionee
within the six-month period) or after ten years from the Date of
Grant.
7.4 All Incentive Stock Options granted under the Plan
shall comply with the provisions of the Code governing incentive
stock options and with all other applicable rules and
regulations.
7.5 The maximum number of Shares of Common Stock with
respect to which Options may be granted to any Employee under
this Plan during its term is 200,000 Shares. In no event shall
the Option Price of an Option be less than the Fair Market Value
of a Share of Common Stock at the time of the grant.
7.6 All other terms of Options granted under the Plan shall
be determined by the Committee in its sole discretion.
8. Rights
8.1 The Committee is hereby authorized to grant Rights to
Employees, including Employee Directors.
8.2 A Right may be granted under the Plan:
(a) in connection with, and at the same time as, the
grant of an Option under the Plan;
(b) by amendment of an outstanding Nonstatutory Stock
Option granted under the Plan; or
(c) independently of any Option granted under the
Plan.
A Right granted under clause (a) or (b) of the preceding
sentence is a Related Right. A Related Right may, in the
Committee's discretion, apply to all or a portion of the Shares
subject to the Related Option.
8.3 A Right may be exercised in whole or in part as
provided in the Agreement, and, subject to the provisions of the
Agreement, entitles its Optionee to receive, without any payment
to the Company (other than required income tax withholding
amounts), either cash or that number of Shares (equal to the
highest whole number of Shares), or a combination thereof, in an
amount or having a Fair Market Value determined as of the Date of
Exercise not to exceed the number of Shares subject to the
portion of the Right exercised multiplied by an amount equal to
the excess of (i) the Fair Market Value of a share of Common
Stock on the Date of Exercise of the Right over (ii) either (A)
the Fair Market Value of a share of Common Stock on the Date of
Grant of the Right if it is not a Related Right, or (B) the
Option Price as provided in the Related Option if the Right is a
Related Right.
8.4 The Right Period shall be determined by the Committee
and specifically set forth in the Agreement, provided, however --
(a) a Right may not be exercised before the expiration
of six months from the Date of Grant (except that this limitation
need not apply in the event of the death or disability of the
Optionee within the six-month period);
(b) a Right will expire no later than the earlier of
(i) ten years from the Date of Grant, or (ii) in the case of a
Related Right, the expiration of the Related Option;
(c) a Right may be exercised only when the Fair Market
Value of a share of Common Stock exceeds either (i) the Fair
Market Value of a share of Common Stock on the Date of Grant of
the Right if it is not a Related Right, or (ii) the Option Price
as provided in the Related Option if the Right is a Related
Right; and
(d) a Right that is a Related Right to an Incentive
Stock Option may be exercised only when and to the extent the
Related Option is exercisable.
8.5 The exercise, in whole or in part, of a Related Right
shall cause a reduction in the number of Shares subject to the
Related Option equal to the number of Shares with respect to
which the Related Right is exercised. Similarly, the exercise,
in whole or in part, of a Related Option shall cause a reduction
in the number of Shares subject to the Related Right equal to the
number of Shares with respect to which the Related Option is
exercised.
8.6 Rights granted under the Plan, to the extent determined
by the Committee, shall comply with the requirements of Rule 16b-
3(e) under the Exchange Act during the term of this Plan. Should
any provision of this Article 8 necessary for that purpose at the
date of adoption of this Plan by the Board no longer be necessary
to comply with the requirements of Rule 16b-3(e) or should any
additional provisions be necessary for this Article 8 to comply
with the requirements of Rule 16b-3(e), the Board may amend this
Plan to delete, add to or modify the provisions of the Plan
accordingly. The Company intends to comply, if and to the extent
applicable, with the public information and reporting
requirements of Rule 16b-3(e)(1); however, the Company's failure
for any reason whatsoever to comply with such requirements or
with any other requirements of Rule 16b-3, and any resultant
unavailability of Rule 16b-3(e) to Optionees shall not impose any
liability on the Company to any Optionee or any other party.
8.7 To the extent required by Rule 16b-3(e) under the
Exchange Act or otherwise provided in the Agreement, the
Committee shall have sole discretion to consent to or disapprove
the election of any Optionee to receive cash in full or partial
settlement of a Right. In cases where an election of settlement
in cash must be consented to by the Committee, the Committee may
consent to, or disapprove, such election at any time after such
election, or within such period for taking action as is specified
in the election, and failure to give consent shall be
disapproval. Consent may be given in whole or as to a portion of
the Right surrendered by the Optionee. If the election to
receive cash is disapproved in whole or in part, the Right shall
be deemed to have been exercised for Shares, or, if so specified
in the notice of exercise and election, not to have been
exercised to the extent the election to receive cash is
disapproved.
8.8 The maximum number of Shares of Common Stock with
respect to which Rights may be granted to any Employee under this
Plan during its term is 200,000 Shares.
9. Performance Units
9.1 The Committee is hereby authorized to grant Performance
Units to Employees, including Employee Directors.
9.2 Performance Units may be granted under the Plan:
(a) in connection with, and at the same time as, the
grant of a Nonstatutory Stock Option under the Plan;
(b) by amendment of an outstanding Nonstatutory Stock
Option under the Plan; or
(c) independently of any Option granted under the
Plan.
A Performance Unit granted under clause (a) or (b) of the
preceding sentence is a Related Performance Unit. A Related
Performance Unit may, in the Committee's discretion, apply to all
or a portion of the shares subject to the Related Option. A
Performance Unit may not be granted in connection with, or by
amendment to, an Incentive Stock Option.
9.3 A Performance Unit may be exercised in whole or in part
as provided in the Agreement, and, subject to the provisions of
the Agreement, entitles its Optionee to receive, without any
payment to the Company (other than required income tax
withholding amounts), cash, Shares or a combination of cash and
Shares, based upon the degree to which Performance Goals
established by the Committee and specified in the Agreement have
been achieved.
9.4 The Performance Unit Period shall be determined by the
Committee and specifically set forth in the Agreement, provided,
however --
(a) a Performance Unit may not be exercised before the
expiration of six months from the Date of Grant (except that this
limitation need not apply in the event of the death or disability
of the Optionee within the six-month period); and
(b) a Performance Unit will expire no later than the
earlier of (i) ten years from the Date of Grant, or (ii) in the
case of a Related Performance Unit, the expiration of the Related
Option.
9.5 Each Agreement granting Performance Units shall specify
the number of Performance Units granted; provided, however, that
the maximum number of Related Performance Units may not exceed
the maximum number of Shares subject to the Related Option.
9.6 The exercise, in whole or in part, of Related
Performance Units shall cause a reduction in the number of Shares
subject to the Related Option and the number of Performance Units
in accordance with the terms of the Agreement. Similarly, the
exercise, in whole or in part, of a Related Option, shall cause a
reduction in the number of Shares subject to the Related
Performance Unit equal to the number of Share with respect to
which the Related Option is exercised.
9.7 Performance Units granted under the Plan, to the extent
determined by the Committee, shall comply with the requirements
of Rule 16b-3(e) under the Exchange Act during the term of this
Plan. Should any provision of this Article 9 necessary for that
purpose at the date of adoption of this Plan by the Board no
longer be necessary to comply with the requirements of Rule 16b-
3(e) or should any additional provisions be necessary for this
Article 9 to comply with the requirements of Rule 16b-3(e), the
Board may amend this Plan to delete, add to or modify the
provisions of the Plan accordingly. The Company intends to
comply, if and to the extent applicable, with the public
information and reporting requirements of Rule 16b-3(e)(1);
however, the Company's failure for any reason whatsoever to
comply with such requirements or with any other requirements of
Rule 16b-3, and any resultant unavailability of Rule 16b-3(e) to
Optionees shall not impose any liability on the Company to any
Optionee or any other party.
9.8 To the extent required by Rule 16b-3(e) under the
Exchange Act or otherwise provided in the Agreement, the
Committee shall have sole discretion to consent to or disapprove
the election of any Optionee to receive cash in full or partial
settlement of a Performance Unit. In cases where an election of
settlement in cash must be consented to by the Committee, the
Committee may consent to, or disapprove, such election at any
time after such election, or within such period for taking action
as is specified in the election, and failure to give consent
shall be disapproval. Consent may be given in whole or as to a
portion of the Performance Unit surrendered by the Optionee. If
the election to receive cash is disapproved in whole or in part,
the Performance Unit shall be deemed to have been exercised for
Shares, or, if so specified in the notice of exercise and
election, not to have been exercised to the extent the election
to receive cash is disapproved.
9.9 The maximum number of Shares that may be paid to any
Employee pursuant to the exercise of Performance Units shall not
exceed 200,000 Shares. For purposes of the preceding sentence,
any Performance Units paid in the form of cash shall be deemed to
have been paid in Shares, with the number of Shares being deemed
paid equal to the amount of cash paid to the Employee divided by
the Fair Market Value of a Share on the date of payment.
10. Exercise
10.1 An Option, Right or Performance Unit may, subject to
the provisions of the Agreement under which it was granted, be
exercised in whole or in part by the delivery to the Company of
written notice of the exercise, in such form as the Committee may
prescribe, accompanied, in the case of an Option, by full payment
for the Shares with respect to which the Option is exercised,
unless and to the extent that the Committee agreed in the
Agreement in which an Option was granted to accept a promissory
note as provided in Section 10.2 hereof.
10.2 To the extent permitted by applicable law, the
Committee may agree in the Agreement in which an Option is
granted to an Employee to accept as partial payment for the
Shares a promissory note of the Optionee evidencing his or her
obligation to make future cash payment thereof; provided,
however, that in no event may the Committee accept a promissory
note for an amount in excess of the difference between the
aggregate Option Price and the par value of the Shares.
Promissory notes made pursuant to this Section 10.2 shall be
payable as determined by the Committee, shall be secured by a
pledge of the Shares and shall bear interest at a rate fixed by
the Committee.
11. Non-transferability
Unless otherwise provided in the Agreement respecting the
grant or award, Options, Rights, Performance Units and Incentive
Shares granted or awarded under the Plan shall not be
transferable otherwise than (A) by will or the laws of descent
and distribution, or (B) except in the case of an Incentive Stock
Option, pursuant to a qualified domestic relations order as
defined in Section 414(p) of the Code, and an Option, Right or
Performance Unit may be exercised during his or her lifetime only
by the Optionee or, in the event of his or her legal disability,
by his or her legal representative. A Related Right or Related
Performance Unit is transferable only when the Related Option is
transferable and only with the Related Option and under the same
conditions.
12. Restricted Stock Awards
12.1 The Committee is hereby authorized to award Shares of
Restricted Stock to Employees, including Employee Directors.
12.2 Restricted Stock awards under the Plan shall consist of
Shares that are restricted against transfer, subject to
forfeiture, and subject to such other terms and conditions
intended to further the purposes of the Plan as may be determined
by the Committee. Such terms and conditions may provide, in the
discretion of the Committee, for the vesting of such awards to be
contingent upon the achievement of one or more Performance Goals.
12.3 Restricted Stock awards shall be evidenced by
Agreements containing provisions setting forth the terms and
conditions governing such awards. Each such agreement shall
contain the following:
(a) prohibitions against the sale, assignment,
transfer, exchange, pledge, hypothecation, or other encumbrance
of (i) the Shares awarded as Restricted Stock under the Plan,
(ii) the right to vote the Shares, or (iii) the right to receive
dividends thereon in each case during the restriction period
applicable to the Shares; provided, however, that the Grantee
shall have all the other rights of a shareholder including, but
not limited to, the right to receive dividends and the right to
vote the Shares;
(b) at least one term, condition or restriction
constituting a "substantial risk of forfeiture" as defined in
Section 83(c) of the Code;
(c) such other terms, conditions and restrictions as
the Committee in its discretion may specify (including, without
limitation, provisions creating additional substantial risks of
forfeiture);
(d) a requirement that each certificate representing
Shares of Restricted Stock shall be deposited with the Company,
or its designee, and shall bear the following legend:
"This certificate and the shares of stock
represented hereby are subject to the terms
and conditions (including the risks of
forfeiture and restrictions against transfer)
contained in THE KROGER CO. 1994 Long-Term
Incentive Plan and an Agreement entered into
between the registered owner and The
Kroger Co. Release from such terms and
conditions shall be made only in accordance
with the provisions of the Plan and the
Agreement, a copy of each of which is on file
in the office of the Secretary of The
Kroger Co.
(e) the applicable period or periods of any terms,
conditions or restrictions applicable to the Restricted Stock,
provided, however, that the Committee in its discretion may
accelerate the expiration of the applicable restriction period
with respect to any part or all of the Shares awarded to a
Grantee; and
(f) the terms and conditions upon which any
restrictions upon Shares of Restricted Stock awarded under the
Plan shall lapse and new certificates free of the foregoing
legend shall be issued to the Grantee or his or her legal
representative.
12.4 The Committee may include in an Agreement a requirement
that in the event of a Grantee's termination of employment for
any reason prior to the lapse of restrictions, all Shares of
Restricted Stock shall be forfeited by the Grantee to the Company
without payment of any consideration by the Company, and neither
the Grantee nor any successors, heirs, assigns or personal
representatives of the Grantee shall thereafter have any further
rights or interest in the Shares or certificates.
12.5 The maximum number of Shares of Restricted Stock that
my be awarded to any Employee under this Plan during its term is
200,000 Shares.
13. Incentive Share Awards
13.1 The Committee is hereby authorized to award Incentive
Shares to Employees, including Employee Directors.
13.2 Incentive Shares shall be Shares that shall be issued
at such times, subject to achievement of such Performance Goals
or other goals and on such other terms and conditions as the
Committee shall deem appropriate and specify in the Agreement
relating thereto.
13.3 The maximum number of Shares of Incentive Shares that
may be awarded to any Employee under this Plan during its term is
200,000 Shares.
14. Capital Adjustments
The number and class of Shares subject to each outstanding
Option, Right or Performance Unit or Restricted Stock or
Incentive Share award, the Option Price and the aggregate number
and class of Shares for which grants or awards thereafter may be
made shall be subject to such adjustment, if any, as the
Committee in its sole discretion deems appropriate to reflect
such events as stock dividends, stock splits, adoption of stock
rights plans, recapitalizations, mergers, consolidations or
reorganizations of or by the Company. The adjustments made with
respect to Stock Options granted pursuant to Article 6 hereof
shall be equivalent to the treatment accorded to the holders of
Common Stock.
15. Termination or Amendment
The Board shall have the power to terminate the Plan and to
amend it in any respect, provided that, after the Plan has been
approved by the shareholders of the Company, the Board may not,
without the approval of the shareholders of the Company if such
approval is then required by applicable law or in order for the
Plan to continue to satisfy the requirements of Rule 16b-3 under
the Exchange Act, amend the Plan so as to increase the number of
Shares that may be issued under the Plan (except as provided in
Article 14), to modify materially the requirements as to
eligibility for participation in the Plan, to change the class of
persons eligible to receive Incentive Stock Options, or to
increase materially the benefits accruing to participants under
the Plan. No termination or amendment of the Plan shall, without
his or her consent, adversely affect the rights or obligations of
any Optionee or Grantee with respect to any outstanding grants or
awards hereunder. No amendment to Article 6 shall be made more
often than once every six months other than to comport with
changes to the Code, the Employee Retirement Income Security Act,
or the rules and regulations thereunder.
16. Modification, Extension and Renewal of Options, Rights,
Performance Units, Restricted Stock and Incentive Shares
Subject to the terms and conditions and within the
limitations of the Plan, the Committee may modify, extend or
renew outstanding Options, Rights and Performance Units, or
accept the surrender of outstanding options, rights and
performance units (to the extent not theretofore exercised)
granted under the Plan or under any other plan of the Company, a
Subsidiary or a company or similar entity acquired by the Company
or a Subsidiary, and authorize the granting of new Options,
Rights and Performance Units pursuant to the Plan in substitution
therefor (to the extent not theretofore exercised), and the
substituted Options, Rights and Performance Units may specify a
lower exercise price than the surrendered options, rights and
performance units, a longer term than the surrendered options,
rights and performance units or have any other provisions that
are authorized by the Plan. Subject to the terms and conditions
and within the limitations of the Plan, the Committee may modify
the terms of any outstanding Agreement providing for awards of
Restricted Stock or Incentive Shares. Notwithstanding the
foregoing, however, no modification of an Option, Right or
Performance Unit granted under the Plan, or an award of
Restricted Stock or Incentive Shares, shall, without the consent
of the Optionee or Grantee, alter or impair any of the Optionee's
or Grantee's rights or obligations.
17. Effectiveness of the Plan
The Plan and any amendments requiring shareholder approval
pursuant to Article 15 are subject to approval by vote of the
shareholders of the Company within 12 months after their adoption
by the Board. Subject to that approval, the Plan and any
amendments are effective on the date on which they are adopted by
the Board. Options, Rights, Performance Units, Restricted Stock
and Incentive Shares may be granted or awarded prior to
shareholder approval of the Plan or amendments, but each such
Option, Right, Performance Unit, Restricted Stock or Incentive
Share grant or award shall be subject to the approval of the Plan
or amendments by the shareholders. Except to the extent required
to satisfy the requirements of Rule 16b-3 under the Exchange Act,
the date on which any Option, Right, Performance Unit, Restricted
Stock or Incentive Shares granted or awarded prior to shareholder
approval of the Plan or amendment is granted or awarded shall be
the Date of Grant for all purposes as if the Option, Right,
Performance Unit, Restricted Stock or Incentive Shares had not
been subject to approval. No Option, Right or Performance Unit
may be exercised prior to such shareholder approval, and any
Restricted Stock or Incentive Shares awarded shall be forfeited
if such shareholder approval is not obtained.
18. Term of the Plan
Unless sooner terminated by the Board pursuant to Article
15, the Plan shall terminate on the date ten years after its
adoption by the Board, and no Options, Rights, Performance Units,
Restricted Stock or Incentive Shares may be granted or awarded
after termination. The termination shall not affect the validity
of any Option, Right, Performance Unit, Restricted Stock or
Incentive Shares outstanding on the date of termination.
19. Indemnification of Committee
In addition to such other rights of indemnification as they
may have as Directors or as members of the Committee, the members
of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and
reasonably incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or
any Option, Right, Performance Unit, Restricted Stock or
Incentive Shares granted or awarded hereunder, and against all
amounts reasonably paid by them in settlement thereof or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, if such members acted in good faith and in a manner
which they believed to be in, and not opposed to, the best
interests of the Company.
20. General Provisions
20.1 The establishment of the Plan shall not confer upon any
Employee or Director any legal or equitable right against the
Company, any Subsidiary or the Committee, except as expressly
provided in the Plan.
20.2 The Plan does not constitute inducement or
consideration for the employment of any Employee or the service
of any Director, nor is it a contract between the Company or any
Subsidiary and any Employee or Director. Participation in the
Plan, or the receipt of a grant or award hereunder, shall not
give an Employee or Director any right to be retained in the
service of the Company or any Subsidiary.
20.3 The Company and its Subsidiaries may assume options,
warrants, or rights to purchase stock issued or granted by other
corporations whose stock or assets shall be acquired by the
Company or its Subsidiaries, or which shall be merged into or
consolidated with the Company. Neither the adoption of this
Plan, nor its submission to the shareholders, shall be taken to
impose any limitations on the powers of the Company or its
affiliates to issue, grant, or assume options, warrants, rights,
or restricted stock, otherwise than under this Plan, or to adopt
other long-term incentive plans or to impose any requirement of
shareholder approval upon the same.
20.4 The interests of any Employee or Director under the
Plan are not subject to the claims of creditors and may not, in
any way, be assigned, alienated or encumbered except as provided
in Article 11.
20.5 The Plan shall be governed, construed and administered
in accordance with the laws of Ohio and the intention of the
Company that Incentive Stock Options granted under the Plan
qualify as such under Section 422 of the Code.