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Exhibit 10.38
FEDERATED DEPARTMENT STORES, INC.
1995 EXECUTIVE EQUITY INCENTIVE PLAN
(AS AMENDED AND RESTATED AS OF FEBRUARY 28, 1997)
Federated Department Stores, Inc., a Delaware corporation (the "Company"),
hereby amends and restates this 1995 Executive Equity Incentive Plan (this
"Plan") effective as of February 28, 1997 (the "Effective Date").
1. PURPOSE. The purpose of this Plan is to attract and retain directors,
officers, and other key executives and employees of the Company and its
subsidiaries and to provide to such persons incentives and rewards relating to
the Company's business plans.
2. DEFINITIONS. In addition to the terms defined elsewhere herein, the
following terms have the following meanings when used herein with initial
capital letters:
(a) "Appreciation Right" means a right granted pursuant to Section 5.
(b) "Board" means the Board of Directors of the Company or, pursuant
to any delegation by the Board to the Compensation Committee pursuant to
Section 11, the Compensation Committee.
(c) "Change in Control" means the occurrence of any of the following
events:
(i) The Company is merged, consolidated, or reorganized into or
with another corporation or other legal entity, and as a result of
such merger, consolidation, or reorganization less than a majority of
the combined voting power of the then-outstanding securities of such
corporation or entity immediately after such transaction are held in
the aggregate by the holders of the then-outstanding securities
entitled to vote generally in the election of directors of the Company
(the "Voting Stock") immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal
entity and, as a result of such sale or transfer, less than a majority
of the combined voting power of the then-outstanding securities of
such other corporation or entity immediately after such sale or
transfer is held in the aggregate by the holders of Voting Stock of
the Company immediately prior to such sale or transfer.
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form, or report or item therein), each as
promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 30% or
more of the combined voting power of the Voting Stock of the Company;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form, or report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction; or
(v) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the directors of
the Company cease for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this clause (v) each
director who is first elected, or first nominated for election by the
Company's stockholders, by a vote of at least two-thirds of the
directors of the Company (or a committee thereof) then still in office
who were directors of the Company at the beginning of any such period
will be deemed to
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have been a director of the Company at the beginning of such
period.
Notwithstanding the foregoing provisions of Section 2(d)(iii) or 2(d)(iv),
unless otherwise determined in a specific case by majority vote of the
Board, a "Change in Control" will not be deemed to have occurred for
purposes of Section 2(d)(iii) or 2(d)(iv) solely because (1) the Company,
(2) a Subsidiary, or (3) any employee stock ownership plan or any other
employee benefit plan of the Company or any Subsidiary either files or
becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K, or Schedule 14A (or any
successor schedule, form, or report or item therein) under the Exchange Act
disclosing beneficial ownership by it of shares of Voting Stock, whether in
excess of 30% or otherwise, or because the Company reports that a change in
control of the Company has occurred or will occur in the future by reason
of such beneficial ownership.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Common Shares" means shares of Common Stock of the Company or any
security into which such Common Shares may be changed by reason of any
transaction or event of the type referred to in Section 8.
(f) "Compensation Committee" means a committee appointed by the Board
in accordance with the By-Laws of the Company consisting of at least three
Non-Employee Directors.
(g) "Date of Grant" means the date determined in accordance with the
Board's authorization on which a grant of Option Rights or Appreciation
Rights, or a grant of Restricted Shares, becomes effective.
(h) "Immediate Family" has the meaning ascribed thereto in Rule
16a-1(e) under the Exchange Act.
(i) "Incentive Stock Options" means Option Rights that are intended to
qualify as "incentive stock options" under Section 422 of the Code or any
successor provision.
(j) "Market Value per Share" means any of the following, as determined
in accordance with the Board's authorization: (i) the closing sale price
per share of the Common Shares as reported in the New York Stock Exchange
Composite Transactions Report (or any other consolidated transactions
reporting system which subsequently may replace such Composite Transactions
Report) for the New York Stock Exchange (the "NYSE") trading day
immediately preceding the date determined in accordance with the Board's
authorization, or if there are no sales on such date, on the next preceding
day on which there were sales, (ii) the average (whether weighted or not)
or mean price, determined by reference to the closing sales prices, average
between the high and low sales prices, or any other standard for
determining price adopted by the Board, per share of the Common Shares as
reported in the NYSE Composite Transactions Report as of the date or for
the period determined in accordance with the Board's authorization, or
(iii) in the event that the Common Shares are not listed for trading on the
NYSE as of a relevant Date of Grant, an amount determined in accordance
with standards adopted by the Board.
(k) "Non-Employee Director" means a Director of the Company who is not
a full-time employee of the Company or any Subsidiary.
(l) "Nonqualified Stock Option" means Option Rights other than
Incentive Stock Options.
(m) "Optionee" means the optionee named in an agreement with the
Company evidencing an outstanding Option Right.
(n) "Option Price" means the purchase price payable on exercise of an
Option Right.
(o) "Option Right" means the right to purchase Common Shares upon
exercise
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of an option granted pursuant to Section 4.
(p) "Participant" means a person who is approved by the Board to
receive benefits under this Plan and who is at the time an officer,
executive, or other employee of the Company or any one or more of its
Subsidiaries, or who has agreed to commence serving in any of such
capacities, and also includes each Non-Employee Director.
(q) "Restricted Shares" means Common Shares issued pursuant to Section
6 as to which neither the substantial risk of forfeiture nor the
prohibition on transfers referred to in Section 6 has expired.
(r) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act
(or any successor rule substantially to the same effect), as in effect from
time to time.
(s) "Spread" means the excess of the Market Value per Share of the
Common Shares on the date when an Appreciation Right is exercised, or on
the date when Option Rights are surrendered in payment of the Option Price
of other Option Rights, over the Option Price provided for in the related
Option Right.
(t) "Subsidiary" has the meaning specified in Rule 405 promulgated
under the Securities Act of 1933, as amended (or in any successor rule
substantially to the same effect).
3. SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as provided in
Section 8, the number of Common Shares that may be issued or transferred under
this Plan upon the exercise of Option Rights or Appreciation Rights or as
Restricted Shares and released from substantial risks of forfeiture thereof, may
not exceed the sum of (i) 10.0 million and (ii) the number of shares which would
otherwise have been available for issuance under the 1992 Equity Plan upon the
effectiveness of this Plan. The aggregate number of Common Shares issued under
this Plan upon the grant of Restricted Shares may not exceed the number of
shares which would otherwise have been available for issuance as restricted
shares under the 1992 Equity Plan as of the Effective Date. Shares issued under
this Plan may be shares of original issuance or treasury shares or a combination
of the foregoing. No Participant will be granted Option Rights or Appreciation
Rights, in the aggregate, for more than 500,000 Common Shares in any period of
three fiscal years of the Company, subject to adjustment as provided in Section
8.
4. OPTION RIGHTS. The Board may from time to time authorize the grant to
Participants of options to purchase Common Shares upon such terms and conditions
as it may determine in accordance with the following provisions:
(a) Each grant will specify the number of Common Shares to which it
pertains and the term during which the rights granted thereunder will
exist. The aggregate number of Common Shares to which the grants to any
Non-Employee Director in any fiscal year of the Company pertain shall not
exceed 3500 (subject to adjustment as provided in Section 8).
(b) Each grant will specify an Option Price per share, which may not
be less than the Market Value per Share as of the Date of Grant.
(c) Each grant will specify whether the Option Price is payable (i) in
cash, (ii) by the actual or constructive transfer to the Company of
nonforfeitable, unrestricted Common Shares already owned by the Optionees
(or other consideration authorized pursuant to Section 4(d)) having an
actual or constructive value as of the time of exercise as determined by
the Board or in accordance with the applicable agreement referred to in
Section 4(i), equal to the total Option Price, or (iii) by a combination of
such methods of payment.
(d) The Board may determine, at or after the Date of Grant, that
payment of the Option Price of any option (other than an Incentive Stock
Option) may also be made in whole or in part in the form of Restricted
Shares or other Common Shares that are forfeitable or subject to
restrictions on transfer, or other Option Rights (based on the Spread on
the date of exercise). Unless otherwise determined by the Board at or after
the Date of Grant, whenever any Option Price is paid in whole or in part by
means of any of the forms
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of consideration specified in this paragraph, the Common Shares received
upon the exercise of the Option Rights will be subject to such risks of
forfeiture or restrictions on transfer as may correspond to any that apply
to the consideration surrendered, but only to the extent of (i) the number
of shares surrendered in payment of the Option Price or (ii) the Spread of
any unexercisable portion of Option Rights surrendered in payment of the
Option Price.
(e) Any grant may provide for deferred payment of the Option Price
from the proceeds of sale through a bank or broker on the exercise date of
some or all of the shares to which such exercise relates.
(f) Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain
unexercised.
(g) Each grant will specify the period or periods of continuous
service by the Optionee with the Company or any Subsidiary which is
necessary before the Option Rights or installments thereof will become
exercisable and may provide for the earlier exercise of such Option Rights
in the event of a Change in Control or other event.
(h) Option Rights granted under this Plan may be (i) Incentive Stock
Options, (ii) Nonqualified Stock Options, or (iii) combinations of the
foregoing.
(i) Each grant of Option Rights will be evidenced by an agreement
executed on behalf of the Company by any officer, director, or, if
authorized by the Board, employee of the Company and delivered to the
Optionee and containing such terms and provisions as the Board may approve,
except that in no event will any such agreement include any provision
prohibited by the express terms of this Plan.
5. APPRECIATION RIGHTS. The Board may also authorize the grant to any
Optionee (other than a Non-Employee Director) of Appreciation Rights in respect
of Option Rights granted hereunder. An Appreciation Right will be a right of the
Optionee, exercisable by surrender of the related Option Right or in accordance
with the applicable agreement referred to in Section 5(f), to receive from the
Company an amount, as determined by the Board, which will be expressed as a
percentage of the Spread at the time of exercise. Each such grant will be in
accordance with the following provisions:
(a) Any grant may provide that the amount payable on exercise of an
Appreciation Right may be paid by the Company in cash, in Common Shares, or
in any combination thereof and may either grant to the Optionee or retain
in the Board the right to elect among those alternatives.
(b) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Board as of
the Date of Grant.
(c) Any grant may specify waiting periods before exercise and
permissible exercise dates or periods and will provide that no Appreciation
Right may be exercised except at a time when the related Option Right is
also exercisable and at a time when the Spread is positive.
(d) Any grant may specify that such Appreciation Right may be
exercised only in the event of a Change in Control or other event.
(e) Any grant may provide that, in the event of a Change in Control,
then any such Appreciation Right will automatically be deemed to have been
exercised by the Optionee, the related Option Right will be deemed to have
been surrendered by the Optionee and will be cancelled, and the Company
forthwith upon the consummation thereof will pay to the Optionee in cash an
amount equal to the Spread at the time of such consummation.
(f) Each grant of Appreciation Rights will be evidenced by an
agreement executed on behalf of the Company by any officer, director, or,
if authorized by the Board, employee of the Company and delivered to and
accepted by the Optionee, which agreement will describe such Appreciation
Rights, identify the related Option Rights, state that such
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Appreciation Rights are subject to all the terms and conditions of this
Plan, and contain such other terms and provisions as the Board may approve,
except that in no event will any such agreement include any provision
prohibited by the express terms of this Plan.
6. RESTRICTED SHARES. The Board may also authorize the issuance or transfer
of Restricted Shares to Participants (other than Non-Employee Directors) in
accordance with the following provisions:
(a) Each such issuance or transfer will constitute an immediate
transfer of the ownership of Common Shares to the Participant in
consideration of the performance of services, entitling such Participant to
voting, dividend, and other ownership rights, but subject to the
substantial risk of forfeiture provided below.
(b) Each such issuance or transfer may be made without additional
consideration.
(c) Each such issuance or transfer will provide that the Restricted
Shares covered thereby will be subject, except (if the Board so determines)
in the event of a Change in Control or other event specified in the
agreement referred to in Section 6(e), for a period to be determined by the
Board at the Date of Grant, to a "substantial risk of forfeiture" within
the meaning of Section 83 of the Code.
(d) Each such issuance or transfer will provide that during the period
for which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Shares will be prohibited or restricted
in the manner and to the extent prescribed in or pursuant to the agreement
referred to in Section 6(e) (which restrictions may include, without
limitation, rights of repurchase or first refusal or provisions subjecting
the Restricted Shares to a continuing substantial risk of forfeiture in the
hands of any transferee).
(e) Each issuance or transfer of Restricted Shares will be evidenced
by an agreement executed on behalf of the Company by any officer, director,
or, if authorized by the Board, employee of the Company and delivered to
and accepted by the Participant and containing such terms and provisions as
the Board may approve except that in no event will any such agreement
include any provision prohibited by the express terms of the Plan. All
certificates representing Restricted Shares will be held in custody by the
Company until all restrictions thereon have lapsed, together with a stock
power executed by the Participant in whose name such certificates are
registered, endorsed in blank and covering such Restricted Shares, which
may be executed by any officer of the Company upon a determination by the
Board that an event causing the forfeiture of the Restricted Shares has
occurred.
7. TRANSFERABILITY. (a) Except as provided in Section 7(b), no Option
Right, Appreciation Right, or Restricted Share granted, issued, or transferred
under this Plan will be transferable otherwise than (i) upon death, by will or
the laws of descent and distribution, (ii) pursuant to a qualified domestic
relations order, as that term is defined in the Code or the rules thereunder
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules thereunder, or (iii) to a fully revocable trust of which
the Optionee is treated as the owner for federal income tax purposes.
(b) Notwithstanding the provisions of Section 7(a), Option Rights,
Appreciation Rights, and Restricted Shares (including Option Rights,
Appreciation Rights, and Restricted Shares granted, issued, or transferred
under this Plan prior to the Effective Date) will be transferable by a
Participant who at the time of such transfer is eligible to earn "Long-Term
Incentive Awards" under the Company's 1992 Incentive Bonus Plan, as amended
(or any successor plan thereto), without payment of consideration therefor
by the transferee, to any one or more members of the Participant's
Immediate Family (or to one or more trusts established solely for the
benefit of one or more members of the Participant's Immediate Family or to
one or more partnerships in which the only partners are members of the
Participant's Immediate Family); provided, however, that (i) no such
transfer will be effective unless reasonable prior notice thereof is
delivered to the Company and such transfer is thereafter effected in
accordance with any terms and conditions that shall have been made
applicable thereto by the Company or the Board and (ii) any such transferee
will be subject to the same terms and conditions hereunder as the
Participant.
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(c) The Board may specify at the Date of Grant that part or all of the
Common Shares that are (i) to be issued or transferred by the Company upon
the exercise of Option Rights or Appreciation Rights or (ii) no longer
subject to the substantial risk of forfeiture and restrictions on transfer
referred to in Section 6, will be subject to further restrictions on
transfer.
8. ADJUSTMENTS. The Board may make or provide for such adjustments in the
numbers of Common Shares covered by outstanding Option Rights or Appreciation
Rights granted hereunder, in the prices per share applicable to such Option
Rights and Appreciation Rights, and in the kind of shares covered thereby, as
the Board may determine is equitably required to prevent dilution or enlargement
of the rights of Participants that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization, or other change
in the capital structure of the Company, (b) any merger, consolidation,
spin-off, split-off, spin-out, split-up, reorganization, partial or complete
liquidation, or other distribution of assets or issuance of rights or warrants
to purchase securities, or (c) any other corporate transaction or event having
an effect similar to any of the foregoing; provided, however, that no such
adjustment in the numbers of Common Shares covered by outstanding Option Rights
or Appreciation Rights will be made unless such adjustment would change by more
than 5% the number of Common Shares issuable upon exercise of Option Rights or
Appreciation Rights; provided, further, however, that any adjustment which by
reason of this Section 8 is not required to be made currently will be carried
forward and taken into account in any subsequent adjustment. In the event of any
such transaction or event, the Board may provide in substitution for any or all
outstanding awards under this Plan such alternative consideration as it may
determine to be equitable in the circumstances and may require in connection
therewith the surrender of all awards so replaced. The Board may also make or
provide for such adjustments in the numbers of shares specified in Section 3 as
the Board may determine is appropriate to reflect any transaction or event
described in this Section 8.
9. FRACTIONAL SHARES. The Company will not be required to issue any
fractional Common Shares pursuant to this Plan. The Board may provide for the
elimination of fractions and for the settlement of fractions in cash.
10. WITHHOLDING TAXES. To the extent that the Company is required to
withhold federal, state, local, or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Company for such withholding are insufficient, it
will be a condition to the receipt of such payment or the realization of such
benefit that the Participant or such other person make arrangements satisfactory
to the Company for payment of the balance of such taxes required to be withheld,
which arrangements may include relinquishment of a portion of such benefit.
11. ADMINISTRATION OF THE PLAN. (a) This Plan will be administered by the
Board, which may from time to time delegate all or any part of its authority
under this Plan to the Compensation Committee or any subcommittee thereof.
(b) The Board will take such actions as are required to be taken by it
hereunder, may take the actions permitted to be taken by it hereunder, and
will have the authority from time to time to interpret this Plan and to
adopt, amend, and rescind rules and regulations for implementing and
administering this Plan. All such actions will be in the sole discretion of
the Board, and when taken, will be final, conclusive, and binding. Without
limiting the generality or effect of the foregoing, the interpretation and
construction by the Board of any provision of this Plan or of any
agreement, notification, or document evidencing the grant of Option Rights,
Appreciation Rights, or Restricted Shares, and any determination by the
Board in its sole discretion pursuant to any provision of this Plan or of
any such agreement, notification, or document will be final and conclusive.
Without limiting the generality or effect of any provision of the
Certificate of Incorporation of the Company, no member of the Board will be
liable for any such action or determination made in good faith.
(c) The provisions of Sections 4, 5, and 6 will be interpreted as
authorizing the Board, in taking any action under or pursuant to this Plan,
to take any action it determines in its sole discretion to be appropriate
subject only to the express limitations therein contained and no
authorization in any such Section or other provision of this Plan is
intended or may be deemed to constitute a limitation on the authority of
the Board.
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(d) The existence of this Plan or any right granted or other action
taken pursuant hereto will not affect the authority of the Board or the
Company to take any other action, including in respect of the grant or
award of any option, security, or other right or benefit, whether or not
authorized by this Plan, subject only to limitations imposed by applicable
law as from time to time applicable thereto.
12. AMENDMENTS, ETC. (a) This Plan may be amended from time to time by the
Board, but without further approval by the holders of a majority of the Common
Shares present in person or by proxy at a meeting of the Company's stockholders
and entitled to vote generally in the election of directors, or such other
approval as may be required by Rule 16b-3, no such amendment will (i) increase
the maximum numbers of Common Shares or Restricted Shares issuable pursuant to
Section 3 or the maximum number of Common Shares that may be subject to Option
Rights or Appreciation Rights granted to any Participant in any period of three
fiscal years of the Company (except that adjustments and additions authorized by
this Plan will not be limited by this provision) or (ii) cause Rule 16b-3 to
become inapplicable to this Plan or Option Rights, Appreciation Rights, or
Restricted Shares granted, issued, or transferred hereunder during any period in
which the Company has any class of equity securities registered pursuant to
Section 13 or 15 of the Exchange Act.
(b) The Board may, with the concurrence of the affected Optionee,
cancel any agreement evidencing Option Rights or any other award granted
under this Plan. In the event of such cancellation, the Board may authorize
the granting of new Option Rights or other awards hereunder (which may or
may not cover the same number of Common Shares which had been the subject
of the prior award) in such manner, at such option price, and subject to
such other terms, conditions, and discretions as would have been applicable
under this Plan had the canceled Option Rights or other award not been
granted.
(c) In case of termination of employment by reason of death,
disability, or normal or early retirement, or in the case of hardship or
other special circumstances, of a Participant who holds an Option Right or
Appreciation Right not immediately exercisable in full, or any Restricted
Shares as to which the substantial risk of forfeiture or the prohibition or
restriction on transfer has not lapsed, or who holds Common Shares subject
to any transfer restriction imposed pursuant to Section 7(b), the Board may
take such action as it deems equitable in the circumstances or in the best
interests of the Company, including without limitation waiving or modifying
any other limitation or requirement under any such award.
(d) This Plan will not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or
any Subsidiary, nor will it interfere in any way with any right the Company
or any Subsidiary would otherwise have to terminate or modify the terms of
such Participant's employment or other service at any time.
(e) To the extent that any provision of this Plan would prevent any
Option Right that was intended to qualify as an Incentive Stock Option from
qualifying as such, that provision will be null and void with respect to
such Option Right, but will remain in effect for other Option Rights and
there will be no further effect on any provision of this Plan.
(f) This Plan will be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflict of laws thereof. If any provision of this Plan is held to be
invalid or unenforceable, no other provision of this Plan will be affected
thereby.