Document:

Exhibit 10.9 Debenture

     

    Exhibit 10.9

    THIS
      DEBENTURE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
      THESECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATE.
      WITHOUT SUCH REGISTRATION, THIS DEBENTURE MAY NOT BE SOLD, PLEDGED, OR OTHERWISE
      TRANSFERRED, EXCEPT ON THE OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED
      FOR THE TRANSFER, OR SUCH OTHER EVIDENCE THAT THE TRANSFER IS NOT IN VIOLATION
      OF THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS.

    

     

    

     

    

    EPSI
      BENEFITS, INC. 

    

     

    

    CONVERTIBLE
      DEBENTURE 

    

     

    

     

    

    $1,357,407.00
      

    

     

    

     

    

    DATE:
      July 25, 2001 

    

     

    

    EPSI
      Benefits, Inc., a corporation duly organized and existing under the laws
of
      the
      State of Texas (“EBI”), for value received, hereby promises to pay to BNL

    Equity
      Corporation (“BNLE”), or its permitted registered assigns, the principal sum of
      One Million Three Hundred Fifty Seven Thousand, Four Hundred Seven Dollars
      in
      lawful money of the United States of America (U.S.$1,357,407.00) in accordance
      with the provisions hereof, and to pay interest on outstanding principal from
      July 25, 2001. Monthly interest payments shall be payable monthly on the
      fifteenth day of each month, the first payment being due September 15, 2001.
      Monthly principal payments of $16,666.67 each shall be due beginning on
      September 15, 2008, and continuing on the fifteenth (15th) day of each month
      thereafter up to and including August 15, 2014 and $13,117.25 shall be due
      on
      the fifteenth (15th) day of September, 2014 and each month thereafter up to
      and
      including August 15, 2015, when all outstanding principal and interest
      outstanding hereunder shall be due and payable. Interest shall accrue on the
      outstanding principal amount hereunder at the rate of 14.00% per annum from
      the
      date of issuance through and including August 15, 2015, until the principal
      hereof is paid in full or made available for payment. 

    

     

    

    Principal
      of and interest on this Debenture is payable by check at the office of BNLE
      at
      such address as BNLE shall indicate in writing to EBI. 

    

     

    

    

    Conversion.
      At any time, BNLE may elect to immediately convert all or a portion
      of the principal amount of this Debenture into common stock of EBI on the
      following basis: 

    

     

    

    BNLE
      shall receive 1 share of $1.00 par value EBI common stock for each $2,661.5823
      of principal amount of this Debenture converted into common stock. 

    

     

    

    Notwithstanding
      anything herein to the contrary, BNLE’s right to convert the principal
      amount of this Debenture and/or collect the then remaining outstanding

    principal
      balance of this Debenture shall automatically terminate and be of no further
      force or effect in the event BNLE exercises its right to foreclose on stock
      in
      EBI owned by Lyndon A. Smith (“Smith”) and Sally A. Dwyer (“Dwyer”) pursuant to
      the terms and conditions of a Security Agreement (Pledge) by and among BNLE,
      EBI
      Smith and Dwyer of even date herewith. 

    

     

    

    Repurchase
      Upon a Change of Control. If at any time a Change of Control (as
      defined below) has occurred, EBI shall, at the express request of BNLE, redeem
      this Debenture at 100% of the outstanding principal hereof plus accrued and
      unpaid interest. For purposes hereof, “Change of Control” shall mean (i) any
      voluntary merger or consolidation of EBI with or into any person or entity
      or
      any voluntary sale, transfer or other conveyance, whether direct or indirect,
      of
      all or substantially all of the assets of EBI in one transaction or a series
      of
      related transactions or any other transaction or series of related transactions,
      if, in each case, immediately after giving effect to such transaction(s), any
      “person” or “group” (as such terms are used for purposes of Sections 13(d) and
      14(d) of the Securities Exchange Act of 1934, as amended, whether or not
      applicable), is or becomes the beneficial owner, directly or indirectly, of
      more
      than 50% of the total voting power of EBI entitled to vote in the election
      of
      Directors of EBI, or (ii) any changes in the Directors of EBI as a result of
      

    which
      individuals approved by BNLE cease to constitute a majority of the Board of
      Directors of EBI. 

    

     

    

    Notices.
      Any notice, demand, payment or other communication which may or is
      required to be given pursuant to this Debenture (collectively referred to as
      “notices”)
      shall be in writing and shall be sufficiently given or made if delivered by
      courier, or (except in the case of an actual or pending disruption of postal
      service) mailed by prepaid registered mail or transmitted by telecopier and
      shall be addressed to: 

    

     

    

     

    

     

    

    
      
        
        

      

      
        E-39

        
          

        

      

      
        
        

      

    

    

    If
      to
      EBI: 

    

     

    

    Lyndon
      Smith 

    

    EPSI
      Benefits, Inc. 

    

    2180
      North Loop West, Suite 400 

    

    Houston,
      Texas 77018 

    

    Fax:
      (713) 932-1162 

    

     

    

    If
      to
      BNLE: 

    

     

    

    BNL
      Equity Corporation 

    

    Barry
      N.
      Shamas 

    

    2100
      W.
      William Cannon, Suite L 

    

    Austin,
      TX 78745 

    

    Fax:
      (512) 692-5047 

    

     

    

    Any
      such
      notices shall be conclusively deemed to have been given or made on
      the
      day upon which same is delivered or, if sent by prepaid registered mail, on
      the
      third business day following the date of mailing or, if transmitted by
      telecopier, when electronic indication of receipt is received, provided that
      a
      copy of each such telecopied notices be delivered by first class mail, postage
      prepaid within three (3) days following receipt of such telecopied notices.
      Notice of any change of address or telecopier number may be given at any time
      in
      the aforementioned manner. 

    

     

    

    Amendments
      and Waivers. Any terms of this Debenture may be amended and
      the
      observance of any term of this Debenture may be waived (either generally or
      in a
      particular instance and either retroactively or prospectively) upon the mutual
      written consent of EBI and BNLE, or its permitted registered assign, as the
      case
      maybe. Any amendment or waiver effected in accordance herewith shall be binding
      upon BNLE, or its permitted registered assign, as the case may be, and any
      future holder of this Debenture. For purposes of this Debenture, only affiliates
      of BNLE shall be permitted assigns. 

    

     

    

    Miscellaneous.
      If any payment hereunder is required to be made on a day on which
      commercial banks in the State of Texas are authorized by law to close, such
      payment date shall be extended to the next succeeding business day, and interest
      shall be payable at the rate herein specified during such extension.

    

    Upon
      payment of the last amount of principal of and interest on this Debenture,
      the holder of this Debenture shall immediately return this Debenture to
EBI
      for
      cancellation. 

    

     

    

    Presentment
      for payment, demand, notice of dishonor, protest, notice of protest
      and all other notices of any kind are hereby expressly waived. 

    

     

    

    Paragraph
      headings contained in this Debenture are for reference purposes only
      and
      shall not affect in any way the meaning of interpretation of the provisions
      

    hereof.
      

    

     

    

    THIS
      DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
      THE
      STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS. 

    

     

    

    This
      Debenture is executed and delivered pursuant to the Loan Agreement of
even
      date
      herewith and the provisions of the Loan Agreement shall govern in the

    event
      of
      any conflict between the terms hereof and the Loan Agreement. 

    

     

    

    IN
      WITNESS WHEREOF, this Debenture has been duly executed and delivered
      by a duly authorized officer of EBI on the date set forth below. 

    

     

    

    Dated:
      July 25, 2001 

    

     

    

    EPSI
      BENEFITS, INC. 

    

     

    

     

                
      /s/ Lyndon Smith 

    By:
      _______________________ 

    

     

    

    
      
        
        

      

      
        
          E-40Exhibit 10

Exhibit 10.1

FEDERATED DEPARTMENT STORES, INC.

Description of Stock Credit Plan for 2006-2007 Performance Period

On March 24, 2006, the Compensation and Management Development Committee of the Board of Directors of Federated Department Stores, Inc. (the "Company") authorized a stock credit plan for its senior executives, including its named executive officers, for the performance period covering fiscal years 2006 and 2007. The purpose of the stock credit plan is to align senior management's compensation with the interests of the Company's stockholders and the Company's performance, including achievement of Federated's Four Priorities for 2006 and 2007: Merchandise Assortments, Price Simplification, The Shopping Experience and Marketing, and achievement of synergies associated with the Company's merger with The May Department Stores Company ("May").

The stock credit plan consists of two types of stock credits: core stock credits and merger stock credits. Core stock credits are 50% performance based and 50% time based. The performance based portion will be based on performance against Federated's Four Priorities. Merger stock credits are 100% performance based and will be based on performance against financial measurements of May merger synergies. Stock credits earned will be subject to two-year and three-year holding periods and their ultimate value to the participants will be based on Federated' stock price performance. The value of one-half of the stock credits earned will be paid in cash in Spring 2010 and the value of the other half will be paid in cash in Spring 2011. In each case, the value will be determined on the basis of the average closing price of Federated common stock as reported on the New York Stock Exchange for the 20 business days preceding the payment date.

The performance portion of the stock credits for Ronald W. Tysoe, who has previously announced his intended retirement, will be based on goals specific to his responsibilities for May merger-related asset and real estate transactions. Mr. Tysoe's stock credits are 75% performance based and 25% time based. Mr. Tysoe's performance period will be 2006-2007, with payout of his time based and any earned performance-based stock credits in 2008.

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