1996 STOCK OPTION PLAN
THE FORSCHNER GROUP, INC.
SECTION 1. Establishment. There is hereby established the 1996 Stock Option
Plan (this "Plan"), pursuant to which officers, directors and key employees of
THE FORSCHNER GROUP, INC. (hereinafter the "Company") and its subsidiaries, and
persons or entities who have been or may be in a position to benefit the
Company, may be granted options to purchase shares of common stock of the
Company, par value $.10 per share ("Common Stock"), and thereby share in the
future growth of the business. The subsidiaries of the Company included in this
Plan (the "Subsidiaries") shall be any subsidiary of the Company as defined in
Section 424 of the Internal Revenue Code of 1986, as amended (the "Code").
SECTION 2. Status of Options. The options which may be granted pursuant to
this Plan will constitute either incentive stock options within the meaning of
Section 422 of the Code ("Incentive Stock Options") or options which are not
Incentive Stock Options ("Non-incentive Stock Options"). Incentive Stock Options
and Non-incentive Stock Options shall be collectively referred to herein as
options.
SECTION 3. Eligibility. All employees and members of the Board of Directors
of the Company or any of its Subsidiaries (including officers), and any persons
or entities who have been or may be in a position to benefit the Company, shall
be eligible to be granted Non-incentive Stock Options to purchase shares of
Common Stock under this Plan. All employees of the Company or any of its
Subsidiaries who are employed at the time of adoption of this Plan or thereafter
shall be eligible to receive grants of Incentive Stock Options pursuant to this
Plan.
SECTION 4. Number of Shares covered by Options; No Preemptive Rights. The
total number of shares which may be issued and sold pursuant to options granted
under this Plan shall be 1,000,000 shares of Common Stock (or the number and
kind of shares of stock or other securities which, in accordance with Section 8
of this Plan, shall be substituted for such shares of Common Stock or to which
said shares shall be adjusted; hereinafter, all references to shares of Common
Stock are deemed to be references to said shares or shares so adjusted). The
issuance of said shares shall be free from any preemptive or preferential right
of subscription or purchase on the part of any stockholder. If any outstanding
option granted under this Plan expires or is terminated, for any reason, the
shares of Common Stock subject to the unexercised portion of such option will
again be available for options issued under this Plan.
SECTION 5. Administration.
(a) This Plan shall be administered by the committee (the "Committee")
referred to in paragraph (b) of this Section. Subject to the express
provisions of this Plan, the Committee shall have complete authority, in
its discretion, to interpret this Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the terms and provisions
of the respective option agreements (which need not be identical), to
determine to whom, the times and the prices at which options shall be
granted, the option periods, the number of shares of the Common Stock to be
subject to each option and whether each option shall be an Incentive Stock
Option or a Non-incentive Stock Option, and to make all other
determinations necessary or advisable for the administration of the Plan;
provided, however, that from the date of approval of the Plan by the
stockholders of the Company to the first anniversary of such date options
to purchase no more than 333,333 shares of Common Stock shall be granted
under the Plan and from the date of approval of the Plan to the second
anniversary of such date options to purchase no more than 666,666 shares of
Common Stock in the aggregate shall be granted under the Plan. Each option
shall be clearly identified at the time of grant as to its status as an
Incentive Stock Option or Non-incentive Stock Option. In making such
determinations, the Committee may take into account the nature of the
services rendered by the respective individuals or entities, their present
and potential contributions to the success of the Company and such other
factors as the Committee, in its discretion, shall deem relevant. The
Committee's determination on all of the matters referred to in this Section
5 shall be conclusive.
(b) The Committee shall consist of from two (2) to five (5)
individuals who are "outside directors" within the meaning of section
162(m) of the Code and applicable interpretive authority thereunder. The
Committee shall be appointed by the Board, which may at any time and from
time to time, remove any member of the Committee, with or without cause,
appoint additional members to the Committee and fill vacancies, however
caused, in the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination of the Committee
reduced to writing and signed by all of the members of the Committee shall
be fully as effective as if it had been made at a meeting duly called and
held. Nothing contained in this Plan shall be deemed to give any individual
or entity any right to be granted an option to purchase shares of Common
Stock except to the extent and upon such terms and conditions as may be
determined by the Committee.
SECTION 6. Terms of Options. Each option granted under this Plan shall be
evidenced by a Stock Option Agreement which shall be executed by the Company and
by the person or entity to whom such option is granted, and shall be subject to
the following terms and conditions:
(a) The price at which shares of Common Stock covered by each option
may be purchased pursuant thereto shall be determined in each case on the
date of grant by the Committee, but shall be an amount not less than the
par value of such shares. In the case of Incentive Stock Options, the price
at which shares of Common Stock covered by each Incentive Stock Option may
be purchased pursuant thereto shall be an amount not less than the fair
market value of shares of Common Stock at the time the Incentive Stock
Option is granted. For purposes of this Section, the fair market value of
shares of Common Stock on any day shall be (i) in the event the Common
Stock is not publicly traded, the fair market value on such day as
determined in good faith by the Committee or (ii) in the event the Common
Stock is publicly traded, the last sale price of a share of stock as
reported by the principal quotation service on which the Common Stock is
listed, or, if last sale prices are not reported with respect to the Common
Stock, the mean of the high bid and low asked price of a share of Common
Stock as reported by such principal quotation service, or, if there is no
such report by such quotation service for such day, such fair market value
shall be the average of (i) the last sale price (or, if last sale prices
are not reported with respect to the Common Stock, the mean of the high bid
and low asked prices) on the day next preceding such day for which there
was a report and (ii) the last sale price (or, if last sale prices are not
reported with respect to the Common Stock, the mean of the high bid and low
asked prices) on the day next succeeding such day for which there was a
report, or as otherwise determined by the Committee in its discretion
pursuant to any reasonable method contemplated by Section 422 of the Code
and any treasury regulations issued pursuant to that Section.
(b) The option price of the shares to be purchased pursuant to each
option shall be paid in full in cash, or by delivery (i.e. surrender) of
shares of Common Stock of the Company then owned by the optionee at the
time of the exercise of the option. Shares of Common Stock so delivered
will be valued on the day of delivery for the purpose of determining the
extent to which the option price has been paid thereby, in the same manner
as provided in paragraph (a) of this Section, or as otherwise determined by
the Committee, in its discretion, pursuant to any reasonable method
contemplated by Section 422 of the Code and any treasury regulations issued
pursuant to that section.
(c) Each Stock Option Agreement shall provide that such option may be
exercised by the optionee, in such parts and at such times, as may be
specified in such Agreement, within a period not exceeding ten years after
the date on which the option is granted (hereinafter called the "option
period") and, in any event, in the case of employees of the Company, only
during the continuance of the optionee's employment by the Company or any
of its Subsidiaries or, in the case of Incentive Stock Options, during the
period of thirty days after the termination of such employment to the
extent that the right to exercise such options had accrued at the date of
such termination or, in the case of Non-incentive Stock Options, during the
period of six months after the termination of such employment to the extent
that the right to exercise such options had accrued or the date of such
termination; provided, however, that if options as to 100 or more shares
are held by an optionee, then such options may not be exercised for less
than 100 shares at any one time, and if options for less than 100 shares
are held by an optionee, then options for all such shares must be exercised
at one time; and provided, further, that, if the optionee shall die within
the option period, the option may be exercised, to the extent specified in
such Stock Option Agreement, and as herein provided, but only prior to the
first to occur of:
(i) the expiration of the period of one year after the date of the
optionee's death, or
(ii) the expiration of the option period, by the person or persons
entitled to do so under the optionee's will, or, if the optionee shall fail
to make testamentary disposition of said option, or shall die intestate, by
the optionee's legal representative or representatives.
(d) In the discretion of the Committee, a single Stock Option
Agreement may include both Incentive Stock Options and Non-Incentive Stock
Options, or those options may be included in separate Stock Option
Agreements.
(e) Unless otherwise determined by the Committee with respect to
options that are not Incentive Stock Options, each option granted under
this Plan shall by its terms be non-transferable by the optionee except by
will or by the laws of descent and distribution and shall be exercisable
during the optionee's lifetime only by the optionee.
(f) Notwithstanding the foregoing, if an Incentive Stock Option is
granted to a person at any time when such person owns, within the meaning
of Section 424(d) of the Code, more than 10% of the total combined voting
power of all classes of stock of the employer corporation (or a parent or
subsidiary of such corporation within the meaning of Section 424 of the
Code) the price at which each share of Common Stock covered by such option
may be purchased pursuant to such option shall not be less than 110% of the
fair market value (determined as in paragraph (a) of this Section) of the
shares of Common Stock at the time the option is granted, and such option
must be exercised within a period specified in the Stock Option Agreement
relating to such options which does not exceed five years after the date on
which such option is granted.
(g) Each Stock Option Agreement entered into pursuant hereto may
contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Committee including, without
limitation, provisions (i) requiring the giving of satisfactory assurances
by the optionee that the shares are purchased for investment and not with a
view to resale in connection with a distribution of such shares, and will
not be transferred in violation of applicable securities laws, (ii)
restricting the transferability of such shares during a specified period
and (iii) requiring the resale of such shares to the Company at the option
price if the employment of the optionee terminates prior to a specified
time.
SECTION 7. Limit on Option Amount.
(a) Notwithstanding any provision contained herein, the aggregate fair
market value (determined under Section 6(a) as of the time such Incentive
Stock Options are granted) of the Common Stock with respect to which
Incentive Stock Options are first exercisable by any employee during any
calendar year (under all stock option plans of the employee's employer
corporation and its parent and subsidiary corporation within the meaning of
Section 424 of the Code) shall not exceed $100,000. The limit in this
paragraph shall not apply to options which are designated as Non-incentive
Stock Options, and, except as otherwise provided herein, there shall be no
limit on the amount of such options which may be first exercisable in any
year.
(b) Notwithstanding any provision contained herein, grants of options
under this Plan to any one optionee who is an employee of the Company shall
be limited to options to purchase no more than 250,000 shares of common
stock per calendar year.
SECTION 8. Adjustment of Number of Shares. In the event that a dividend
shall be declared upon the shares of Common Stock payable in shares of Common
Stock, the number of shares of Common Stock then subject to any option granted
hereunder and the number of shares reserved for issuance pursuant to this Plan
but not yet covered by an option, shall be adjusted by adding to each of such
shares the number of shares which would be distributable thereon if such share
had been outstanding on the date fixed for determining the stockholders entitled
to receive such stock dividend. In the event that the outstanding shares of
Common Stock shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up, combination of
shares, merger or consolidation, then there shall be substituted for each share
of Common Stock subject to any such option and for each share of Common Stock
reserved for issuance pursuant to the Plan but not yet covered by an option, the
number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall be so changed or for which each such
share shall be exchanged; provided, however, that in the event that such change
or exchange results from a merger or consolidation, and in the judgment of the
Committee such substitution cannot be effected or would be inappropriate, or if
the Company shall sell all or substantially all of its assets, the Company shall
use reasonable efforts to effect some other adjustment of each then outstanding
option which the Committee, in its sole discretion, shall deem equitable. In the
event that there shall be any change, other than as specified above in this
Section 8, in the number or kind of outstanding shares of Common Stock or of any
stock or other securities into which such shares of Common Stock shall have been
changed or for which they shall have been exchanged, then, if the Committee
shall determine that such change equitably requires an adjustment in the number
or kind of shares theretofore reserved for issuance pursuant to the Plan but not
yet covered by an option and of the shares then subject to an option or options,
such adjustment shall be made by the Committee and shall be effective and
binding for all purposes of this Plan and of each Stock Option Agreement.
Notwithstanding the foregoing, if any adjustment in the number of shares which
may be issued and sold pursuant to options is required by the Code or
regulations promulgated thereunder to be approved by the stockholders in order
to enable the Company to issue Incentive Stock Options pursuant to this Plan,
then no such adjustment shall be made without the approval of the stockholders.
In the case of any such substitution or adjustment as provided for in this
Section, the option price in each Stock Option Agreement for each share covered
thereby prior to such substitution or adjustment will be the total option price
for all shares of stock or other securities which shall have been substituted
for each such share or to which such share shall have been adjusted pursuant to
this Section 8. No adjustment or substitution provided for in this A - 7 Section
8 shall require the Company, in any Stock Option Agreement, to sell a fractional
share, and the total substitution or adjustment with respect to each Stock
Option Agreement shall be limited accordingly. Notwithstanding the foregoing, in
the case of Incentive Stock Options, if the effect of the adjustments or
substitution is to cause the option to fail to continue to qualify as an
Incentive Stock Option or to cause a modification, extension or renewal of such
option within the meaning of Section 424 of the Code, the Committee shall use
reasonable efforts to effect such other adjustment of each then outstanding
option as the Committee, in its sole discretion, shall deem equitable.
SECTION 9. Amendments. This Plan may be amended from time to time by vote
of the Committee; provided, however, that no amendment which shall (i) change
the total number of shares which may be issued and sold pursuant to options
granted under this Plan, (ii) change the designation of the class of employees
eligible to receive Incentive Stock Options or the class of individuals or
entities eligible to receive Non-incentive Stock Options, (iii) decrease the
minimum option price stated in Section 6(a) of this Plan, (iv) extend the period
during which an option may be granted to exercised beyond the maximum period
specified in this Plan or (v) withdraw the authority to administer this Plan
from the Committee, shall be effective without the approval of the stockholders.
Notwithstanding the foregoing, the Plan may be amended by the Committee to
incorporate or conform to requirements imposed by any amendments made to the
Code or regulations promulgated thereunder which the Committee deems to be
necessary or desirable to preserve (a) incentive stock option status for
outstanding Incentive Stock Options and the ability to issue Incentive Stock
Options pursuant to this Plan, and (b) the deductibility by the Company pursuant
to Section 162(m) of the Code of amounts taxed to Plan participants as ordinary
compensation income.
SECTION 10. Termination. This Plan shall terminate on, and no additional
options shall be granted after, ten years from the date the Plan is adopted by
the Committee. In addition, the Plan may be terminated at any time by a vote of
the Board of Directors.