Exhibit 10.3
THE ANNTAYLOR STORES CORPORATION
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2003 EQUITY INCENTIVE PLAN
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1. PURPOSE.
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This 2003 Equity Incentive Plan (the "Plan"), is intended to encourage
stock ownership by employees of AnnTaylor Stores Corporation (the
"Corporation"), its divisions and Subsidiary Corporations, so that they may
acquire or increase their proprietary interest in the Corporation, and to
encourage such employees to remain in the employ of the Corporation, its
divisions and Subsidiary Corporations, and to put forth maximum efforts for
the success of the business. The Plan is also intended to encourage
directors of the Corporation who are not employees or officers of the
Corporation or its Subsidiary Corporations ("Eligible Directors") to acquire
or increase their proprietary interest in the Corporation and to further
promote and strengthen the interest of such Eligible Directors in the
development and financial success of the Corporation and to assist the
Corporation in attracting and retaining highly qualified directors.
2. DEFINITIONS.
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As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "CAUSE" used in connection with the termination of employment or
service of a Grantee, shall mean a termination of employment or
service of the Grantee by the Corporation or a division or Subsidiary
Corporation due to (i) the Grantee's failure to render services in
accordance with the terms of such Grantee's employment or service,
which failure amounts to a material neglect of such Grantee's duties,
(ii) the commission by the Grantee of an act of fraud,
misappropriation (including, without limitation, the unauthorized
disclosure of confidential or proprietary information) or
embezzlement, or (iii) a conviction of or guilty plea or confession to
any felony.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean shares of the Corporation's Common Stock,
par value $.0068 per share.
(d) "DISABILITY" shall mean a Grantee's inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death
or that has lasted or can be expected to last for a continuous period
of not less than twelve (12) months.
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(e) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(f) "EXECUTIVE OFFICER" shall mean an officer of the Corporation who is an
"executive officer" within the meaning of Rule 3b-7 under the Exchange
Act.
(g) "FAIR MARKET VALUE" per share as of a particular date shall mean (i)
the closing sales price per share of Common Stock as reported on the
New York Stock Exchange (or if the shares of Common Stock are not then
traded on such exchange, on the principal national securities exchange
on which they are then traded) for the last preceding date on which
there was a sale of such Common Stock on such exchange, or (ii) if the
shares of Common Stock are not then traded on a national securities
exchange but are traded on an over-the-counter market, the average of
the closing bid and asked prices for the shares of Common Stock in
such over-the-counter market for the last preceding date on which
there was a sale of such Common Stock in such market, or (iii) if the
shares of Common Stock are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the
Committee (as defined in Section 3 hereof) in its discretion may
determine.
(h) "GRANTEE" shall mean a person to whom an Option, Restricted Stock
Award or Restricted Unit Award has been granted.
(i) "INCENTIVE STOCK OPTION" shall mean an Option that is intended to be
an "incentive stock option" within the meaning of Section 422 of the
Code.
(j) "NONSTATUTORY STOCK OPTION" shall mean an Option that is not intended
to be an Incentive Stock Option.
(k) "OPTION" shall mean the right, granted to a Grantee pursuant to
Section 4, to purchase a specified number of shares of Common Stock,
on the terms and subject to the restrictions set forth in this Plan
and by the Committee upon the grant of the Option to the Grantee.
(l) "PERFORMANCE GOAL" shall mean the specific objectives that may be
established by the Committee, from time to time, with respect to an
award granted under the Plan, which objectives may be based on one or
more of the following, determined in accordance with generally
accepted accounting principles, as applicable: revenue; comparable
store sales; gross margin; operating profit; earnings before all or
any of interest, taxes, depreciation and/or amortization; cash flow;
working capital; return on equity, assets, capital or investment;
market share; sales (net or gross) measured by store, product line,
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territory, operating or business unit, customers, or other category;
earnings or book value per share of Common Stock; earnings from
continuing operations; net worth; turnover in inventory; levels of
expense, cost or liability by store, product line, territory,
operating or business unit or other category; appreciation in the
price of Common Stock; total shareholder return (stock price
appreciation plus dividends); and implementation of critical projects
or processes. Where applicable, the Performance Goal may be expressed
in terms of attaining a specified level of the selected criterion or
the attainment of a percentage increase or decrease in the selected
criterion, or may be applied to the performance of the Corporation
relative to a market index, a group of other companies or a
combination thereof, all as determined by the Committee. Performance
Goals may relate to the performance of a store, business unit, product
line, division, territory, or the Corporation or a combination
thereof.
(m) "RESTRICTED SHARE" shall mean a share of Common Stock, awarded to a
Grantee pursuant to Section 3, that is subject to the terms and
restrictions set forth in this Plan and by the Committee upon the
award of the Restricted Share to the Grantee.
(n) "RESTRICTED UNIT" shall mean the right, awarded to a Grantee pursuant
to Section 3, to receive an amount in cash equal to the Fair Market
Value of one share of Common Stock, on the terms and subject to the
restrictions set forth in this Plan and by the Committee upon the
award of the Restricted Unit to the Grantee.
(o) "RETIREMENT" shall have such meaning as the Committee shall determine
from time to time.
(p) "SUBSIDIARY CORPORATION" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of granting an Option, Restricted
Stock Award or Restricted Unit Award, each of the corporations other
than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
3. ADMINISTRATION.
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The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Corporation (the "Board"). The
Committee shall consist solely of two or more members of the Board, each of
whom shall be an "outside director" within the meaning of Section 162(m) of
the Code, a "nonemployee director" within the meaning of Rule 16b-3, as from
time to time amended, promulgated under Section 16 of the Exchange Act, and
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an "independent director" within the meaning of the New York Stock Exchange
Listed Company Manual.
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in the administration
of the Plan, including, without limitation, the authority to grant Options
and make awards of Restricted Shares and Restricted Units ("Restricted Stock
Awards" and "Restricted Unit Awards", respectively, and sometimes
collectively with the grant of Options, "Grants"); to determine the purchase
price of the shares of Common Stock covered by each Option (the "Option
Price"); to determine the persons to whom, and the time or times at which,
Options, Restricted Stock Awards and Restricted Unit Awards shall be granted;
to determine the number of shares to be covered by each Option, and to
determine the number of Restricted Shares and Restricted Units to be covered
by each Restricted Stock Award and Restricted Unit Award; to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the agreements (which need not
be identical) entered into in connection with grants of Options ("Option
Agreements") and Restricted Stock Awards and Restricted Unit Awards
("Restricted Award Agreements"); and to make all other determinations deemed
necessary or advisable for the administration of the Plan. Notwithstanding
the foregoing, the Committee shall not have the authority to reduce the
exercise price for any Option by repricing or replacing such Option unless
the Corporation shall have obtained the prior consent of its stockholders.
The determinations of the Committee shall be binding and conclusive on
all parties. The Committee may delegate to one or more of its members or to
one or more agents such administrative duties as it may deem advisable, and
the Committee or any person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. The
Committee shall have the authority in its discretion to delegate to specified
officers of the Corporation the power to make Grants, including, without
limitation, to determine the terms of such Grants, and the power to extend
the exercisability of Options pursuant to Section 6(f) or 6(g) hereof, in
each case consistent with the terms of this Plan and subject to such
restrictions, if any, as the Committee may specify when making such
delegation; provided that the delegates shall not have authority to make
Grants to, or extend the exercisability of Options held by, such delegates or
any Executive Officer.
No member of the Board or Committee shall be liable for any action taken
or determination made in good faith with respect to the Plan or any Grant
made hereunder.
4. ELIGIBILITY.
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Options, Restricted Stock Awards and Restricted Unit Awards may be
granted to employees (including, without limitation, officers who are
employees) of the Corporation or its present or future divisions and
Subsidiary Corporations, and to Eligible Directors of the Corporation or its
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present or future divisions and Subsidiary Corporations. In determining the
persons to whom Options, Restricted Stock Awards and Restricted Unit Awards
shall be granted and the number of shares to be covered by each Option, and
the number of Restricted Shares and Restricted Units to be covered by each
Restricted Stock Award and Restricted Unit Award, the Committee shall take
into account the duties of the respective persons, their present and
potential contributions to the success of the Corporation and such other
factors as the Committee shall deem relevant in connection with accomplishing
the purpose of the Plan. A person to whom an Option has been granted
hereunder is sometimes referred to herein as an "Optionee".
A Grantee shall be eligible to receive more than one Grant during the
term of the Plan, but only on the terms and subject to the restrictions
hereinafter set forth.
5. STOCK.
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The shares of Common Stock subject to Options and Restricted Stock
Awards hereunder may, in whole or in part, be authorized but unissued shares
or shares that shall have been or may be reacquired by the Corporation.
Subject to the next sentence, the aggregate number of shares of Common Stock
as to which Options and Restricted Shares may be granted from time to time
under this Plan shall not exceed 2,200,000, of which no more than an
aggregate of 440,000 shares may be used for grants of Restricted Shares. The
limitations established by the preceding sentence shall be subject to
adjustment as provided in Section 6(j) or 7(f) hereof, as applicable. Under
the Plan, no single employee may be granted Options covering more than
400,000 shares of Common Stock, or Restricted Stock Awards (constituting
performance based compensation within the meaning of Section 162(m) of the
Code) covering more than 100,000 shares of Common Stock, (subject to any
adjustments pursuant to Section 6(j) or 7(f) hereof, as applicable) during
any fiscal year of the Corporation.
If any shares subject to an Option grant or Restricted Stock Award are
forfeited, canceled, exchanged or surrendered or if a Grant otherwise
terminates or expires without a distribution of shares to the Grantee, the
shares of Common Stock with respect to such Grant shall, to the extent of any
such forfeiture, cancellation, exchange, surrender, termination or
expiration, again be available for Grants under the Plan. If any Restricted
Units are forfeited, canceled, exchanged or surrendered or if a Restricted
Unit Award otherwise terminates or expires without any payment being required
to be made with respect to any of the Restricted Units subject thereto, then
such Restricted Units shall, to the extent of any such forfeiture,
cancellation, exchange, surrender, termination or expiration, again be
available for Grants under the Plan.
6. TERMS AND CONDITIONS OF OPTIONS.
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Each Option granted pursuant to the Plan shall be evidenced by a written
Option Agreement between the Corporation and the Optionee, which agreement
shall comply with and be subject to the following terms and conditions (and
with such other terms and conditions not inconsistent with the terms of this
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Plan as the Committee, in its discretion, shall establish):
(a) NUMBER OF SHARES. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates. The number of
shares subject to any Option shall be subject to adjustment as
provided in Section 6(j) hereof.
(b) TYPE OF OPTION. Each Option Agreement shall specifically state
whether the Option is intended to be an Incentive Stock Option.
(c) OPTION PRICE. Each Option Agreement shall state the Option Price,
which shall be not less than one hundred percent (100%) of the Fair
Market Value of the shares of Common Stock of the Corporation on
the date of grant of the Option. The Option Price shall be subject
to adjustment as provided in Section 6(j) hereof. The date on
which the Committee adopts a resolution expressly granting an
Option shall be considered the day on which such Option is granted,
unless such resolution expressly provides for a specific later date.
(d) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in
full, at the time of exercise, (i) in cash, (ii) in shares of
Common Stock having a Fair Market Value equal to such Option Price
provided that such shares have been held by the Grantee for at
least one year prior to such exercise, or (iii) in a combination of
cash and shares provided that such shares have been held by the
Grantee for at least one year prior to such exercise, or (iv) in
the sole discretion of the Committee, through a cashless exercise
procedure involving a broker; provided, however, that such method
and time for payment shall be permitted by and be in compliance
with applicable law.
(e) TERM AND EXERCISE OF OPTIONS. Except as provided in Section 6(j)
hereof or unless otherwise determined by the Committee, the shares
covered by an Option shall become exercisable over such period,
in cumulative installments or otherwise, or upon the satisfaction
of such Performance Goals or other conditions, as the Committee
shall determine; provided, however, that the Committee shall have
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the authority to accelerate the exercisability of all or any
portion of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate, and
provided further, however, that such exercise period shall not (i)
be earlier than one year from the date of grant of such Option, and
(ii) exceed 10 years from the date of grant of such Option. The
exercise period shall be subject to earlier termination as provided
in Sections 6(f) and 6(g) hereof. An Option may be exercised, as
to any or all full shares of Common Stock as to which the Option
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has become exercisable, by giving written notice of such exercise
to the Secretary of the Corporation; provided, however, that an
Option may not be exercised at any one time as to fewer than 100
shares (or such number of shares as to which the Option is then
exercisable if such number of shares is less than 100).
(f) TERMINATION. Except as provided in this Section 6(f) and in
Section 6(g) hereof, an Option may not be exercised unless the
Optionee is then in the employ or service of the Corporation or one
of its divisions or Subsidiary Corporations, and unless the
Optionee has remained continuously so employed or in service since
the date of grant of the Option. In the event that the employment
or service of an Optionee shall terminate or cease other than by
reason of death, Disability or Retirement, all Options theretofore
granted to such Optionee shall, to the extent not theretofore
exercised or canceled, terminate immediately upon such separation
of employment or cessation of service, as applicable; provided,
however, that the Committee may in its discretion extend the period
for exercise of Options that were exercisable at the time of
separation of employment or cessation of service to a date later
than such separation or cessation date, but in any event not beyond
the date on which the Option would otherwise expire pursuant to
Section 6(e) hereof.
(g) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall
die while employed by or in service to the Corporation or a
Subsidiary Corporation, or if the Optionee's employment or service
shall terminate or cease by reason of Disability or Retirement, all
Options theretofore granted to such Optionee, to the extent
exercisable on the date of death or separation, may be exercised
by the Optionee or by the Optionee's estate or by a person who
acquired the right to exercise such Option by bequest or
inheritance or otherwise by reason of the death or Disability of
the Optionee, at any time within three (3) years after the date of
death or termination by reason of Disability or Retirement, or at
such later time as the Committee may in its discretion determine,
but in any event not beyond the date on which the Option would
otherwise expire pursuant to Section 6(e) hereof.
(h) NONTRANSFERABILITY OF OPTIONS. Options granted under the Plan
shall not be transferable except (i) by will or the laws of descent
and distribution, or (ii) as specifically provided below in this
Section (6)(h). Any Optionee may transfer Nonstatutory Stock
Options to members of his or her Immediate Family (as defined
below) if (x) the Option Agreement pursuant to which the
Nonstatutory Stock Option was granted so provides, (y) such
agreement was approved by the Board or the Committee, and (z) the
Optionee does not receive any consideration for the transfer.
"Immediate Family" means children, grandchildren, and spouse of the
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Optionee or one or more trusts for the benefit of such family
members or partnerships in which such family members are the only
partners. Any Nonstatutory Stock Option agreement may be amended
to provided for the transferability feature as outlined above,
provided that such amendment is approved by the Board or the
Committee. Any Nonstatutory Stock Option not granted pursuant to
an Option Agreement expressly permitting its transfer shall not be
transferable. During the lifetime of the Optionee, Options may be
exercised only by the Optionee, the guardian or legal
representative of the Optionee, or the transferee as permitted
under this Section 6(h).
(i) SPECIAL PROVISIONS APPLICABLE TO INCENTIVE STOCK OPTIONS. The
provisions of this Section 6(i) shall apply to the grant of
Incentive Stock Options, notwithstanding any other provision of the
Plan to the contrary. Only employees of the Corporation or any
Subsidiary Corporation may be granted Incentive Stock Options under
the Plan. In the case of any Incentive Stock Option, to the extent
the aggregate Fair Market Value (determined at the time such Option
is granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other Incentive
Stock Option plans of the Corporation and any Subsidiary
Corporation) exceeds $100,000, such Option shall be treated as a
Nonstatutory Stock Option. In no event shall any employee who, at
the time such employee would otherwise be granted an Option, owns
(within the meaning of Section 424(d) of the Code) stock of the
Corporation or any Subsidiary Corporation possessing more than 10%
of the total combined voting power of all classes of stock of the
Corporation or any Subsidiary Corporation, be eligible to receive
an Incentive Stock Option under the Plan. To the extent an
Incentive Stock Option is exercised more than three months
following the termination of the Grantee's employment (other than a
termination resulting from the Grantee's death or Disability), such
Option shall be treated as a Nonstatutory Stock Option.
(j) EFFECT OF CERTAIN CHANGES. (1) If there is any change in the
shares of Common Stock through the declaration of stock dividends,
distributions made with respect to shares of Common Stock,
recapitalizations, restructurings, stock splits, or combinations or
exchanges of such shares, or the like, then the number of shares of
Common Stock or other securities available for Options, the kind
and amount of shares and other securities covered by outstanding
Options, and/or the Option Price, as appropriate, shall be adjusted
as necessary to reflect equitably such change in the shares of
Common Stock; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated.
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(2) If an Acceleration Event (as defined below) shall occur while
unexercisable Options remain outstanding under the Plan, such Options not
theretofor exercisable by their terms shall become exercisable in full. An
"Acceleration Event" shall occur if:
(A) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than any person who on the date hereof is a
director or officer of the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation, or
any corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of
stock of the Corporation, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the combined
voting power of the Corporation's then outstanding securities;
(B) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in clause (A) or (C)
of this Section 6(j)(2) whose election by the Board or nomination for
election by the Corporation's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(C) there is consummated a merger or consolidation of the Corporation
with any other entity other than a merger or consolidation which would
result in the voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) more
than 80% of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately after such
merger or consolidation; or
(D) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition
by the Corporation of all or substantially all of the Corporation's assets.
Following the Acceleration Event, the Committee shall provide for the
cancellation of all Options then outstanding. Upon such cancellation, the
Corporation shall make, in exchange therefor, a cash payment for each such
Option in an amount per share equal to the difference between the per share
exercise price of such Option and the Fair Market Value of a share of Common
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Stock on the date during the prior sixty-day period that produces the highest
Fair Market Value.
(3) In the event of a change in the Common Stock of the Corporation as
presently constituted which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par
value or without par value, the shares resulting from any such change shall
be deemed to be the Common Stock within the meaning of the Plan.
(4) The foregoing adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
(5) Except as hereinbefore expressly provided in this Section 6(j), the
Optionee shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or
by reason of any dissolution, liquidation, merger, or consolidation or
spin-off of assets or stock of another corporation; and any issue by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Common Stock subject to the Option. The grant of an Option pursuant to the
Plan shall not affect in any way the right or power of the Corporation to
make adjustments, reclassifications, reorganizations or changes of its
capital or business structures or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or part of its business or assets.
(k) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option
shall have no rights as a stockholder with respect to any shares
covered by the Option until the date of the issuance of a stock
certificate for such shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities
or other property) or distribution of other rights for which the
record date is prior to the date such stock certificate is issued,
except as provided in Section 6(j) hereof.
(l) PERFORMANCE GOALS. The Committee may determine that the vesting
and/or payment of an Option shall be made subject to one or more
Performance Goals. Performance Goals established by the Committee
may be different with respect to different Grantees. The Committee
shall have the authority to make equitable adjustments to any
Performance Goal in recognition of unusual or nonrecurring events
affecting the Corporation, its financial statements or its shares,
in response to change in applicable laws or regulations, or to
account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or
related to the acquisition, disposition or discontinuance of a
business or a segment of a business, or related to a change in
accounting principles, or to reflect capital charges. With respect
to Options granted to Executive Officers, the vesting and/or
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payment of which are to be made subject to Performance Goals, the
Committee may comply with the applicable provisions of Section
162(m) of the Code, including, without limitation, those provisions
relating to the pre-establishment and certification of such
Performance Goals. With respect to Grantees who are not Executive
Officers, Performance Goals may also include such individual
objective or subjective performance criteria as the Committee may,
from time to time, establish. Performance Goals applicable to any
Option may include a threshold level of performance below which no
portion of such Grant shall become vested and/or payable, and
levels of performance at which specified percentages of such Grant
shall become vested and/or payable.
(m) OTHER PROVISIONS. The Option Agreements authorized under the Plan
may contain such other provisions, including, without limitation,
the imposition of (1) restrictions upon the exercise of an Option
and (2) provisions that will result in the forfeiture of an Option
and/or the shares acquired thereunder in the event the Optionee
breaches covenants relating to non-competition, confidentiality and
non-solicitation of employees and customers, as the Committee shall
deem advisable.
7. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS AND RESTRICTED UNIT
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AWARDS.
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Each Restricted Stock Award and Restricted Unit Award granted under the
Plan shall be evidenced by a written Restricted Award Agreement between the
Corporation and the Grantee, which agreement shall comply with, and be
subject to, the following terms and conditions (and with such other terms and
conditions not inconsistent with the terms of this Plan as the Committee, in
its discretion, shall establish):
(a) NUMBER OF SHARES AND UNITS. The Committee shall determine the number
of Restricted Shares to be awarded to a Grantee pursuant to the
Restricted Stock Award and the number of Restricted Units to be
awarded to a Grantee pursuant to a Restricted Unit Award.
(b) NONTRANSFERABILITY. Except as set forth in subsections (f) and (h) of
this Section 7, a Grantee may not sell, assign, transfer, pledge,
hypothecate or otherwise dispose of any Restricted Shares or
Restricted Units awarded to said Grantee under this Plan, or any
interest therein, except by will or the laws of descent and
distribution, until the Restricted Period (as defined below) shall
have elapsed. The Committee may also in its discretion impose such
other restrictions and conditions on Restricted Shares and Restricted
Units awarded as it deems appropriate including, without limitation,
the imposition of provisions that will result in the forfeiture of
Restricted Shares and Restricted Units in the event the Grantee
breaches covenants relating to non-competition, confidentiality and
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non-solicitation of employees and customers. In determining the
Restricted Period of an award, the Committee may provide that the
restrictions shall lapse with respect to specified percentages of the
awarded shares or units on successive anniversaries of the date of
such award or upon the satisfaction of such other conditions as the
Committee may impose, including, without limitation, the attainment of
one or more Performance Goals. The Restricted Period shall not end
with respect to a Restricted Stock Award or a Restricted Unit Award
prior to one year following the date of grant, except for the
Restricted Period of a Restricted Stock Award of 200 shares or less
(as such shares may be appropriately adjusted by the Committee in the
event of any change as set forth in Section 6(j)), which may end
earlier than one year, but no earlier than 30 days following the date
of grant. In no event shall the Restricted Period end with respect to
a Restricted Stock Award or Restricted Unit Award prior to the
satisfaction by the Grantee of any liability arising under Section 8
hereof. Any attempt to dispose of any Restricted Shares in
contravention of any such restrictions shall be null and void and
without effect. The period during which such restrictions on transfer,
and such other restrictions as the Committee may impose, are in effect
is referred to as the "Restricted Period".
(c) CERTIFICATES REPRESENTING RESTRICTED SHARES. The Corporation shall not
be required to issue stock certificates representing Restricted Shares
awarded to a Grantee until the Restricted Period related to such
shares has lapsed. If any stock certificates representing Restricted
Shares awarded pursuant to a Restricted Stock Award are issued prior
to the lapse of the Restricted Period, such stock certificate shall
bear an appropriate legend referring to such restrictions. Such
certificates may be retained by the Corporation during the Restricted
Period.
(d) TERMINATION. If the Grantee's continuous employment or service with
the Corporation or any of its divisions or Subsidiary Corporations
shall terminate for any reason prior to the expiration of the
Restricted Period applicable to any Restricted Shares or Restricted
Units granted to such Grantee, or prior to the satisfaction of any
other conditions established by the Committee applicable to such
Grant, any such Restricted Shares or Restricted Units then remaining
subject to restrictions (after taking into account the provisions of
subsections (f) and (h) of this Section 7) shall thereupon be
forfeited by the Grantee and any such Restricted Shares shall be
transferred to, and reacquired by, the Corporation or its Subsidiary
Corporation at no cost to the Corporation or the Subsidiary
Corporation. In such event, the Grantee, or in the event of his/her
death, his/her personal representative, shall, with respect to any
such shares, forthwith deliver to the Secretary of the Corporation any
stock certificates in the possession of the Grantee or the Grantee's
representative representing the Restricted Shares remaining subject to
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such restrictions, accompanied by such instruments of transfer, if
any, as may reasonably be required by the Secretary of the
Corporation.
(e) RIGHTS AS A STOCKHOLDER. Upon receipt by a Grantee of a Restricted
Stock Award, the Grantee shall possess all incidents of ownership of
the Restricted Shares (subject to subsection (b) of this Section 7),
including, without limitation, the right to receive or reinvest
dividends (to the extent declared by the Corporation) with respect to
such shares and to vote such shares.
(f) EFFECT OF CERTAIN CHANGES. The number of Restricted Shares or
Restricted Units subject to a Grant shall be appropriately adjusted by
the Committee in the event of any change in the shares of Common Stock
set forth in Section 6(j)(1). Upon the occurrence of an Acceleration
Event, as defined in Section 6(j)(2), all restrictions then
outstanding with respect to a Restricted Stock Award and Restricted
Unit Award shall automatically expire and be of no further force and
effect.
(g) PERFORMANCE GOALS. The Committee may determine that the vesting and/or
payment of a Restricted Stock Award or a Restricted Unit Award shall
be made subject to one or more Performance Goals. Performance Goals
established by the Committee may be different with respect to
different Grantees. The Committee shall have the authority to make
equitable adjustments to any Performance Goal in recognition of
unusual or nonrecurring events affecting the Corporation, its
financial statements or its shares, in response to change in
applicable laws or regulations, or to account for items of gain, loss
or expense determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the acquisition, disposition or
discontinuance of a business or a segment of a business, or related to
a change in accounting principles, or to reflect capital charges. With
respect to Restricted Stock Awards or Restricted Unit Awards granted
to Executive Officers, the vesting and/or payment of which are to be
made subject to Performance Goals, the Committee may comply with the
applicable provisions of Section 162(m) of the Code, including,
without limitation, those provisions relating to the pre-establishment
and certification of such Performance Goals. With respect to Grantees
who are not Executive Officers, Performance Goals may also include
such individual objective or subjective performance criteria as the
Committee may, from time to time, establish. Performance Goals
applicable to any Restricted Stock Award or Restricted Unit Award may
include a threshold level of performance below which no portion of
such Grant shall become vested and/or payable, and levels of
performance at which specified percentages of such Grant shall become
vested and/or payable.
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(h) OTHER PROVISIONS. The Committee shall have the authority (and the
Restricted Award Agreement may so provide) to cancel all or any
portion of any outstanding restrictions and conditions prior to the
expiration of the Restricted Period with respect to all or part of a
Restricted Stock Award or Restricted Unit Award on such terms and
conditions as the Committee may deem appropriate. The Restricted Award
Agreements authorized under this Plan shall contain such other
provisions not inconsistent with the terms hereof as the Committee
shall deem advisable.
8. WITHHOLDING TAXES.
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When a Grantee or other person becomes entitled to receive shares of
Common Stock pursuant to the exercise of an Option or upon the lapse of
restrictions relating to a Restricted Stock Award, or to receive a cash
payment with respect to a Restricted Unit Award upon the lapse of
restrictions relating thereto, the Corporation shall have the right to
require the Grantee or such other person to remit to the Corporation an
amount sufficient to satisfy any federal, state and local withholding tax
requirements related thereto. Unless otherwise prohibited by the Committee or
by applicable law, satisfaction of the withholding tax obligation may be
accomplished by any of the following methods or by a combination of such
methods: (a) tendering a cash payment, (b) authorizing the Corporation to
withhold from the shares of Common Stock or cash otherwise payable (1) one or
more of such shares having an aggregate Fair Market Value, determined as of
the date the withholding tax obligation arises, less than or equal to the
amount of the total withholding tax obligation or (2) cash in an amount less
than or equal to the amount of the total withholding tax obligation and (c)
delivering to the Corporation shares of Common Stock (provided that such
shares shall have been held for at least one year) having an aggregate Fair
Market Value, determined as of the date the withholding tax obligation
arises, less than or equal to the amount of the total withholding tax
obligation.
9. TERM OF PLAN.
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Unless terminated earlier by the Board, the term of this Plan shall be
10 years from the date the Plan was adopted. No Option, Restricted Stock
Award or Restricted Unit Award shall be granted pursuant to this Plan later
than May 1, 2013, but Options, Restricted Shares and Restricted Units
theretofore granted may extend beyond that date in accordance with their
terms.
10. AMENDMENT AND TERMINATION OF THE PLAN.
-------------------------------------
The Board may, at any time and from time to time, suspend, terminate,
modify or amend the Plan. Except as provided in Section 6 hereof, no
suspension, termination, modification or amendment of the Plan may adversely
affect any Grant previously made, unless the written consent of the Grantee
is obtained. Furthermore, except as provided in Section 6 hereof, no
modification or amendment of the Plan shall be made that, without the
approval of stockholders, would:
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(a) increase the total number of shares reserved for the purpose of the
Plan; or
(b) reduce the exercise price for Options by repricing or replacing
such Grants.
The Committee shall not have the authority to cancel any outstanding
Option and issue a new Option in its place with a lower exercise price;
provided, however, that this sentence shall not prohibit an exchange offer
whereby the Corporation provides certain Grantees with an election to cancel
an outstanding Option and receive a grant of a new Option at a future date if
such exchange offer only occurs with stockholder approval.
11. EFFECTIVE DATE.
--------------
The Plan was adopted on March 11, 2003 by the Board of Directors and
will become effective on the date on which the Corporation's stockholders
approve the Plan.
12. MISCELLANEOUS.
-------------
(a) EFFECT OF HEADINGS. The section and subsection headings contained
herein are for convenience only and shall not affect the construction
hereof.
(b) COMPLIANCE WITH LEGAL REQUIREMENTS. The Plan and the other obligations
of the Corporation under the Plan and any agreement shall be subject
to all applicable federal and state laws, rules and regulations, and
to such approvals by any regulatory or governmental agency as may be
required. The Corporation, in its discretion, may postpone the
issuance or delivery of Common Stock under any Grant as the
Corporation may consider appropriate, and may require any Grantee to
make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of
Common Stock in compliance with applicable laws, rules and
regulations.
(c) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Plan or in any
agreement entered into pursuant hereto shall confer upon any Grantee
the right to continue in the employ or service of the Corporation or
any of its divisions or Subsidiary Corporations, to be entitled to any
remuneration or benefits not set forth in the Plan or such agreement
or to interfere with or limit in any way the right of the Corporation
or such division or Subsidiary Corporation to terminate such Grantee's
employment.
(d) GRANTEE RIGHTS. No Grantee shall have any claim to be made any Grant
under the Plan, and there is no obligation for uniformity of treatment
for Grantees. Except as provided specifically herein, a Grantee or a
transferee of a Grant shall have no rights as a stockholder with
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respect to any shares covered by any Grant until the date of the
issuance of a stock certificate for such shares.
(e) BENEFICIARY. A Grantee may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the
Committee and may, from time to time, amend or revoke such
designation. If no designated beneficiary survives the Grantee, the
executor or administrator of the Grantee's estate shall be deemed to
be the Grantee's beneficiary.
13. GOVERNING LAW.
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The Plan shall be construed and administered in accordance with the laws
of the state of Delaware without regard to its principles of conflicts of law.
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