Exhibit 4(a)
As Adopted on
July 22, 1994
AMES DEPARTMENT STORES, INC.
1994 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
NYFS10...:\79\15079\0001\1438\PLN71394.N00
TABLE OF CONTENTS
Page
1. Purposes......................................................... 1
2. Amount of Stock Subject to the Plan.............................. 1
3. Effective Date and Term of the Plan.............................. 2
4. Administration................................................... 2
5. Eligibility...................................................... 3
6. Option Grants.................................................... 3
7. Option Price and Payment......................................... 3
8. Terms of Options and Limitations on the Right of
Exercise......................................................... 5
9. Option Period and Exercise of Options............................ 5
10. Termination of Directorship...................................... 6
11. Use of Proceeds.................................................. 7
12. Non-Transferability of Options................................... 7
13. Adjustment of Shares............................................. 7
14. Right to Terminate Service....................................... 8
15. Purchase for Investment.......................................... 8
16. Issuance of Stock Certificates; Legends; Payment
of Expenses...................................................... 9
17. Listing of Shares and Related Matters............................ 10
18. Amendment of the Plan............................................ 10
19. Termination or Suspension of the Plan............................ 10
20. Savings Provision................................................ 10
21. Governing Law.................................................... 11
22. Partial Invalidity............................................... 11
AMES DEPARTMENT STORES, INC.
1994 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. PURPOSES
Ames Department Stores, Inc. (the "Company") desires to
attract and retain the services of outstanding non-employee directors by
affording them an opportunity to acquire a proprietary interest in the Company
through automatic, non-discretionary awards of stock options ("Options")
exercisable to purchase shares of Common Stock (as defined below), and thus to
create in such directors an increased interest in and a greater concern for the
welfare of the Company and its subsidiaries.
The Options offered pursuant to this 1994 Non- Employee
Directors Stock Option Plan (the "Plan") are a matter of separate inducement and
are not in lieu of any other compensation for the services of any director.
The Options granted under the Plan are intended to be options
that do not meet the requirements for incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
As used in the Plan, the term "parent corporation" and
"subsidiary corporation" shall mean a corporation coming within the definition
of such terms contained in Sections 424(e) and 424(f) of the code, respectively.
2. AMOUNT OF STOCK SUBJECT TO THE PLAN
Options granted under the Plan shall be exercisable for shares
of common stock of the Company ("Common Stock"). Initially, and for so long as
the Company continues to have authorized Priority Common Stock, par value $.01
per share, and Common Stock, par value $.01 per share ("Ordinary Common Stock"),
Options granted under the Plan shall be exercisable for shares of Ordinary
Common Stock. If at any time there is more than one class of Common Stock, the
Shares (as defined below) shall be the class designated by the Board of
Directors pursuant to its authority under Section 4.
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The total number of shares of Common Stock authorized for
issuance under the Plan upon the exercise of Options (the "Shares"), shall not
exceed, in the aggregate, 400,000 of the currently authorized shares of Common
Stock of the Company, such number to be subject to adjustment in accordance with
Section 13 of the Plan.
Shares which may be acquired under the Plan may be either
authorized but unissued Shares, Shares of issued stock held in the Company's
treasury, or both. If and to the extent that Options granted under the Plan
expire or terminate without having been exercised, the Shares covered by such
expired or terminated Options may again be subject to a later-granted Option
under the Plan.
3. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective at 5:00 p.m., New York City
time, on July 22, 1994 (the "Effective Date"); provided, however, that if the
Plan is not approved by a vote of the stockholders of the Company at an annual
meeting or any special meeting of stockholders within twelve months after the
Effective Date, the Plan and any Options granted hereunder shall terminate. The
Plan shall terminate at the close of business on July 21, 2004 (the "Termination
Date"), unless sooner terminated in accordance with its terms.
4. ADMINISTRATION
The Plan shall be administered by the Board of Directors of
the Company (the "Board of Directors"), which may designate from among its
members a committee to exercise all power and authority of the Board of
Directors at any time and from time to time to administer the Plan. (References
herein to the Board of Directors shall be deemed to include references to any
such committee, except as the context otherwise requires.) Subject to the
express provisions of the Plan, the Board of Directors shall have authority to
construe the Plan and the Options granted thereunder, to prescribe, amend and
rescind rules and regulations relating to the Plan and to make all other
ministerial determinations necessary or advisable for administering the Plan.
The determination of the Board of Directors on matters
referred to in this Section 4 shall be conclusive.
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5. ELIGIBILITY
All non-employee directors of the Company (including former
officers or former key employees), each of whom (a) has not been an officer or
employee of the Company or any subsidiary corporation or parent corporation of
the Company for one year prior to the time a grant of Options is made to such
person hereunder and (b) is a "disinterested person" as such term is defined in
Rule 16b-3 (or any successor rule) promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), shall be eligible to be granted
Options under the Plan ("Eligible Directors").
The Plan does not create a right in any person to participate
in, or be granted Options under, the Plan.
6. OPTION GRANTS
On the Effective Date, each Eligible Director then in office
shall automatically be granted an Option to purchase 10,000 Shares (subject to
adjustment as provided in Section 13), subject to the approval of the Plan by
the stockholders of the Company at the 1995 Annual Meeting. Thereafter,
effective on the date of each annual meeting of stockholders of the Company
during the term of the Plan commencing with the 1996 Annual Meeting of
Stockholders, each Eligible Director then in office shall automatically be
granted, immediately following each such annual meeting of stockholders of the
Company, an Option to purchase 2,500 Shares (subject to adjustment as provided
in Section 13), with the date of the grant to be the date of such annual
meeting.
7. OPTION PRICE AND PAYMENT
The price for each Share purchasable upon exercise of any
Option granted hereunder on the Effective Date shall be an amount equal to the
fair market value per Share on such date. The price for each Share purchasable
upon exercise of any Option granted hereunder on the date of any annual meeting
of stockholders during the term of the Plan commencing with the 1996 Annual
Meeting of Stockholders shall be an amount equal to the fair market value per
Share on the date of grant. For purposes of the Plan, fair market value per
Share shall be determined as follows:
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(a) If the Shares are listed on a national securities
exchange in the United States or reported on the National
Association of Securities Dealers Automated Quotation
System-National Market System ("NASDAQ-NMS") on any date on
which the fair market value per Share is to be determined, the
fair market value per Share shall be deemed to be the closing
quotation at which such Shares are sold on the principal
national securities exchange or reported on NASDAQ-NMS on the
date such Option is granted. If the Shares are listed on a
national securities exchange in the United States on such date
or reported on NASDAQ-NMS but the Shares are not traded on
such date, or such national securities exchange or NASDAQ-NMS
is not open for business on such date, the fair market value
per Share shall be determined as of the closest date preceding
on which the Shares were traded.
(b) If on the date any Option is granted, a regular,
active public market exists (as determined in the sole
discretion of the Board of Directors, whose decision shall be
conclusive and binding) for the Shares but such Shares are not
listed on a national securities exchange in the United States
or reported on NASDAQ-NMS, the fair market value per Share
shall be deemed to be the average of the closing bid and ask
quotations in the over-the-counter market for such Shares in
the United States on the date such Option is granted. In the
event that there are no bid and ask quotations in the
over-the-counter market in the United States for such Shares
on the date such Option is granted, the fair market value per
Share shall be determined as of the closest preceding date on
which such quotations are available. For purposes of the
foregoing, a market in which trading is sporadic and the ask
quotations generally exceed the bid quotations by more than
15% shall not be deemed to be a "regular, active public
market." If the Board of Directors determines that a regular,
active public market does not exist for the Shares, the Board
of Directors shall determine the fair market value per Share
in its good faith judgment.
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Upon the exercise of an Option granted hereunder, the Company
shall cause the purchased Shares to be issued only when it shall have received
the full purchase price for the Shares in cash; provided, however, that in lieu
of cash, an optionee may, to the extent permitted by applicable law, exercise an
Option in whole or in part, by delivering to the Company shares of Common Stock
of the Company (in proper form for transfer and accompanied by all requisite
stock transfer tax stamps or cash in lieu thereof) owned by such optionee having
a fair market value equal to the cash exercise price applicable to that portion
of the Option being exercised by the delivery of such shares, the fair market
value per Share of Common Stock so delivered to be determined as of the date
immediately preceding the date on which the Option is exercised in accordance
with this Section 7, or as may be required in order to comply with or to conform
to the requirements of any applicable laws or regulations.
8. TERMS OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
To the extent that an Option is not exercised within the
period of exercisability specified therein, it shall expire as to the then
unexercised part.
In no event shall an Option granted hereunder be exercised for
a fraction of a Share or for less than one hundred Shares (unless the number
purchased is the total balance for which the Option is then exercisable).
A person entitled to receive Shares upon the exercise of an
Option shall not have the rights of a stockholder with respect to such Shares
until the date of issuance of a stock certificate to him or her for such Shares;
provided, however, that until such stock certificate is issued, any holder of an
Option using previously acquired shares of Common Stock in payment of an option
exercise price shall continue to have the rights of a stockholder with respect
to such previously acquired shares of Common Stock.
9. OPTION PERIOD AND EXERCISE OF OPTIONS
An Option granted to any Eligible Director shall not be
exercisable for six (6) months following the date of grant of such Option;
provided that for purposes of this sentence only, any Option granted to an
Eligible Director
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prior to stockholder approval of the Plan shall be deemed to have been granted
on the date such approval is obtained. Thereafter, the Option shall be
exercisable for the period ending ten (10) years from the date of grant of such
Option, except to the extent such exercise is further limited or restricted
pursuant to the provisions hereof.
Subject to the express provisions of the Plan, Options granted
under the Plan shall be exercised by the optionee as to all or part of the
Shares covered thereby by the giving of written notice of the exercise thereof
to the Corporate Secretary of the Company at the principal business office of
the Company, specifying the number of Shares to be purchased, the proposed form
of payment and specifying a business day not more than ten (10) days from the
date such notice is given for the payment of the purchase price against delivery
of the Shares being purchased. Subject to the terms of Sections 15, 16 and 17
hereof, the Company shall cause certificates for the Shares so purchased to be
delivered at the principal business office of the Company, against payment of
the full purchase price, on the date specified in the notice of exercise.
10. TERMINATION OF DIRECTORSHIP
If an Eligible Director's service as a director of the Company
is terminated, any Option previously granted to such Eligible Director shall, to
the extent not theretofore exercised, terminate and become null and void;
provided, however, that:
(a) if an Eligible Director holding an outstanding
Option dies, including during either the three (3) month or
one (1) year period, whichever is applicable, specified in
clause (b) immediately below, such Option shall, to the extent
not theretofore exercised, remain exercisable for one (1) year
after such Eligible Director's death, by such Eligible
Director's legatee, distributee, guardian or legal or personal
representative; and
(b) if the service of an Eligible Director holding an
outstanding Option is terminated by reason of (i) such
Eligible Director's disability (as described in Section
22(e)(3) of the Code), (ii) voluntary retirement from service
as a director of the Company or (iii) failure of the
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Company to nominate for re-election such Eligible Director who
is otherwise eligible, except if such failure to nominate for
re-election is due to any act of (A) fraud or intentional
misrepresentation or (B) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
subsidiary corporation or parent corporation of the Company
(in which case, such Option shall terminate and no longer be
exercisable), such Option shall, to the extent not therefore
exercised, remain exercisable at any time up to and including
(X) three (3) months after the date of such termination of
service in the case of termination by reason of voluntary
retirement or failure of the Company to nominate for
re-election such Eligible Director who is otherwise eligible,
subject to the above exceptions thereto stated in this clause
(b), and (Y) one (1) year after the date of termination of
service in the case of termination by reason of disability.
In no event, however, shall an Eligible Director be entitled
to exercise any Option after the expiration of the period of exercisability of
such Option, as specified therein.
11. USE OF PROCEEDS
The cash proceeds of the sale of Shares subject to the Options
granted hereunder are to be added to the general funds of the Company and used
for its general corporate purposes as the Board of Directors shall determine.
12. NON-TRANSFERABILITY OF OPTIONS
An Option granted hereunder shall not be transferable, whether
by operation of law or otherwise, other than by will or the laws of descent and
distribution. Except to the extent provided above, Options also may not be
assigned, transferred, pledged, hypothecated or disposed of in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment or similar process.
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13. ADJUSTMENT OF SHARES
Notwithstanding any other provision contained herein, in the
event of any change in the Shares subject to the Plan or to any Option granted
under the Plan (through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, or other like change in the capital structure of the
Company), an adjustment shall be made to each outstanding Option such that each
such Option shall thereafter be exercisable for such securities, cash and/or
other property as would have been received in respect of the Shares subject to
such Option had such Option been exercised in full immediately prior to such
change, and such an adjustment shall be made successively each time any such
change shall occur. The term "Shares" after any such change shall refer to the
securities, cash and/or property then receivable upon exercise of an Option. In
addition, in the event of any such change, the Board of Directors shall make any
further adjustment to the maximum number of Shares which may be acquired under
the Plan pursuant to the exercise of Options, the maximum number of shares for
which Options may be granted to any one Eligible Director and the number of
Shares and price per Share subject to outstanding Options as shall be equitable
to prevent dilution or enlargement of rights under such Options, and the
determination of the Board of Directors as to these matters shall be conclusive
and binding on the optionee.
14. RIGHT TO TERMINATE SERVICE
The Plan shall not impose any obligation on the Company or on
any subsidiary corporation or parent corporation thereof to continue the service
of any director holding Options and shall not impose any obligation on the part
of any director holding Options to remain in the service of the Company or of
any subsidiary corporation or parent corporation thereof.
15. PURCHASE FOR INVESTMENT
Except as hereinafter provided, the Board of Directors may
require the holder of an Option granted hereunder, as a condition to exercise of
such Option in the event the Shares subject to such Option are not registered
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"),
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and applicable state securities laws, to execute and deliver to the Company a
written statement, in form satisfactory to the Board of Directors, in which such
holder (a) represents and warrants that such holder is purchasing or acquiring
the Shares acquired thereunder for such holder's own account for investment only
and not with a view to the resale or distribution thereof in violation of any
federal or state securities laws and (b) agrees that any subsequent resale or
distribution of any of such Shares shall be made only pursuant to either (i) an
effective registration statement covering such Shares under the Securities Act
and applicable state securities laws or (ii) specific exemptions from the
registration requirements of the Securities Act and any applicable state
securities laws, based on a written opinion of counsel, in form and substance
satisfactory to counsel for the Company, as to the application thereto of any
such exemptions.
Nothing herein shall be construed as requiring the Company to
register Shares subject to any Option under the Securities Act or any state
securities law and, to the extent deemed necessary by the Company, Shares issued
upon exercise of an Option may contain a legend to the effect that registration
rights have not been granted with respect to such Shares.
16. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF
EXPENSES
The Company may endorse such legend or legends upon the
certificates for Shares issued upon exercise of Options granted pursuant to the
Plan and may issue such "stop transfer" instructions to its transfer agent in
respect of such Shares as the Board of Directors, in its discretion, determines
to be necessary or appropriate to (a) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act or (b)
implement the provisions of the Plan and any agreement between the Company and
the optionee or grantee with respect to such Shares.
The Company shall pay all issue or transfer taxes with respect
to the issuance or transfer of Shares, as well as all fees and expenses
necessarily incurred by the Company in connection with such issuance or
transfer, except fees and expenses that may be necessitated by the filing or
amending of a registration statement under the Securities Act, which fees and
expenses shall be borne by the recipient
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of the Shares unless such registration statement has been filed by the Company
for its own corporate purpose (and the Company so states) in which event the
recipient of the Shares shall bear only such fees and expenses as are
attributable solely to the inclusion of the Shares an optionee receives in the
registration statement.
All Shares issued as provided herein shall be fully paid and
nonassessable to the extent permitted by law.
17. LISTING OF SHARES AND RELATED MATTERS
If at any time the listing, registration or qualification of
the Shares subject to such Option on any securities exchange or under any
applicable law, or the consent or approval of any governmental regulatory body,
is necessary as a condition of, or in connection with, the granting of an
Option, or the issuance of Shares thereunder, such Option may not be exercised
in whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained.
18. AMENDMENT OF THE PLAN
The Board of Directors may, from time to time, amend the Plan,
provided that no amendment shall be made without the approval of the
stockholders of the Company that will (a) increase the total number of Shares
reserved for Options under the Plan (other than an increase resulting from an
adjustment provided for in Section 13 hereof), (b) modify the provisions of the
Plan relating to eligibility, or (c) materially increase the benefits accruing
to participants under the Plan. Notwithstanding any other provision hereof, in
no event shall the provisions of the Plan be amended more than one time in any
six-month period, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules promulgated
thereunder.
19. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate
the Plan. Options may not be granted while the Plan is suspended or after it is
terminated. Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom the Option was granted. The
ministerial
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power of the Board of Directors to construe and administer any Options under
Section 4 that are granted prior to the termination or the suspension of the
Plan shall continue after such termination or during such suspension.
20. SAVINGS PROVISION
With respect to all participants in the Plan, transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3 (or any successor provision) under the Exchange Act. To the extent any
provision of the Plan or action by the Board of Directors fails to so comply, it
shall be deemed null and void to the extent permitted by law and deemed
advisable by the Board of Directors.
21. GOVERNING LAW
The Plan, such Options as may be granted hereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware from time to time in effect.
22. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not
be deemed to affect the validity of any other provision.
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