Exhibit 10.2
CABOT NOBLE, INC.
1997 DIRECTOR PHANTOM STOCK PLAN
ARTICLE I -- Purpose of the Plan
The purpose of the Cabot Noble, Inc. 1997 Director Phantom Stock Plan (the
"Plan") is to attract and retain the services of experienced and knowledgeable
directors of Cabot Noble, Inc. (the "Corporation") for the benefit of the
Corporation and its shareholders and to provide such directors an economic
interest in the Corporation's Common Stock ("Shares"), thereby creating a long-
term mutuality of interest between such directors and shareholders.
ARTICLE II -- Definitions
Unless the context clearly indicates otherwise, the following terms shall
have the following meanings:
2.1 "Agreement" means that certain Agreement and Plan of Reorganization
among the Corporation, Phar-Mor, Inc. and ShopKo Stores, Inc. dated as of
September 7, 1996.
2.2 "Annual Retainer" means the annual cash retainer fee payable by the
Corporation to a Director for services as a director of the Corporation, as such
amount may be changed from time to time.
2.3 "Award" means an award of Phantom Stock granted to an Eligible
Director under the Plan.
2.4 "Board" means the Board of Directors of Cabot Noble, Inc.
2.5 "Corporation" means Cabot Noble, Inc.
2.6 "Director" means a member of the Board of Directors of the
Corporation.
2.7 "Eligible Director" means a Director that has met the eligibility
requirements set forth in Article IV.
2.8 "ERISA" means the Employment Retirement Income Security Act.
2.9 "Exchange" means the principal national securities exchange or trading
market on which the Shares are listed or admitted to trading.
2.10 "Fair Market Value" means, with respect to any date, the average
between the highest and lowest sale prices per Share on the Exchange on such
date, provided that if there shall be no sale of Shares reported on such date,
the Fair Market Value of a Share on such date shall be
deemed to be equal to the average between the highest and lowest sale prices per
Share on the Exchange for the last preceding date on which sales of Shares were
reported.
2.11 "Phantom Stock" means any shares granted pursuant to Article V.
2.12 "Phantom Stock Account" means the account used to record the various
Awards made pursuant to the Plan.
2.13 "Plan" means the Cabot Noble, Inc. 1997 Director Phantom Stock Plan,
as amended and restated from time to time.
2.14 "Shares" means shares of Common Stock of the Corporation, par value
$.01 per share.
ARTICLE III -- Administration of the Plan
3.1 Administrator of the Plan. The Plan shall be administered by the
Compensation Committee (the "Committee") of the Board.
3.2 Powers of the Committee. Subject to the express provisions of the
Plan, the Committee shall have plenary authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions relating to it, to determine the terms and provisions
of the Awards made pursuant to the Plan and to make all other determinations of
the matters referred to in this Article III.
3.3 Effect of Committee Determinations. No member of the Committee or
the Board shall be liable for any action taken in the administration of the
Plan, unless such action involves willful misconduct by such member, and each
member of the Committee shall be indemnified and held harmless by the
Corporation for all actions taken in the proper administration of the Plan. Any
decision or action taken by the Committee or the Board with respect to an Award
or the administration or interpretation of the Plan shall be conclusive and
binding upon all persons.
ARTICLE IV -- Eligibility
Directors of the Corporation who are not employees of the Corporation or a
subsidiary thereof shall be eligible to participate in the Plan in accordance
with Article V provided they have served as a Director of the Corporation,
Shopko, Inc. and/or Phar-Mor, Inc. for at least three (3) full years.
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ARTICLE V -- Date of Grant and Amount of Award
5.1 Amount of Award. The Award of Phantom Stock attributable to each
Eligible Director shall be the amount represented by that number of Shares as of
the first business day of February of each year whose aggregate Fair Market
Value equals the amount of the then current Annual Retainer payable to such
Eligible Director or such greater or lesser amount as the Committee shall
determine from time to time by resolution. The Award shall be credited to the
Eligible Director's Phantom Stock Account on the first business day of February
of each year or the last preceding date on which trading occurred if there was
no trading on that date. Although the amount of the Award is determined with
reference to the Fair Market Value of Shares, the Award will not be in the form
of actual Shares and no Shares of the Corporation will be earmarked or otherwise
set aside for the benefit of an Eligible Director under the terms of the Plan.
5.2 Time of Grant. The amount recorded in each Eligible Director's
Phantom Stock Account shall be paid to such Eligible Director solely in cash
upon the effective date of the first to occur of the following events: (1) the
Eligible Director's resignation from the Board, (2) the Eligible Director's
failure to be elected or re-elected to the Board by the Corporation's
shareholders, (3) the retirement of the Eligible Director from the Board or (4)
the death or permanent disability of the Eligible Director. Payment shall be
calculated based upon the Fair Market Value of the Phantom Stock recorded in the
Eligible Director's Phantom Stock Account (including all accrued cash dividends)
as of the date of distribution.
5.3 Restrictions. Neither the Phantom Stock Account nor any interest
therein shall be transferable by the Eligible Director during his lifetime until
after the date of distribution. In the event of the death of an Eligible
Director, the proceeds of the Phantom Stock Account shall be paid to the
designated beneficiary of such Eligible Director, or if no beneficiary is
designated, to his or her surviving spouse. If no beneficiary is designated and
the Eligible Director dies without a surviving spouse, the proceeds of the
Phantom Stock Account shall be paid to such Eligible Director's estate.
ARTICLE VI -- No Rights as Shareholders
An Eligible Director shall have no rights as a shareholder with respect to
shares of Phantom Stock granted hereunder. Nothing in the Plan shall confer on
an individual any right to continue as a Director of the Corporation or
interfere in any way with the right of the Corporation to terminate the Plan
participant's services as a Director at any time.
ARTICLE VII -- Valuation of Phantom Stock
The number of shares of Phantom Stock to be credited to an Eligible
Director's account shall be determined based upon the composite price of Shares
on the Exchange on the first day of February of each year (or the last preceding
date on which trading occurred if there was no trading on such date). In the
event that Shares are no longer traded on any national securities exchange or
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other established trading market on the date of any such payment, then the
Committee shall establish the price of Shares at the fair market value
determined under Treasury Regulation Section 20.2031-2.
ARTICLE VIII - Adjustment Provisions
8.1 Dilution in Value of Shares. If the Corporation shall at any time
change the number of issued Shares without new consideration to the Corporation
(such as by stock dividend, stock split, recapitalization, reorganization,
exchange of shares, liquidation, combination or other change in corporate
structure affecting the Shares) or make a distribution of cash or property which
has a substantial impact on the value of issued Shares, the total number of
shares of Phantom Stock held pursuant to the Plan shall be appropriately
adjusted so that the value of each such share of Phantom Stock shall not be
changed.
8.2 Transactions Where the Corporation is the Survivor. Notwithstanding
any other provision of the Plan, and without affecting the number of shares of
Phantom Stock held pursuant to the Plan, the Committee shall authorize
continuance of outstanding Phantom Stock or provide for other equitable
adjustments after changes in the Shares resulting from any merger,
consolidation, sale of assets, acquisition of property or stock,
recapitalization, reorganization or similar occurrence in which the Corporation
is the continuing or surviving corporation, upon such terms and conditions as it
may deem necessary to preserve Directors' rights under the Plan.
8.3 Acquisition of the Corporation. In the case of any sale of assets,
merger, consolidation or combination of the Corporation with or into another
corporation, other than a transaction in which the Corporation is the continuing
or surviving corporation (an "Acquisition"), any Director granted Phantom Stock
shall have the right (subject to the provisions of the Plan) thereafter to
receive the Acquisition Consideration (as defined below) receivable upon the
Acquisition by a holder of the number of Shares equal to the number of shares of
Phantom Stock granted to the Director. The term "Acquisition Consideration"
shall mean the kind and amount of shares of the surviving or new corporation,
cash, securities, evidence of indebtedness, other property or any combination
thereof receivable in respect of one Share of the Corporation upon consummation
of an Acquisition.
ARTICLE IX -- Amendment and Termination
The Plan may be terminated, modified or amended by the Board, provided that
no amendment shall become effective without the approval of the Corporation's
shareholders. In addition, except as provided in Article VIII hereof, the Board
shall not have the power to decrease or otherwise diminish the value or number
of shares of Phantom Stock deemed held in an Eligible Director's Phantom Stock
Account once such Phantom Stock has been credited to that account.
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ARTICLE X -- Limitations on Liability
The Plan is an unfunded plan of deferred compensation. Neither the
establishment of the Plan nor any modification thereof, nor the creation of any
account under the Plan, nor the payment of any benefits, shall be construed as
giving to any participant or other person any legal or equitable right against
the Corporation (or any person connected therewith), except as provided by law
or expressly by any Plan provision. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a fiduciary relationship between the Corporation (or any person connected
therewith) and any participant or other person. In no event shall the
Corporation (or any person connected therewith) be liable to any person for the
failure of any participant or other person to be entitled to any particular tax
consequences with respect to the Plan or any contribution thereto or
distribution therefrom.
ARTICLE XI -- Construction
The Plan is intended to be exempt from ERISA and, if any provision of the
Plan is subject to more than one interpretation or construction, such ambiguity
shall be resolved in favor of that interpretation or construction which is
consistent with the Plan being so exempted. In case any provision of the Plan
shall be held to be illegal or void, such illegality or invalidity shall not
affect the remaining provisions of the Plan, but shall be fully severable, and
the Plan shall be construed and enforced as if said illegal or invalid
provisions had never been inserted herein. For all purposes of the Plan, where
the context admits, words in the masculine gender shall include the feminine and
neuter genders, the singular shall include the plural, and the plural shall
include the singular. Headings of Articles are inserted only for convenience of
reference and are not to be considered in the construction of the Plan.
ARTICLE XII -- Spendthrift Provision
12.1 Encumbrance of the Phantom Stock. No amount payable under the Plan
will, except as otherwise specifically provided by law, be subject in any manner
to anticipation, alienation, attachment, garnishment, sale, transfer, assignment
(either at law or in equity), levy, execution, pledge, encumbrance, charge or
any other legal or equitable process, and any attempt to do so will be void; nor
will any benefit be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the person entitled thereto. The foregoing
shall not preclude any arrangement for: (i) the withholding of taxes from Plan
benefit payments, (ii) the recovery by the Plan of overpayments of benefits
previously made to a participant, or (iii) the direct deposit of benefit
payments to an account in a banking institution (if not part of an arrangement
constituting an assignment or alienation).
12.2 Right of Declaratory Judgement. In the event that any participant's
benefits are garnished or attached by order of any court, the Corporation may
bring action for a declaratory judgment in a court of competent jurisdiction to
determine the proper recipient of the benefits to be paid by the Plan. During
the pendency of said action, any benefits that become payable shall be paid
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into the court as they become payable, to be distributed by the court to the
recipient it deems proper at the close of said action.
ARTICLE XIII -- Governing Law
Except to the extent preempted by the laws of the United States of America, the
laws of the state of Delaware shall govern, control and determine all questions
arising with respect to the Plan and the interpretation and validity of its
respective provisions.
ARTICLE XIV - Effective Date
The Plan shall become effective as of the Effective Date as defined in the
Agreement.
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