Exhibit 10.3
CABOT NOBLE, INC.
1997 DIRECTOR STOCK PLAN
ARTICLE I - Purpose of the Plan
The purpose of the Cabot Noble, Inc. 1997 Director Stock Plan is to promote
the long-term growth of Cabot Noble, Inc. (hereinafter sometimes referred to as
the "Corporation") by increasing the proprietary interest of Directors in Cabot
Noble, Inc. and to attract and retain highly qualified and capable Directors.
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 granted to a Director under the Plan in the
form of Options or Shares, or any combination thereof.
2.4 "Board" means the Board of Directors of Cabot Noble, Inc.
2.5 "Corporation" means Cabot Noble, Inc.
2.6 "Director" means a director of the Corporation.
2.7 "Exchange" means the principal national securities exchange or trading
market on which the Shares are listed or admitted to trading.
2.8 "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.
2.9 "Option" means an option to purchase Shares awarded under Article VIII
or IX which does not meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended, or any successor law.
2.10 "Option Grant Date" means the date upon which an Option is granted
to a Director.
2.11 "Optionee" means a Director of the Corporation to whom an Option has
been granted or, in the event of such Director's death prior to the expiration
of an Option, such Director's executor, administrator, beneficiary or similar
person, or, in the event of a transfer permitted by Article VII hereof, such
permitted transferee.
2.12 "Plan" means the Cabot Noble, Inc. 1997 Director Stock Plan, as
amended and restated from time to time.
2.13 "Shares" means shares of the Common Stock, par value $.01 per share,
of the Corporation.
2.14 "Stock Award Date" means the date on which Shares are awarded to a
Director.
2.15 "Stock Option Agreement" means a written agreement between a Director
and the Corporation evidencing an Option.
ARTICLE III - Administration of the Plan
3.1 Administrator of the Plan. The Plan shall be administered by the
Compensation Committee of the Board (the "Committee").
3.2 Authority of the Committee. The Committee shall have full power and
authority to: (i) interpret and construe the Plan and adopt such rules and
regulations as it shall deem necessary and advisable to implement and administer
the Plan, and (ii) designate persons other than members of the Committee to
carry out its responsibilities, subject to such limitations, restrictions and
conditions as it may prescribe, such determinations to be made in accordance
with the Committee's best business judgment as to the best interests of the
Corporation and its stockholders and in accordance with the purposes of the
Plan. The Committee may delegate administrative duties under the Plan to one or
more agents as it shall deem necessary or advisable.
3.3 Determinations of the Committee. A majority of the Committee shall
constitute a quorum at any meeting of the Committee, and all determinations of
the Committee shall be made by a majority of its members. Any determination of
the Committee under the Plan may be made without notice or a meeting of the
Committee by a written consent signed by all members of the Committee.
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3.4 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 - Awards under the Plan
Awards in the form of Options shall be granted to Directors in accordance
with Article VIII. Deferred Contingent Shares may be granted to Directors in
accordance with Article IX. Each Option granted under the Plan shall be
evidenced by a Stock Option Agreement.
ARTICLE V - Eligibility
Directors of the Corporation shall be eligible to participate in the Plan
in accordance with Articles VIII and IX.
ARTICLE VI - Shares Subject to the Plan
Subject to adjustment as provided in Article XII, the aggregate number of
Shares which may be issued upon the award of Shares and the exercise of Options
shall not exceed 250,000 Shares. To the extent that Shares subject to an
outstanding Option are not issued or delivered by reason of the expiration,
termination, cancellation or forfeiture of such Option or by reason of the
delivery of Shares (either actually or by attestation) to pay all or a portion
of the exercise price of such Option, then such Shares shall again be available
under the Plan.
ARTICLE VII - Non-Transferability of Options
No Options granted under the Plan shall be transferable by a Director
during his or her lifetime and may not be assigned, exchanged, pledged,
transferred or otherwise encumbered or disposed of except by court order, will
or by the laws of descent and distribution. Notwithstanding the foregoing, in
the event Options may be transferable without failing to comply with Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), then
each Option shall be transferable to the extent set forth in the related Stock
Option Agreement, as determined by the Committee (provided that all Options
granted under Article VIII with the same Option Grant Date shall have identical
provisions relating to the transferability of such Options). In the event that
any Option is thereafter transferred as permitted by the preceding sentence, the
permitted transferee thereof shall be deemed the Optionee hereunder. Options
shall be exercisable during the Optionee's lifetime only by the Optionee or by
the Optionee's guardian, legal representative or similar person.
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ARTICLE VIII - Options
Each Director shall be granted Options, subject to the following terms
and conditions:
8.1 Time of Grant. On the first business day of February of each
year (or, if later, on the date on which a person is first elected or begins to
serve as a Director), each person who is a Director shall be granted an Option
to purchase 5,000 Shares (which number shall be pro-rated if such Director is
first elected or begins to serve as a Director on a date other than the date of
an annual meeting of stockholders).
8.2 Purchase Price. The purchase price per Share under each Option
granted pursuant to this Article shall be 100% of the Fair Market Value per
Share on the Option Grant Date.
8.3 Exercise of Options. Each Option shall be fully exercisable on
and after the Option Grant Date. In no event shall the period of time over
which the Option may be exercised exceed five years from the Option Grant Date.
An Option, or portion thereof, may be exercised in whole or in part only with
respect to whole Shares.
Shares shall be issued to the Optionee pursuant to the exercise of an
Option only upon receipt by the Corporation from the Optionee of payment in full
either in cash or by surrendering (or attesting to the ownership of) Shares
together with proof acceptable to the Committee that such Shares have been owned
by the Optionee for at least six (6) months prior to the date of exercise of the
Option, or a combination of cash and Shares, in an amount or having a combined
value equal to the aggregate purchase price for the Shares subject to the Option
or portion thereof being exercised. The Shares issued to an Optionee for the
portion of any Option exercised by attesting to the ownership of Shares shall
not exceed the number of Shares issuable as a result of such exercise
(determined as though payment in full therefor were being made in cash) less the
number of Shares for which attestation of ownership is submitted. The value of
owned Shares submitted (directly or by attestation) in full or partial payment
for the Shares purchased upon exercise of an Option shall be equal to the
aggregate Fair Market Value of such owned Shares on the date of the exercise of
such Option.
ARTICLE IX - Election to Receive Contingent Deferred Shares
9.1 Election Procedures. On the first business day of February of
each year, Shares shall be identified pursuant to this Article as being for the
contingent benefit of each Director who, at least six (6) months prior thereto,
files with the Committee or its designee a written election to receive a
contingent deferred right to such Shares in lieu of all or a portion of such
Director's Annual Retainer. In the event a Director does not file a written
election in accordance with the preceding sentence by reason of becoming a
Director after the date which is six (6) months prior to the first business day
of February in any year, Shares shall be identified as being for the contingent
benefit
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of such director as of the first business day (the "Effective Date") which is at
least six (6) months after the date such Director files with the Committee or
its designee a written election to receive Shares in lieu of all or a portion of
such Director's Annual Retainer; provided, however, that such an election may
apply only to the portion of such Director's Annual Retainer determined by
multiplying such Director's Annual Retainer by a fraction, the numerator of
which is the number of days from and including the Effective Date to and
including the last day of the period for which such Annual Retainer would
otherwise be payable, and the denominator of which is 365 or 366, as the case
may be. An election pursuant to the first sentence of this Section 9.1 may be
revoked or changed only on or prior to the date which is six (6) months prior to
the first business day of the following February. An election pursuant to the
second sentence of this Section 9.1 shall be irrevocable. Any elections made by
any Director under the Phar-Mor, Inc. 1996 Director Stock Plan with respect to
shares of common stock, par value $.01 per share, of Phar-Mor, Inc. identified
pursuant to section 9.1 thereof in October 1996 shall be deemed to relate to
Shares of the Corporation pursuant hereto.
9.2 Term of Deferral. Receipt of Shares subject to a Director
election made pursuant to Section 9.1 shall be deferred until such Director's
retirement, resignation, disability, death, or termination (other than
termination resulting in forfeiture as described in Section 9.8) , or in the
event of emergency or necessity, as hereinafter provided.
9.3 Accounting. The Committee shall cause records to be kept in the
name of each Director electing to participate pursuant to Section 9.1 which
shall reflect the number of contingent Shares deferred by that Director.
9.4 Contingency. Until and except to the extent that deferred Shares
hereunder are distributed to or vested in the Directors or beneficiaries from
time to time in accordance with orders of the Committee, the interest of each
Director and beneficiary therein is contingent only and is subject to forfeiture
as provided in Section 9.8. Title to and beneficial ownership of the Shares,
which the Corporation will identify as subject to its contingent obligation
hereunder, shall at all times remain in the Corporation; and no Director or
beneficiary shall under any circumstances acquire any property interest in any
specific assets of the Corporation.
9.5 Method of Payment.
(a) In order to meet its contingent Share obligation hereunder, the
Corporation shall each year set aside Shares in an amount equal to the total
amounts deferred for such year under this Article IX.
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(b) In the event of vesting, or upon the retirement, resignation,
disability, death or termination (other than termination resulting in forfeiture
as described in Section 9.8) of a Director, the number of contingent deferred
Shares payable to such Director or his beneficiary shall be determined as of
that date. If the Committee, in the exercise of its discretion provided in
Section 9.6, determines to make installment distributions of such amount, the
Corporation shall continue to set aside Shares in an amount equal to the unpaid
balance of such obligation to pay Shares.
9.6 Method of Distribution. The Committee shall from time to time
determine the time and manner of making distributions of contingent deferred
Shares in case of the retirement, resignation, disability, or death of a
Director or in the event of an emergency or necessity affecting the personal or
family affairs of any Director or beneficiary of a deceased Director by such
methods as it shall find appropriate for providing incentive to Directors for
their continued service on behalf of the Corporation. Commencement of
distribution in each case may be deferred by the Committee, but (subject to
Section 9.8) not beyond one year after the retirement, disability or death of
the Director or, in the case of a Director who shall have resigned, not beyond
one year after such director reaches the age of 65 or incurs a disability or
dies. In the case of a Director's death before distribution is completed, the
balance may be distributed in a lump sum or on an installment basis as the
Committee may determine.
9.7 Designation of Beneficiaries. Each Director shall have the
right to designate beneficiaries who are to succeed to such Director's
contingent right to receive future payments hereunder in the event of death. In
case of the failure of a Director to make a designation or the death of a
designated beneficiary without the Director having designated a successor,
distribution shall be made to the Director's estate. No designation of
beneficiaries shall be valid unless it is in writing, signed by the Director,
dated, and filed with the Committee. Beneficiaries may be changed without the
consent of any prior beneficiaries.
9.8 Possible Forfeiture of Shares.
(a) The contingent right of a Director or beneficiary to receive
deferred Shares hereunder shall be forfeited upon the occurrence of any one or
more of the following events:
(1) If the Director is discharged for cause by the
Corporation or a subsidiary thereof; or
(2) If the Director shall enter into a business or employment
which the Committee determines to be (i) detrimentally competitive with the
business of the Corporation or a subsidiary, and (ii) substantially injurious to
the Corporation's financial interests;
(b) The Committee may at any time and from time to time order all or
any part of the value of the contingent right of a Director or beneficiary to
receive future Shares to be vested and no longer
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subject to forfeiture, and may order payment of the amounts so vested on dates
specified in such orders, if it finds such action appropriate in the
circumstances.
9.9 Number of Shares. The number of Shares identified pursuant to
this Article shall be the number of whole Shares equal to (i) the portion of the
Annual Retainer which the Director has elected pursuant to Section 9.1 to be
payable in Shares, divided by (ii) the Fair Market Value per Share on the date
Shares are identified as contingent deferred Shares of the Director (which will
occur either on the first business day in February of the year of election or on
the Effective Date, whichever is applicable). Any fraction of a Share shall be
disregarded and the remaining amount of such Annual Retainer shall be paid to
the Director in cash and shall not be deferred pursuant to this Article.
9.10 Characterization of the Relationships Created by this Article.
Nothing contained herein shall be deemed to create a trust of any kind or create
any fiduciary relationship. Shares identified hereunder shall continue for all
purposes to be treasury stock held by the Corporation, and no person other than
the Corporation shall, by virtue of the provisions of this Article IX, have any
interest in such Shares. To the extent that any person acquires a right to
receive Shares from the Corporation under this Article IX, such right shall be
no greater than the right of any unsecured general creditor of the Corporation.
ARTICLE X - Amendment and Termination
The Board may amend the Plan from time to time or terminate the Plan
at any time; provided, however, that no action authorized by this Article shall
adversely change the terms and conditions of an outstanding Option without the
Optionee's consent.
ARTICLE XI - Adjustment Provisions
11.1 Adjustments Under the Plan. 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 reserved for issuance under the Plan shall be appropriately
adjusted and the number of Shares covered by each outstanding Option and the
purchase price per Share under each outstanding Option and the number of shares
underlying Options to be issued annually pursuant to Section 8.1 shall be
adjusted so that the aggregate consideration payable to the Corporation and the
value of each such Option shall not be changed.
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11.2 Corporation as Surviving Entity. Notwithstanding any other
provision of the Plan, and without affecting the number of Shares reserved or
available hereunder, the Committee shall authorize the issuance, continuance or
assumption of outstanding Options 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
Optionees' rights under the Plan.
11.3 Corporation Not Surviving Entity. 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 and which does not result in the outstanding
Shares being converted into or exchanged for different securities, cash or other
property, or any combination thereof (an "Acquisition"), any Optionee who holds
an outstanding Option shall have the right (subject to the provisions of the
Plan and any limitation applicable to the Option) thereafter and during the
terms of the Option, to receive upon exercise thereof the Acquisition
Consideration (as defined below) receivable upon the Acquisition by a holder of
the number of Shares which would have been obtained upon exercise of the Option
or portion thereof, as the case may be, immediately prior to the Acquisition.
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 XII - 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 question arising with respect to the Plan and the interpretation and
validity of its respective provisions
ARTICLE XIII - Effective Date
To the extent required by applicable law, the Plan shall be submitted
to the stockholders of the Corporation for approval. The effective date of the
Plan shall be the Effective Date as defined in the Agreement.
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