EXHIBIT 10.1
THE LIMITED, INC.
1993 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
(1996 Amendment and Restatement)
(Amended and Restated as of November 1, 1996)
THE LIMITED, INC.
1993 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
(1996 Amendment and Restatement)
TABLE OF CONTENTS
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ARTICLE ONE
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date................................. 1
1.2 Purpose.......................................................... 1
ARTICLE TWO
AWARDS
2.1 Form of Awards................................................... 1
2.2 Maximum Shares Available......................................... 2
2.3 Return of Prior Awards........................................... 2
ARTICLE THREE
ADMINISTRATION
3.1 Committee........................................................ 2
3.2 Powers of Committee.............................................. 2
3.3 Delegation....................................................... 3
3.4 Interpretations.................................................. 3
3.5 Liability; Indemnification....................................... 3
ARTICLE FOUR
ELIGIBILITY 4
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ARTICLE FIVE
STOCK OPTIONS
5.1 Grant of Options................................................. 4
5.2 Option Price..................................................... 4
5.3 Term of Options.................................................. 4
5.4 Exercise of Options.............................................. 5
5.5 Cancellation of Stock Appreciation Rights........................ 5
ARTICLE SIX
SPECIAL RULES APPLICABLE TO INCENTIVE STOCK OPTIONS
6.1 Ten Percent Stockholder.......................................... 5
6.2 Limitation on Grants............................................. 5
6.3 Limitations on Time of Grant..................................... 5
ARTICLE SEVEN
STOCK APPRECIATION RIGHTS
7.1 Grants of Stock Appreciation Rights.............................. 6
7.2 Limitations on Exercise.......................................... 6
7.3 Surrender or Exchange of Tandem Stock Appreciation Rights........ 6
7.4 Exercise of Nontandem Stock Appreciation Rights.................. 6
7.5 Settlement of Stock Appreciation Rights.......................... 7
7.6 Cash Settlement.................................................. 7
ARTICLE EIGHT
NONTRANSFERABILITY OF OPTIONS AND
STOCK APPRECIATION RIGHTS 7
ARTICLE NINE
TERMINATION OF EMPLOYMENT
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9.1 Exercise after Termination of Employment........................ 8
9.2 Total Disability................................................ 8
9.3 Disability or Cessation of Director's Term...................... 8
ARTICLE TEN
DEATH OF ASSOCIATE 8
ARTICLE ELEVEN
RESTRICTED SHARES
11.1 Grant of Restricted Shares..................................... 9
11.2 Restrictions................................................... 9
11.3 Restricted Stock Certificates.................................. 9
11.4 Rights of Holders of Restricted Shares......................... 9
11.5 Forfeiture..................................................... 9
11.6 Delivery of Restricted Shares.................................. 10
11.7 Performance-Based Objectives................................... 10
ARTICLE TWELVE
PERFORMANCE SHARES
12.1 Award of Performance Shares.................................... 10
12.2 Performance Period............................................. 10
12.3 Right to Payment of Performance Shares......................... 10
12.4 Payment for Performance Shares................................. 11
12.5 Voting and Dividend Rights..................................... 11
ARTICLE THIRTEEN
PERFORMANCE UNITS
13.1 Award of Performance Units..................................... 12
13.2 Right to Payment of Performance Units.......................... 12
13.3 Payment for Performance Units.................................. 12
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ARTICLE FOURTEEN
UNRESTRICTED SHARES
14.1 Award of Unrestricted Shares.................................. 13
14.2 Delivery of Unrestricted Shares............................... 13
ARTICLE FIFTEEN
TAX OFFSET PAYMENTS 13
ARTICLE SIXTEEN
ADJUSTMENT UPON CHANGES IN CAPITALIZATION 13
ARTICLE SEVENTEEN
ADJUSTMENT UPON CHANGES IN CAPITALIZATION 14
ARTICLE EIGHTEEN
WRITTEN AGREEMENT 14
ARTICLE NINETEEN
MISCELLANEOUS PROVISIONS
19.1 Fair Market Value............................................. 15
19.2 Tax Withholding............................................... 15
19.3 Compliance With Section 16 and Section 162(m)................. 15
19.4 Successors.................................................... 15
19.5 General Creditor Status....................................... 16
19.6 No Right to Employment........................................ 16
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19.7 Other Plans................................................... 16
19.8 Notices....................................................... 16
19.9 Severability.................................................. 16
19.10 Governing Law................................................. 17
19.11 Term of Plan.................................................. 17
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THE LIMITED, INC.
1993 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
(1996 Amendment and Restatement)
ARTICLE ONE
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date. The Limited, Inc., a Delaware
corporation (the "Company"), hereby establishes a stock incentive plan to be
known as "The Limited, Inc. 1993 Stock Option and Performance Incentive Plan
(1996 Amendment and Restatement)" (the "Plan"). The Plan shall become effective
on May 20, 1996, subject to the approval of the Company's stockholders at the
1996 Annual Meeting. Upon approval by the Board of Directors of the Company
(the "Board"), awards may be made as provided herein, subject to subsequent
stockholder approval. In the event that such stockholder approval is not
obtained, any such awards shall be cancelled and all rights of associates with
respect to such award shall thereupon cease.
1.2 Purpose. The Company desires to attract and retain the best
available executive and key management associates for itself and its
subsidiaries and to encourage the highest level of performance by such
associates in order to serve the best interests of the Company and its
stockholders. The Plan is expected to contribute to the attainment of these
objectives by offering eligible associates the opportunity to acquire stock
ownership interests in the Company, and other rights with respect to stock of
the Company, and to thereby provide them with incentives to put forth maximum
efforts for the success of the Company and its subsidiaries.
ARTICLE TWO
AWARDS
2.1 Form of Awards. Awards under the Plan may be granted in any one or
all of the following forms: (i) incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"); (ii) nonstatutory stock options ("Nonstatutory
Stock Options") (unless otherwise indicated, references in the Plan to Options
shall include both Incentive Stock Options and Nonstatutory Stock Options);
(iii) stock appreciation rights ("Stock Appreciation Rights"), as described in
Article 7, which may be awarded either in tandem with Options ("Tandem Stock
Appreciation Rights") or on a stand-alone basis ("Nontandem Stock Appreciation
Rights"); (iv) shares of common stock of the Company ("Common Stock") which are
restricted as provided in Article
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11 ("Restricted Shares"); (v) units representing shares of Common Stock, as
described in Article 12 ("Performance Shares"); (vi) units which do not
represent shares of Common Stock but which may be paid in the form of Common
Stock, as described in Article 13 ("Performance Units"); (vii) shares of
unrestricted Common Stock ("Unrestricted Shares"); and (viii) tax offset
payments ("Tax Offset Payments"), as described in Article 15.
2.2 Maximum Shares Available. The maximum aggregate number of shares
of Common Stock available for award under the Plan is 17,298,225 subject to
adjustment pursuant to Article 16. In addition, Tax Offset Payments which may
be awarded under the Plan will not exceed the number of shares available for
issuance under the Plan.] Shares of Common Stock issued pursuant to the Plan
may be either authorized but unissued shares or issued shares reacquired by the
Company. In the event that prior to the end of the period during which Options
may be granted under the Plan, any Option or any Nontandem Stock Appreciation
Right under the Plan expires unexercised or is terminated, surrendered or
cancelled (other than in connection with the exercise of a Stock Appreciation
Right) without being exercised in whole or in part for any reason, or any
Restricted Shares, Performance Shares or Performance Units are forfeited, or if
such awards are settled in cash in lieu of shares of Common Stock, then such
shares or units may, at the discretion of the Committee to the extent
permissible under Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Act"), be made available for subsequent awards under the Plan, upon such terms
as the Committee may determine.
2.3 Return of Prior Awards. As a condition to any subsequent award,
the Committee shall have the right, at its discretion, to require associates to
return to the Company awards previously granted under this Plan. Subject to the
provisions of this Plan, such new award shall be upon such terms and conditions
as are specified by the Committee at the time the new award is granted.
ARTICLE THREE
ADMINISTRATION
3.1 Committee. The Plan shall be administered by a Committee (the
"Committee") appointed by the Board and consisting of not less than two (2)
members of the Board. Each member of the Committee shall be an "outside
director" (within the meaning of Section 162(m) of the Code) and a "non-employee
director" (within the meaning of Rule 16b-3(b)(3)(i) under the Act).
3.2 Powers of Committee. Subject to the express provisions of the
Plan, the Committee shall have the power and authority (i) to grant Options and
to determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option
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and any performance objectives or vesting standards applicable to each Option;
(ii) to designate Options as Incentive Stock Options or Nonstatutory Stock
Options and to determine which Options, if any, shall be accompanied by Tandem
Stock Appreciation Rights; (iii) to grant Tandem Stock Appreciation Rights and
Nontandem Stock Appreciation Rights and to determine the terms and conditions of
such rights; (iv) to grant Restricted Shares and to determine the term of the
restricted period and other conditions and restrictions applicable to such
shares; (v) to grant Performance Shares and Performance Units and to determine
the performance objectives, performance periods and other conditions applicable
to such shares or units; (vi) to grant Unrestricted Shares; (vii) to determine
the amount of, and to make, Tax Offset Payments; and (viii) to determine the
associates to whom, and the time or times at which, Options, Stock Appreciation
Rights, Restricted Shares, Performance Shares, Performance Units and
Unrestricted Shares shall be granted.
3.3 Delegation. The Committee may delegate to one or more of its
members or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation will cause (i) transactions under
the Plan to fail to comply with Section 16 of the Act or (ii) the Committee to
fail to qualify as "outside directors" under Section 162(m) of the Code. The
Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.
3.4 Interpretations. The Committee shall have sole discretionary
authority to interpret the terms of the Plan, to adopt and revise rules,
regulations and policies to administer the Plan and to make any other factual
determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Company, all associates who have received awards under the Plan and all
other interested persons.
3.5 Liability; Indemnification. No member of the Committee, nor any
associate to whom ministerial duties have been delegated, shall be personally
liable for any action, interpretation or determination made with respect to the
Plan or awards made thereunder, and each member of the Committee shall be fully
indemnified and protected by the Company with respect to any liability he or she
may incur with respect to any such action, interpretation or determination, to
the extent permitted by applicable law and to the extent provided in the
Company's Certificate of Incorporation and Bylaws, as amended from time to time.
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ARTICLE FOUR
ELIGIBILITY
Awards shall be limited to executive and key management associates who
are regular, full-time associates of the Company and its present and future
subsidiaries. In determining the associates to whom awards shall be granted and
the number of shares to be covered by each award, the Committee shall take into
account the nature of the services rendered by such associates, their present
and potential contributions to the success of the Company and its subsidiaries
and such other factors as the Committee in its sole discretion shall deem
relevant. Notwithstanding the foregoing, the Committee may also grant awards to
non-associate directors of the Company and its present and future subsidiaries.
Unless otherwise specified, references to associates herein shall mean both
associates and non-associate directors who have received grants under this Plan.
As used in this Plan, the term "subsidiary" shall mean any corporation which at
the time qualifies as a subsidiary of the Company under the definition of
"subsidiary corporation" set forth in Section 424(f) of the Code, or any similar
provision hereafter enacted. No associate may be granted in any calendar year
awards covering more than 400,000 shares of Common Stock.
ARTICLE FIVE
STOCK OPTIONS
5.1 Grant of Options. Options may be granted under this Plan for the
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.
5.2 Option Price. The option price of each Option to purchase Common
Stock shall be determined by the Committee at the time of the grant, but shall
not be less than 100 percent of the fair market value of the Common Stock
subject to such Option on the date of grant. The option price so determined
shall also be applicable in connection with the exercise of any Tandem Stock
Appreciation Right granted with respect to such Option.
5.3 Term of Options. The term of each Nonstatutory Stock Option
granted under the Plan shall not exceed ten (10) years and one day from the date
of grant, subject to earlier termination as provided in Articles 9 and 10.
Except as otherwise provided in Section 6.1 with respect to ten (10) percent
stockholders of the Company, the term of each Incentive Stock Option shall not
exceed ten (10) years from the date of grant, subject to earlier termination as
provided in Articles 9 and 10.
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5.4 Exercise of Options. An Option may be exercised, in whole or in
part, at such time or times as the Committee shall determine. The Committee
may, in its discretion, accelerate the exercisability of any Option at any time.
Options may be exercised by an associate by giving written notice to the
Committee stating the number of shares of Common Stock with respect to which the
Option is being exercised and tendering payment therefor. Payment for the
Common Stock issuable upon exercise of the Option shall be made in full in cash
or by certified check or, if the Committee, in its sole discretion, permits, in
shares of Common Stock (valued at fair market value on the date of exercise).
As soon as reasonably practicable following such exercise, a certificate
representing the shares of Common Stock purchased, registered in the name of the
associate, shall be delivered to the associate. Notwithstanding the foregoing,
an associate may not exercise an Option prior to the approval of the Plan by the
stockholders.
5.5 Cancellation of Stock Appreciation Rights. Upon exercise of all or
a portion of an Option, the related Tandem Stock Appreciation Rights shall be
cancelled with respect to an equal number of shares of Common Stock.
ARTICLE SIX
SPECIAL RULES APPLICABLE TO INCENTIVE STOCK OPTIONS
6.1 Ten Percent Stockholder. Notwithstanding any other provision of
this Plan to the contrary, no associate may receive an Incentive Stock Option
under the Plan if such associate, at the time the award is granted, owns (after
application of the rules contained in Section 424(d) of the Code) stock
possessing more than ten (10) percent of the total combined voting power of all
classes of stock of the Company or its subsidiaries, unless (i) the option price
for such Incentive Stock Option is at least 110 percent of the fair market value
of the Common Stock subject to such Incentive Stock Option on the date of grant
and (ii) such Option is not exercisable after the date five (5) years from the
date such Incentive Stock Option is granted.
6.2 Limitation on Grants. The aggregate fair market value (determined
with respect to each Incentive Stock Option at the time such Incentive Stock
Option is granted) of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an associate during any
calendar year (under this Plan or any other plan of the Company or a subsidiary)
shall not exceed $100,000.
6.3 Limitations on Time of Grant. No grant of an Incentive Stock
Option shall be made under this Plan more than ten (10) years after the earlier
of the date of adoption of the Plan by the Board or the date the Plan is
approved by stockholders.
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ARTICLE SEVEN
STOCK APPRECIATION RIGHTS
7.1 Grants of Stock Appreciation Rights. Tandem Stock Appreciation
Rights may be awarded by the Committee in connection with any Option granted
under the Plan, either at the time the Option is granted or thereafter at any
time prior to the exercise, termination or expiration of the Option. Nontandem
Stock Appreciation Rights may also be granted by the Committee at any time. At
the time of grant of a Nontandem Stock Appreciation Right, the Committee shall
specify the number of shares of Common Stock covered by such right and the base
price of shares of Common Stock to be used in connection with the calculation
described in Section 7.4 below. The base price of a Nontandem Stock
Appreciation Right shall be not less than 100 percent of the fair market value
of a share of Common Stock on the date of grant. Stock Appreciation Rights
shall be subject to such terms and conditions not inconsistent with the other
provisions of this Plan as the Committee shall determine.
7.2 Limitations on Exercise. A Tandem Stock Appreciation Right shall
be exercisable only to the extent that the related Option is exercisable and
shall be exercisable only for such period as the Committee may determine (which
period may expire prior to the expiration date of the related Option). Upon the
exercise of all or a portion of Tandem Stock Appreciation Rights, the related
Option shall be cancelled with respect to an equal number of shares of Common
Stock. Shares of Common Stock subject to Options, or portions thereof,
surrendered upon exercise of a Tandem Stock Appreciation Right, shall not be
available for subsequent awards under the Plan. A Nontandem Stock Appreciation
Right shall be exercisable during such period as the Committee shall determine.
7.3 Surrender or Exchange of Tandem Stock Appreciation Rights. A
Tandem Stock Appreciation Right shall entitle the associate to surrender to the
Company unexercised the related option, or any portion thereof, and to receive
from the Company in exchange therefor that number of shares of Common Stock
having an aggregate fair market value equal to (A) the excess of (i) the fair
market value of one (1) share of Common Stock as of the date the Tandem Stock
Appreciation Right is exercised over (ii) the option price per share specified
in such Option, multiplied by (B) the number of shares of Common Stock subject
to the Option, or portion thereof, which is surrendered. Cash shall be
delivered in lieu of any fractional shares.
7.4 Exercise of Nontandem Stock Appreciation Rights. The exercise of a
Nontandem Stock Appreciation Right shall entitle the associate to receive from
the Company that number of shares of Common Stock having an aggregate fair
market value equal to (A) the excess of (i) the fair market value of one (1)
share of Common Stock as of the date on which the Nontandem Stock Appreciation
Right is exercised
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over (ii) the base price of the shares covered by the Nontandem Stock
Appreciation Right, multiplied by (B) the number of shares of Common Stock
covered by the Nontandem Stock Appreciation Right, or the portion thereof being
exercised. Cash shall be delivered in lieu of any fractional shares.
7.5 Settlement of Stock Appreciation Rights. As soon as is reasonably
practicable after the exercise of a Stock Appreciation Right, the Company shall
(i) issue, in the name of the associate, stock certificates representing the
total number of full shares of Common Stock to which the associate is entitled
pursuant to Section 7.3 or 7.4 hereof and cash in an amount equal to the fair
market value, as of the date of exercise, of any resulting fractional shares,
and (ii) if the Committee causes the Company to elect to settle all or part of
its obligations arising out of the exercise of the Stock Appreciation Right in
cash pursuant to Section 7.6, deliver to the associate an amount in cash equal
to the fair market value, as of the date of exercise, of the shares of Common
Stock it would otherwise be obligated to deliver.
7.6 Cash Settlement. The Committee, in its discretion, may cause the
Company to settle all or any part of its obligation arising out of the exercise
of a Stock Appreciation Right by the payment of cash in lieu of all or part of
the shares of Common Stock it would otherwise be obligated to deliver in an
amount equal to the fair market value of such shares on the date of exercise.
ARTICLE EIGHT
NONTRANSFERABILITY OF OPTIONS AND
STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Right may be transferred, assigned,
pledged or hypothecated (whether by operation of law or otherwise), except as
provided by will or the applicable laws of descent and distribution, and no
Option or Stock Appreciation Right shall be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of an Option or a Stock Appreciation Right not specifically
permitted herein shall be null and void and without effect. An Option or Stock
Appreciation Right may be exercised by an associate only during his or her
lifetime, or following his or her death pursuant to Article 10.
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ARTICLE NINE
TERMINATION OF EMPLOYMENT
9.1 Exercise after Termination of Employment. In the event that the
employment of an associate to whom an Option or Stock Appreciation Right has
been granted under the Plan shall be terminated (for reasons other than death or
total disability), such Option or Stock Appreciation Right may be exercised (to
the extent that the associate was entitled to do so at the termination of his
employment) at any time within three (3) months after such termination of
employment.
9.2 Total Disability. In the event that an associate to whom an Option
or Stock Appreciation Right has been granted under the Plan shall become totally
disabled, such Option or Stock Appreciation Right may be exercised at any time
during the first nine (9) months that the associate receives benefits under The
(illegible) Long-Term Disability Plan (the "Disability Plan"). For purposes
hereof, "total disability" shall have the definition set forth in the Disability
Plan, which definition is hereby incorporated by reference.
9.3 Disability or Cessation of Director's Term. A non-associate
director shall be entitled to exercise Options or Stock Appreciation Rights only
during his or her term as director and for a period of three (3) months
thereafter; provided, however, that a non-associate director shall be entitled
to exercise awards for a period of nine (9) months following the total
disability of such non-associate director.
ARTICLE TEN
DEATH OF ASSOCIATE
If an associate to whom an Option or Stock Appreciation Right has been
granted under the Plan shall while employed by the Company or one of its
subsidiaries or within three (3) months after the termination of such employment
or cessation of director's term, such Option or Stock Appreciation Right may be
exercised to the extent that the associate was entitled to do so at the time of
his or her death, by the associate's estate or by the person who acquires the
right to exercise such Option or Stock Appreciation Right (illegible) his or her
death by bequest or inheritance. Such exercise may occur at any time within one
(1) year (illegible) the date of the associate's death, but in no case later
than the date on which the Option or Stock Appreciation Right terminates.
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ARTICLE ELEVEN
RESTRICTED SHARES
11.1 Grant of Restricted Shares. The Committee may from time to time
cause the Company to grant Restricted Shares under the Plan to associates,
subject to such restrictions, conditions and other terms as the Committee may
determine.
11.2 Restrictions. At the time a grant of Restricted Shares is made,
the Committee shall establish a period of time (the "Restricted Period")
applicable to such Restricted Shares. Each grant of Restricted Shares may be
subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a grant is made, prescribe restrictions in addition to
or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which shall be
applicable to all or any portion of the Restricted Shares. The Committee may
also, in its sole discretion, shorten or terminate the Restricted Period or
waive any other restrictions applicable to all or a portion of such Restricted
Shares. None of the Restricted Shares may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of during the Restricted Period or
prior to the satisfaction of any other restrictions prescribed by the Committee
with respect to such Restricted Shares.
11.3 Restricted Stock Certificates. The Company shall issue, in the
name of each associate to whom Restricted Shares have been granted, stock
certificates representing the total number of Restricted Shares granted to the
associate, as soon as reasonably practicable after the grant. The Secretary of
the Company shall hold such certificates, properly endorsed for transfer, for
the associate's benefit until such time as the Restricted Shares are forfeited
to the Company, or the restrictions lapse.
11.4 Rights of Holders of Restricted Shares. Holders of Restricted
Shares shall not have the right to vote such shares or the right to receive any
dividends with respect to such shares. All distributions, if any, received by
an associate with respect to Restricted Shares as a result of any stock split-
up, stock distribution, a combination of shares, or other similar transaction
shall be subject to the restrictions of this Article 11.
11.5 Forfeiture. Any Restricted Shares granted to an associate
pursuant to the Plan shall be forfeited if the associate terminates employment
with the Company or its subsidiaries (or if a non-associate director ceases to
be a director of the Company or one of its subsidiaries) prior to the expiration
or termination of the Restricted Period and the satisfaction of any other
conditions applicable to such Restricted Shares. Upon such forfeiture, the
Secretary of the Company shall either cancel or retain in its treasury the
Restricted Shares that are forfeited to the Company. If the associate's
employment (or director's term) terminates as a result of his or her
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death or total disability (as defined in Article 9), Restricted Shares of such
associate shall be forfeited, unless the Committee, in its sole discretion,
shall determine otherwise.
11.6 Delivery of Restricted Shares. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee, the restrictions applicable to the Restricted Shares shall
lapse and a stock certificate for the number of Restricted Shares with respect
to which the restrictions have lapsed shall be delivered, free of all such
restrictions, to the associate or the associate's beneficiary or estate, as the
case may be.
11.7 Performance-Based Objectives. At the time of the grant of
Restricted Shares to an associate, and prior to the beginning of the performance
period to which performance objectives relate, the Committee may establish
performance objectives based on operating income and/or gross margin objectives
of the Company or any subsidiary or division thereof. These objectives shall be
based on an analysis of historical performance and growth expectations for the
relevant business unit, financial results of other comparable businesses both
inside and outside the Company, and progress towards achieving the long-range
strategic plan for that business unit. These objectives and determination of
results shall be based entirely on such financial measures, and the Committee
shall have no discretion to modify such results.
ARTICLE TWELVE
PERFORMANCE SHARES
12.1 Award of Performance Shares. For each Performance Period (as
defined in Section 12.2), Performance Shares may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. Each Performance Share shall be deemed to be equivalent to one (1)
share of Common Stock. Performance Shares granted to an associate shall be
credited to an account (a "Performance Share Account") established and
maintained for such associate.
12.2 Performance Period. "Performance Period" shall mean such period
of time as shall be determined by the Committee in its sole discretion.
Different Performance Periods may be established for different associates
receiving Performance Shares. Performance Periods may run consecutively or
concurrently.
12.3 Right to Payment of Performance Shares. With respect to each
award of Performance Shares under this Plan, the Committee shall specify
performance objectives (the "Performance Objectives") which must be satisfied in
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order for the associate to vest in the Performance Shares which have been
awarded to him or her for the Performance Period. If the Performance Objectives
established for an associate for the Performance Period are partially but not
fully met, the Committee may, nonetheless, in its sole discretion, determine
that all or a portion of the Performance Shares have vested. If the Performance
Objectives for a Performance Period are exceeded, the Committee may, in its sole
discretion, grant additional, fully vested Performance Shares to the associate.
The Committee may also determine, in its sole discretion, that Performance
Shares awarded to an associate shall become partially or fully vested upon the
associate's death, total disability (as defined in Article 9) or retirement, or
upon the termination of the associate's employment (or director's term) prior to
the end of the Performance Period.
12.4 Payment for Performance Shares. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 12.3). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Shares shall be granted to the
associate pursuant to Section 12.3. As soon as reasonably practicable after
such determinations, or at such later date as the Committee shall determine at
the time of grant, the Company shall pay to the associate an amount with respect
to each vested Performance Share equal to the fair market value of a share of
Common Stock on such payment date or, if the Committee shall so specify at the
time of grant, an amount equal to (i) the fair market value of a share of Common
Stock on the payment date less (ii) the fair market value of a share of Common
Stock on the date of grant of the Performance Share. Payment shall be made
entirely in cash, entirely in Common Stock (including Restricted Shares) or in
such combination of cash and Common Stock as the Committee shall determine.
12.5 Voting and Dividend Rights. Except as the Committee may otherwise
provide, no associate shall be entitled to any voting rights, to receive any
dividends, or to have his or her Performance Share Account credited or increased
as a result of any dividends or other distribution with respect to Common Stock.
Notwithstanding the foregoing, within sixty (60) days from the date of payment
of a dividend by the Company on its shares of Common Stock, the Committee, in
its discretion, may credit an associate's Performance Share Account with
additional Performance Shares having an aggregate fair market value equal to the
dividend per share paid on the Common Stock multiplied by the number of
Performance Shares credited to his or her account at the time the dividend was
declared.
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ARTICLE THIRTEEN
PERFORMANCE UNITS
13.1 Award of Performance Units. For each Performance Period (as
defined in Section 12.2), Performance Units may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. The award agreement covering such Performance Units shall specify a
value for each Performance Unit or shall set forth a formula for determining the
value of each Performance Unit at the time of payment (the "Ending Value"). If
necessary to make the calculation of the amount to be paid to the associate
pursuant to Section 13.3, the Committee shall also state in the award agreement
the initial value of each Performance Unit (the "Initial Value"). Performance
Units granted to an associate shall be credited to an account (a "Performance
Unit Account") established and maintained for such associate.
13.2 Right to Payment of Performance Units. With respect to each award
of Performance Units under this Plan, the Committee shall specify Performance
Objectives which must be satisfied in order for the associate to vest in the
Performance Objectives established for an associate for the Performance Period
are partially but not fully met, the Committee may, nonetheless, in its sole
discretion, determine that all or a portion of the Performance Units have
vested. If the Performance Objectives for a Performance Period are exceeded,
the Committee may, in its sole discretion, grant additional, fully vested
Performance Units to the associate. The Committee may also determine, in its
sole discretion, total disability (as defined in Article 9) or retirement, or
upon the termination of employment of the associate by the Company.
13.3 Payment for Performance Units. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 13.2). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Units shall be granted to the associate
pursuant to Section 13.2. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine at the
time of grant, the Company shall pay to the associate an amount with respect to
each vested Performance Unit equal to the Ending Value of the Performance Unit
or, if the Committee shall so specify at the time of grant, an amount equal to
(i) the Ending Value of the Performance Unit less (ii) the Initial Value of the
Performance Unit. Payment shall be made entirely in cash, entirely in Common
Stock (including Restricted Shares) or in such combination of cash and Common
Stock as the Committee shall determine.
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ARTICLE FOURTEEN
UNRESTRICTED SHARES
14.1 Award of Unrestricted Shares. The Committee may cause the Company
to grant Unrestricted Shares to associates at such time or times, in such
amounts and for such reasons as the Committee, in its sole discretion, shall
determine. No payment shall be required for Unrestricted Shares.
14.2 Delivery of Unrestricted Shares. The Company shall issue, in the
name of each associate to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
associate, and shall deliver such certificates to the associate as soon as
reasonably practicable after the date of grant or on such later date as the
Committee shall determine at the time of grant.
ARTICLE FIFTEEN
TAX OFFSET PAYMENTS
The Committee shall have the authority at the time of any award under
this Plan or anytime thereafter to make Tax Offset Payments to assist associates
in paying income taxes incurred as a result of their participation in this Plan.
The Tax Offset Payments shall be determined by multiplying a percentage
established by the Committee times all or a portion (as the Committee shall
determine) of the taxable income recognized by an associate upon (i) the
exercise of a Nonstatutory Stock Option or a Stock Appreciation Right, (ii) the
disposition of shares received upon exercise of an Incentive Stock Option, (iii)
the lapse of restrictions on Restricted Shares, (iv) the award of Unrestricted
Shares, or (v) payments for Performance Shares or Performance Units. The
percentage shall be established, from time to time, by the Committee at that
rate which the Committee, in its sole discretion, determines to be appropriate
and in the best interests of the Company to assist associates in paying income
taxes incurred as a result of the events described in the preceding sentence.
Tax Offset Payments shall be subject to the restrictions on transferability
applicable to Options and Stock Appreciation Rights under Article 8.
ARTICLE SIXTEEN
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, the Committee may at
any time make or provide for such adjustments to the Plan, to the number and
class
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of shares available thereunder or to any outstanding Options, Stock Appreciation
Rights, Restricted Shares or Performance Shares as it shall deem appropriate to
prevent dilution or enlargement of rights, including adjustments in the event of
changes in the number of shares of outstanding Common Stock by reason of stock
dividends, extraordinary cash dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and the like.
ARTICLE SEVENTEEN
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
The Board may suspend, terminate, modify or amend the Plan, provided
that any amendment that would (i) materially increase the aggregate number of
shares which may be issued under the Plan; (ii) materially increase the benefits
accruing to associates under the Plan; or (iii) materially modify the
requirements as to eligibility for participation in the Plan, shall be subject
to the approval of the Company's stockholders, except that any such increase or
modification that may result from adjustments authorized by Article 16 does not
require such approval. If the Plan is terminated, the terms of the Plan shall,
notwithstanding such termination, continue to apply to awards granted prior to
such termination. No suspension, termination, modification or amendment of the
Plan may, without the consent of the associate to whom an award shall
theretofore have been granted, adversely affect the rights of such associate
under such award.
ARTICLE EIGHTEEN
WRITTEN AGREEMENT
Each award of Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units, Unrestricted Shares and Tax Offset
Payments shall be evidenced by a written agreement, executed by the associate
and the Company, and containing such restrictions, terms and conditions, if any,
as the Committee may require. In the event of any conflict between a written
agreement and the Plan, the terms of the Plan shall govern.
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ARTICLE NINETEEN
MISCELLANEOUS PROVISIONS
19.1 Fair Market Value. "Fair market value" for purposes of this Plan
shall be the closing price of the Common Stock as reported on the principal
exchange on which the shares are listed for the date on which the grant,
exercise or other transaction occurs, or if there were no sales on such date,
the most recent prior date on which there were sales.
19.2 Tax Withholding. The Company shall have the right to require
associates or their beneficiaries or legal representatives to remit to the
Company an amount sufficient to satisfy Federal, state and local withholding tax
requirements, or to deduct from all payments under this Plan, including Tax
Offset Payments, amounts sufficient to satisfy all withholding tax requirements.
Whenever payments under the Plan are to be made to an associate in cash, such
payments shall be net of any amounts sufficient to satisfy all Federal, state
and local withholding tax requirements. The Committee may, in its discretion,
permit an associate to satisfy his or her tax withholding obligation either by
(i) surrendering shares owned by the associate or (ii) having the Company
withhold from shares otherwise deliverable to the associate. Shares surrendered
or withheld shall be valued at their fair market value as of the date on which
income is required to be recognized for income tax purposes. In the case of an
award of Incentive Stock Options, the foregoing right shall be deemed to be
provided to the associate at the time of such award.
19.3 Compliance With Section 16 and Section 162(m). In the case of
associates who are or may be subject to Section 16 of the Act, it is the intent
of the corporation that any award granted hereunder satisfy and be interpreted
in a manner that satisfies the applicable requirements of Rule 16b-3, so that
such persons will be entitled to the benefits of Rule 16b-3 or other exemptive
rules under Section 16 of the Act and will not be subjected to liability
thereunder. If any provision of the Plan or any award would otherwise conflict
with the intent expressed herein, that provision, to the extent possible, shall
be interpreted and deemed amended so as to avoid such conflict. To the extent
of any remaining irreconcilable conflict with such intent, such provision shall
be deemed void as applicable to associates who are or may be subject to Section
16 of the Act. If any award hereunder is intended to qualify as performance-
based for purposes of Section 162(m) of the Code, the Committee shall not
exercise any discretion to increase the payment under such award except to the
extent permitted by Section 162(m) and the regulations thereunder.
19.4 Successors. The obligations of the Company under the Plan shall
be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and businesses
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of the Company. In the event of any of the foregoing, the Committee may, at its
discretion prior to the consummation of the transaction, cancel, offer to
purchase, exchange, adjust or modify any outstanding awards, at such time and in
such manner as the Committee deems appropriate and in accordance with applicable
law.
19.5 General Creditor Status. Associates shall have no right, title,
or interest whatsoever in or to any investments which the Company may make to
aid it in meeting its obligations under the Plan. Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the
Company and any associate or beneficiary or legal representative of such
associate. To the extent that any person acquires a right to receive payments
from the Company under the Plan, such right shall be no greater than the right
of an unsecured general creditor of the Company. All payments to be made
hereunder shall be paid from the general funds of the Company and no special or
separate fund shall be established and no segregation of assets shall be made to
assure payment of such amounts except as expressly set forth in the Plan.
19.6 No Right to Employment. Nothing in the Plan or in any written
agreement entered into pursuant to Article 18, nor the grant of any award, shall
confer upon any associate any right to continue in the employ of the Company or
a subsidiary or to be entitled to any remuneration or benefits not set forth in
the Plan or such written agreement or interfere with or limit the right of the
Company or a subsidiary to modify the terms of or terminate such associate's
employment at any time.
19.7 Other Plans. Effective upon the adoption of the Plan by the
stockholders, no further awards shall be made under The Limited, Inc. 1987 Stock
Option Plan (as amended as of April 20, 1992) (the "Prior Plan"). Thereafter,
all awards made under the Prior Plan prior to adoption of this Plan by the
stockholders shall continue in accordance with the terms of the Prior Plan.
19.8 Notices. Notices required or permitted to be made under the Plan
shall be sufficiently made if sent by registered or certified mail addressed (a)
to the associate at the associate's address set forth in the books and records
of the Company or its subsidiaries, or (b) to the Company or the Committee at
the principal office of the Company.
19.9 Severability. In the event that any provision of the Plan shall
be held illegal or invalid for any reason, such illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
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19.10 Governing Law. To the extent not preempted by Federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
19.11 Term of Plan. Unless earlier terminated pursuant to Article 17
hereof, the Plan shall terminate on the tenth (10th) anniversary of the date of
adoption of the Plan by the stockholders.
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