EXHIBIT 10.58
THE GYMBOREE CORPORATION
2004 EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of The Gymboree Corporation 2004 Equity Incentive Plan is to
attract, retain and motivate employees, officers, directors, consultants,
agents, advisors and independent contractors of the Company and its Related
Companies by providing them the opportunity to acquire a proprietary interest in
the Company and to align their interests and efforts to the long-term interests
of the Company's stockholders.
SECTION 2. DEFINITIONS
Certain capitalized terms used in the Plan have the meanings set forth in
Appendix A.
SECTION 3. ADMINISTRATION
3.1 ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board or the Compensation Committee, which
shall be composed of two or more directors, each of whom is a "non-employee
director" within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange
Act, or any successor definition adopted by the Securities and Exchange
Commission, and an "outside director" within the meaning of Section 162(m) of
the Code, or any successor provision thereto. Notwithstanding the foregoing, the
Board may delegate responsibility for administering the Plan with respect to
designated classes of Eligible Persons to different committees consisting of one
or more members of the Board, subject to such limitations as the Board deems
appropriate, except with respect to Awards to Participants who are subject to
Section 16 of the Exchange Act or Awards granted pursuant to Section 16 of the
Plan. Members of any committee shall serve for such term as the Board may
determine, subject to removal by the Board at any time. To the extent consistent
with applicable law, the Board or the Compensation Committee may authorize one
or more officers of the Company to grant Options to designated classes of
Eligible Persons, within limits specifically prescribed by the Board or the
Compensation Committee; provided, however, that no such officer shall have or
obtain authority to grant Options to himself or herself or to any person subject
to Section 16 of the Exchange Act. All references in the Plan to the "Committee"
shall be, as applicable, to the Compensation Committee or any other committee or
any officer to whom the Board or the Compensation Committee has delegated
authority to administer the Plan.
3.2 ADMINISTRATION AND INTERPRETATION BY COMMITTEE
(a) Except for the terms and conditions explicitly set forth in the Plan and
to the extent permitted by applicable law, the Committee shall have full power
and exclusive authority,
subject to such orders or resolutions not inconsistent with the provisions of
the Plan as may from time to time be adopted by the Board or a Committee
composed of members of the Board, to (i) select the Eligible Persons to whom
Awards may from time to time be granted under the Plan; (ii) determine the type
or types of Award to be granted to each Participant under the Plan; (iii)
determine the number of shares of Common Stock to be covered by each Award
granted under the Plan; (iv) determine the terms and conditions of any Award
granted under the Plan; (v) approve the forms of notice or agreement for use
under the Plan; (vi) determine whether, to what extent and under what
circumstances Awards may be settled in cash, shares of Common Stock or other
property or canceled or suspended; (vii) determine whether, to what extent and
under what circumstances cash, shares of Common Stock, other property and other
amounts payable with respect to an Award shall be deferred either automatically
or at the election of the Participant; (viii) interpret and administer the Plan
and any instrument evidencing an Award, notice or agreement executed or entered
into under the Plan; (ix) establish such rules and regulations as it shall deem
appropriate for the proper administration of the Plan; (x) delegate ministerial
duties to such of the Company's employees as it so determines; and (xi) make any
other determination and take any other action that the Committee deems necessary
or desirable for administration of the Plan.
(b) In no event, however, shall the Committee have the right, without
stockholder approval, to (i) cancel or amend outstanding Options or SARs for the
purpose of repricing, replacing or regranting such Options or SARs with Options
or SARs that have a purchase or grant price that is less than the purchase or
grant price for the original Options or SARs except in connection with
adjustments provided in Section 15, or (ii) issue an Option or amend an
outstanding Option to provide for the grant or issuance of a new Option on
exercise of the original Option.
(c) The effect on the vesting of an Award of a Company-approved leave of
absence or a Participant's working less than full-time shall be determined by
the Company's chief human resources officer or other person performing that
function or, with respect to directors or executive officers, by the
Compensation Committee, whose determination shall be final.
(d) Decisions of the Committee shall be final, conclusive and binding on all
persons, including the Company, any Participant, any stockholder and any
Eligible Person. A majority of the members of the Committee may determine its
actions.
SECTION 4. SHARES SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 15.1, the number
of shares of Common Stock available for issuance under the Plan shall be:
(a) 1,690,000 shares; plus
(b) any authorized shares (i) not issued or subject to outstanding options
under the Company's 2002 Amended and Restated Stock Incentive Plan and the
Company's Amended
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and Restated 1993 Stock Option Plan (the "PRIOR PLANS") on the Effective Date
and (ii) any shares subject to outstanding options under the Prior Plans on the
Effective Date that cease to be subject to such options (other than by reason of
exercise or settlement of the options to the extent they are exercised for or
settled in shares), up to an aggregate maximum of 5,268,841 shares, subject to
adjustment from time to time as provided in Section 15.1, which shares shall
cease, as of the Effective Date, to be available for grant and issuance under
the Prior Plans, but shall be available for issuance under the Plan.
Shares issued under the Plan shall be drawn from authorized and unissued shares
or shares now held or subsequently acquired by the Company as treasury shares.
4.2 SHARE USAGE
(a) Shares of Common Stock covered by an Award shall not be counted as used
unless and until they are actually issued and delivered to a Participant. If any
Award lapses, expires, terminates or is canceled prior to the issuance of shares
thereunder or if shares of Common Stock are issued under the Plan to a
Participant and thereafter are forfeited to or otherwise reacquired by the
Company, the shares subject to such Awards and the forfeited or reacquired
shares shall again be available for issuance under the Plan. Any shares of
Common Stock (i) tendered by a Participant or retained by the Company as full or
partial payment to the Company for the purchase price of an Award or to satisfy
tax withholding obligations in connection with an Award, or (ii) covered by an
Award that is settled in cash, or in a manner such that some or all of the
shares of Common Stock covered by the Award are not issued, shall be available
for Awards under the Plan. The number of shares of Common Stock available for
issuance under the Plan shall not be reduced to reflect any dividends or
dividend equivalents that are reinvested into additional shares of Common Stock
or credited as additional shares of Common Stock subject or paid with respect to
an Award.
(b) The Committee shall also, without limitation, have the authority to grant
Awards as an alternative to or as the form of payment for grants or rights
earned or due under other compensation plans or arrangements of the Company.
(c) Notwithstanding anything in the Plan to the contrary, the Committee may
grant Substitute Awards under the Plan. Substitute Awards shall not reduce the
number of shares authorized for issuance under the Plan. In the event that an
Acquired Entity has shares available for awards or grants under one or more
preexisting plans not adopted in contemplation of such acquisition or
combination, then, to the extent determined by the Board or the Compensation
Committee, the shares available for grant pursuant to the terms of such
preexisting plan (as adjusted, to the extent appropriate, using the exchange
ratio or other adjustment or valuation ratio or formula used in such acquisition
or combination to determine the consideration payable to holders of common stock
of the entities that are parties to such acquisition or combination) may be used
for Awards under the Plan and shall not reduce the number of shares of Common
Stock authorized for issuance under the Plan; provided, however, that Awards
using such available shares shall not be made after the date awards or grants
could have been made under the terms of such preexisting plans, absent the
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acquisition or combination, and shall only be made to individuals who were not
employees or directors of the Company or a Related Company prior to such
acquisition or combination. In the event that a written agreement between the
Company and an Acquired Entity pursuant to which a merger or consolidation is
completed is approved by the Board and said agreement sets forth the terms and
conditions of the substitution for or assumption of outstanding awards of the
Acquired Entity, said terms and conditions shall be deemed to be the action of
the Committee without any further action by the Committee, except as may be
required for compliance with Rule 16b-3 under the Exchange Act, and the persons
holding such awards shall be deemed to be Participants.
(d) Notwithstanding the other provisions in this Section 4.2, the maximum
number of shares that may be issued upon the exercise of Incentive Stock Options
shall equal the aggregate share number stated in Section 4.1, subject to
adjustment as provided in Section 15.1.
4.3 LIMITATIONS
(a) Subject to adjustment as provided in Section 15.1, the aggregate number of
shares that may be issued pursuant to Awards granted under the Plan, other than
Awards of Options or Stock Appreciation Rights, that are not (i) subject to
restrictions based on the satisfaction of specified performance goals or (ii)
granted in lieu of the payment of performance-based cash incentive awards shall
not exceed 50% of the aggregate maximum number of shares specified in Section
4.1.
(b) Subject to adjustment as provided in Section 15.1, the aggregate number of
shares that may be issued pursuant to Awards granted under the Plan, other than
Awards of Options or Stock Appreciation Rights, that contain no restrictions or
restrictions based solely on continuous employment or services for less than
three years (except where Termination of Service occurs by reason of death or
Disability) shall not exceed 50% of the aggregate maximum number of shares
specified in Section 4.1.
SECTION 5. ELIGIBILITY
An Award may be granted to any employee, officer or director of the Company or a
Related Company whom the Committee from time to time selects. An Award may also
be granted to any consultant, agent, advisor or independent contractor for bona
fide services rendered to the Company or any Related Company that (a) are not in
connection with the offer and sale of the Company's securities in a
capital-raising transaction and (b) do not directly or indirectly promote or
maintain a market for the Company's securities.
SECTION 6. AWARDS
6.1 FORM, GRANT AND SETTLEMENT OF AWARDS
The Committee shall have the authority, in its sole discretion, to determine the
type or types of Awards to be granted under the Plan. Such Awards may be granted
either alone or in
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addition to or in tandem with any other type of Award. Any Award settlement may
be subject to such conditions, restrictions and contingencies as the Committee
shall determine.
6.2 EVIDENCE OF AWARDS
Awards granted under the Plan shall be evidenced by a written, including an
electronic, notice or agreement that shall contain such terms, conditions,
limitations and restrictions as the Committee shall deem advisable and that are
not inconsistent with the Plan.
6.3 DEFERRALS
The Committee may permit or require a Participant to defer receipt of the
payment of any Award. If any such deferral election is permitted or required,
the Committee, in its sole discretion, shall establish rules and procedures for
such payment deferrals, which may include the grant of additional Awards or
provisions for the payment or crediting of interest or dividend equivalents,
including converting such credits to deferred stock unit equivalents.
6.4 DIVIDENDS AND DISTRIBUTIONS
Participants may, if the Committee so determines, be credited with dividends
paid with respect to shares of Common Stock underlying an Award in a manner
determined by the Committee in its sole discretion. The Committee may apply any
restrictions to the dividends or dividend equivalents that the Committee deems
appropriate. The Committee, in its sole discretion, may determine the form of
payment of dividends or dividend equivalents, including cash, shares of Common
Stock, Restricted Stock or Stock Units.
SECTION 7. OPTIONS
7.1 GRANT OF OPTIONS
The Committee may grant Options designated as Incentive Stock Options or
Nonqualified Stock Options.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as determined
by the Committee, but shall not be less than 100% of the Fair Market Value on
the Grant Date, except in the case of Substitute Awards. Notwithstanding the
foregoing, the Committee, in its sole discretion, may establish an exercise
price that is equal to the average of 100% of the Fair Market Value over a
period of trading days not to exceed 30 days from the Grant Date.
7.3 TERM OF OPTIONS
Subject to earlier termination in accordance with the terms of the Plan and the
instrument evidencing the Option, the maximum term of a Nonqualified Stock
Option shall be as established for that Option by the Committee or, if not so
established, shall be ten years from the Grant Date.
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7.4 EXERCISE OF OPTIONS
The Committee shall establish and set forth in each instrument that evidences an
Option the time at which, or the installments in which, the Option shall vest
and become exercisable, any of which provisions may be waived or modified by the
Committee at any time. If not so established in the instrument evidencing the
Option, the Option shall vest and become exercisable according to the following
schedule, which may be waived or modified by the Committee at any time:
PERIOD OF PARTICIPANT'S CONTINUOUS
EMPLOYMENT OR SERVICE WITH THE COMPANY
OR ITS RELATED COMPANIES FROM THE VESTING PORTION OF TOTAL OPTION
COMMENCEMENT DATE THAT IS VESTED AND EXERCISABLE
After 1 year 1/4th
Each additional one-month period of An additional 1/48th
continuous service completed thereafter
After 4 years 100%
To the extent an Option has vested and become exercisable, the Option may be
exercised in whole or from time to time in part by delivery to or as directed or
approved by the Company of a properly executed stock option exercise agreement
or notice, in a form and in accordance with procedures established by the
Committee, setting forth the number of shares with respect to which the Option
is being exercised, the restrictions imposed on the shares purchased under such
exercise agreement, if any, and such representations and agreements as may be
required by the Committee, accompanied by payment in full as described in
Sections 7.5 and 13. An Option may be exercised only for whole shares and may
not be exercised for less than a reasonable number of shares at any one time, as
determined by the Committee.
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid in full to
the Company by delivery of consideration equal to the product of the Option
exercise price and the number of shares purchased. Such consideration must be
paid before the Company will issue the shares being purchased and must be in a
form or a combination of forms acceptable to the Committee for that purchase,
which forms may include:
(a) cash, check or wire transfer;
(b) tendering (either actually or, so long as the Common Stock is registered
under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of
Common Stock that on the day prior to the exercise date have an aggregate Fair
Market Value equal to the aggregate exercise price of the shares being purchased
under the Option owned by the Participant for at
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least six months (or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes);
(c) so long as the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, and to the extent permitted by law, delivery of a properly
executed exercise notice, together with irrevocable instructions to a brokerage
firm designated or approved by the Company to deliver promptly to the Company
the aggregate amount of proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise, all
in accordance with the regulations of the Federal Reserve Board; or
(d) such other consideration as the Committee may permit.
7.6 EFFECT OF TERMINATION OF SERVICE
The Committee shall establish and set forth in each instrument that evidences an
Option whether the Option shall continue to be exercisable, and the terms and
conditions of such exercise, after a Termination of Service, any of which
provisions may be waived or modified by the Committee at any time. If not so
established in the instrument evidencing the Option, the Option shall be
exercisable according to the following terms and conditions, which may be waived
or modified by the Committee at any time:
(a) Any portion of an Option that is not vested and exercisable on the date of
a Participant's Termination of Service shall expire on such date.
(b) Any portion of an Option that is vested and exercisable on the date of a
Participant's Termination of Service shall expire on the earliest to occur of:
(i) if the Participant's Termination of Service occurs for reasons other than
Cause, Disability or death, the date that is three months after such Termination
of Service;
(ii) if the Participant's Termination of Service occurs by reason of Disability
or death, the one-year anniversary of such Termination of Service; and
(iii) the last day of the maximum term of the Option (the "OPTION EXPIRATION
DATE").
Notwithstanding the foregoing, if a Participant dies after his or her
Termination of Service but while an Option is otherwise exercisable, the portion
of the Option that is vested and exercisable on the date of such Termination of
Service shall expire upon the earlier to occur of (y) the Option Expiration Date
and (z) the one-year anniversary of the date of death, unless the Committee
determines otherwise.
Also notwithstanding the foregoing, in case a Participant's Termination of
Service occurs for Cause, all Options granted to the Participant shall
automatically expire upon first notification to the Participant of such
termination, unless the Committee determines otherwise. If a Participant's
employment or service relationship with the Company is suspended pending an
investigation of whether the Participant shall be terminated for Cause, all the
Participant's
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rights under any Option shall likewise be suspended during the period of
investigation. If any facts that would constitute termination for Cause are
discovered after a Participant's Termination of Service, any Option then held by
the Participant may be immediately terminated by the Committee, in its sole
discretion.
(c) A Participant's change in status from an employee to a consultant, advisor
or independent contractor, or a change in status from a consultant, advisor or
independent contractor to an employee, shall not be considered a Termination of
Service for purposes of this Section 7.6.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
Notwithstanding any other provisions of the Plan, the terms and conditions of
any Incentive Stock Options shall in addition comply in all respects with
Section 422 of the Code, or any successor provision, and any applicable
regulations thereunder, including, to the extent required thereunder, the
following:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the Grant Date)
of Common Stock with respect to which a Participant's Incentive Stock Options
become exercisable for the first time during any calendar year (under the Plan
and all other stock option plans of the Company and its parent and subsidiary
corporations) exceeds $100,000, such portion in excess of $100,000 shall be
treated as a Nonqualified Stock Option. In the event the Participant holds two
or more such Options that become exercisable for the first time in the same
calendar year, such limitation shall be applied on the basis of the order in
which such Options are granted.
8.2 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent or
subsidiary corporations may not be granted Incentive Stock Options.
8.3 EXERCISE PRICE
The exercise price of an Incentive Stock Option shall be at least 100% of the
Fair Market Value of the Common Stock on the Grant Date, and in the case of an
Incentive Stock Option granted to a Participant who owns more than 10% of the
total combined voting power of all classes of the stock of the Company or of its
parent or subsidiary corporations (a "TEN PERCENT STOCKHOLDER"), shall not be
less than 110% of the Fair Market Value of the Common Stock on the Grant Date.
The determination of more than 10% ownership shall be made in accordance with
Section 422 of the Code.
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8.4 OPTION TERM
Subject to earlier termination in accordance with the terms of the Plan and the
instrument evidencing the Option, the maximum term of an Incentive Stock Option
shall not exceed ten years, and in the case of an Incentive Stock Option granted
to a Ten Percent Stockholder, shall not exceed five years.
8.5 EXERCISABILITY
An Option designated as an Incentive Stock Option shall cease to qualify for
favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three months
after the date of a Participant's Termination of Service if termination was for
reasons other than death or disability, (b) more than one year after the date of
a Participant's Termination of Service if termination was by reason of
disability, or (c) after the Participant has been on leave of absence for more
than 90 days, unless the Participant's reemployment rights are guaranteed by
statute or contract.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock Options
under Section 422 of the Code, the Participant must hold the shares acquired
upon the exercise of an Incentive Stock Option for two years after the Grant
Date and one year after the date of exercise.
A Participant may be subject to the alternative minimum tax at the time of
exercise of an Incentive Stock Option. The Participant shall give the Company
prompt notice of any disposition of shares acquired on the exercise of an
Incentive Stock Option prior to the expiration of such holding periods.
8.7 CODE DEFINITIONS
For the purposes of this Section 8 "disability," "parent corporation" and
"subsidiary corporation" shall have the meanings attributed to those terms for
purposes of Section 422 of the Code.
SECTION 9. STOCK APPRECIATION RIGHTS
9.1 GRANT OF STOCK APPRECIATION RIGHTS
The Committee may grant Stock Appreciation Rights to Participants at any time on
such terms and conditions as the Committee shall determine in its sole
discretion. An SAR may be granted in tandem with an Option or alone
("freestanding"). The grant price of a tandem SAR shall be equal to the exercise
price of the related Option. The grant price of a freestanding SAR shall be
established in accordance with procedures for Options set forth in Section 7.2.
An SAR may be exercised upon such terms and conditions and for the term as the
Committee determines in its sole discretion; provided, however, that, subject to
earlier termination in accordance with the terms of the Plan and the instrument
evidencing the SAR,
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the term of a freestanding SAR shall be as established for that SAR by the
Committee or, if not so established, shall be ten years, and in the case of a
tandem SAR, (a) the term shall not exceed the term of the related Option and (b)
the tandem SAR may be exercised for all or part of the shares subject to the
related Option upon the surrender of the right to exercise the equivalent
portion of the related Option, except that the tandem SAR may be exercised only
with respect to the shares for which its related Option is then exercisable.
9.2 PAYMENT OF SAR AMOUNT
Upon the exercise of an SAR, a Participant shall be entitled to receive payment
in an amount determined by multiplying: (a) the difference between the Fair
Market Value of the Common Stock for the date of exercise over the grant price
of the SAR by (b) the number of shares with respect to which the SAR is
exercised. At the discretion of the Committee as set forth in the instrument
evidencing the Award, the payment upon exercise of an SAR may be in cash, in
shares, in some combination thereof or in any other manner approved by the
Committee in its sole discretion.
SECTION 10. STOCK AWARDS, RESTRICTED STOCK AND
STOCK UNITS
10.1 GRANT OF STOCK AWARDS, RESTRICTED STOCK AND STOCK UNITS
The Committee may grant Stock Awards, Restricted Stock and Stock Units on such
terms and conditions and subject to such repurchase or forfeiture restrictions,
if any, which may be based on continuous service with the Company or a Related
Company or the achievement of any performance goals, as the Committee shall
determine in its sole discretion, which terms, conditions and restrictions shall
be set forth in the instrument evidencing the Award.
10.2 VESTING OF RESTRICTED STOCK AND STOCK UNITS
Upon the satisfaction of any terms, conditions and restrictions prescribed with
respect to Restricted Stock or Stock Units, or upon a Participant's release from
any terms, conditions and restrictions of Restricted Stock or Stock Units, as
determined by the Committee, and subject to the provisions of Section 13, (a)
the shares of Restricted Stock covered by each Award of Restricted Stock shall
become freely transferable by the Participant, and (b) Stock Units shall be paid
in shares of Common Stock or, if set forth in the instrument evidencing the
Awards, in cash or a combination of cash and shares of Common Stock. Any
fractional shares subject to such Awards shall be paid to the Participant in
cash.
10.3 WAIVER OF RESTRICTIONS
Notwithstanding any other provisions of the Plan, the Committee, in its sole
discretion, may waive the repurchase or forfeiture period and any other terms,
conditions or restrictions on any Restricted Stock or Stock Unit under such
circumstances and subject to such terms and conditions as the Committee shall
deem appropriate.
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SECTION 11. PERFORMANCE AWARDS
11.1 PERFORMANCE SHARES
The Committee may grant Awards of Performance Shares, designate the Participants
to whom Performance Shares are to be awarded and determine the number of
Performance Shares and the terms and conditions of each such Award. Performance
Shares shall consist of a unit valued by reference to a designated number of
shares of Common Stock, the value of which may be paid to the Participant by
delivery of shares of Common Stock or, if set forth in the instrument evidencing
the Award, of such property as the Committee shall determine, including, without
limitation, cash, shares of Common Stock, other property, or any combination
thereof, upon the attainment of performance goals, as established by the
Committee, and other terms and conditions specified by the Committee.
Notwithstanding the foregoing, the amount to be paid under an Award of
Performance Shares may be adjusted on the basis of such further consideration as
the Committee shall determine in its sole discretion.
11.2 PERFORMANCE UNITS
The Committee may grant Awards of Performance Units, designate the Participants
to whom Performance Units are to be awarded and determine the number of
Performance Units and the terms and conditions of each such Award. Performance
Units shall consist of a unit valued by reference to a designated amount of
property other than shares of Common Stock, which value may be paid to the
Participant by delivery of such property as the Committee shall determine,
including, without limitation, cash, shares of Common Stock, other property, or
any combination thereof, upon the attainment of performance goals, as
established by the Committee, and other terms and conditions specified by the
Committee. Notwithstanding the foregoing, the amount to be paid under an Award
of Performance Units may be adjusted on the basis of such further consideration
as the Committee shall determine in its sole discretion.
SECTION 12. OTHER STOCK OR CASH-BASED AWARDS
Subject to the terms of the Plan and such other terms and conditions as the
Committee deems appropriate, the Committee may grant other incentives payable in
cash or in shares of Common Stock under the Plan.
SECTION 13. WITHHOLDING
The Company may require the Participant to pay to the Company the amount of (a)
any taxes that the Company is required by applicable federal, state, local or
foreign law to withhold with respect to the grant, vesting or exercise of an
Award ("tax withholding obligations") and (b) any amounts due from the
Participant to the Company or to any Related Company ("other obligations"). The
Company shall not be required to issue any shares of Common Stock or otherwise
settle an Award under the Plan until such tax withholding obligations and other
obligations are satisfied.
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The Committee may permit or require a Participant to satisfy all or part of the
Participant's tax withholding obligations and other obligations by (a) paying
cash to the Company, (b) having the Company withhold an amount from any cash
amounts otherwise due or to become due from the Company to the Participant, (c)
having the Company withhold a number of shares of Common Stock that would
otherwise be issued to the Participant (or become vested, in the case of
Restricted Stock) having a Fair Market Value equal to the tax withholding
obligations and other obligations, or (d) surrendering a number of shares of
Common Stock the Participant already owns having a value equal to the tax
withholding obligations and other obligations. The value of the shares so
withheld may not exceed the employer's minimum required tax withholding rate,
and the value of the shares so tendered may not exceed such rate to the extent
the Participant has owned the tendered shares for less than six months if such
limitations are necessary to avoid a charge to the Company for financial
reporting purposes.
SECTION 14. ASSIGNABILITY
No Award or interest in an Award may be sold, assigned, pledged (as collateral
for a loan or as security for the performance of an obligation or for any other
purpose) or transferred by a Participant or made subject to attachment or
similar proceedings otherwise than by will or by the applicable laws of descent
and distribution, except to the extent the Participant designates one or more
beneficiaries on a Company-approved form who may exercise the Award or receive
payment under the Award after the Participant's death. During a Participant's
lifetime, an Award may be exercised only by the Participant. Notwithstanding the
foregoing and to the extent permitted by Section 422 of the Code, the Committee,
in its sole discretion, may permit a Participant to assign or transfer an Award
subject to such terms and conditions as the Committee shall specify.
SECTION 15. ADJUSTMENTS
15.1 ADJUSTMENT OF SHARES
In the event, at any time or from time to time, a stock dividend, stock split,
spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to stockholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in (a)
the outstanding shares of Common Stock, or any securities exchanged therefor or
received in their place, being exchanged for a different number or kind of
securities of the Company or (b) new, different or additional securities of the
Company or any other company being received by the holders of shares of Common
Stock, then the Committee shall make proportional adjustments in (i) the maximum
number and kind of securities available for issuance under the Plan; (ii) the
maximum number and kind of securities issuable as Incentive Stock Options as set
forth in Section 4.2; and (iii) the number and kind of securities that are
subject to any outstanding Award and the per share price of such securities,
without any change in the aggregate price to be paid therefor. The determination
by the Committee as to the terms of any of the foregoing adjustments shall be
conclusive and binding.
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Notwithstanding the foregoing, the issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, for cash
or property, or for labor or services rendered, either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, outstanding Awards. Also notwithstanding the foregoing, a
dissolution or liquidation of the Company or a Company Transaction shall not be
governed by this Section 15.1 but shall be governed by Sections 15.2 and 15.3,
respectively.
15.2 DISSOLUTION OR LIQUIDATION
To the extent not previously exercised or settled, and unless otherwise
determined by the Committee in its sole discretion, Awards shall terminate
immediately prior to the dissolution or liquidation of the Company. To the
extent a vesting condition, forfeiture provision or repurchase right applicable
to an Award has not been waived by the Committee, the Award shall be forfeited
immediately prior to the consummation of the dissolution or liquidation.
15.3 COMPANY TRANSACTION; CHANGE IN CONTROL
15.3.1 EFFECT OF A COMPANY TRANSACTION THAT IS NOT A CHANGE IN CONTROL OR A
RELATED PARTY TRANSACTION
Notwithstanding any other provision of the Plan to the contrary, unless the
Committee shall determine otherwise at the time of grant with respect to a
particular Award, in the event of a Company Transaction that is not (a) a Change
in Control or (b) a Related Party Transaction:
(i) All outstanding Awards, other than Performance Shares and Performance
Units, shall become fully and immediately exercisable, and all applicable
deferral and restriction limitations or forfeiture provisions shall lapse,
immediately prior to the Company Transaction and shall terminate effective at
the effective time of the Company Transaction, unless such Awards are converted,
assumed or replaced by the Successor Company. Notwithstanding the foregoing,
with respect to Options or Stock Appreciation Rights, the Committee, in its sole
discretion, may instead provide that a Participant's outstanding Options shall
terminate upon consummation of such Company Transaction and that each such
Participant shall receive, in exchange therefor, a cash payment equal to the
amount (if any) by which (x) the Acquisition Price multiplied by the number of
shares of Common Stock subject to such outstanding Options or SARs (whether or
not then exercisable) exceeds (y) the respective aggregate exercise price for
such Options or grant price for such SARs.
For the purposes of this Section 15.3.1, an Award shall be considered assumed or
substituted for if following the Company Transaction the option or right confers
the right to purchase or receive, for each share of Common Stock subject to the
Award immediately prior to the Company Transaction, the consideration (whether
stock, cash or other securities or property) received in the Company Transaction
by holders of Common Stock for each share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares);
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provided, however, that if such consideration received in the Company
Transaction is not solely common stock of the Successor Company, the Committee
may, with the consent of the Successor Company, provide for the consideration to
be received upon the exercise of the Option, for each share of Common Stock
subject thereto, to be solely common stock of the Successor Company
substantially equal in fair market value to the per share consideration received
by holders of Common Stock in the Company Transaction. The determination of such
substantial equality of value of consideration shall be made by the Committee,
and its determination shall be conclusive and binding.
(ii) All Performance Shares or Performance Units earned and outstanding as of
the date the Company Transaction is determined to have occurred shall be payable
in full at the target level in accordance with the payout schedule pursuant to
the Award agreement. Any remaining Performance Shares or Performance Units
(including any applicable performance period) for which the payout level has not
been determined shall be prorated at the target payout level up to and including
the date of such Company Transaction and shall be payable in full at the target
level in accordance with the payout schedule pursuant to the Award agreement.
Any existing deferrals or other restrictions not waived by the Committee in its
sole discretion shall remain in effect.
15.3.2 EFFECT OF A CHANGE IN CONTROL
Notwithstanding any other provision of the Plan to the contrary, unless the
Committee shall determine otherwise at the time of grant with respect to a
particular Award, in the event of a Change in Control:
(a) any Options and Stock Appreciation Rights outstanding as of the date such
Change in Control is determined to have occurred, and which are not then
exercisable and vested, shall become fully exercisable and vested to the full
extent of the original grant;
(b) any restrictions and deferral limitations applicable to any Restricted
Stock or Stock Units shall lapse, and such Restricted Stock or Stock Units shall
become free of all restrictions and limitations and become fully vested and
transferable to the full extent of the original grant;
(c) all Performance Shares and Performance Units shall be considered to be
earned at the target level and payable in full, any deferral or other
restriction shall lapse and such Performance Shares and Performance Units shall
be immediately settled or distributed; and
(d) any restrictions and deferral limitations and other conditions applicable
to any other Awards shall lapse, and such other Awards shall become free of all
restrictions, limitations or conditions and become fully vested and transferable
to the full extent of the original grant.
15.3.3 CHANGE IN CONTROL CASH-OUT
Notwithstanding any other provision of the Plan, during the 60-day period from
and after a Change in Control (the "CHANGE IN CONTROL EXERCISE PERIOD"), if the
Committee shall so
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determine at, or at any time after, the time of grant, a Participant holding an
Option, SAR, Restricted Stock Unit or Performance Share, shall have the right,
whether or not the Award is fully vested and/or exercisable and without regard
to any deferral or other restriction and in lieu of the payment of the purchase
price for the shares of Common Stock being purchased under an Option, to elect
by giving notice to the Company within the Change in Control Exercise Period to
surrender all or part of the Award to the Company and to receive cash, within 30
days of such notice:
(a) for an Option or SAR, in an amount equal to the amount by which the
Acquisition Price per share of Common Stock on the date of such election shall
exceed the exercise price per share of Common Stock under the Option, or the
grant price per share of Common Stock under the SAR; and
(b) for a Restricted Stock Unit or Performance Share, in an amount equal to
the Acquisition Price per share of Common Stock under the Restricted Stock or
Performance Share,
multiplied by the number of shares of Common Stock granted under the Award as to
which the right granted under this Section 15.3.3 shall have been exercised.
15.4 FURTHER ADJUSTMENT OF AWARDS
Subject to Sections 15.2 and 15.3, the Committee shall have the discretion,
exercisable at any time before a sale, merger, consolidation, reorganization,
liquidation, dissolution or change in control of the Company, as defined by the
Committee, to take such further action as it determines to be necessary or
advisable with respect to Awards. Such authorized action may include (but shall
not be limited to) establishing, amending or waiving the type, terms, conditions
or duration of, or restrictions on, Awards so as to provide for earlier, later,
extended or additional time for exercise, lifting restrictions and
modifications, and the Committee may take such actions with respect to all
Participants, to certain categories of Participants or only to individual
Participants. The Committee may take such action before or after granting Awards
to which the action relates and before or after any public announcement with
respect to such sale, merger, consolidation, reorganization, liquidation,
dissolution or change in control that is the reason for such action.
15.5 NO LIMITATIONS
The grant of Awards shall in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
15.6 FRACTIONAL SHARES
In the event of any adjustment in the number of shares covered by any Award,
each such Award shall cover only the number of full shares resulting from such
adjustment.
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SECTION 16. CODE SECTION 162(m) PROVISIONS
Notwithstanding any other provision of the Plan, if the Committee determines, at
the time Awards are granted to a Participant who is, or is likely to be as of
the end of the tax year in which the Company would claim a tax deduction in
connection with such Award, a Covered Employee, then the Committee may provide
that this Section 16 is applicable to such Award.
16.1 PERFORMANCE CRITERIA
If an Award is subject to this Section 16, then the lapsing of restrictions
thereon and the distribution of cash, shares of Common Stock or other property
pursuant thereto, as applicable, shall be subject to the achievement of one or
more objective performance goals established by the Committee, which shall be
based on the attainment of specified levels of one of or any combination of the
following "performance criteria" for the Company as a whole or any business unit
of the Company, as reported or calculated by the Company: cash flows (including,
but not limited to, operating cash flow, free cash flow or cash flow return on
capital); working capital; earnings per share; book value per share; operating
income (including or excluding depreciation, amortization, extraordinary items,
restructuring charges or other expenses); revenues; operating margins; return on
assets; inventory turns; return on equity; debt; debt plus equity; market or
economic value added; stock price appreciation; total stockholder return; cost
control; strategic initiatives; store openings; growth and development of new
concepts; market share; net income (including or excluding extraordinary items,
restructuring charges or other expenses); return on invested capital;
improvements in capital structure; or customer satisfaction, employee
satisfaction, services performance, cash management or asset management metrics
(together, the "PERFORMANCE CRITERIA"). Such performance goals also may be based
on the achievement of specified levels of Company performance (or performance of
an applicable affiliate, division or business unit of the Company) under one or
more of the Performance Criteria described above relative to the performance of
other corporations. Such performance goals shall be set by the Committee within
the time period prescribed by, and shall otherwise comply with the requirements
of, Section 162(m) of the Code, or any successor provision thereto, and the
regulations thereunder.
16.2 ADJUSTMENT OF AWARDS
Notwithstanding any provision of the Plan other than Section 15, with respect to
any Award that is subject to this Section 16, the Committee may adjust
downwards, but not upwards, the amount payable pursuant to such Award, and the
Committee may not waive the achievement of the applicable performance goals
except in the case of the death or disability of the Covered Employee.
16.3 LIMITATIONS
Subject to adjustment from time to time as provided in Section 15.1, no Covered
Employee may be granted Awards other than Performance Units subject to this
Section 16 in any calendar year period with respect to more than 400,000 shares
of Common Stock for such
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Award, except that the Company may make additional one time grants of such
Awards for up to 400,000 shares to newly hired individuals, and the maximum
dollar value payable with respect to Performance Units subject to this Section
16 granted to any Covered Employee in any one calendar year is $10,000,000.
The Committee shall have the power to impose such other restrictions on Awards
subject to this Section 16 as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for "performance-based compensation"
within the meaning of Section 162(m)(4)(C) of the Code, or any successor
provision thereto.
SECTION 17. AMENDMENT AND TERMINATION
17.1 AMENDMENT, SUSPENSION OR TERMINATION
The Board or the Compensation Committee may amend, suspend or terminate the Plan
or any portion of the Plan at any time and in such respects as it shall deem
advisable; provided, however, that, to the extent required by applicable law,
regulation or stock exchange rule, stockholder approval shall be required for
any amendment to the Plan; and provided, further, that any amendment that
requires stockholder approval may be made only by the Board. Subject to Section
17.3, the Committee may amend the terms of any outstanding Award, prospectively
or retroactively.
17.2 TERM OF THE PLAN
Unless sooner terminated as provided herein, the Plan shall terminate ten years
from the Effective Date. After the Plan is terminated, no future Awards may be
granted, but Awards previously granted shall remain outstanding in accordance
with their applicable terms and conditions and the Plan's terms and conditions.
Notwithstanding the foregoing, no Incentive Stock Options may be granted more
than ten years after the later of (a) the Effective Date and (b) the approval by
the stockholders of any amendment to the Plan that constitutes the adoption of a
new plan for purposes of Section 422 of the Code.
17.3 CONSENT OF PARTICIPANT
The amendment, suspension or termination of the Plan or a portion thereof or the
amendment of an outstanding Award shall not, without the Participant's consent,
materially adversely affect any rights under any Award theretofore granted to
the Participant under the Plan. Any change or adjustment to an outstanding
Incentive Stock Option shall not, without the consent of the Participant, be
made in a manner so as to constitute a "modification" that would cause such
Incentive Stock Option to fail to continue to qualify as an Incentive Stock
Option. Notwithstanding the foregoing, any adjustments made pursuant to Section
15 shall not be subject to these restrictions.
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SECTION 18. GENERAL
18.1 NO INDIVIDUAL RIGHTS
No individual or Participant shall have any claim to be granted any Award under
the Plan, and the Company has no obligation for uniformity of treatment of
Participants under the Plan.
Furthermore, nothing in the Plan or any Award granted under the Plan shall be
deemed to constitute an employment contract or confer or be deemed to confer on
any Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Company or limit in any way the
right of the Company or any Related Company to terminate a Participant's
employment or other relationship at any time, with or without cause.
18.2 ISSUANCE OF SHARES
Notwithstanding any other provision of the Plan, the Company shall have no
obligation to issue or deliver any shares of Common Stock under the Plan or make
any other distribution of benefits under the Plan unless, in the opinion of the
Company's counsel, such issuance, delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act or the laws of any state or foreign jurisdiction) and the
applicable requirements of any securities exchange or similar entity.
The Company shall be under no obligation to any Participant to register for
offering or resale or to qualify for exemption under the Securities Act, or to
register or qualify under the laws of any state or foreign jurisdiction, any
shares of Common Stock, security or interest in a security paid or issued under,
or created by, the Plan, or to continue in effect any such registrations or
qualifications if made.
As a condition to the exercise of an Option or any other receipt of Common Stock
pursuant to an Award under the Plan, the Company may require (a) the Participant
to represent and warrant at the time of any such exercise or receipt that such
shares are being purchased or received only for the Participant's own account
and without any present intention to sell or distribute such shares and (b) such
other action or agreement by the Participant as may from time to time be
necessary to comply with the federal, state and foreign securities laws. At the
option of the Company, a stop-transfer order against any such shares may be
placed on the official stock books and records of the Company, and a legend
indicating that such shares may not be pledged, sold or otherwise transferred,
unless an opinion of counsel is provided (concurred in by counsel for the
Company) stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on stock certificates to ensure exemption from
registration. The Committee may also require the Participant to execute and
deliver to the Company a purchase agreement or such other agreement as may be in
use by the Company at such time that describes certain terms and conditions
applicable to the shares.
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To the extent the Plan or any instrument evidencing an Award provides for
issuance of stock certificates to reflect the issuance of shares of Common
Stock, the issuance may be effected on a noncertificated basis, to the extent
not prohibited by applicable law or the applicable rules of any stock exchange.
18.3 INDEMNIFICATION
Each person who is or shall have been a member of the Board, or a committee
appointed by the Board, or an officer of the Company to whom authority was
delegated in accordance with Section 3, shall be indemnified and held harmless
by the Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit or proceeding to which such person may be
a party or in which such person may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
such person in settlement thereof, with the Company's approval, or paid by such
person in satisfaction of any judgment in any such claim, action, suit or
proceeding against such person; provided, however, that such person shall give
the Company an opportunity, at its own expense, to handle and defend the same
before such person undertakes to handle and defend it on such person's own
behalf, unless such loss, cost, liability or expense is a result of such
person's own willful misconduct or except as expressly provided by statute.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such person may be entitled under the
Company's certificate of incorporation or bylaws, as a matter of law, or
otherwise, or of any power that the Company may have to indemnify or hold
harmless.
18.4 NO RIGHTS AS A STOCKHOLDER
Unless otherwise provided by the Committee or in the instrument evidencing the
Award or in a written employment, services or other agreement, no Award, other
than a Stock Award, shall entitle the Participant to any cash dividend, voting
or other right of a stockholder unless and until the date of issuance under the
Plan of the shares that are the subject of such Award.
18.5 COMPLIANCE WITH LAWS AND REGULATIONS
In interpreting and applying the provisions of the Plan, any Option granted as
an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by
law, be construed as an "incentive stock option" within the meaning of Section
422 of the Code.
18.6 PARTICIPANTS IN OTHER COUNTRIES OR JURISDICTIONS
Without amending the Plan, the Committee may grant Awards to Eligible Persons
who are foreign nationals on such terms and conditions different from those
specified in this Plan as may, in the judgement of the Committee, be necessary
or desirable to foster and promote achievement of the purposes of the Plan and
shall have the authority to adopt such modifications, procedures, subplans and
the like as may be necessary or desirable to comply
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with provisions of the laws or regulations of other countries or jurisdictions
in which the Company or any Related Company may operate or have employees to
ensure the viability of the benefits from Awards granted to Participants
employed in such countries or jurisdictions, meet the requirements that permit
the Plan to operate in a qualified or tax-efficient manner, comply with
applicable foreign laws or regulations and meet the objectives of the Plan.
18.7 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing contained herein
shall require the Company to segregate any monies or other property, or shares
of Common Stock, or to create any trusts, or to make any special deposits for
any immediate or deferred amounts payable to any Participant, and no Participant
shall have any rights that are greater than those of a general unsecured
creditor of the Company.
18.8 SUCCESSORS
All obligations of the Company under the Plan with respect to Awards shall be
binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all the business and/or assets of the
Company.
18.9 SEVERABILITY
If any provision of the Plan or any Award is determined to be invalid, illegal
or unenforceable in any jurisdiction, or as to any person, or would disqualify
the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws,
or, if it cannot be so construed or deemed amended without, in the Committee's
determination, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or Award, and the
remainder of the Plan and any such Award shall remain in full force and effect.
18.10 CHOICE OF LAW
The Plan, all Awards granted thereunder and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the laws of the
United States, shall be governed by the laws of the State of California without
giving effect to principles of conflicts of law.
18.11 LEGAL REQUIREMENTS
The granting of Awards and the issuance of shares of Common Stock under the Plan
are subject to all applicable laws, rules and regulations and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
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SECTION 19. EFFECTIVE DATE
The effective date (the "EFFECTIVE DATE") is the date on which the Plan is
approved by the stockholders of the Company. If the stockholders of the Company
do not approve the Plan within 12 months after the Board's adoption of the Plan,
any Incentive Stock Options granted under the Plan will be treated as
Nonqualified Stock Options.
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APPENDIX A
DEFINITIONS
As used in the Plan,
"ACQUIRED ENTITY" means any entity acquired by the Company or a Related Company
or with which the Company or a Related Company merges or combines.
"ACQUISITION PRICE" means the higher of (a) the highest reported sales price,
regular way, of a share of Common Stock in any transaction reported on the New
York Stock Exchange or other national exchange on which the Common Stock is
listed or on the Nasdaq National Market during the 60-day period prior to and
including the date of a Company Transaction or Change in Control or (b) if the
Company Transaction or Change in Control is the result of a tender or exchange
offer or a negotiated acquisition of the Company's Common Stock, the highest
price per share of Common Stock paid in such tender or exchange offer or
acquisition. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other noncash
consideration, the value of such other securities or other noncash consideration
shall be determined by the Board in its sole discretion.
"AWARD" means any Option, Stock Appreciation Right, Stock Award, Restricted
Stock, Stock Unit, Performance Share, Performance Unit, cash-based award or
other incentive payable in cash or in shares of Common Stock as may be
designated by the Committee from time to time.
"BOARD" means the Board of Directors of the Company.
"CAUSE," unless otherwise defined in the instrument evidencing an Award or in a
written employment, services or other agreement between the Participant and the
Company or a Related Company, means dishonesty, fraud, serious or willful
misconduct, unauthorized use or disclosure of confidential information or trade
secrets, or conduct prohibited by law (except minor violations), in each case as
determined by the Company's chief human resources officer or other person
performing that function or, in the case of directors and executive officers,
the Compensation Committee, whose determination shall be conclusive and binding.
"CHANGE IN CONTROL," unless the Committee determines otherwise with respect to
an Award at the time the Award is granted, means the happening of any of the
following events:
(a) an acquisition by any Entity of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (1)
the then outstanding shares of common stock of the Company (the "OUTSTANDING
COMPANY COMMON STOCK") or (2) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "OUTSTANDING
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COMPANY VOTING SECURITIES"), excluding, however, the following (i) any
acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege where the security being so converted was
not acquired directly from the Company by the party exercising the conversion
privilege, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Related Company, or (iv) a Related Party Transaction; or
(b) a change in the composition of the Board during any two-year period such
that the individuals who, as of the beginning of such two-year period,
constitute the Board (the "INCUMBENT BOARD") cease for any reason to constitute
at least a majority of the Board; provided, however, that for purposes of this
definition, any individual who becomes a member of the Board subsequent to the
beginning of the two-year period, whose election, or nomination for election by
the Company's stockholders, was approved by a vote of more than half of those
individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; and
provided further, however, that any such individual whose initial assumption of
office occurs as a result of or in connection with an actual or threatened
solicitation of proxies or consents by or on behalf of an Entity other than the
Board shall not be considered a member of the Incumbent Board.
"CHANGE IN CONTROL EXERCISE PERIOD" has the meaning set forth in Section 15.3.3.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time.
"COMMITTEE" has the meaning set forth in Section 3.1.
"COMMON STOCK" means the common stock, par value $0.001 per share, of the
Company.
"COMPANY" means The Gymboree Corporation, a Delaware corporation.
"COMPANY TRANSACTION," unless otherwise defined in the instrument evidencing the
Award or in a written employment, services or other agreement between the
Participant and the Company or a Related Company, means consummation of:
(a) a merger or consolidation of the Company with or into any other company or
other entity;
(b) a sale in one transaction or a series of transactions undertaken with a
common purpose of more than 50% of the Company's outstanding voting securities;
or
(c) a sale, lease, exchange or other transfer in one transaction or a series
of related transactions undertaken with a common purpose of all or substantially
all of the Company's assets.
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Where a series of transactions undertaken with a common purpose is deemed to be
a Company Transaction, the date of such Company Transaction shall be the date on
which the last of such transactions is consummated.
"COMPENSATION COMMITTEE" means the Compensation Committee of the Board.
"COVERED EMPLOYEE" means a "covered employee" as that term is defined for
purposes of Section 162(m)(3) of the Code or any successor provision.
"DISABILITY," unless otherwise defined by the Committee or in the instrument
evidencing the Award or in a written employment, services or other agreement
between the Participant and the Company or a Related Company, means a mental or
physical impairment of the Participant that is expected to result in death or
that has lasted or is expected to last for a continuous period of 12 months or
more and that causes the Participant to be unable to perform his or her material
duties for the Company or a Related Company and to be engaged in any substantial
gainful activity, in each case as determined by the Company's chief human
resources officer or other person performing that function or, in the case of
directors and executive officers, the Compensation Committee, whose
determination shall be conclusive and binding.
"EFFECTIVE DATE" has the meaning set forth in Section 19.
"ELIGIBLE PERSON" means any person eligible to receive an Award as set forth in
Section 5.
"ENTITY" means any individual, entity or group (within the meaning of Section
13(d)(3) of the Exchange Act).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time
to time.
"FAIR MARKET VALUE" means the average of the high and low trading prices for the
Common Stock on any given date during regular trading, or if not trading on that
date, such price on the last preceding date on which the Common Stock was
traded, unless determined otherwise by the Committee using such methods or
procedures as it may establish.
"GRANT DATE" means the later of (a) the date on which the Committee completes
the corporate action authorizing the grant of an Award or such later date
specified by the Committee or (b) the date on which all conditions precedent to
an Award have been satisfied, provided that conditions to the exercisability or
vesting of Awards shall not defer the Grant Date.
"INCENTIVE STOCK OPTION" means an Option granted with the intention that it
qualify as an "incentive stock option" as that term is defined for purposes of
Section 422 of the Code or any successor provision.
"NONQUALIFIED STOCK OPTION" means an Option other than an Incentive Stock
Option.
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"OPTION" means a right to purchase Common Stock granted under Section 7.
"PARENT COMPANY" means a company or other entity which as a result of a Company
Transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries.
"PARTICIPANT" means any Eligible Person to whom an Award is granted.
"PERFORMANCE AWARD" means an Award of Performance Shares or Performance Units
granted under Section 11.
"PERFORMANCE CRITERIA" has the meaning set forth in Section 16.1.
"PERFORMANCE SHARE" means an Award of units denominated in shares of Common
Stock granted under Section 11.1.
"PERFORMANCE UNIT" means an Award of units denominated in cash or property other
than shares of Common Stock granted under Section 11.2.
"PLAN" means The Gymboree Corporation 2004 Equity Incentive Plan.
"RELATED COMPANY" means any entity that is directly or indirectly controlled by,
in control of or under common control with the Company.
"RELATED PARTY TRANSACTION" means a Company Transaction pursuant to which:
(a) the Entities who are the beneficial owners of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to such
Company Transaction will beneficially own, directly or indirectly, at least 50%
of the outstanding shares of common stock, and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors of the Successor Company in substantially the same proportions as
their ownership, immediately prior to such Company Transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities;
(b) no Entity (other than the Company, any employee benefit plan (or related
trust) of the Company or a Related Company, the Successor Company or, if
reference was made to equity ownership of any Parent Company for purposes of
determining whether clause (a) above is satisfied in connection with the
applicable Company Transaction, such Parent Company) will beneficially own,
directly or indirectly, 50% or more of, respectively, the outstanding shares of
common stock of the Successor Company or the combined voting power of the
outstanding voting securities of the Successor Company entitled to vote
generally in the election of directors unless such ownership resulted solely
from ownership of securities of the Company prior to the Company Transaction;
and
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(c) individuals who were members of the Incumbent Board will immediately after
the consummation of the Company Transaction constitute at least a majority of
the members of the board of directors of the Successor Company (or, if reference
was made to equity ownership of any Parent Company for purposes of determining
whether clause (a) above is satisfied in connection with the applicable Company
Transaction, of the Parent Company).
"RESTRICTED STOCK" means an Award of shares of Common Stock granted under
Section 10, the rights of ownership of which are subject to restrictions
prescribed by the Committee.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to time.
"STOCK APPRECIATION RIGHT" or "SAR" means a right granted under Section 9.1 to
receive the excess of the Fair Market Value of a specified number of shares of
Common Stock over the grant price.
"STOCK AWARD" means an Award of shares of Common Stock granted under Section 10,
the rights of ownership of which are not subject to restrictions prescribed by
the Committee.
"STOCK UNIT" means an Award denominated in units of Common Stock granted under
Section 10.
"SUBSTITUTE AWARDS" means Awards granted or shares of Common Stock issued by the
Company in substitution or exchange for awards previously granted by an Acquired
Entity.
"SUCCESSOR COMPANY" means the surviving company, the successor company or Parent
Company, as applicable, in connection with a Company Transaction.
"TERMINATION OF SERVICE" means a termination of employment or service
relationship with the Company or a Related Company for any reason, whether
voluntary or involuntary, including by reason of death or Disability. Any
question as to whether and when there has been a Termination of Service for the
purposes of an Award and the cause of such Termination of Service shall be
determined by the Company's chief human resources officer or other person
performing that function or, with respect to directors and executive officers,
by the Compensation Committee, whose determination shall be conclusive and
binding. Transfer of a Participant's employment or service relationship between
the Company and any Related Company shall not be considered a Termination of
Service for purposes of an Award. Unless the Compensation Committee determines
otherwise, a Termination of Service shall be deemed to occur if the
Participant's employment or service relationship is with an entity that has
ceased to be a Related Company.
"VESTING COMMENCEMENT DATE" means the Grant Date or such other date selected by
the Committee as the date from which an Award begins to vest.
A-5
PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
SUMMARY PAGE
DATE OF BOARD SECTION/EFFECT DATE OF STOCKHOLDER
ACTION ACTION OF AMENDMENT APPROVAL
April 27, 2004 Initial Plan Adoption June 16, 2004
(effective on receipt
of stockholder
approval)