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EXHIBIT 10.8
REEBOK INTERNATIONAL LTD.
1994 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of this 1994 Equity Incentive Plan (the "Plan") is to
advance the interests of Reebok International Ltd. (the "Company") and its
subsidiaries by enhancing the ability of the Company to (i) attract and retain
employees and other persons or entities who are in a position to make
significant contributions to the success of the Company and its subsidiaries;
(ii) reward such persons for such contributions; and (iii) encourage such
persons to take into account the long-term interest of the Company through
ownership of shares ("Shares") of the Company's common stock ("Stock").
The Plan is intended to accomplish these goals by enabling the Company to
grant awards ("Awards") in the form of Options, Stock Appreciation Rights,
Restricted Stock or Deferred Stock, all as more fully described below.
2. ADMINISTRATION
The Plan will be administered by the Compensation and Nominating
Committee (the "Committee") of the Board of Directors of the Company (the
"Board") which will be constituted to permit the Plan to comply with Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor rule and to comply with the requirements for a
compensation committee composed of outside directors under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Committee will
determine the recipients of Awards, the times at which Awards will be made and
the size and type or types of Awards to be made to each recipient and will set
forth in such Awards the terms, conditions and limitations applicable to it.
Awards may be made singly, in combination or in tandem. The Committee will have
full and exclusive power to interpret the Plan, to adopt rules, regulations and
guidelines relating to the Plan, to grant waivers of Plan restrictions and to
make all of the determinations necessary for its administration. Such
determinations and actions of the Committee, and all other determinations and
actions of the Committee made or taken under authority granted by any provision
of the Plan, will be conclusive and binding on all parties. Nothing in this
paragraph shall be construed as limiting the power of the Committee or the Board
to make adjustments under Section 12 or to amend or terminate the Plan under
Section 17.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it is approved by
the stockholders of the Company. Grants of Awards under the Plan may be made
prior to that date, subject to such approval of the Plan.
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The Plan will terminate ten years after the effective date of the Plan,
subject to earlier termination of the Plan by the Board pursuant to Section 17.
No Award may be granted under the Plan after the termination date of the Plan,
but Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 12 below, (i) the maximum
aggregate number of Shares of Stock that may be delivered for all purposes under
the Plan shall be 7,000,000 and (ii) the maximum number of Shares of Stock
awarded to any Participant (as defined in Section 5 below) in any calendar year
under the Plan shall be (x) 250,000 Shares of Stock in the case of all
Participants other than the Chief Executive Officer and/or President of the
Company and (y) 500,000 Shares of Stock in the case of the Chief Executive
Officer and/or President of the Company. The maximum aggregate number of Shares
of Stock which may be issued under the Plan pursuant to the exercise of ISOs (as
defined in Section 7 below) shall be 1,000,000. The maximum amount of
compensation (other than Stock) that may be awarded to any Participant in any
calendar year under the Plan shall be $2,000,000.
If any Award requiring exercise by the Participant for delivery of Stock is
canceled or terminates without having been exercised in full, or if any Award
payable in Stock or cash is satisfied in cash rather than Stock, the number of
Shares of Stock as to which such Award was not exercised or for which cash was
substituted will be available for future grants of Stock except that Stock
subject to an Option canceled upon the exercise of an SAR shall not again be
available for Awards under the Plan unless, and to the extent that, the SAR is
settled in cash. Likewise, if any Award payable in Stock or cash is satisfied in
Stock rather than cash, the amount of cash for which such Stock was substituted
will be available for future Awards of cash compensation. Shares of Stock
tendered by a Participant or withheld by the Company to pay the exercise price
of an Option or to satisfy the tax withholding obligations of the exercise or
vesting of an Award shall be available again for Awards under the Plan, but only
to Participants who are not subject to Section 16 of the Exchange Act. Shares of
Restricted Stock forfeited to the Company in accordance with the Plan and the
terms of the particular Award shall be available again for Awards under the Plan
unless the Participant has received the benefits of ownership (within the
applicable interpretation under Rule 16b-3 under the Exchange Act), in which
case such Shares may only be available for Awards to Participants who are not
subject to Section 16 of the Exchange Act.
Stock delivered under the Plan may be either authorized but unissued Stock
or previously issued Stock acquired by the Company and held in treasury. No
fractional Shares of Stock will be delivered under the Plan and the Committee
shall determine the manner in which fractional share value will be treated.
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5. ELIGIBILITY AND PARTICIPATION
Those eligible to receive Awards under the Plan ("Participants") will
be persons in the employ of the Company or any of its subsidiaries ("Employees")
and other persons or entities who, in the opinion of the Committee, are in a
position to make a significant contribution to the success of the Company or its
subsidiaries, except that non-Employee directors of the Company or a subsidiary
of the Company are not eligible to participate in this Plan. A "subsidiary" for
purposes of the Plan will be a corporation in which the Company owns, directly
or indirectly, stock possessing 50% or more of the total combined voting power
of all classes of stock.
6. DELEGATION OF AUTHORITY
The Committee may delegate to senior officers of the Company who are
also directors of the Company (including, without limitation, the Chief
Executive Officer and/or President) its duties under the Plan subject to such
conditions and limitations as the Committee may prescribe, except that only the
Committee may designate and make grants to Participants (i) who are subject to
Section 16 of the Exchange Act or any successor statute, including, without
limitation, decisions on timing, amount and pricing of Awards, or (ii) whose
compensation is covered by Section 162(m) of the Code.
7. OPTIONS
(a) Nature of Options. An Option is an Award entitling the Participant
to purchase a specified number of Shares at a specified exercise price. Both
"incentive stock options," as defined in Section 422 of the Code (referred to
herein as an "ISO") and non-incentive stock options may be granted under the
Plan. ISOs may be awarded only to Employees.
(b) Exercise Price. The exercise price of each Option shall be
determined by the Committee, but in the case of an ISO shall not be less than
100% (110% in the case of an ISO granted to a ten-percent shareholder) of the
Fair Market Value of a Share at the time the ISO is granted; nor shall the
exercise price of any other Option be less than 100% of the Fair Market Value of
a Share at the time the Option is granted except that (i) Options may be granted
to Participants who are not executive officers of the Company at less than Fair
Market Value, (ii) in connection with an amendment of an Option which, in the
opinion of the Committee, is or may be treated for tax or Section 16 purposes as
a new grant of the Option, the exercise price of such amended Option may be
equal to the exercise price of the original Option even if such exercise price
is less than Fair Market Value, and (iii) in connection with an acquisition,
consolidation, merger or other extraordinary transaction, Options may be granted
at less than Fair Market Value in order to replace existing Options at
comparable value; provided, that, in no case shall the exercise price of an
Option be less, in the case of an original issue of authorized Stock, than the
par value of a Share. For purposes of this Plan, "Fair Market Value" shall mean,
except as provided
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below, the closing price of a Share as reported on the New York Stock Exchange
on the date of the grant (based on The Wall Street Journal report of composite
transactions) or, if the New York Stock Exchange is closed on the date of grant,
the next preceding date on which it is open or, if the Shares are no longer
listed on such Exchange, such term shall have the same meaning as it does in the
case of ISOs. In the case of ISOs, the term "Fair Market Value" shall have the
same meaning as it does in the provisions of the Code and the regulations
thereunder applicable to ISOs. For purposes of this Plan, "ten-percent
shareholder" shall mean any Employee who at the time of grant owns directly, or
is deemed to own by reason of the attribution rules set forth in Section 424(d)
of the Code, Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any of its subsidiaries.
(c) Duration of Options. In no case shall an Option be exercisable
more than ten years (five years, in the case of an ISO granted to a "ten-percent
shareholder" as defined in (b) above) from the date the Option was granted.
(d) Exercise of Options and Conditions. Options granted under any
single Award will become exercisable at such time or times, and on and subject
to such conditions, as the Committee may specify. The Committee may at any time
and from time to time accelerate the time at which all or any part of the Option
may be exercised.
(e) Payment for and Delivery of Stock. Full payment for Shares
purchased will be made at the time of the exercise of the Option, in whole or in
part. Payment of the purchase price will be made in cash or in such other form
as the Committee may approve, including, without limitation, delivery of Shares
of Stock.
8. STOCK APPRECIATION RIGHTS
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right
(an "SAR") is an Award entitling the recipient to receive payment, in cash
and/or Stock, determined in whole or in part by reference to appreciation in the
value of a Share. In general, an SAR entitles the recipient to receive, with
respect to each Share as to which the SAR is exercised, the excess of the Fair
Market Value of a Share on the date of exercise over the Fair Market Value of a
Share on the date the SAR was granted. However, the Committee may provide at the
time of grant that the amount the recipient is entitled to receive will be
adjusted upward or downward under rules established by the Committee to take
into account the performance of the Shares in comparison with the performance of
other stocks or an index or indices of other stocks.
(b) Grant of SARs. SARs may be granted in tandem with, or
independently of, Options granted under the Plan. An SAR granted in tandem with
an Option which is not an ISO may be granted either at or after the time the
Option is granted. An
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SAR granted in tandem with an ISO may be granted only at the time the Option is
granted.
(c) Exercise of SARs. An SAR not granted in tandem with an Option will
become exercisable at such time or times, and on such conditions, as the
Committee may specify. An SAR granted in tandem with an Option will be
exercisable only at such times, and to the extent, that the related Option is
exercisable. An SAR granted in tandem with an ISO may be exercised only when the
market price of the Shares subject to the Option exceeds the exercise price of
such Option. The Committee may at any time and from time to time accelerate the
time at which all or part of the SAR may be exercised.
9. RESTRICTED STOCK.
A Restricted Stock Award entitles the recipient to acquire Shares,
subject to certain restrictions or conditions, for no cash consideration, if
permitted by applicable law, or for such other consideration as determined by
the Committee. The Award may be subject to such restrictions, conditions and
forfeiture provisions as the Committee may determine, including, but not limited
to, restrictions on transfer; continuous service with the Company; achievement
of business objectives; and individual, unit and Company performance. Subject to
such restrictions, conditions and forfeiture provisions as may be established by
the Committee, any Participant receiving an Award will have all the rights of a
stockholder of the Company with respect to Shares of Restricted Stock, including
the right to vote the Shares and the right to receive any dividends thereon.
10. DEFERRED STOCK
A Deferred Stock Award entitles the recipient to receive Shares to be
delivered in the future. Delivery of the Shares will take place at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time accelerate the time at which delivery of all or any part of the
Shares will take place. At the time any Deferred Stock Award is granted, the
Committee may provide that the Participant will receive an instrument evidencing
the Participant's right to future delivery of Deferred Stock.
11. TRANSFERS
No Award (other than an Award in the form of an outright transfer of
cash or Stock) may be assigned, pledged or transferred other than by will or by
the laws of descent and distribution and during a Participant's lifetime will be
exercisable only by the Participant or, in the event of a Participant's
incapacity, his or her guardian or legal representative.
12. ADJUSTMENTS
(a) In the event of a stock dividend, stock split or combination of
Shares, recapitalization or other change in the
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Company's capitalization, or other distribution to common stockholders other
than normal cash dividends, after the effective date of the Plan, the Committee
will make any appropriate adjustments to the maximum number of Shares that may
be delivered under the Plan and to any Participant under Section 4 above.
(b) In any event referred to in paragraph (a), the Committee will also
make any appropriate adjustments to the number and kind of Shares of Stock or
securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision of Awards affected by
such change. The Committee may also make such adjustments to take into account
material changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions or similar corporate transactions, or
any other event, if it is determined by the Committee that adjustments are
appropriate to avoid distortion in the operation of the Plan.
13. RIGHTS AS A STOCKHOLDER
Except as specifically provided by the Plan, the receipt of an Award
will not give a Participant rights as a stockholder; the Participant will obtain
such rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, upon actual receipt of Shares. However, the Committee may,
on such conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been payable on any
or all Shares subject to the Participant's Award had such Shares been
outstanding.
14. CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any Shares pursuant to
the Plan or to remove any restrictions or legends from Shares previously
delivered under the Plan until, (a) in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, (b)
if the outstanding Shares are at the time listed on any stock exchange, until
the Shares to be delivered have been listed or authorized to be listed on such
exchange upon official notice of notice of issuance, and (c) until all other
legal matters in connection with the issuance and delivery of such Shares have
been approved by the Company's counsel. If the sale of Shares has not been
registered under the Securities Act of 1933, as amended, the Company may
require, as a condition to exercise of the Award, such representations and
agreements as counsel for the Company may consider appropriate to avoid
violation of such Act and may require that the certificates evidencing such
Shares bear an appropriate legend restricting transfer.
If an Award is exercised by the Participant's legal representative, the
Company will be under no obligation to deliver Shares pursuant to such exercise
until the Company is satisfied as to the authority of such representative.
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15. TAX WITHHOLDING
The Company will have the right to deduct from any cash payment under
the Plan taxes that are required to be withheld and further to condition the
obligation to deliver or vest Shares under this Plan upon the Participant's
paying the Company such amount as it may request to satisfy any liability for
applicable withholding taxes. The Committee may in its discretion permit
Participants to satisfy all or part of their withholding liability by delivery
of Shares with a Fair Market Value equal to such liability or by having the
Company withhold from Stock delivered upon exercise of an Award, Shares whose
Fair Market Value is equal to such liability.
16. MERGERS; ETC.
In the event of any merger or consolidation involving the Company, any
sale of substantially all of the Company's assets or any other transaction or
series of related transactions as a result of which a single person or several
persons acting in concert own a majority of the Company's then outstanding Stock
(such merger, consolidation, sale or other transaction being hereinafter
referred to as a "Transaction"), all outstanding Options and SARs shall become
immediately exercisable and each outstanding share of Restricted Stock and each
outstanding Deferred Stock Award shall immediately become free of all
restrictions and conditions. Upon consummation of the Transaction, all
outstanding Options and SARs shall terminate and cease to be exercisable. There
shall be excluded from the foregoing any Transaction as a result of which (a)
the holders of Stock prior to the Transaction retain or acquire securities
constituting a majority of the outstanding voting common stock of the acquiring
or surviving corporation or other entity and (b) no single person owns more than
half of the outstanding voting common stock of the acquiring or surviving
corporation or other entity. For purposes of this Section, voting common stock
of the acquiring or surviving corporation or other entity that is issuable upon
conversion of convertible securities or upon exercise of warrants or options
shall be considered outstanding, and all securities that vote in the election of
directors (other than solely as the result of a default in the making of any
dividend or other payment) shall be deemed to constitute that number of shares
of voting common stock which is equivalent to the number of such votes that may
be cast by the holders of such securities.
In lieu of the foregoing, if there is an acquiring or surviving corporation
or entity, the Committee may, by vote of a majority of the members of the
Committee who are Continuing Directors (as defined below), arrange to have such
acquiring or surviving corporation or entity or an Affiliate (as defined below)
thereof grant to Participants holding outstanding Awards replacement Awards
which, in the case of ISOs, satisfy, in the determination of the Committee, the
requirements of Section 425(e) of the Code.
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The term "Continuing Director" shall mean any director of the Company who
(i) is not an Acquiring Person or an Affiliate of an Acquiring Person and (ii)
either was (A) a member of the Board of Directors of the Company on the date
hereof or (B) nominated for his or her initial term of office by a majority of
the Continuing Directors in office at the time of such nomination. The term
"Acquiring Person" shall mean, with respect to any Transaction, each Person who
is a party to or a participant in such Transaction or who, as a result of such
Transaction, would (together with other Persons acting in concert) own a
majority of the Company's outstanding Common Stock; provided, however, that none
of the Company, any wholly-owned subsidiary of the Company, any employee benefit
plan of the Company or any trustee in respect thereof acting in such capacity
shall, for purposes of this Section, be deemed an "Acquiring Person". The term
"Affiliate", with respect to any Person, shall mean any other Person who is, or
would be deemed to be, an "affiliate" or an "associate" of such Person within
the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended. The
term "Person" shall mean a corporation, association, partnership, joint venture,
trust, organization, business, individual or government or any governmental
agency or political subdivision thereof.
17. AMENDMENTS AND TERMINATION
The Committee will have the authority to make such amendments to any
terms and conditions applicable to outstanding Awards as are consistent with
this Plan provided that, except for adjustments under Section 12 hereof, no such
action will modify such Award in a manner adverse to the Participant without the
Participant's consent except as such modification is provided for or
contemplated in the terms of the Award.
The Board may amend, suspend or terminate the Plan except that no such
action may be taken, without shareholder approval, which would effectuate any
change for which shareholder approval is required pursuant to Section 16 of the
Exchange Act.
18. PRIOR PLANS
This Plan is intended to replace the Reebok International Ltd. 1985
Stock Option Plan, the Reebok International Ltd. 1986 Stock Option Plan for
Selected Individuals and the Reebok International 1987 Stock Bonus Plan
(collectively the "Prior Plans"), which Prior Plans shall automatically be
terminated and replaced and superseded by this Plan on the date on which this
Plan becomes effective.
19. MISCELLANEOUS
This Plan shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts.
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