EXHIBIT 99.1
As Amended March 17, 1999 and October 19, 1993
ZANY BRAINY, INC.
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1993 STOCK INCENTIVE PLAN
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1. Definitions. As used herein, the following terms have the
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meanings hereinafter set forth:
(a) "Affiliate" shall mean a corporation which is a parent corporation
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or a subsidiary corporation with respect to the Company within the meaning of
section 424(e) or 424(f) of the Code.
(b) "Award" shall mean a transfer of Common Stock subject to
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conditions of forfeiture (or the right to purchase Common Stock subject to
conditions of forfeiture) made pursuant to sections 3 and 10 of the Plan.
(c) "Award Agreement" shall mean the agreement between the Company and
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a Grantee with respect to an Award made pursuant to the Plan.
(d) "Board" shall mean the Board of Directors of the Company or of an
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Affiliate; "Company's Board" shall mean the Board of Directors of Zany Brainy,
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Inc.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended,
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and the same as may be further amended from time to time.
(f) "Committee" shall mean the Company's Board, subject to the right
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of the Company's Board to designate some other committee to make recommendations
to it for the grant of Options and Awards and/or to assume other designated
responsibilities in the administration of the Plan.
(g) "Common Stock" shall mean the Company's common stock, par
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value $0.01 per share.
(h) "Company" shall mean Zany Brainy, Inc., a Pennsylvania
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business corporation.
(i) "Grantee" shall mean a person to whom an Award has been
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granted pursuant to the Plan.
(j) "Incentive Stock Option" or "ISO" shall mean an Option granted
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pursuant to the Plan which is intended to constitute an incentive stock option
within the meaning of section 422 of the Code.
(k) "Option" shall mean the right to purchase Common Stock
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granted pursuant to sections 3 and 7 of the Plan.
(l) "Option Agreement" shall mean the agreement between the Company
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and the Optionee under which the Optionee may purchase Common Stock pursuant to
the Plan.
(m) "Optionee" shall mean a person to whom an Option has been
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granted pursuant to the Plan.
(n) "Plan" shall mean Zany Brainy, Inc. 1993 Stock Incentive Plan, as
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set forth herein, and the same as may be amended from time to time.
(o) "Stock Appreciation Right" or "SAR" shall mean the right granted
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pursuant to the Plan in connection with an Option to surrender the Option and
receive in exchange therefor an amount equal to the excess of the fair market
value of the Common Stock subject to the Option so surrendered over the exercise
price of the Option.
2. Purpose. The Plan is intended as an additional incentive to key
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employees and non-employee members of the Board to enter into or remain in the
employ of the Company or any Affiliate or to serve on the Board and to devote
themselves to the Company's success and to reward past service of such persons
by providing them with an opportunity to acquire or increase a proprietary
interest in the Company through receipt of Awards and/or Options.
3. Administration. The Plan shall be administered by the Company's
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Board or the Committee if a Committee is appointed. The powers and duties of
the Committee set forth in this Plan shall be exercised by the Company's Board
in the absence of a Committee.
The Committee shall from time to time at its discretion grant Options
and Awards pursuant to the terms of the Plan. Subject to section 4, the
Committee shall have plenary authority to determine the persons to whom and the
times at which Options or Awards shall be granted, the number of shares of
Common Stock to be covered thereby and the price and other terms and conditions
thereof, including in the case of an Option a specification with respect to
whether or not the option is intended to be an ISO and/or to include an SAR. In
making such determinations the Committee may take into account the nature of the
person's services and responsibilities, the person's present and potential
contribution to the Company's success and
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such other factors as it may deem relevant. The interpretation and construction
by the Committee of any provision of the Plan or of any Option or Award granted
under it shall be final, binding and conclusive.
4. Eligibility.
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(a) All key employees of the Company or an Affiliate and all members
of the Board shall be eligible to receive Options or Awards hereunder. The
Committee, in its sole discretion, shall determine whether an individual
qualifies as a key employee.
5. Shares. The aggregate maximum number of shares for which options
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or Awards may be issued under the Plan is 300,000 shares of the Company's Common
Stock, $.0l par value, adjusted as provided in section 11. Shares shall be
issued from authorized and unissued Common Stock or Common Stock held in or
hereafter acquired for the treasury of the Company. If any outstanding Option
granted under the Plan expires, lapses or is terminated for any reason or if any
shares which are subject to an Award are forfeited for any reason, the Shares
allocable thereto may again be the subject of an Option or Award granted
pursuant to the Plan.
6. Effective Date and Term of the Plan.
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(a) Effective Date. The Plan shall be effective immediately.
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(b) Term. This Plan shall terminate on May 9, 2003 and no Option
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or Award shall be granted hereunder after such date.
7. Terms and Conditions of Options. Options granted pursuant to the
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Plan shall be evidenced by written Option Agreements in such form as the
Committee shall from time to time approve, which Option Agreements shall comply
with and be subject to the following terms and conditions and such other terms
and conditions which the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Shares. Each Option Agreement shall state the
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number of shares to which it pertains.
(b) Exercise Price. Each Option Agreement shall state the exercise
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price at which shares covered by the Option may be purchased. In the case of an
ISO, the exercise price shall be at least 100% of the fair market value of the
Common Stock on the date the ISO is granted; provided, however, if an ISO is
granted to an Optionee who then owns, directly or by attribution under section
424(d) of the Code, shares possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or an Affiliate,
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then the exercise price shall be at least 110% of the fair market value of the
shares on the date the Option is granted. If the Common Stock is traded in a
public market, then the fair market value per share shall be the mean between
the closing "bid" and "asked" prices thereof or the mean between the highest and
lowest quoted selling prices thereof, as applicable, as the Committee
determines, on the day the Option is granted as reported in customary financial
reporting services. If the Common Stock is not traded in a public market, fair
market value shall be determined in good faith by the Committee.
(c) Medium of Payment. An Optionee shall pay for shares (i) in cash,
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(ii) by certified check payable to the order of the Company, or (iii) by such
other mode of payment as the Committee may approve. Furthermore, the Committee
may provide in an Option Agreement that payment may be made all or in part in
shares of the Common Stock held by the Optionee. If payment is made in whole or
in part in shares of the Common Stock, then the Optionee shall deliver to the
Company certificates registered in the name of such Optionee representing shares
of Common Stock owned by such optionee, free of all liens, claims and
encumbrances of every kind, accompanied by stock powers duly endorsed in blank
by the Optionee. For purposes of determining the amount of payment, shares of
Common Stock tendered as payment by the Optionee shall be valued at fair market
value (as determined under subsection 7(b)) on the date of exercise (as
determined under section 9). Notwithstanding the foregoing, the Committee, in
its sole discretion, may refuse to accept shares of Common Stock in payment of
the exercise price. In that event, any certificates representing shares of
Common Stock which were delivered to the Company shall be returned to the
Optionee with notice of the refusal of the Committee to accept such shares in
payment of the exercise price. The Committee may impose from time to time such
limitations and prohibitions on the use of shares of the Common Stock to
exercise an Option as it deems appropriate.
(d) Termination of Options. No Option shall be exercisable after
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the first to occur of the following:
(i) Expiration of the term specified in the Option Agreement,
which shall not exceed (A) five years from the date of grant with respect to an
ISO if the Optionee on the date of grant owns, directly or by attribution under
section 424(d) of the Code, shares possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of an Affiliate
or (B) ten yea rs in all other cases;
(ii) Termination of the optionee's employment or service as a
director with the Company and its Affiliates, subject to such additional periods
not to exceed one year as the Committee shall determine, which periods may vary
with the reason for termination including, without limitation, the Optionee's
death, disability or retirement;
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(iii) The date set by the Committee to be an accelerated expiration
date in the event of dissolution or liquidation of the Company or consummation
of any acquisition or business combination transaction in which the Company is
not the surviving or acquiring entity or in which the Company becomes an 80% or
more owned subsidiary of another person or company, in which case the Committee
may take whatever other action with respect to the Option, including
acceleration of any exercise provisions, it deems necessary or desirable; or
(iv) A finding by the Committee, after full consideration of the facts
presented on behalf of both the Company and the Optionee, that the Optionee has
breached his employment or service contract with the Company or an Affiliate, or
has been engaged in any sort of disloyalty to the Company or an Affiliate,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his employment or service or has
disclosed trade secrets or confidential information of the Company or an
Affiliate. In such event, in addition to immediate termination of the Option,
the Optionee, upon a determination by the Committee, shall automatically forfeit
all shares for which the Company has not yet delivered the share certificates
upon refund by the Company of the exercise price.
(e) Transferability of Grants.
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(i) Nontransferability of Grants. Except as provided below, only the
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Grantee may exercise rights under an Option during the Grantee's lifetime. A
Grantee may not transfer those rights except by will or by the laws of descent
and distribution or, with respect to Grants other than Incentive Stock Options,
if permitted in any specific case by the Committee, pursuant to a domestic
relations order (as defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the regulations thereunder). When a
Grantee dies, the personal representative or other person entitled to succeed to
the rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee must furnish proof satisfactory to the Company of his or her
right to receive the Option under the Grantee's will or under the applicable
laws of descent and distribution.
(ii) Transfer of Nonqualified Stock Options. Notwithstanding the
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foregoing, the Committee may provide, in an Option Agreement, that a Grantee may
transfer nonqualified stock options to family members, according to such terms
as the Committee may determine; provided that the Option is not transferred to
the family member for value. For purposes of the Plan, "family member" includes
any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employee's household (other than a tenant
or employee), a trust in which these persons have more than fifty percent of the
beneficial interest, a foundation
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in which these persons (or the employee) control the management of assets, and
any other entity in which these persons (or the employee) own more than fifty
percent of the voting interests. The following transactions are not deemed to be
transfers for value for purposes of the Plan:
(i) a transfer under a domestic relations order in
settlement of marital property rights; and
(ii) a transfer to an entity in which more than fifty
percent of the voting interests are owned by family members (or the employee) in
exchange for an interest in that entity.
(f) Other Provisions. The Option Agreements shall contain such other
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provisions including, without limitation, additional restrictions upon the
exercise of the Option or additional limitations upon the term of the Option, as
the Committee shall deem advisable.
(g) Amendment. The Committee shall have the right to amend Option
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Agreements issued to an Optionee subject to his consent, except that the consent
of the Optionee shall not be required for any amendment made under subsection
7(d)(iii).
8. Stock Appreciation Rights (SARs).
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(a) In General. Subject to the terms and conditions of the Plan, the
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Committee may, in its sole and absolute discretion, grant to an Optionee rights
to surrender to the Company, in whole or in part, an option, and to receive in
exchange therefor payment by the Company of an amount equal to the excess of the
fair market value of the shares of Common Stock subject to such Option, or
portion thereof, so surrendered (determined in the manner described in
subsection 7(b) as of the date the SARs are exercised) over the exercise price
to acquire such shares. Such payment may be made, as determined by the
Committee in accordance with subsection 8(c) below and set forth in the Option
Agreement, either in shares of Common Stock or in cash or in any combination
thereof.
(b) Grant. Each SAR shall relate to a specific Option granted under
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the Plan and shall be granted to the Optionee concurrently with the grant of
such Option by inclusion of appropriate provisions in the Option Agreement
pertaining thereto. The number of SARs granted to an Optionee shall not exceed
the number of shares of Common Stock which such Optionee is entitled to purchase
pursuant to the related Option. The number of SARs held by an Optionee shall be
reduced by (i) the number of SARs exercised under the provisions of the Option
Agreement pertaining to the related Option, and (ii) the number of shares of
Common Stock purchased pursuant to the exercise of the related Option.
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(c) Payment. The Committee shall have sole discretion to determine
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whether, and shall set forth in the Option Agreement pertaining to the related
Option the circumstances under which, payment in respect of SARs granted to any
Optionee shall be made in shares of Common Stock, or in cash, or in a
combination thereof. If payment is made in Common Stock, the number of shares
of Common Stock which shall be issued pursuant to the exercise of SARs shall be
determined by dividing (i) the total number of SARs being exercised, multiplied
by the amount by which the fair market value (as determined under subsection
7(b)) of a share of Common Stock on the exercise date exceeds the exercise price
for shares covered by the related Option, by (ii) the fair market value of a
share of Common Stock on the exercise date of the SARs. No fractional share of
Common Stock shall be issued on exercise of an SAR; cash may be paid by the
Company to the individual exercising an SAR in lieu of any such fractional
share. If payment on exercise of an SAR is to be made in cash, the individual
exercising the SAR shall receive in respect of each share to which such exercise
relates an amount of money equal to the difference between the fair market value
of a share of Common Stock on the exercise date and the exercise price for
shares covered by the related Option.
(d) Limitations. SARs shall be exercisable at such times and under
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such terms and conditions as the Committee, in its sole and absolute discretion,
shall determine and set forth in the Option Agreements pertaining to the related
Options; provided, however, that an SAR may be exercised only at such times and
by such individuals as the related Option under the Plan and the Option
Agreement may be exercised.
9. Exercise. No Option or SAR associated therewith shall be deemed
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to have been exercised prior to the receipt by the Company of written notice of
such exercise and, in the case of an Option exercise, of payment in full of the
exercise price for the shares to be purchased. The date on which the Company
receives such notice, together with payment of the exercise price and all
information or acknowledgments required herein, shall be the exercise date of
the Option or SAR. Each such notice shall specify the number of shares to which
the exercise pertains and, in the case of an Option, shall (unless the shares
are covered by a then current registration statement or a Notification under
Regulation A under the Securities Act of 1933, as amended (the "Act")), contain
the Optionee's acknowledgment in form and substance satisfactory to the Company
that (a) such shares are being purchased for investment and not for distribution
or resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (b) the Optionee has been advised and understands that
(i) the shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to register
the shares under the Act or to take any action which would make available to the
Optionee any exemption from such registration, (c) such shares may not be
transferred without compliance with all applicable federal and state securities
laws, and (d) an appropriate legend
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referring to the foregoing restrictions on transfer may be endorsed on the
certificates. Notwithstanding the above, should the Company be advised by
counsel that issuance of shares should be delayed pending (A) registration under
federal or state securities laws or (B) the receipt of an opinion that an
appropriate exemption therefrom is available, the Company may defer exercise of
any Option granted hereunder until either such event in (A) or (B) has occurred.
10. Terms and Conditions of Awards. Awards granted pursuant to the
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Plan shall be evidenced by written Award Agreements in such form as the
Committee shall from time to time approve, which Award Agreements shall comply
with and be subject to the following terms and conditions and such other terms
and conditions which the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Shares. Each Award Agreement shall state the
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number of shares of Common Stock to which it pertains.
(b) Purchase Price. Each Award Agreement shall specify the purchase
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price, if any, which applies to the Award. If the Board specifies a purchase
price, the Grantee shall be required to make payment on or before the date
specified in the Award Agreement. A Grantee shall pay for shares (i) in cash,
(ii) by certified check payable to the order of the Company, or (iii) by such
other mode of payment as the Committee may approve.
(c) Transfer. In the case of an Award which provides for a transfer
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of shares without any payment by the Grantee, the transfer shall take place on
the date specified in the Award Agreement. In the case of an Award which
provides for a payment, the transfer shall take place on the date the initial
payment is delivered to the Company, unless the Committee or the Award Agreement
otherwise specifies. Stock certificates evidencing shares transferred pursuant
to an Award shall be issued in the sole name of the Grantee. Notwithstanding
the foregoing, as a precondition to a transfer, the Company may require an
acknowledgment by the Grantee as required under section 9.
(d) Forfeiture Conditions. The Committee shall specify in an Award
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Agreement any conditions under which the Grantee of that Award shall be required
to convey to the Company the shares covered by the Award. Upon the occurrence
of any such specified condition, the Grantee shall forthwith surrender and
deliver to the Company the certificates evidencing such shares as well as
completely executed instruments of conveyance. The Committee, in its
discretion, may provide that certificates for shares transferred pursuant to an
Award be held in escrow by the Company or an appropriate officer of the Company
until such time as each and every forfeiture condition has lapsed and that the
Grantee be required, as a condition of the transfer, to deliver to such escrow
agent stock powers covering the transferred shares duly endorsed by the Grantee.
Stock certificates evidencing shares subject to forfeiture
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shall bear a legend to the effect that the Common Stock evidenced thereby is
subject to repurchase or conveyance to the Company in accordance with an Award
made under the Plan and that the shares may not be sold or otherwise
transferred.
(e) Lapse of Conditions. Upon termination or lapse of each and every
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forfeiture condition, the Company shall cause certificates without the legend
referring to the Company's repurchase right (but with any other legends that may
be appropriate) evidencing the shares covered by the Award to be issued to the
Grantee upon the Grantee's surrender of the legended certificates held by him to
the Company.
(f) Rights as Shareholder. Upon payment of the purchase price, if
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any, for shares covered by an Award and compliance with the acknowledgment
requirement of subsection 10(c), the Grantee shall have all of the rights of a
shareholder with respect to the shares of Common Stock covered thereby,
including the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto, except to the extent otherwise
provided by the Committee or in the Award Agreement.
11. Adjustments on Changes in Capitalization. The aggregate number
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of shares and class of shares as to which Options or Awards may be granted
hereunder, the number of shares covered by each outstanding Option and the
exercise price thereof, and the number of shares subject to forfeiture with
respect to each Award shall be appropriately adjusted in the event of a stock
dividend, stock split, recapitalization or other change in the number or class
of issued and outstanding equity securities of the Company resulting from a
subdivision or consolidation of the Common Stock and/or other outstanding equity
security or a recapitalization or other capital adjustment (not including the
issuance of Common Stock on the conversion of other securities of the Company
which are convertible into Common Stock) affecting the Common Stock which is
effected without receipt of consideration by the Company. In the event of any
adjustment relating to shares covered by an Award and still subject to
forfeiture, the foregoing provisions and the provisions of subsection 10(d)
shall apply to the certificates issued in connection with the adjustment. The
Committee shall have authority to determine the adjustments to be made under
this section and any such determination by the Committee shall be final, binding
and conclusive; provided, however, that no adjustment shall be made which will
cause an ISO to lose its status as such without the consent of the Optionee.
12. Amendment of the Plan. The Company's Board may amend the Plan
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from time to time in such manner as it may deem advisable. Nevertheless, the
Company's Board may not, without obtaining approval by vote of a majority of the
outstanding voting stock of the Company, within twelve months before or after
such action, change the class of individuals eligible to receive an ISO, extend
the expiration date of the Plan or increase the maximum number of shares as to
which Options or Awards may be granted, except as provided in section
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11 hereof. No amendment to the Plan shall adversely affect any outstanding
Option or Award, however, without the consent of its holder.
13. Continued Employment. The grant of an Option or Award pursuant
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to the Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of the Company or any Affiliate to
retain an Optionee or Grantee in the employ of the Company or an Affiliate or as
a member of the Board or in any other capacity.
14. Withholding of Taxes. Whenever the Company proposes or is
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required to deliver or transfer shares or cash in connection with the exercise
of an Option, SAR or Award, the Company shall have the right to (a) require the
intended transferee to remit or otherwise make available to the Company an
amount sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery or transfer of any certificate or
certificates for such shares, or (b) take whatever action it deems necessary to
protect its interests with respect to tax liabilities, including, without
limitation, withholding a portion of any shares or cash otherwise deliverable
pursuant to the Plan. The Company's obligation to make any delivery or transfer
of shares under the Plan shall be conditioned on the Optionee's or Grantee's
compliance with any withholding requirement to the satisfaction of the Company.
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