<PAGE> 1
As filed with the Securities and Exchange Commission on March 5, 1999
Registration No. 333-38953
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Post-Effective Amendment No. 1 to
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FRUIT OF THE LOOM, LTD.
(Exact Name of Registrant as specified in its Charter)
CAYMAN ISLANDS NONE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O Box 31311 SMB
Safehaven Corporate Center
Grand Cayman, Cayman Islands, BWI
(345) 949-6690
(Address of principal executive offices including zip code)
FRUIT OF THE LOOM, INC. 1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
AS AMENDED AND RESTATED
FRUIT OF THE LOOM, INC. 1996 INCENTIVE COMPENSATION PLAN
AS AMENDED AND RESTATED
(Full title of the plans)
John J. Ray III
Vice President and Secretary
Fruit of the Loom, Ltd.,
5000 SEARS TOWER
Chicago, Illinois 60606
(312) 876-1724
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Howard S. Lanznar, Esq., P.C.
Katten Muchin & Zavis
525 West Monroe Street
Chicago, Illinois 60661
(312) 902-5200
<PAGE> 2
This Post-Effective Amendment is being filed pursuant to Rule 414 under
the Securities Act of 1933, as amended (the "Securities Act"), by Fruit of the
Loom, Ltd., a Cayman Islands company ("FTL-Cayman" or the "Company"), as
successor to Fruit of the Loom, Inc., a Delaware corporation ("FTL-Delaware").
FTL-Cayman hereby expressly adopts the Registration Statement on Form S-8 (File
No. 333-38953) as its own Registration Statement for all purposes of the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
2
<PAGE> 3
PART I
INFORMATION REQUIRED IN PROSPECTUS
The documents containing the information specified in Part I of this
Registration Statement on Form S-8 will be sent or given to employees as
specified by Rule 428(b)(1). Such documents are not required to be and are not
filed with the Securities and Exchange Commission (the "Commission") either as
part of this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424 under the Securities Act. These documents and the documents
incorporated by reference in this Registration Statement pursuant to Item 3 of
Part II of this Form S-8, taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
3
<PAGE> 4
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which have been filed with the
Commission, are incorporated herein by reference and made a part hereof:
(i) The Annual Report on Form 10-K for the year ended December
31, 1997 of FTL-Delaware as amended on Form 10K/A dated August 10, 1998;
(ii) The Quarterly Report on Form 10-Q for the quarter ended
September 26, 1998 of FTL-Delaware; and
(iii) The Quarterly Report on Form 10-Q for the quarter ended
June 27, 1998 of FTL-Delaware; and
(iv) The Quarterly Report on Form 10-Q for the quarter ended
March 28, 1998 of FTL-Delaware; and
(v) The Current Reports on Form 8-K dated February 11, 1998,
February 12, 1998, July 24, 1998, February 17, 1999 and March 4, 1999 and on
Form 8-K/A dated February 23, 1998 of FTL-Delaware; and
(vi) The description of the Company's Class A Ordinary Shares,
par value $.01 per share ("Class A Shares") contained in the Company's
Registration Statement on Form S-4 (Registration No. 333-46007) filed on
February 10, 1998 and all amendments thereto (the "S-4 Registration Statement");
and
(vii) The S-4 Registration Statement.
In addition, all documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all such securities then remaining unsold, shall be deemed to be
incorporated in this Registration Statement by reference and to be a part hereof
from the date of filing of such documents.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained therein or in any subsequently
4
<PAGE> 5
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
The Company hereby undertakes to provide without charge to
each person who has received a copy of the prospectus to which this Registration
Statement relates, upon the written or oral request of any such person, a copy
of any or all the documents that have been or may be incorporated by reference
into this Registration Statement, other than exhibits to such documents (unless
such exhibits are incorporated therein by reference).
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Cayman Islands company. Article 119 of the
Company's Amended and Restated Articles of Association, filed as Exhibit 3.3 to
the S-4 Registration Statement, contains provisions with respect to
indemnification of the Company's officers and directors. Such provisions provide
that the Company shall indemnify, in accordance with and to the full extent now
or hereafter permitted by law, any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including,
without limitation, an action by or in the right of the Company), by reason of
his acting as a director, officer, employee or agent of, or his acting in any
other capacity for or on behalf of, the Company, against any liability or
expense actually and reasonably incurred by such person in respect thereof. The
Company shall also advance the expenses of defending any such act, suit or
proceeding in accordance with and to the full extent now or hereafter permitted
by law. Such indemnification and advancement of expenses are not exclusive of
any other right to indemnification or advancement of expenses provided by law or
otherwise. The Articles of Association also provide that except under certain
circumstances, directors of the Company shall not be personally liable to the
Company or its shareholders for monetary damages for breach of fiduciary duties
as a director.
The Companies Law (1995 Revision) of the Cayman Islands does
not set out any specific restrictions on the ability of a company to indemnify
officers or directors. However, the application of basic principles and certain
Commonwealth case law which is likely to be
5
<PAGE> 6
persuasive in the Cayman Islands would indicate that indemnification is
generally permissible except in the event that there had been fraud or wilful
default on the part of the officer or director or reckless disregard of his
duties and obligations to the Company.
The Company has purchased directors' and officers' liability
insurance covering certain liabilities incurred by its officers and directors
and those of its subsidiaries and affiliates in connection with the performance
of their duties.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
The following is a list of all exhibits filed as part of this
Registration Statement on Form S-8, including those incorporated by reference.
EXHIBIT
NUMBER DESCRIPTION
4.1 Amended and Restated Articles of Association of FTL-Cayman.
(1)
4.2 Amended and Restated Memorandum of Association of FTL-
Cayman. (1)
4.3 Form of Certificate for the Class A Shares. (1)
4.4 Fruit of the Loom, Inc. 1995 Executive Incentive Compensation
Plan As Amended and Restated through 5/19/98. (2)
4.5 Fruit of the Loom, Inc. 1996 Incentive Compensation Plan As
Amended and Restated through 5/19/98. (2)
5 Opinion of Truman Bodden & Company. (2)
23.1 Consent of Independent Auditors, Ernst & Young LLP. (2)
23.2 Consent of Counsel (included in the Opinion of Truman Bodden
& Company in Exhibit 5 hereto).
24 Power of Attorney
- --------------------
(1) Previously filed as an exhibit to the S-4 Registration Statement and
incorporated herein by reference.
(2) Filed herewith.
6
<PAGE> 7
ITEM 9. UNDERTAKINGS.
1. The Company hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect is the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually,
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in a periodic report filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
2. The Company hereby undertakes that, for the purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
7
<PAGE> 8
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company and subsidiary companies pursuant to the foregoing provisions, or
otherwise, the Company has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment of by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by the Company is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
8
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Act the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, and State of Illinois on this 2nd day of
March, 1999.
FRUIT OF THE LOOM, LTD.
By: /s/ G. William Newton
----------------------------------------
G. William Newton, Senior Vice President
Finance and Acting Chief Financial Officer
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Chairman of the Board and Chief Executive Officer
* (Principal Executive Officer) and Director
- -------------------------------------------------------
William Farley
Senior Vice President Finance and Acting Chief
Financial Officer (Principal Financial and Accounting
/s/ G. William Newton Officer)
- -------------------------------------------------------
G. William Newton
* Director
- -------------------------------------------------------
Omar Z. Al Askari
* Director
- -------------------------------------------------------
Dennis S. Bookshester
* Director
- -------------------------------------------------------
Henry A. Johnson
* Director
- -------------------------------------------------------
A. Lorne Weil
* Director
- -------------------------------------------------------
Sir Brian G. Wolfson
- ------------------------------------------------------- Director
Mark A. McCormack
By: /s/ Howard S. Lanznar
---------------------------------------------------
Howard S. Lanznar
Attorney-in-fact
</TABLE>
9
<PAGE> 10
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
4.1 Amended and Restated Articles of Association of FTL-Cayman. (1)
4.2 Amended and Restated Memorandum of Association of FTL-Cayman. (1)
4.3 Form of Certificate for the Class A Shares. (1)
4.4 Fruit of the Loom, Inc. 1995 Executive Incentive Compensation Plan As
Amended and Restated through 5/19/98. (2)
4.5 Fruit of the Loom, Inc. 1996 Incentive Compensation Plan As Amended
and Restated through 5/19/98. (2)
5 Opinion of Truman Bodden & Company. (2)
23.1 Consent of Independent Auditors, Ernst & Young LLP. (2)
23.2 Consent of Counsel (included in the Opinion of Truman Bodden &
Company in Exhibit 5 hereto).
24 Power of Attorney
- --------------------
(1) Previously filed as an exhibit to the S-4 Registration Statement and
incorporated herein by reference.
(2) Filed herewith.
10
<PAGE> 1
EXHIBIT 4.4
FRUIT OF THE LOOM, INC.
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
As Amended and Restated Through May 19, 1998
<PAGE> 2
FRUIT OF THE LOOM, INC.
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
As Amended and Restated Through May 19, 1998
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Purpose .................................................................................... 1
2. Definitions...................................................................................1
3. Administration................................................................................4
(a) Authority of the Committee...........................................................4
(b) Manner of Exercise of Committee Authority............................................4
(c) Limitation of Liability..............................................................5
4. Stock Subject to Plan .......................................................................5
(a) Overall Number of Shares Available for Delivery......................................5
(b) Application of Limitation to Grants of Awards........................................5
(c) Availability of Shares Not Delivered Under Awards....................................5
5. Eligibility; Per-Person Award Limitations.....................................................6
6. Specific Terms of Awards......................................................................6
(a) General..............................................................................6
(b) Options..............................................................................6
(c) Stock Appreciation Rights............................................................7
(d) Restricted Stock.....................................................................7
(e) Deferred Stock.......................................................................8
(f) Bonus Stock and Awards in Lieu of Obligations........................................9
(g) Dividend Equivalents.................................................................9
(h) Other Stock-Based Awards.............................................................9
7. Certain Provisions Applicable to Awards.......................................................9
(a) Stand-Alone, Additional, Tandem, and Substitute Awards...............................9
(b) Term of Awards......................................................................10
(c) Form and Timing of Payment Under Awards; Deferrals..................................10
(d) Exemptions from Section 16(b) Liability.............................................10
8. Performance Awards...........................................................................11
(a) Performance Conditions..............................................................11
(b) Performance Awards Granted to Designated "Covered Employees"........................11
(c) Annual Incentive Awards Granted to Designated "Covered Employees"...................12
(d) Written Determinations..............................................................13
(e) Status of Section 8(b) and 8(c) Awards Under Code Section 162(m)....................13
</TABLE>
<PAGE> 3
FRUIT OF THE LOOM, INC.
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
As Amended and Restated Through May 19, 1998
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
9. Change in Control............................................................................14
(a) Effect of "Change in Control".......................................................14
(b) Definition of "Change in Control"...................................................14
(c) Definition of "Change in Control Price".............................................15
10. General Provisions...........................................................................15
(a) Compliance With Legal and Other Requirements........................................15
(b) Limits on Transferability; Beneficiaries............................................16
(c) Adjustments.........................................................................16
(d) Taxes...............................................................................17
(e) Changes to the Plan and Awards......................................................17
(f) Limitation on Rights Conferred Under Plan...........................................17
(g) Unfunded Status of Awards; Creation of Trusts.......................................18
(h) Nonexclusivity of the Plan..........................................................18
(i) Payments in the Event of Forfeitures; Fractional Shares.............................18
(j) Governing Law.......................................................................18
(k) Awards Under Preexisting Plans......................................................18
(l) Plan Effective Date, Stockholder Approval, and Termination..........................19
</TABLE>
<PAGE> 4
FRUIT OF THE LOOM, INC.
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
As Amended and Restated Through May 19, 1998
1. PURPOSE. The purpose of this 1995 Executive Incentive Compensation
Plan (the "Plan") is to assist Fruit of the Loom, Inc., a Delaware corporation
(the "Company"), and its subsidiaries in attracting, retaining, and rewarding
high quality executive officers, other key salaried employees and other persons
who provide services to the Company, enabling such persons to acquire or
increase a proprietary interest in the Company in order to strengthen the
mutuality of interests between such persons and the Company's stockholders, and
providing such persons with performance incentives to expend their maximum
efforts in the creation of long-term stockholder value. The Plan is also
intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Code (as hereafter defined) to the
extent deemed appropriate by the Compensation Committee (or any successor
committee) of the Board of Directors of the Company.
2. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof:
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, unless
otherwise determined by the Committee, after the end of a specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, Deferred Stock, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof. If, upon
a Participant's death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the person, persons,
trust or trust entitled by will or the laws of descent and distribution to
receive such benefits.
(d) "Beneficial Owner," "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" means Change in Control as defined with related
terms in Section 9 of the Plan.
(g) "Change in Control Price" means the amount calculated in accordance
with Section 9(c) of the Plan.
<PAGE> 5
(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "Committee" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan;
provided, however, that Committee action shall be taken by act of such members
specified in, and otherwise in accordance with, Section 3(c). The Committee
shall consist solely of two or more directors of the Company who are not
employees of the Company or any subsidiary. In appointing members of the
Committee, the Board will consider whether a member is or will be a Qualified
Member, but such members are not required to be Qualified Members at the time of
appointment or during their term of service on the Committee.
(j) "Corporate Transaction" means a transaction as defined in Section
9(b) of the Plan.
(k) "Covered Employee" means an Eligible Person as defined in Section
8(e) of the Plan.
(l) "Deferred Stock" means a right (a restricted stock unit), granted
to a Participant under Section 6(e) hereof, to receive Stock, cash or a
combination thereof at the end of a specified deferral period.
(m) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g), to receive cash, Stock, other Awards or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments.
(n) "Effective Date" means December 18, 1994, the effective date of the
Plan.
(o) "Eligible Person" means each executive officer of the Company (as
defined under the Exchange Act) and other officers and salaried employees of the
Company or of any subsidiary, including such persons who may also be directors
of the Company, and each executive officer, other officer or employee of any
other entity who provides substantial services to the Company or any subsidiary
pursuant to an arrangement approved by the Board. The foregoing notwithstanding,
no member of the Committee shall be an Eligible Person.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(q) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(r) "Fair Market Value" means the fair market value of Stock, Awards or
other property as determined by the Committee or under procedures established by
the Committee. Unless otherwise determined by the Committee, the Fair Market
Value of Stock as of any given
2
<PAGE> 6
date shall be the closing sale price per share reported on a consolidated basis
for stock listed on the principal stock exchange or market on which Stock is
traded on the date as of which such value is being determined or, if there is no
sale on that date, then on the last previous day on which a sale was reported.
(s) "Incentive Stock Option" or "ISO" means any Option intended to be
and designated as an incentive stock option within the meaning of Section 422 of
the Code or any successor provision thereto.
(t) "Incumbent Board" means the Board as defined in Section 9(b) of the
Plan.
(u) "Limited SAR" means a right granted to a Participant under Section
6(c) thereof.
(v) "162(m) Award" means an Award intended by the Committee to
constitute "qualified performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder. Such Awards would include Options or
SARs and Awards granted in accordance with Sections 8(b) and (c).
(w) "Option" means a right, granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.
(x) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(y) "Participant" means a person who has been granted an Award under
the Plan, including a person who is no longer an Eligible Person.
(z) "Performance Award" means a right, granted to a Participant under
Section 8 hereof, to receive Awards based upon performance criteria specified by
the Committee.
(aa) "Person" will have the meaning assigned in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, and includes a
"group" as defined in Section 13(d) thereof.
(bb) "Preexisting Plans" means the Company's Executive Incentive
Compensation Plan effective as of January 1, 1994, the 1992 Executive Stock
Option Plan and the 1987 Stock Option Plan, as amended and restated.
(cc) "Qualified Member" means a member of the Committee who is a
"Non-Employee Director" within the meaning of Rule 16b-3(b)(3) and an "outside
director" within the meaning of Treasury Regulation 1.162-27(e)(3) under Code
Section 162(m).
(dd) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
3
<PAGE> 7
(ee) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(ff) "Stock" means the Company's Class A Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
(gg) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
3. ADMINISTRATION.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to select Eligible
Persons to become Participants, grant Awards, determine the type, number, and
other terms and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each Participant)
and rules and regulations for the administration of the Plan, establish trusts,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions, or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee may deem necessary or advisable for the
administration of the Plan. The foregoing and other provisions of the Plan
notwithstanding, the Board may perform any function of the Committee under the
Plan, including for the purpose of ensuring that transactions under the Plan by
Participants who are then subject to Section 16 of the Exchange Act in respect
of the Company are exempt under Rule 16b-3. In any case in which the Board is
performing a function of the Committee under the Plan, each reference to the
Committee herein shall be deemed to refer to the Board, except where the context
otherwise requires.
(b) Manner of Exercise of Committee Authority. At any time that a
member of the Committee is not a Qualified Member, any action of the Committee
relating to an Award granted or to be granted to a Participant who is then
subject to Section 16 of the Exchange Act in respect of the Company, or relating
to a 162(m) Award, may be taken either (i) by a subcommittee, designated by the
Committee, composed solely of two or more Qualified Members, or (ii) by the
Committee but with each such member who is a not a Qualified Member abstaining
or recusing himself or herself from such action; provided, however, that, upon
such abstention or recusal, the Committee remains composed solely of two or more
Qualified Members. Such action, authorized by such a subcommittee or by the
Committee upon the abstention or recusal of such non-Qualified Member(s), shall
be the action of the Committee for purposes of the Plan. Any action of the
Committee shall be final, conclusive and binding on all persons, including the
Company, its subsidiaries, Participants, Beneficiaries, transferees under
Section 10(b) hereof or other persons claiming rights from or through a
Participant, and stockholders. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate
to officers or employees of the Company or any subsidiary the authority, subject
to such terms as the Committee shall
4
<PAGE> 8
determine, to perform such functions, including administrative functions, as the
Committee may determine, to the extent that such delegation will not result in
the loss of an exemption under Rule 16b-3(d)(1) or (e) for Awards granted to
Participants subject to Section 16 of the Exchange Act in respect of the Company
and will not cause Awards intended to be 162(m) Awards to fail to so qualify.
The Committee may appoint agents to assist it in administering the Plan.
(c) Limitation of Liability. The Committee and each member thereof
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any executive officer, other officer or
employee of the Company or a subsidiary, the Company's independent auditors,
consultants or any other agents assisting in the administration of the Plan.
Members of the Committee and any officer or employee of the Company or a
subsidiary acting at the direction or on behalf of the Committee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or
determination.
4. STOCK SUBJECT TO PLAN.
(a) Overall Number of Shares Available for Delivery. Subject to
adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock reserved and available for delivery in connection with Awards under the
Plan shall be (i) 4,000,000, plus (ii) 5% of the number of shares newly issued
by the Company or delivered out of treasury shares during the term of the Plan
(excluding any issuance or delivery in connection with Awards, awards under
Preexisting Plans, or options or other stock features of plans exclusively for
directors of the Company), plus (iii) the number of shares of Stock remaining
available under the Preexisting Plans at the effective date of the Plan plus
shares subject to awards under the Preexisting Plans which become available
after the Plan effective date in accordance with Section 4(c) hereof; provided
that any shares of Stock added as a result of clause (ii) of this sentence shall
not be available for grants of ISOs or SARs in tandem with ISOs. Any shares of
Stock delivered under the Plan may consist, in whole or in part, of authorized
and unissued shares or treasury shares.
(b) Application of Limitation to Grants of Awards. No Award may be
granted if the number of shares of Stock to be delivered in connection with such
Award or, in the case of an Award relating to shares of Stock but settleable
only in cash (such as cash-only SARs), the number of shares to which such Award
relates, exceeds the number of shares of Stock remaining available under the
Plan minus the number of shares of Stock relating to then-outstanding cash-only
Awards. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments if the number of shares of
Stock actually delivered differs from the number of shares previously counted in
connection with an Award.
5
<PAGE> 9
(c) Availability of Shares Not Delivered Under Awards. Shares of Stock
subject to an Award or award under a Preexisting Plan that is cancelled,
expired, forfeited, settled in cash or otherwise terminated without a delivery
of shares to the Participant, including (i) the number of shares withheld in
payment of any exercise or purchase price of an Award or taxes relating to
Awards, and (ii) the number of shares equal to the number of shares surrendered
in payment of any exercise or purchase price of an Award or taxes relating to
Awards, will again be available for Awards under the Plan, except that if any
such shares could not again be available for Awards to a particular Participant
under any applicable law or regulation, such shares shall be available
exclusively for Awards to Participants who are not subject to such limitation.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be
granted under the Plan only to Eligible Persons. In each fiscal year during any
part of which the Plan is in effect, an Eligible Person may not be granted
Awards relating to more than 2,000,000 shares of Stock, subject to adjustment as
provided in Section 10(c), under Sections 6(b), or Awards relating to more than
1,000,000 shares of Stock, subject to adjustment as provided in Section 10(c),
under each of Sections 6(c), 6(d), 6(e), 6(f), 6(h), 8(b) and 8(c). In addition,
the maximum amount that may be paid out as a final Annual Incentive Award or
other cash-denominated Award in any fiscal year to any one Participant shall be
$3,500,000.
6. SPECIFIC TERMS OF AWARDS.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
10(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by the
Participant and terms permitting a Participant to make elections relating to his
or her Award. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an Award that
is not mandatory under the Plan. Except in cases in which the Committee is
authorized to require other forms of consideration under the Plan, or to the
extent other forms of consideration must by paid to satisfy the requirements of
the Delaware General Corporation Law, no consideration other than services may
be required for the grant (but not the exercise) of any Award.
(b) Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee,
provided that such exercise price shall be not less than the Fair
Market Value of a share of Stock on the date of grant of such Option,
except as provided under Section 7(a) hereof.
(ii) Time and Method of Exercise. The Committee shall
determine the time or times at which or the circumstances under which
an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future
6
<PAGE> 10
service requirements), the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment, including,
without limitation, cash, Stock, other Awards or awards granted under
other plans of the Company or any subsidiary, or other property
(including notes or other contractual obligations of Participants to
make payment on a deferred basis), and the methods by or forms in
which Stock will be delivered or deemed to be delivered to
Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the Code.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to ISOs shall be interpreted, amended or altered, nor
shall any discretion or authority granted under the Plan be exercised
so as to disqualify either the Plan or any ISO under Section 422 of the
Code, unless the Participant has first requested the change that will
result in such disqualification.
(c) Stock Appreciation Rights. The Committee is authorized to grant
SAR's to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of Stock on the date
of exercise (or, in the case of a "Limited SAR," the Fair Market Value
determined by reference to the Change in Control Price, as defined
under Section 9(c) hereof), over (B) the grant price of the SAR as
determined by the Committee, provided that such grant price shall be
not less than the Fair Market Value of a share of Stock on the date of
grant of such SAR, except as provided under Section 7(a) hereof.
(ii) Other Terms. The Committee shall determine at the date of
grant or thereafter, the time or times at which and the circumstances
under which a SAR may be exercised in whole or in part (including based
on achievement of performance goals and/or future service
requirements), the method of exercise, the method of settlement, form
of consideration payable in settlement, the method by or forms in which
Stock will be delivered or deemed to be delivered to Participants,
whether or not a SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any SAR. Limited
SARs that may only be exercised in connection with a Change in Control
or other event as specified by the Committee may be granted on such
terms, not inconsistent with this Section 6(c), as the Committee may
determine. SARs and Limited SARs may be either freestanding or in
tandem with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject
to such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose, which restrictions
may lapse separately or in combination at
7
<PAGE> 11
such times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date
of grant or thereafter. Except to the extent restricted under the terms
of the Plan and any Award agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the
right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee). During the
restricted period applicable to the Restricted Stock, subject to
Section 10(b) below, the Restricted Stock may not be sold, transferred,
pledged, hypothecated, margined or otherwise encumbered by the
Participant.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; provided
that the Committee may provide, by rule or regulation or in any Award
agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Stock will be waived in
whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Stock are registered
in the name of the Participant, the Committee may require such
certificates to bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock, that
the Company retain physical possession of the certificates, or that the
Participant deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an
Award of Restricted Stock, the Committee may require that any cash
dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise
determined by the Committee, Stock distributed in connection with a
Stock split or Stock dividend, and other property distributed as a
dividend, shall be subject to restrictions and a risk of forfeiture to
the same extent as the Restricted Stock with respect to which such
Stock or other property has been distributed.
(e) Deferred Stock. The Committee is authorized to grant Deferred Stock
(restricted stock units) to Participants, which are rights to receive Stock,
cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of
Deferred Stock will occur upon expiration of the deferral period
specified for such Deferred Stock by the Committee (or, if permitted by
the Committee, as elected by the Participant). In
8
<PAGE> 12
addition, Deferred Stock shall be subject to such restrictions (which
may include a risk of forfeiture) as the Committee may impose, if any,
which restrictions may lapse at the expiration of the deferral period
or at earlier specified times (including based on achievement of
performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may
determine. Deferred Stock may be satisfied by delivery of Stock, cash
equal to the Fair Market Value of the specified number of shares of
Stock covered by the Deferred Stock, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment during the applicable
deferral period or portion thereof to which forfeiture conditions apply
(as provided in the Award agreement evidencing the Deferred Stock), all
Deferred Stock that is at that time subject to deferral (other than a
deferral at the election of the Participant) shall be forfeited;
provided that the Committee may provide, by rule or regulation or in
any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Deferred Stock will
be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in
whole or in part the forfeiture of Deferred Stock.
(iii) Dividend Equivalents. Unless otherwise determined by the
Committee at date of grant, Dividend Equivalents on the specified
number of shares of Stock covered by an Award of Deferred Stock will be
either (A) paid with respect to such Deferred Stock at the dividend
payment date in cash or in shares of unrestricted Stock having a Fair
Market Value equal to the amount of such dividends, or (B) deferred
with respect to such Deferred Stock and the amount or value thereof
automatically deemed reinvested in additional Deferred Stock, other
Awards, or other investment vehicles, as the Committee shall determine
or permit the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company obligations to pay cash or deliver other property under other plans
or compensatory arrangements. Stock or Awards granted hereunder shall be subject
to such other terms as shall be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents will be paid
or distributed when accrued or will be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.
9
<PAGE> 13
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified
subsidiaries. The Committee shall determine the terms and conditions of such
Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
subsidiary, or any business entity to be acquired by the Company or a
subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require the surrender
of such other Award or award in consideration for the grant of the new Award. In
addition, Awards may be granted in lieu of cash compensation, including in lieu
of cash amounts payable under other plans of the Company or any subsidiary, in
which the value of the Award or the Stock subject to the Award is equivalent in
value to the cash compensation (for example, Deferred Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price "discounted" by
the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided that in no event shall the term of
any Option or SAR exceed a period of ten years (or such shorter term as may be
required in respect of an ISO under Section 422 of the Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by the
Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and
10
<PAGE> 14
cash paid in lieu of Stock in connection with such settlement, in the discretion
of the Committee or upon occurrence of one or more specified events (in addition
to a Change in Control). Installment or deferred payments may be required by the
Committee (subject to Section 10(e) of the Plan) or permitted at the election of
the Participant. Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred payments
or the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.
(d) Exemptions from Section 16(b) Liability. With respect to a
Participant who is then subject to Section 16 of the Exchange Act in respect of
the Company, the Committee shall use its best efforts to implement transactions
under the Plan and administer the Plan in a manner that will ensure that each
transaction by such a Participant is exempt from liability under Rule 16b-3,
except that such a Participant may be permitted to engage in a non-exempt
transaction under the Plan if written notice has been given to the Participant
regarding the non-exempt nature of such transaction. The Committee may authorize
the repurchase of any Award or shares resulting from any Award in order to
prevent a Participant from incurring or potentially incurring liability under
Section 16(b) of the Exchange Act. Unless otherwise specified by the
Participant, equity securities, including derivative securities, acquired under
the Plan which are disposed of by a Participant shall be deemed to be disposed
of in the order acquired by the Participant.
8. PERFORMANCE AWARDS.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under Sections 8(b)
and 8(c) hereof in the case of a Performance Award intended to qualify under
Code Section 162(m).
(b) Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to an Eligible
Person who is designated by the Committee as likely to be a Covered Employee
should qualify as "performance-based compensation" for purposes of Code Section
162(m), the grant and/or settlement of such Performance Award shall be
contingent upon achievement of preestablished performance goals and other terms
set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for
such Performance Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect each to such
criteria, as specified by the Committee consistent with this Section
8(b). Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder
(including Treasury Regulation 1.162-27 and any successor thereto),
including the
11
<PAGE> 15
requirement that the level or levels of performance targeted by the
Committee result in the achievement of performance goals being
"substantially uncertain." The Committee may determine that such
Performance Awards shall be payable upon achievement of any one
performance goal or that two or more of the performance goals must be
achieved as a condition to settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.
(ii) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
subsidiaries or business units of the Company (except with respect to
the total stockholder return and earnings per share criteria), shall be
used exclusively by the Committee in establishing performance goals for
such Performance Awards: (1) total stockholder return; (2) such total
stockholder return as compared to total return (on a comparable basis)
of an index such as, but not limited to, the Standard & Poor's 500 or
the Value Line Apparel Industry Index; (3) net income; (4) pretax
earnings; (5) earnings before interest, taxes, depreciation and
amortization (EBITDA); (6) pretax operating earnings before or after
interest expense and before or after bonuses, service fees, and
extraordinary or special items; (7) operating margin; (8) earnings per
share; (9) return on equity; (10) return on capital; (11) return on
investment; (12) operating earnings; and (13) working capital, all on
an absolute or relative basis. The foregoing business criteria shall
also be exclusively used in establishing performance goals for Annual
Incentive Awards granted to a Covered Employee under Section 8(c)
hereof.
(iii) Performance Period; Timing For Establishing Performance
Goals. Achievement of performance goals in respect of such Performance
Awards shall be measured over a performance period of not less than six
months nor more than ten years, as specified by the Committee.
Performance goals shall be established not later than 90 days after the
beginning of any performance period applicable to such Performance
Awards, or at such other date as may be required or permitted for
"performance-based compensation" under Code Section 162(m).
(iv) Settlement of Performance Awards; Other Terms. Settlement
of such Performance Awards shall be in cash or Stock, or other Awards,
or other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise to
be made in connection with such Performance Awards, but may not
exercise discretion to increase any such amount payable to a Covered
Employee in respect of Performance Award subject to this Section 8(b).
The Committee shall specify the circumstances in which such Performance
Awards shall be forfeited in the event of termination of employment by
the Participant prior to the end of a performance period or settlement
of Performance Awards, and other terms relating to such Performance
Awards in accordance with Section 6 and this Section 8.
(c) Annual Incentive Awards Granted to Designated Covered Employees.
The Committee may grant Annual Incentive Awards to Eligible Persons including
those designated by the Committee as likely to be Covered Employees, which
Awards shall represent a
12
<PAGE> 16
conditional right to receive a payment in cash, unless otherwise determined by
the Committee, after the end of a specified fiscal year, in accordance with this
Section 8(c).
(i) Annual Incentive Award Pool. The Committee may establish
an Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool shall
be based upon the achievement of a performance goal or goals based on
one or more of the business criteria set forth in Section 8(b)(ii)
hereof in the given performance year, as specified by the Committee in
accordance with Section 8(c)(ii) hereof. The Committee may specify the
amount of the Annual Incentive Award pool as a percentage of any of
such business criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end
of the 90th day of each fiscal year, or at such other date as may be
required or permitted for "qualified performance-based compensation"
under Code Section 162(m), the Committee shall determine the Eligible
Persons who will potentially receive Annual Incentive Awards for that
fiscal year, either out of an Annual Incentive Award pool established
by such date under Section 8(c)(i) hereof or as individual Annual
Incentive Awards. In the case of individual Annual Incentive Awards
intended to qualify under Code Section 162(m), the amount potentially
payable shall be based upon the achievement of a performance goal or
goals based on one or more of the business criteria set forth in
Section 8(b)(ii) hereof in the given performance year, as specified by
the Committee; in other cases, such amount shall be based on such
criteria as shall be established by the Committee. In all cases, the
maximum Annual Incentive Award of any Participant shall be subject to
the limitation set forth in Section 5 hereof.
(iii) Payout of Annual Incentive Awards. After the end of each
fiscal year, the Committee shall determine the amount, if any, of (A)
the Annual Incentive Award pool and the maximum amount of potential
Annual Incentive Award payable to each Participant in the Annual
Incentive Award pool, or (B) the amount of potential Annual Incentive
Award otherwise payable to each Participant. The Committee may, in its
discretion, determine that the amount payable to any Participant as a
final Annual Incentive Award shall be increased or reduced from the
amount of his or her potential Annual Incentive Award, including a
determination to make no final Award whatsoever, but may not exercise
discretion to increase any such amount in the case of an Annual
Incentive Award intended to qualify under Code Section 162(m). The
Committee shall specify the circumstances in which an Annual Incentive
Award shall be forfeited in the event of termination of employment by
the Participant prior to the end of a fiscal year or the payout of such
Annual Incentive Award, and other terms relating to such Annual
Incentive Award in accordance with the Plan.
(d) Written Determinations. All determinations by the Committee as to
the establishment of performance
13
<PAGE> 17
goals and the potential Awards related to such performance goals and as to the
achievement of performance goals relating to such Performance Awards under
Section 8(b), and the amount of any Annual Incentive Award pool and the amount
of final Annual Incentive Awards under Section 8(c), shall be made in writing in
the case of any Award intended to qualify under Code Section 162(m). The
Committee may not delegate any responsibility relating to such Performance
Awards or Annual Incentive Awards.
(e) Status of Section 8(b) and Section 8(c) Awards Under Code Section
162(m). It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Sections 8(b) and 8(c) hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder (including Treasury Regulation
1.162-27 and any successor thereto) shall, if so designated by the Committee,
constitute "qualified performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the terms of Sections
8(b), (c), (d) and (e), including the definitions of Covered Employee and other
terms used therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder. The foregoing notwithstanding,
because the Committee cannot determine with certainty whether a given
Participant will be a Covered Employee with respect a fiscal year that has not
yet been completed, the term Covered Employee as used herein shall mean only a
person designated by the Committee, at the time of grant of Performance Awards
or an Annual Incentive Award, as likely to be a Covered Employee with respect to
that fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards or Annual Incentive Awards does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.
14
<PAGE> 18
9. CHANGE IN CONTROL.
(a) Effect of "Change in Control." In the event of a "Change in
Control," as defined in Section 9(b), the following provisions shall apply:
(i) Any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable and
vested as of the time of the Change in Control and shall remain
exercisable and vested for the balance of the stated term of such Award
without regard to any termination of employment by the Participant,
subject only to the restrictions set forth in Section 10(a) hereof;
(ii) The restrictions, deferral of settlement and forfeiture
conditions applicable to any other Award granted under the Plan shall
lapse and such Awards shall be deemed fully vested as of the time of
the Change in Control, except to the extent of any waiver by the
Participant and subject to the restrictions set forth in Section 10(a)
hereof; and
(iii) With respect to any outstanding Award subject to
achievement of performance goals and conditions under the Plan, such
performance goals and other conditions will be deemed to be met if and
to the extent so provided by the Committee in the Award agreement
relating to such Award.
(b) Definition of "Change in Control." A "Change in Control" shall be
deemed to have occurred if:
(i) An acquisition by any Person of Beneficial Ownership of
the shares of Common Stock of the Company then outstanding (the
"Company Common Stock Outstanding") or the voting securities of the
Company then outstanding entitled to vote generally in the election of
directors (the "Company Voting Securities Outstanding"); provided,
however, that such acquisition of Beneficial Ownership would result in
the Person's Beneficially Owning 25% or more of the Company Common
Stock Outstanding or 25% or more of the combined voting power of the
Company Voting Securities Outstanding; and provided further, that
immediately prior to such acquisition such Person was not a direct or
indirect Beneficial Owner of 25% or more of the Company Common Stock
Outstanding or 25% or more of the combined voting power of Company
Voting Securities Outstanding, as the case may be; or
(ii) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or
dissolution of the Company, sale or disposition of all or substantially
all of the assets of the Company, or similar corporate transaction (in
each case referred to in this Section 9(b) as a "Corporate
Transaction") or, if consummation of such Corporate Transaction is
subject, at the time of such approval by stockholders, to the consent
of any government or governmental agency, the obtaining of such consent
(either explicitly or implicitly); provided, however, that any
merger, consolidation, sale, disposition or other similar transaction
to or with William Farley or entities controlled by him shall not
constitute a Corporate Transaction; or
15
<PAGE> 19
(iii) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such
Board shall be hereinafter referred to as the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section 9(b), that any
individual who becomes a member of the Board subsequent to the
Effective Date whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority
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; but, provided, further, that any such individual
whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act, including any
successor to such Rule) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board
shall not be so considered as a member of the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii)
of this Section 9(b), the following shall not constitute a Change in Control for
purposes of the Plan: (1) any acquisition by or consummation of a Corporate
Transaction with any subsidiary of the Company or an employee benefit plan (or
related trust) sponsored or maintained by the Company or an affiliate; or (2)
any acquisition or consummation of a Corporate Transaction following which more
than 50% of, respectively, the shares then outstanding of common stock of the
corporation resulting from such acquisition or Corporate Transaction and the
combined voting power of the voting securities then outstanding of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were Beneficial Owners, respectively, of the
Company Common Stock Outstanding and Company Voting Securities Outstanding
immediately prior to such acquisition or Corporate Transaction in substantially
the same proportions as their ownership, immediately prior to such acquisition
or Corporate Transaction, of the Company Common Stock Outstanding and Company
Voting Securities Outstanding, as the case may be.
(c) Definition of "Change in Control Price." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash and
fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any transaction triggering the Change in
Control under Section 9(b)(ii) hereof or any liquidation of shares following a
sale of substantially all assets of the Company, or (ii) the highest Fair Market
Value per share at any time during the 60-day period preceding and 60-day period
following the Change in Control.
10. GENERAL PROVISIONS.
(a) Compliance With Legal and Other Requirements. The Company may, to
the extent deemed necessary or advisable by the Committee, postpone the issuance
or delivery of
16
<PAGE> 20
Stock or payment of other benefits under any Award until completion of such
registration or qualification of such Stock or other required action under any
federal or state law, rule or regulation, listing or other required action with
respect to any stock exchange or automated quotation system upon which the Stock
or other Company securities are listed or quoted, or compliance with any other
obligation of the Company, as the Committee may consider appropriate, and may
require any Participant to make such representations, furnish such information
and comply with or be subject to such other conditions as it may consider
appropriate in connection with the issuance or delivery of Stock or payment of
other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations.
(b) Limits on Transferability; Beneficiaries. No Award or other right
or interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Company or a subsidiary), or assigned
or transferred otherwise than by will or the laws of descent and distribution or
to a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant
only by the Participant or his or her guardian or legal representative. The
foregoing notwithstanding, the Committee may provide that Awards (or rights or
interests therein), other than ISOs and SARs in tandem therewith, shall be
transferable (and otherwise not subject to limitations under this Section
10(b)), including permitting transfers to a Participant's immediate family
members (i.e., spouse, children, grandchildren, or siblings, as well as the
Participant), to trusts for the benefit of such immediate family members, and to
partnerships in which such family members are the only parties, or other
transfers deemed by the Committee to be not inconsistent with the purposes of
the Plan, subject to any terms and conditions which the Committee may impose
thereon. A Beneficiary, transferee, or other person claiming any rights under
the Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award agreement applicable to such Participant,
except as otherwise determined by the Committee, and to any additional terms and
conditions deemed necessary or appropriate by the Committee.
(c) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the rights of Participants under the Plan, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards, and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award; provided, in each case, that, with
respect to ISOs and SARs relating thereto, no such adjustment shall be
authorized or made to the extent that such authority or
17
<PAGE> 21
the making of such adjustment would cause the Plan or the ISO not to comply with
Section 422 of the Code. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
(including Performance Awards and performance goals, and Annual Incentive Awards
and any Annual Incentive Award pool or performance goals relating thereto) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence, as well as acquisitions and
dispositions of businesses and assets) affecting the Company, any subsidiary, or
any business unit, or the financial statements of the Company or any subsidiary,
or in response to changes in applicable laws, regulations, acounting principles,
tax rates and regulations, or business conditions or in view of the Committee's
assessment of the business strategy of the Company, any subsidiary or business
unit thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other circumstances
deemed relevant; provided that no such adjustment shall be authorized or made if
and to the extent that such authority or the making of such adjustment would
cause Options, SARs, Performance Awards granted under Section 8(b) hereof, or
Annual Incentive Awards granted under Section 8(c) hereof to Participants
designated by the Committee as Covered Employees as defined in Section 8(e)
hereof, to otherwise fail to qualify as "performance-based compensation" under
Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate the Plan or the Committee's authority to grant
Awards under the Plan without the consent of stockholders or Participants,
except that any amendment or alteration to the Plan shall be subject to the
approval of the Company's stockholders not later than the annual meeting next
following such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; provided that, without the
consent of an affected Participant, no such Board action may materially and
adversely affect the rights of such Participant under any previously granted and
outstanding Award. The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue or terminate any Award theretofore granted
and any Award agreement relating thereto, except as otherwise provided in the
Plan; provided that, without the consent of an affected Participant, no such
Committee action may materially and adversely affect the rights of such
Participant under such Award. Notwithstanding anything in the Plan to
18
<PAGE> 22
the contrary, if any right under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that would, but for the right
hereunder, be eligible for such accounting treatment, the Committee may modify
or adjust the right so that pooling of interest accounting shall be available,
including the substitution of Stock having a Fair Market Value equal to the cash
otherwise payable hereunder for the right which caused the transaction to be
ineligible for pooling of interest accounting.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ of the Company or a subsidiary, (ii) interfering in any way with the
right of the Company or a subsidiary to terminate any Eligible Person's or
Participant's employment at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant has validly exercised an Option or is otherwise duly issued or
transferred shares of Stock in accordance with the terms of the Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other property, or
make other arrangements to meet the Company's obligations under the Plan. Such
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan, unless the Committee otherwise determines with the consent of each
affected Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify and in accordance with
applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable, including incentive arrangements and awards which do not qualify
under Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other consideration. No
fractional shares of Stock shall be issued or delivered pursuant to the Plan or
any Award. The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
19
<PAGE> 23
(j) Governing Law. The validity, construction and effect of the Plan,
any rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the Delaware General Corporation Law, to the
extent applicable, other laws (including those governing contracts) of the State
of Illinois, without giving effect to principles of conflicts of laws, and
applicable federal law.
(k) Awards Under Preexisting Plans. From and after May 16, 1995 (the
date of initial approval of the Plan by stockholders of the Company), no further
Awards shall be granted under any Preexisting Plan, and awards that are
outstanding under the Company's Executive Incentive Compensation Plan effective
as of January 1, 1994 shall be deemed to be Awards under the Plan, provided that
all terms and conditions of such Awards shall be as set forth under such
Executive Incentive Compensation Plan and agreements thereunder, except if and
to the extent such terms and conditions are specifically modified in a writing
executed by the Company and the affected Participant.
(l) Plan Effective Date, Stockholder Approval and Termination. The Plan
became effective on December 18, 1994, subject to the subsequent approval of
stockholders which was obtained May 16, 1995, by a vote sufficient to meet the
requirements of Code Sections 162(m) and 422, Rule 16b-3 under the Exchange Act,
Section 312.03 of the Listed Company Manual of the New York Stock Exchange, and
other laws, regulations, and obligations of the Company applicable to the Plan.
Subject to earlier termination by action of the Board in accordance with Section
10(e) hereof, no Award may be newly granted under the Plan after December 18,
2004, and the Plan will terminate thereafter at such time that the Company has
no further obligations or rights in respect of Awards granted under the Plan.
20
<PAGE> 1
EXHIBIT 4.5
FRUIT OF THE LOOM, INC.
1996 INCENTIVE COMPENSATION PLAN
As Amended and Restated Through May 19, 1998
<PAGE> 2
FRUIT OF THE LOOM, INC.
1996 INCENTIVE COMPENSATION PLAN
As Amended and Restated Through May 19, 1998
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Purpose.........................................................................................1
2. Definitions.....................................................................................1
3. Administration..................................................................................3
(a) Authority of the Committee.............................................................3
(b) Manner of Exercise of Committee Authority..............................................3
(c) Limitation of Liability................................................................4
4. Stock Subject to Plan...........................................................................4
(a) Overall Number of Shares Available for Delivery........................................4
(b) Application of Limitation to Grants of Awards..........................................4
(c) Source of Shares Delivered Under the Plan..............................................4
5. Eligibility.....................................................................................5
6. Specific Terms of Awards........................................................................5
(a) General................................................................................5
(b) Options................................................................................5
(c) Stock Appreciation Rights..............................................................6
(d) Restricted Stock.......................................................................6
(e) Deferred Stock.........................................................................7
(f) Bonus Stock and Awards in Lieu of Obligations..........................................8
(g) Dividend Equivalents...................................................................8
(h) Other Stock-Based Awards...............................................................8
7. Certain Provisions Applicable to Awards.........................................................8
(a) Stand-Alone, Additional, Tandem, and Substitute Awards.................................8
(b) Term of Awards.........................................................................9
(c) Form and Timing of Payment Under Awards; Deferrals.....................................9
8. Performance Awards..............................................................................9
(a) Performance Conditions.................................................................9
(b) Annual Incentive Awards................................................................9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
9. Change in Control..............................................................................10
(a) Effect of "Change in Control."........................................................10
(b) Definition of "Change in Control......................................................11
(c) Definition of "Change in Control Price."..............................................12
10. General Provisions.............................................................................12
(a) Compliance With Legal and Other Requirements..........................................12
(b) Limits on Transferability; Beneficiaries..............................................12
(c) Adjustments...........................................................................13
(d) Taxes.................................................................................13
(e) Changes to the Plan and Awards........................................................14
(f) Limitation on Rights Conferred Under Plan.............................................14
(g) Unfunded Status of Awards; Creation of Trusts.........................................14
(h) Nonexclusivity of the Plan............................................................14
(i) Payments in the Event of Forfeitures; Fractional Shares...............................15
(j) Governing Law.........................................................................15
(k) Plan Effective Date and Termination...................................................15
</TABLE>
<PAGE> 4
FRUIT OF THE LOOM, INC.
1996 INCENTIVE COMPENSATION PLAN
AS AMENDED AND RESTATED MAY 19, 1998
1. PURPOSE. The purpose of this 1996 Incentive Compensation Plan (the
"Plan") is to assist Fruit of the Loom, Inc., a Delaware corporation (the
"Company"), and its subsidiaries in attracting, retaining, and rewarding high
quality employees, other than executive officers, and certain other persons who
provide services to the Company, enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's stockholders, and providing
such persons with performance incentives to expend their maximum efforts in the
creation of long-term stockholder value.
2. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof:
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(b) hereof to receive a cash payment, unless
otherwise determined by the Committee, after the end of a specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, Deferred Stock, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof If, upon a
Participant's death, there is no designated Beneficiary or surviving designated
Beneficiary, then the term Beneficiary means the person, persons, trust or trust
entitled by will or the laws of descent and distribution to receive such
benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" means a Change in Control as defined with
related terms in Section 9 of the Plan.
(g) "Change in Control Price" means the amount calculated in accordance
with Section 9(c) of the Plan.
<PAGE> 5
(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "Committee" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan.
(j) "Corporate Transaction" means a transaction as defined in Section
9(b) of the Plan.
(k) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified deferral period.
(1) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g), to receive cash, Stock, other Awards or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments.
(m) "Effective Date" means February 21, 1996, the effective date of the
Plan. This Plan has been amended and restated as of May 19, 1998.
(n) "Eligible Person" means any employee of the Company or any
subsidiary or consultant or other person who provides substantial services to
the Company or any subsidiary, provided that no person who is an Executive
Officer of the Company or a member of the Compensation Committee or other
committee that administers the 1995 Plan or any successor plan shall be shall be
an Eligible Person.
(o) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(q) "Fair Market Value" means the fair market value of Stock Awards, or
other property as determined by the Committee or under procedures established by
the Committee. Unless otherwise determined by the Committee, the Fair Market
Value of Stock as of any given date shall be the closing sale price per share
reported on a consolidated basis for stock listed on the principal stock
exchange or market on which Stock is traded on the date as of which such value
is being determined or, if there is no sale on that date, then on the last
previous day on which a sale was reported.
(r) "Incumbent Board" means the Board as defined in Section 9(b) of the
Plan.
(s) "Limited SAR" means a right granted to a Participant under Section
6(c) thereof.
(t) "1995 Plan" means the Company's 1995 Executive Incentive
Compensation Plan.
2
<PAGE> 6
(u) "Option" means a right, granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.
(v) "Other Stock Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(w) "Participant" means a person who has been granted an Award under
the Plan, including a person who is no longer an Eligible Person.
(x) "Performance Award" means a right, granted to a Participant under
Section 8 hereof, to receive Awards based upon performance criteria specified by
the Committee.
(y) "Person" will have the meaning assigned in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, and includes a
"group" as defined in Section 13(d) thereof.
(z) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(aa) "Stock" means the Company's Class A Common Stock and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
(bb) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
3. ADMINISTRATION.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to select Eligible
Persons to become Participants, grant Awards, determine the type, number, and
other terms and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each Participant)
and rules and regulations for the administration of the Plan, construe and
interpret the Plan and Award agreements and correct defects, supply omissions,
or reconcile inconsistencies therein, and to make all other decisions and
determinations as the Committee may deem necessary or advisable for the
administration of the Plan.
(b) Manner of Exercise of Committee Authority. The Committee may
delegate to officers or managers of the Company or any subsidiary, or committees
thereof, the authority, subject to such terms as the Committee shall determine,
to perform such functions as the Committee may determine, to the extent
permitted under applicable law. The Committee also may appoint agents to assist
it in administering the Plan. Any action of the Committee or its delegate shall
be final, conclusive and binding on all persons, including the Company, its
subsidiaries, Participants, Beneficiaries, transferees under Section 10(b)
hereof or other persons claiming rights from or through a Participant, and
stockholders, except that action by any delegate shall be subject
3
<PAGE> 7
to oversight by the Committee. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee.
(c) Limitation of Liability. The Committee, each member thereof, and
each delegate or member of a committee which acts as a delegate shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any executive officer, other officer or employee of
the Company or a subsidiary, the Company's independent auditors, consultants or
any other agents assisting in the administration of the Plan, and the Committee,
each member thereof, each delegate or member of a committee which acts as a
delegate, and any officer or employee of the Company or a subsidiary acting at
the direction or on behalf of the Committee or delegate shall not be personally
liable for any action or determination taken or made in good faith with respect
to the Plan, and shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action or determination.
4. STOCK SUBJECT TO PLAN.
(a) Overall Number of Shares Available for Delivery. Subject to
adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock reserved and available for delivery in connection with Awards under the
Plan shall be 3,000,000.
(b) Application of Limitation to Grants of Awards. For purposes of the
Plan, the counting of shares of Stock delivered shall be consistent with the
manner in which shares are so counted under the 1995 Plan. No Award may be
granted if the number of shares of Stock to be delivered in connection with such
Award or, in the case of an Award relating to shares of Stock but settleable
only in cash (such as cash-only SARs), the number of shares to which such Award
relates, exceeds the number of shares of Stock remaining available under the
Plan minus the number of shares of Stock relating to then-outstanding cash-only
Awards. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments if the number of shares of
Stock actually delivered differs from the number of shares previously counted in
connection with an Award.
(c) Source of Shares Delivered Under the Plan. Any shares of Stock
delivered under the Plan may consist, in whole or in part, of authorized and
unissued shares or treasury shares, except as otherwise provided in this Section
4(c). If, at the time shares of Stock are to be delivered under the Plan to a
Participant (including upon exercise of an Option), the shares are listed on the
New York Stock Exchange and such Participant is a "director" or "officer" of the
Company within the meaning of Sections 312.03 and 703.09 of the Listed Company
Manual of the New York Stock Exchange, such that the Participant's acquisition
of shares originally issued by the Company would be subject to the requirement
of stockholder approval under then-applicable Exchange rules, the shares to be
distributed to such Participant shall consist only of either shares issued under
the 1995 Plan, if so specified by the committee then administering the 1995
Plan, or treasury shares then held by the Company. The Company shall use its
best efforts to obtain and have available, at any time that such treasury shares
are required to be distributed in connection with an Award, a sufficient number
of treasury shares, not reserved for other uses, to be able to make prompt
delivery in connection with any such Award.
4
<PAGE> 8
5. ELIGIBILITY. Awards may be granted under the Plan only to
Eligible Persons.
6. SPECIFIC TERMS OF AWARDS.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
10(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by the
Participant and terms permitting a Participant to make elections relating to his
or her Award. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an Award that
is not mandatory under the Plan. Except in cases in which the Committee is
authorized to require other forms of consideration under the Plan, or to the
extent other forms of consideration must by paid to satisfy the requirements of
the Delaware General Corporation Law, no consideration other than services may
be required for the grant (but not the exercise) of any Award.
(b) Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee,
provided that such exercise price shall be not less than the Fair
Market Value of a share of Stock on the date of grant of such Option
except as provided under Section 7(a) hereof.
(ii) Time and Method of Exercise. The Committee shall
determine the time or times at which or the circumstances under which
an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements),
the methods by which such exercise price may be paid or deemed to be
paid, the form of such payment, including, without limitation, cash,
Stock, other Awards or, awards granted under other plans of the Company
or any subsidiary, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred
basis), and the methods by or forms in which Stock will be delivered or
deemed to be delivered to Participants.
(iii) Non-Qualified Stock Options. All options granted under
the plan shall be non-qualified stock options, and shall not be
incentive stock options as defined under Section 422 of the Code.
(c) Stock Appreciation Rights. The Committee is authorized to grant
SAR's to Participants on the following terms and conditions:
5
<PAGE> 9
(i) Right to Payment. A SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of Stock on the date
of exercise (or, in the case of a "Limited SAR, " the Fair Market Value
determined by reference to the Change in Control Price, as defined
under Section 9(c) hereof), over (B) the grant price of the SAR as
determined by the Committee, provided that such grant price shall be
not less than the Fair Market Value of a share of Stock on the date of
grant of such SAR except as provided under Section 7(a) hereof.
(ii) Other Terms. The Committee shall determine at the date of
grant or thereafter, the time or times at which and the circumstances
under which a SAR may be exercised in whole or in part (including based
on achievement of performance goals and/or future service
requirements), the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Stock
will be delivered or deemed to be delivered to Participants, whether or
not a SAR shall be in tandem or in combination with any other Award,
and any other terms and conditions of any SAR. Limited SARs that may
only be exercised in connection with a Change in Control or other event
as specified by the Committee may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may determine.
SARs and Limited SARs may be either freestanding or in tandem with
other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject
to such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose, which restrictions
may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or otherwise,
as the Committee may determine at the date of grant or thereafter.
Except to the extent restricted under the terms of the Plan and any
Award agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder,
including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or
other requirement imposed by the Committee). During the restricted
period applicable to the Restricted Stock, subject to Section 10(b)
below, the Restricted Stock may not be sold, transferred, pledged,
hypothecated, margined or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; provided
that the Committee may provide, by rule or regulation or in any Award
agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Stock will be waived in
whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
the forfeiture of Restricted Stock.
6
<PAGE> 10
(iii) Certificates for Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Stock are registered
in the name of the Participant, the Committee may require such
certificates to bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock, that
the Company retain physical possession of the certificates, or that the
Participant deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an
Award of Restricted Stock, the Committee may require that any cash
dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise
determined by the Committee, Stock distributed in connection with a
Stock split or Stock dividend, and other property distributed as a
dividend, shall be subject to restrictions and a risk of forfeiture to
the same extent as the Restricted Stock with respect to which such
Stock or other property has been distributed.
(e) Deferred Stock. The Committee is authorized to grant Deferred Stock
to Participants, which are rights to receive Stock, cash, or a combination
thereof at the end of a specified deferral period, subject to the following
terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of
Deferred Stock will occur upon expiration of the deferral period
specified for such Deferred Stock by the Committee (or, if permitted by
the Committee, as elected by the Participant). In addition, Deferred
Stock shall be subject to such restrictions (which may include a risk
of forfeiture) as the Committee may impose, if any, which restrictions
may lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals
and/or future service requirements), separately or in combination, in
installments or otherwise, as the Committee may determine. Deferred
Stock may be satisfied by delivery of Stock, cash equal to the Fair
Market Value of the specified number of shares of Stock covered by the
Deferred Stock, or a combination thereof, as determined by the
Committee at the date of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment during the applicable
deferral period or portion thereof to which forfeiture conditions apply
(as provided in the Award agreement evidencing the Deferred Stock), all
Deferred Stock that is at that time subject to deferral (other than a
deferral at the election of the Participant) shall be forfeited;
provided that the Committee may provide, by rule or regulation or in
any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Deferred Stock will
be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in
whole or in part the forfeiture of Deferred Stock.
(iii) Dividend Equivalents. Unless otherwise determined by
the Committee at date of grant, Dividend Equivalents on the specified
number of shares of Stock covered by
7
<PAGE> 11
an Award of Deferred Stock will be either (A) paid with respect to such
Deferred Stock at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of
such dividends, or (B) deferred with respect to such Deferred Stock and
the amount or value thereof automatically deemed reinvested in
additional Deferred Stock, other Awards, or other investment vehicles,
as the Committee shall determine or permit the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu.
of Company obligations to pay cash or deliver other property under other plans
or compensatory arrangements. Stock or Awards granted hereunder shall be subject
to such other terms as shall be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents will be paid
or distributed when, accrued or will be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified
subsidiaries. The Committee shall determine the terms and conditions of such
Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
subsidiary, or any business entity to be acquired by the Company or a
subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the
8
<PAGE> 12
Committee shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be granted
in lieu of cash compensation, including in lieu of cash amounts payable under
other plans of the Company or any subsidiary, in which the value of Stock
subject to the Award is equivalent in value to the cash compensation (for
example, Deferred Stock or Restricted Stock), or in which the exercise price,
grant price or purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying Stock minus the
value of the cash compensation surrendered (for example, Options granted with an
exercise price "discounted" by the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee.
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by the
Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and cash
paid in lieu of Stock in connection with such settlement, in the discretion of
the Committee or upon occurrence of one or more specified events (in addition to
a Change in Control). Installment or deferred payments may be required by the
Committee (subject to Section 10(e) of the Plan) or permitted at the election of
the Participant. Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred payments
or the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.
8. PERFORMANCE AWARDS.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions.
(b) Annual Incentive Awards. The Committee may grant Annual Incentive
Awards to Eligible Persons, which Awards shall represent a conditional right to
receive a payment in cash, unless otherwise determined by the Committee, after
the end of a specified fiscal year, in accordance with this Section 8(b).
(i) Annual Incentive Award Pool. The Committee may establish
an Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool shall
be based upon the achievement of a performance goal or goals specified
by the Committee. The Committee may specify the amount of the Annual
Incentive Award pool as a percentage of any of such business criteria,
a percentage
9
<PAGE> 13
thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business
criteria.
(ii) Potential Annual Incentive Awards. The Committee shall
determine the Eligible Persons who will potentially receive Annual
Incentive Awards for a given fiscal year, either out of an Annual
Incentive Award pool established for that fiscal year or as individual
Annual Incentive Awards. The amount potentially payable shall be based
upon the achievement of a performance goal or goals based on such
criteria as shall be established by the Committee.
(iii) Payout of Annual Incentive Awards. After the end of each
fiscal year, the Committee shall determine the amount, if any, of (A)
the Annual Incentive Award pool, and the maximum amount of potential
Annual Incentive Award payable to each Participant in the Annual
Incentive Award pool, or (B) the amount of potential Annual Incentive
Award otherwise payable to each Participant. The Committee may, in its
discretion, determine that the amount payable to any Participant as a
final Annual Incentive Award shall be increased or reduced from the
amount of his or her potential Annual Incentive Award, including a
determination to make no final Award whatsoever. The Committee shall
specify the circumstances in which an Annual Incentive Award shall be
forfeited in the event of termination of employment by the Participant
prior to the end of a fiscal year or the payout of such Annual
Incentive Award, and other terms relating to such Annual Incentive
Award in accordance with the Plan.
9. CHANGE IN CONTROL.
(a) Effect of "Change in Control." In the event of a "Change in
Control," as defined in Section 9(b), the following provisions shall apply:
(i) Any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable and
vested as of the time of the Change in Control and shall remain
exercisable and vested for the balance of the stated term of such Award
without regard to any termination of employment by the Participant,
subject only to the restrictions set forth in Section 10(a) hereof;
(ii) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan shall
lapse and such Awards shall be deemed fully vested as of the time of
the Change in Control, except to the extent of any waiver by the
Participant and subject to the restrictions set forth in Section 10(a)
hereof; and
(iii) With respect to any outstanding Award subject to
achievement of performance goals and conditions under the Plan, such
performance goals and other conditions will be deemed to be met if and
to the extent so provided by the Committee in the Award agreement
relating to such Award.
10
<PAGE> 14
(b) Definition of "Change in Control." A "Change in Control" shall be
deemed to have occurred if:
(i) An acquisition by any Person of Beneficial Ownership of
the shares of Common Stock of the Company then outstanding (the
"Company Common Stock Outstanding") or the voting securities of the
Company then outstanding entitled to vote generally in the election of
directors (the "Company Voting Securities Outstanding"); provided,
however, that such acquisition of Beneficial Ownership would result in
the Person's Beneficially Owning 25% or more of the Company Common
Stock Outstanding or 25% or more of the combined voting power of the
Company Voting Securities Outstanding; and provided further, that
immediately prior to such acquisition such Person was not a direct or
indirect Beneficial Owner of 25% or more of the Company Common Stock
Outstanding or 25% or more of the combined voting power of Company
Voting Securities Outstanding, as the case may be; or
(ii) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or
dissolution of the Company, sale or disposition of all or substantially
all of the assets of the Company, or similar corporate transaction (in
each case referred to in this Section 9(b) as a "Corporate
Transaction") or, if consummation of such Corporate Transaction is
subject, at the time of such approval by stockholders, to the consent
of any government or governmental agency, the obtaining of such consent
(either explicitly or implicitly); provided, however, that any merger,
consolidation, sale, disposition or other similar transaction to or
with William Farley or entities controlled by him shall not constitute
a Corporate Transaction; or
(iii) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such
Board shall be hereinafter referred to as the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section 9(b), that any
individual who becomes a member of the Board subsequent to the
Effective Date whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority
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; but, provided, further, that any such individual
whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act, including any
successor to such Rule) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board
shall not be so considered as a member of the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii)
of this Section 9(b), the following shall not constitute a Change in Control for
purposes of the Plan: (1) any acquisition by or consummation of a Corporate
Transaction with any subsidiary of the Company or an employee benefit plan (or
related trust) sponsored or maintained by the Company or an affiliate; or (2)
any acquisition or consummation of a Corporate Transaction following which more
than
11
<PAGE> 15
50% of, respectively, the shares then outstanding of common stock of the
corporation resulting from such acquisition or Corporate Transaction and the
combined voting power of the voting securities then outstanding of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were Beneficial Owners, respectively, of the
Company Common Stock Outstanding and Company Voting Securities Outstanding
immediately prior to such acquisition or Corporate Transaction in substantially
the same proportions as their ownership, immediately prior to such acquisition
or Corporate Transaction, of the Company Common Stock Outstanding and Company
Voting Securities Outstanding, as the case may be.
(c) Definition of "Change in Control Price." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash and
fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any transaction triggering the Change in
Control under Section 9(b)(ii) hereof or any liquidation of shares following a
sale of substantially all assets of the Company, or (ii) the highest Fair Market
Value per share at any time during the 60-day period preceding and 60-day period
following the Change in Control.
10. GENERAL PROVISIONS.
(a) Compliance With Legal and Other Requirements. The Company may, to
the extent deemed necessary or advisable by the Committee, postpone the issuance
or delivery of Stock or payment of other benefits under any Award until
completion of such registration or qualification of such Stock or other required
action under any federal or state law, rule, or regulation, listing or other
required action with respect to any stock exchange or automated quotation system
upon which the Stock or other Company securities are listed or quoted, or
compliance with any other obligation of the Company, as the Committee may
consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations. In
addition, the Committee is authorized to modify Awards that are then held by a
Participant who has become or is expected to become subject to Section 16 of the
Exchange Act with respect to the Company to limit the risk to such Participant
of incurring liability under Section 16(b) while substantially maintaining the
value of the Award to such Participant.
(b) Limits on Transferability; Beneficiaries. No Award or other right
or interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Company or a subsidiary), or assigned
or transferred by such Participant otherwise than by will or the laws of
descent and distribution or to a Beneficiary upon the death of a Participant,
and such Awards or rights that may be exercisable shall be exercised during the
lifetime of the Participant only by the Participant or his or her guardian or
legal representative, except that Awards and other rights may be transferred to
one or more Beneficiaries or other transferees during the lifetime of the
Participant in connection with the Participant's estate planning, and may be
exercised by such transferees in accordance with the terms of such Award, but
only if and to the extent such transfers are then
12
<PAGE> 16
consistent with the registration of the offer and sale of Stock on Form S-8 or a
successor registration form of the Securities and Exchange Commission or such
other form of registration statement as has in fact been filed in connection
with the Plan, and permitted by the Committee (subject to any terms and
conditions which the Committee may impose thereon). A Beneficiary, transferee,
or other person claiming any rights under the Plan from or through any
Participant shall be subject to all terms and conditions of the Plan and any
Award agreement applicable to such Participant, except as otherwise determined
by the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.
(c) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the rights of Participants under the Plan, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock subject
to or deliverable in respect of outstanding Awards, and (iii) the exercise
price, grant price, or purchase price relating to any Award and/or make
provision for payment of cash or other property in respect of any outstanding
Award. In addition, the Committee is authorized to make adjustments in the terms
and conditions of, and the criteria included in, Awards (including Performance
Awards and performance goals, and Annual Incentive Awards and any Annual
Incentive Award pool or performance goals relating thereto) in recognition of
unusual or nonrecurring events (including, without limitation, events described
in the preceding sentence, as well as acquisitions and dispositions of
businesses and assets) affecting the Company, any subsidiary, or any business
unit, or the financial statements of the Company or any subsidiary, or in
response to changes in applicable laws, regulations, accounting principles, tax
rates and regulations, or business conditions or in view of the Committee's
assessment of the business strategy of the Company, any subsidiary or business
unit thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other circumstances
deemed relevant.
(d) Taxes. The Company and any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate the Plan or the Committee's authority to grant
Awards under the Plan without the consent of stockholders or Participants;
provided that, without the consent of an affected Participant, no such Board
action may materially and adversely affect the rights of such
13
<PAGE> 17
Participant under any previously granted and outstanding Award. The Committee
may waive any conditions or rights under, or amend, alter, suspend, discontinue
or terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee action may materially and
adversely affect the rights of such Participant under such Award.
Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee may modify or adjust the right so that
pooling of interest accounting shall be available, including the substitution of
Stock having a Fair Market Value equal to the cash otherwise payable hereunder
for the right which caused the transaction to be ineligible for pooling of
interest accounting.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ of the Company or a subsidiary, (ii) interfering in any way with the
right of the Company or a subsidiary to terminate any Eligible Person's or
Participant's employment at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant has validly exercised an Option or is otherwise duly issued or
transferred shares of Stock in accordance with the terms of the Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other property, or
make other arrangements to meet the Company's obligations under the Plan. Such
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify and in accordance with
applicable law.
(h) Nonexclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as creating any limitations on the power of the Board or
a committee thereof to adopt such other incentive arrangements as it may deem
desirable.
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other consideration. No
fractional shares of Stock shall be issued or delivered pursuant to the Plan or
any Award. The Committee shall determine whether cash, other Awards, or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
14
<PAGE> 18
(j) Governing Law. The validity, construction and effect of the Plan,
any rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the Delaware General Corporation Law, to the
extent applicable, other laws (including those governing contracts) of the State
of Illinois, without giving effect to principles of conflicts of laws, and
applicable federal law.
(k) Plan Effective Date and Termination. The Plan shall become
effective on the Effective Date. Subject to earlier termination by action of the
Board in accordance with Section 10(e) hereof, no Award may be newly granted
under the Plan more than ten years after the Effective Date, and the Plan will
terminate thereafter at such time that the Company has no further obligations or
rights in respect of Awards granted under the Plan.
15
<PAGE> 1
EXHIBIT 5
March 4, 1999
Fruit of the Loom, Ltd.
P.O. Box 31311 SMB
Safehaven Corporate Centre
Grand Cayman
Cayman Islands
Dear Sirs:
This opinion is delivered in connection with the Registration Statement
on Form S-8 (the "REGISTRATION STATEMENT") (No. 333-38953) filed with the
Securities and Exchange Commission by Fruit of the Loom, Ltd., a Cayman Islands'
company ("FTL-CAYMAN") under the Securities Act of 1933, as amended (the "ACT"),
relating to the Class A ordinary shares, par value $.01 per share, in the
capital of FTL-Cayman (the "CLASS A SHARES") issuable pursuant to FTL-Cayman's
Fruit of the Loom, Inc. 1995 Executive Incentive Compensation Plan As Amended
and Restated and Fruit of the Loom, Inc. 1996 Executive Incentive Compensation
Plan As Amended and Restated (the "PLAN").
For the purposes of giving this opinion, we have examined the documents
listed in Schedule 1 hereto.
In giving this opinion we have relied upon the assumption set out in
Schedule 2 hereto.
We are Attorneys-at-Law in the Cayman Islands and express no opinion as
to any laws other than the laws of the Cayman Islands in force and as
interpreted at the date hereof. Except as explicitly stated herein, we express
no opinion in relation to any representation or warranty contained in the
documents nor upon the commercial terms of the transactions contemplated by the
documents.
Based upon the foregoing examinations and assumptions and upon such
searches as we have conducted and having regard to legal considerations which we
deem relevant, we are of the opinion that under the law of the Cayman Islands
the Class A Shares have been duly authorized and that the Class A Shares when
issued under the Plan, and in the manner and on the terms described in the
Registration Statement and the Plan will be in accordance with the provisions of
the Memorandum and Articles of Association of FTL-Cayman and the same will be
validly issued and fully paid and non-assessable.
This opinion is limited to the matters referred to herein and shall not
be construed as extending to any other matter or document not referred to
herein. This opinion is governed by and shall be construed in accordance with
the laws of the Cayman Islands.
<PAGE> 2
Fruit of the Loom, Ltd.
March 4, 1999
Page 2
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and all references to our name in the Registration
Statement including, without limitation, under the caption "Legal Matters" in
the prospectus forming a part of the Registration Statement.
Yours faithfully,
Truman Bodden & Company
<PAGE> 3
SCHEDULE 1
1. The Certificate of Incorporation of FTL-Cayman.
2. The Articles of Association of FTL-Cayman.
3. The Memorandum of Association of FTL-Cayman.
4. The Registration Statement.
5. The Agreement and Plan of Merger, dated as of 10th February, 1998 among FTL-
Delaware, FTL-Cayman and Sub.
6. Minutes of a meeting of the board of directors of FTL-Cayman held on 10th
February, 1998.
7. FTL-Cayman's Registration Statement S-4 (Registration No. 333-46007) filed on
10th February, 1998 (and all amendments thereto) (the "S-4 REGISTRATION
STATEMENT").
<PAGE> 4
SCHEDULE 2
1. The Amended and Restated Memorandum of Association and the Amended and
Restated Articles of Association in the form attached to the S-4 Registration
Statement as Exhibit 3.4 and 3.3 respectively will be adopted by Special
Resolution of the shareholder(s) of FTL-Cayman prior to the issue of the
Class A Shares.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Fruit of the Loom, Ltd. Post
Effective Amendment No. 1 to the Registration Statement (Form S-8 No.333-38953)
pertaining to the Fruit of the Loom, Inc. 1995 Executive Incentive Compensation
Plan As Amended and Restated and the Fruit of the Loom, Inc. 1996 Incentive
Compensation Plan As Amended and Restated and in the related Prospectus of our
report dated February 12, 1998, with respect to the consolidated financial
statements and schedule of Fruit of the Loom, Inc. included in its Annual Report
(Form 10-K/A) for the year ended December 31, 1997, and our report dated
February 9, 1998 with respect to the balance sheet of Fruit of the Loom, Ltd.,
included in amendment No. 2 to the Registration Statement (Form S-4 No.
333-46007) of Fruit of the Loom, Ltd., both filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
March 3, 1999
