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EXHIBIT 10.4
TOO, INC.
FIRST AMENDED AND RESTATED
1999 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
(AMENDED MAY 10, 2000)
ARTICLE 1
ESTABLISHMENT AND PURPOSE
SECTION 1.1. Establishment and Effective Date. Too, Inc., a Delaware corporation
(the "COMPANY"), hereby establishes a stock incentive plan to be known as the
"Too, Inc. 1999 Stock Option and Performance Incentive Plan" (the "PLAN"). The
Plan shall become effective on the date The Limited, Inc. distributes (the
"DISTRIBUTION") to its shareholders the Company's common stock, par value $.01
per share (the "COMMON STOCK").
SECTION 1.2. Purpose. The Company desires to attract and retain the best
available executive and key management associates for itself and its
subsidiaries and to encourage the highest level of performance by such
associates in order to serve the best interests of the Company and its
stockholders. The Plan is expected to contribute to the attainment of these
objectives by offering eligible associates the opportunity to acquire stock
ownership interests in the Company, and other rights with respect to stock of
the Company, and to thereby provide them with incentives to put forth maximum
efforts for the success of the Company and its subsidiaries.
ARTICLE 2
AWARDS
SECTION 2.1. Form of Awards. Awards under the Plan may be granted in any one or
all of the following forms: (i) incentive stock options ("INCENTIVE STOCK
OPTIONS") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "CODE"); (ii) nonstatutory stock options ("NONSTATUTORY
STOCK OPTIONS") (unless otherwise indicated, references in the Plan to "OPTIONS"
shall include both Incentive Stock Options and Nonstatutory Stock Options);
(iii) stock appreciation rights ("STOCK APPRECIATION RIGHTS"), as described in
Article 7, which may be awarded either in tandem with Options ("TANDEM STOCK
APPRECIATION RIGHTS") or on a stand-alone basis ("NONTANDEM STOCK APPRECIATION
RIGHTS"); (iv) shares of Common Stock which are restricted as provided in
Article II ("RESTRICTED SHARES"); (v) units representing shares of Common Stock,
as described in Article 12 ("PERFORMANCE SHARES"); (vi) units which do not
represent shares of Common Stock but which may be paid in the form of Common
Stock, as described in Article 13 ("PERFORMANCE UNITS"); (vii) shares of
unrestricted Common Stock ("UNRESTRICTED SHARES"); and (viii) tax offset
payments ("TAX OFFSET PAYMENTS"), as described in Article 15.
SECTION 2.2. Maximum Shares Available. The maximum aggregate number of shares of
Common Stock available for award under the Plan is 3,750,000 subject to
adjustment pursuant to Article 16. In addition, Tax Offset Payments which may be
awarded under the Plan will not exceed the number of shares available for
issuance under the Plan. Shares of Common Stock issued pursuant to the Plan may
be either authorized but unissued shares or issued shares reacquired by the
Company. In the event that prior to the end of the period during which Options
may be granted under the Plan, any Option or any Nontandem
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Stock Appreciation Right under the Plan expires unexercised or is terminated,
surrendered or canceled (other than in connection with the exercise of a Stock
Appreciation Right) without being exercised in whole or in part for any reason,
or any Restricted Shares, Performance Shares or Performance Units are forfeited,
or if such awards are settled in cash in lieu of shares of Common Stock, then
such shares or units may, at the discretion of the Committee (as defined below)
to the extent permissible under Rule 16b-3 under the Securities Exchange Act of
1934 (the "ACT"), be made available for subsequent awards under the Plan, upon
such terms as the Committee may determine.
SECTION 2.3. Return of Prior Awards. As a condition to any subsequent award, the
Committee shall have the right, at its discretion, to require associates to
return to the Company awards previously granted under this Plan. Subject to the
provisions of this Plan, such new award shall be upon such terms and conditions
as are specified by the Committee at the time the new award is granted to the
extent permitted by Rule 16b-3 under the Act.
ARTICLE 3
ADMINISTRATION
SECTION 3.1. Committee. The Plan shall be administered by a Committee (the
"COMMITTEE") appointed by the Board and consisting of not less than two (2)
members of the Board. Each member of the Committee shall be an "outside
director" (within the meaning of Section 162(m) of the Code) and a "non-employee
director" (within the meaning of Rule l6b-3(b)(3)(i) under the Act).
SECTION 3.2. Powers of Committee. Subject to the express provisions of the Plan,
the Committee shall have the power and authority (i) to grant Options and to
determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option; (ii) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options and to determine which Options, if any, shall be accompanied by
Tandem Stock Appreciation Rights; (iii) to grant Tandem Stock Appreciation
Rights and Nontandem Stock Appreciation Rights and to determine the terms and
conditions of such rights; (iv) to grant Restricted Shares and to determine the
term of the restricted period and other conditions and restrictions applicable
to such shares; (v) to grant Performance Shares and Performance Units and to
determine the performance objectives, performance periods and other conditions
applicable to such shares or units; (vi) to grant Unrestricted Shares; (vii) to
determine the amount of, and to make, Tax Offset Payments; and (viii) to
determine the associates to whom, and the time or times at which, Options, Stock
Appreciation Rights, Restricted Shares, Performance Shares, Performance Units
and Unrestricted Shares shall be granted.
SECTION 3.3. Delegation. The Committee may delegate to one or more of its
members or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation will cause (i) transactions under
the Plan to fail to comply with Section 16 of the Act or (ii) the Committee to
fail to qualify as "outside directors" under Section 162(m) of the Code. The
Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.
SECTION 3.4. Interpretations. The Committee shall have sole discretionary
authority to interpret the terms of the Plan, to adopt and revise rules,
regulations and policies to administer the Plan and to make any other factual
determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Company, all associates who have received awards under the Plan and all
other interested persons.
SECTION 3.5. Liability; Indemnification. No member of the Committee, nor any
person to whom duties have been delegated, shall be personally liable for any
action, interpretation or determination made with respect to the Plan or awards
made thereunder, and each member of the Committee shall be fully indemnified and
protected by the Company with respect to any
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liability he or she may incur with respect to any such action, interpretation or
determination, to the extent permitted by applicable law and to the extent
provided in the Company's Certificate of Incorporation and Bylaws, as amended
from time to time.
ARTICLE 4
ELIGIBILITY
Awards shall be limited to executive and key management associates who are
regular, full-time associates of the Company and its present and future
subsidiaries. In determining the associates to whom awards shall be granted and
the number of shares to be covered by each award, the Committee shall take into
account the nature of the services rendered by such associates, their present
and potential contributions to the success of the Company and its subsidiaries
and such other factors as the Committee in its sole discretion shall deem
relevant. As used in this Plan, the term "SUBSIDIARY" shall mean any corporation
which at the time qualifies as a subsidiary of the Company under the definition
of "subsidiary corporation" set forth in Section 424(f) of the Code, or any
successor provision hereafter enacted. No associate may be granted in any
calendar year awards covering more than 1,100,000 shares of Common Stock.
ARTICLE 5
STOCK OPTIONS
SECTION 5.1. Grant of Options. Options may be granted under this Plan for the
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.
SECTION 5.2. Option Price. The option price of each Option to purchase Common
Stock shall be determined by the Committee at the time of the grant, but shall
not be less than 100 percent of the fair market value of the Common Stock
subject to such Option at the time of grant. The option price so determined
shall also be applicable in connection with the exercise of any Tandem Stock
Appreciation Right granted with respect to such Option. The exercise price of an
option previously granted under the Plan shall not thereafter be reduced other
than pursuant to the provisions of Article 17 or Article 18.
SECTION 5.3. Term of Options. The term of each Option granted under the Plan
shall not exceed ten (10) years from the date of grant, subject to earlier
termination as provided in Articles 9 and 10, except as otherwise provided in
Section 6.1 with respect to ten (10) percent stockholders of the Company.
SECTION 5.4. Exercise of Options. An Option may be exercised, in whole or in
part, at such time or times as the Committee shall determine. The Committee may,
in its discretion, accelerate the exercisability of any Option at any time.
Options may be exercised by an associate by giving written notice to the
Committee stating the number of shares of Common Stock with respect to which the
Option is being exercised and tendering payment therefor. Payment for the Common
Stock issuable upon exercise of the Option shall be made in full in cash or by
certified check or, if the Committee, in its sole discretion, permits, in shares
of Common Stock (valued at fair market value on the date of exercise). As soon
as reasonably practicable following such exercise, a certificate representing
the shares of Common Stock purchased, registered in the name of the associate,
shall be delivered to the associate.
SECTION 5.5. Cancellation of Stock Appreciation Rights. Upon exercise of all or
a portion of an Option, the related Tandem Stock Appreciation Rights shall be
canceled with respect to an equal number of shares of Common Stock.
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ARTICLE 6
SPECIAL RULES APPLICABLE TO INCENTIVE STOCK OPTIONS
SECTION 6.1. Ten Percent Stockholder. Notwithstanding any other provision of
this Plan to the contrary, no associate may receive an Incentive Stock Option
under the Plan if such associate, at the time the award is granted, owns (after
application of the rules contained in Section 424(d) of the Code) stock
possessing more than ten (10) percent of the total combined voting power of all
classes of stock of the Company or its subsidiaries, unless (i) the option price
for such Incentive Stock Option is at least 110 percent of the fair market value
of the Common Stock subject to such Incentive Stock Option on the date of grant
and (ii) such Option is not exercisable after the date five (5) years from the
date such Incentive Stock Option is granted.
SECTION 6.2. Limitation on Grants. The aggregate fair market value (determined
with respect to each Incentive Stock Option at the time such Incentive Stock
Option is granted) of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an associate during any
calendar year (under this Plan or any other plan of the Company or a subsidiary)
shall not exceed $100,000.
SECTION 6.3. Limitations on Time of Grant. No grant of an Incentive Stock Option
shall be made under this Plan more than ten (10) years after the earlier of the
date of adoption of the Plan by the Board or the date the Plan is approved by
stockholders.
ARTICLE 7
STOCK APPRECIATION RIGHTS
SECTION 7.1. Grants of Stock Appreciation Rights. Tandem Stock Appreciation
Rights may be awarded by the Committee in connection with any Option granted
under the Plan, either at the time the Option is granted or thereafter at any
time prior to the exercise, termination or expiration of the Option. Nontandem
Stock Appreciation Rights may also be granted by the Committee at any time. At
the time of grant of a Nontandem Stock Appreciation Right, the Committee shall
specify the number of shares of Common Stock covered by such right and the base
price of shares of Common Stock to be used in connection with the calculation
described in Section 7.04 below. The base price of a Nontandem Stock
Appreciation Right shall be not less than 100 percent of the fair market value
of a share of Common Stock on the date of grant. Stock Appreciation Rights shall
be subject to such terms and conditions not inconsistent with the other
provisions of this Plan as the Committee shall determine.
SECTION 7.2. Limitations on Exercise. A Tandem Stock Appreciation Right shall be
exercisable only to the extent that the related Option is exercisable and shall
be exercisable only for such period as the Committee may determine (which period
may expire prior to the expiration date of the related Option). Upon the
exercise of all or a portion of Tandem Stock Appreciation Rights, the related
Option shall be canceled with respect to an equal number of shares of Common
Stock. Shares of Common Stock subject to Options, or portions thereof,
surrendered upon exercise of a Tandem Stock Appreciation Right, shall not be
available for subsequent awards under the Plan. A Nontandem Stock Appreciation
Right shall be exercisable during such period as the Committee shall determine.
SECTION 7.3. Surrender or Exchange of Tandem Stock Appreciation Rights. A Tandem
Stock Appreciation Right shall entitle the associate to surrender to the Company
unexercised the related option, or any portion thereof, and to receive from the
Company in exchange therefor that number of shares of Common Stock having an
aggregate fair market value equal to (A) the excess of (i) the fair market value
of one (1) share of Common Stock as of the date the Tandem Stock Appreciation
Right is exercised over (ii) the option price per share specified in such
Option, multiplied by (B) the number of shares of Common Stock subject to the
Option, or portion thereof, which is surrendered. Cash shall be delivered in
lieu of any fractional shares.
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SECTION 7.4. Exercise of Nontandem Stock Appreciation Rights. The exercise of a
Nontandem Stock Appreciation Right shall entitle the associate to receive from
the Company that number of shares of Common Stock having an aggregate fair
market value equal to (A) the excess of (i) the fair market value of one (1)
share of Common Stock as of the date on which the Nontandem Stock Appreciation
Right is exercised over (ii) the base price of the shares covered by the
Nontandem Stock Appreciation Right, multiplied by (B) the number of shares of
Common Stock covered by the Nontandem Stock Appreciation Right, or the portion
thereof being exercised. Cash shall be delivered in lieu of any fractional
shares.
SECTION 7.5. Settlement of Stock Appreciation Rights. As soon as is reasonably
practicable after the exercise of a Stock Appreciation Right, the Company shall
(i) issue, in the name of the associate, stock certificates representing the
total number of full shares of Common Stock to which the associate is entitled
pursuant to Section 7.03 or 7.04 hereof, and cash in an amount equal to the fair
market value, as of the date of exercise, of any resulting fractional shares,
and (ii) if the Committee causes the Company to elect to settle all or part of
its obligations arising out of the exercise of the Stock Appreciation Right in
cash pursuant to Section 7.06, deliver to the associate an amount in cash equal
to the fair market value, as of the date of exercise, of the shares of Common
Stock it would otherwise be obligated to deliver.
SECTION 7.6. Cash Settlement. The Committee, in its discretion, may cause the
Company to settle all or any part of its obligation arising out of the exercise
of a Stock Appreciation Right by the payment of cash in lieu of all or part of
the shares of Common Stock it would otherwise be obligated to deliver in an
amount equal to the fair market value of such shares on the date of exercise.
ARTICLE 8
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Right may be transferred, assigned, pledged or
hypothecated (whether by operation of law or otherwise), except as provided by
will or the applicable laws of descent and distribution, and no Option or Stock
Appreciation Right shall be subject to execution, attachment or similar process.
Any attempted assignment, transfer, pledge, hypothecation or other disposition
of an Option or a Stock Appreciation Right not specifically permitted herein
shall be null and void and without effect. An Option or Stock Appreciation Right
may be exercised by an associate only during his or her lifetime, or following
his or her death pursuant to Article 10.
ARTICLE 9
TERMINATION OF EMPLOYMENT
SECTION 9.1. Exercise after Termination of Employment. Except as the Committee
may at any time provide, in the event that the employment of an associate to
whom an Option or Stock Appreciation Right has been granted under the Plan shall
be terminated (for reasons other than death or total disability), such Option or
Stock Appreciation Right may be exercised (to the extent that the associate was
entitled to do so at the termination of his employment) at any time within three
(3) months after such termination of employment.
SECTION 9.2. Total Disability. In the event that an associate to whom an Option
or Stock Appreciation Right has been granted under the Plan shall become totally
disabled, except as the Committee may at anytime provide, such Option or Stock
Appreciation Right may be exercised at any time during the first nine (9) months
that the associate receives benefits under the Company's Long-Term Disability
Plan (THE "DISABILITY PLAN"). For purposes hereof, "total disability" shall have
the definition set forth in the Disability Plan, which definition is hereby
incorporated by reference.
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ARTICLE 10
DEATH OF ASSOCIATE
If an associate to whom an Option or Stock Appreciation Right has been granted
under the Plan shall die while employed by the Company or one of its
subsidiaries or within three (3) months after the termination of such
employment, except as the Committee may at anytime provide, such Option or Stock
Appreciation Right may be exercised to the extent that the associate was
entitled to do so at the time of his or her death, by the associate's estate or
by the person who acquires the right to exercise such Option or Stock
Appreciation Right upon his or her death by bequest or inheritance. Such
exercise may occur at any time within one (1) year after the date of the
associate's death or such other period as the Committee may at anytime provide,
but in no case later than the date on which the Option or Stock Appreciation
Right terminates.
ARTICLE 11
RESTRICTED SHARES
SECTION 11.1. Grant of Restricted Shares. The Committee may from time to time
cause the Company to grant Restricted Shares under the Plan to associates,
subject to such restrictions, conditions and other terms as the Committee may
determine.
SECTION 11.2. Restrictions. At the time a grant of Restricted Shares is made,
the Committee shall establish a period of time (the "RESTRICTED PERIOD")
applicable to such Restricted Shares. Each grant of Restricted Shares may be
subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a grant is made, prescribe restrictions in addition to
or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which shall be
applicable to all or any portion of the Restricted Shares. Except with respect
to grants of Restricted Shares intended to qualify as performance based
compensation for purposes of Section 162(m) of the Code, the Committee may also,
in its sole discretion, shorten or terminate the Restricted Period or waive any
other restrictions applicable to all or a portion of such Restricted Shares.
None of the Restricted Shares may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restricted Period or prior to the
satisfaction of any other restrictions prescribed by the Committee with respect
to such Restricted Shares.
SECTION 11.3. Restricted Stock Certificates. If the Committee deems it necessary
or appropriate, the Company may issue, in the name of each associate to whom
Restricted Shares have been granted, stock certificates representing the total
number of Restricted Shares granted to the associate, provided that such
certificates bear an appropriate legend or other restriction on transfer. The
Secretary of the Company shall hold such certificates, properly endorsed for
transfer, for the associate's benefit until such time as the Restricted Shares
are forfeited to the Company, or the restrictions lapse.
SECTION 11.4. Rights of Holders of Restricted Shares. Except as determined by
the Committee either at the time Restricted Shares are awarded or any time
thereafter prior to the lapse of the restrictions, holders of Restricted Shares
shall not have the right to vote such shares or the right to receive any
dividends with respect to such shares. All distributions, if any, received by an
associate with respect to Restricted Shares as a result of any stock split-up,
stock distribution, a combination of shares, or other similar transaction shall
be subject to the restrictions of this Article 11.
SECTION 11.5. Forfeiture. Except as the Committee may at any time provide, any
Restricted Shares granted to an associate pursuant to the Plan shall be
forfeited if the associate terminates employment with the Company or its
subsidiaries prior to the expiration or termination of the Restricted Period and
the satisfaction of any other conditions applicable to such Restricted Shares.
Upon such forfeiture, the Secretary of the Company shall either cancel or retain
in its treasury the Restricted Shares that are forfeited to the Company.
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SECTION 11.6. Delivery of Restricted Shares. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee, the restrictions applicable to the Restricted Shares shall
lapse and a stock certificate for the number of Restricted Shares with respect
to which the restrictions have lapsed shall be delivered, free of all such
restrictions, to the associate or the associate's beneficiary or estate, as the
case may be.
SECTION 11.7. Performance-based Objectives. At the time of the grant of
Restricted Shares to an associate, and prior to the beginning of the performance
period to which performance objectives relate, the Committee may establish
performance objectives based on any one or more of the following: price of
Company Common Stock or the stock of any affiliate, shareholder return, return
on equity, return on investment, return on capital, sales productivity,
comparable store sales growth, economic profit, economic value added, net
income, operating income, gross margin, sales, free cash flow, earnings per
share, operating company contribution or market share. These factors shall have
a minimum performance standard below which, and a maximum performance standard
above which, no payments will be made. These performance goals may be based on
an analysis of historical performance and growth expectations for the business,
financial results of other comparable businesses, and progress towards achieving
the long-range strategic plan for the business. These performance goals and
determination of results shall be based entirely on financial measures. The
Committee may not use any discretion to modify award results except as permitted
under Section 162(m) of the Code.
ARTICLE 12
PERFORMANCE SHARES
SECTION 12.1. Award of Performance Shares. For each Performance Period (as
defined in Section 12.2), Performance Shares may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. Each Performance Share shall be deemed to be equivalent to one (1)
share of Common Stock. Performance Shares granted to an associate shall be
credited to an account (a "PERFORMANCE SHARE ACCOUNT") established and
maintained for such associate.
SECTION 12.2. Performance Period. "PERFORMANCE PERIOD" shall mean such period of
time as shall be determined by the Committee in its sole discretion. Different
Performance Periods may be established for different associates receiving
Performance Shares. Performance Periods may run consecutively or concurrently.
SECTION 12.3. Right to Payment of Performance Shares. With respect to each award
of Performance Shares under this Plan, the Committee shall specify performance
objectives (the "PERFORMANCE OBJECTIVES") which must be satisfied in order for
the associate to vest in the Performance Shares which have been awarded to him
or her for the Performance Period. If the Performance Objectives established for
an associate for the Performance Period are partially but not fully met, the
Committee may, nonetheless, in its sole discretion, determine that all or a
portion of the Performance Shares have vested. If the Performance Objectives for
a Performance Period are exceeded, the Committee may, in its sole discretion,
grant additional, full vested Performance Shares to the associate. The Committee
may also determine, in its sole discretion, that Performance Shares awarded to
an associate shall become partially or fully vested upon the associate's death,
total disability (as defined in Article 9) or retirement, or upon the
termination of the associate's employment prior to the end of the Performance
Period.
SECTION 12.4. Payment for Performance Shares. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 12.3). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Shares shall be granted to the
associate pursuant to Section 12.3. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine at the
time of grant, the Company shall pay to the associate an amount with respect to
each vested Performance Share equal to the fair market value of a share of
Common Stock on such payment date or, if the Committee shall so specify at the
time of grant, an amount equal to (i) the fair market value of a share of Common
Stock on the payment date less (ii) the fair market value of a share of Common
Stock on the date
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of grant of the Performance Share. Payment shall be made entirely in cash,
entirely in Common Stock (including Restricted Shares) or in such combination of
cash and Common Stock as the Committee shall determine.
SECTION 12.5. Voting and Dividend Rights. Except as the Committee may otherwise
provide, no associate shall be entitled to any voting rights, to receive any
dividends, or to have his or her Performance Share Account credited or increased
as a result of any dividends or other distribution with respect to Common Stock.
Notwithstanding the foregoing, within sixty (60) days from the date of payment
of a dividend by the Company on its shares of Common Stock, the Committee, in
its discretion, may credit an associate's Performance Share Account with
additional Performance Shares having an aggregate fair market value equal to the
dividend per share paid on the Common Stock multiplied by the number of
Performance Shares credited to his or her account at the time the dividend was
declared.
ARTICLE 13
PERFORMANCE UNITS
SECTION 13.1. Award of Performance Units. For each Performance Period (as
defined in Section 12.2), Performance Units may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. The award agreement covering such Performance Units shall specify a
value for each Performance Unit or shall set forth a formula for determining the
value of each Performance Unit at the time of payment (the "ENDING VALUE"). If
necessary to make the calculation of the amount to be paid to the associate
pursuant to Section 13.3, the Committee shall also state in the award agreement
the initial value of each Performance Unit (the "INITIAL VALUE"). Performance
Units granted to an associate shall be credited to an account (a "PERFORMANCE
UNIT ACCOUNT") established and maintained for such associate.
SECTION 13.2. Right to Payment of Performance Units. With respect to each award
of Performance Units under this Plan, the Committee shall specify Performance
Objectives which must be satisfied in order for the associate to vest in the
Performance Units which have been awarded to him or her for the Performance
Period. If the Performance Objectives established for an associate for the
Performance Period are partially but not fully met, the Committee may,
nonetheless, in its sole discretion, determine that all or a portion of the
Performance Units have vested. If the Performance Objectives for a Performance
Period are exceeded, the Committee may, in its sole discretion, grant
additional, fully vested Performance Units to the associate. The Committee may
also determine, in its sole discretion, that Performance Units awarded to an
associate shall become partially or fully vested upon the associate's death,
total disability (as defined in Article 9) or retirement, or upon the
termination of employment of the associate by the Company.
SECTION 13.3. Payment for Performance Units. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 13.2). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Units shall be granted to the associate
pursuant to Section 13.2. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine, the
Company shall pay to the associate an amount with respect to each vested
Performance Unit equal to the Ending Value of the Performance Unit or, if the
Committee shall so specify at the time of grant, an amount equal to (i) the
Ending Value of the Performance Unit less (ii) the Initial Value of the
Performance Unit. Payment shall be made entirely in cash, entirely in Common
Stock (including Restricted Shares) or in such combination of cash and Common
Stock as the Committee shall determine.
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ARTICLE 14
UNRESTRICTED SHARES
SECTION 14.1. Award of Unrestricted Shares. The Committee may cause the Company
to grant Unrestricted Shares to associates at such time or times, in such
amounts and for such reasons as the Committee, in its sole discretion, shall
determine. No payment shall be required for Unrestricted Shares.
SECTION 14.2. Delivery of Unrestricted Shares. The Company shall issue, in the
name of each associate to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
associate, and shall deliver such certificates to the associate as soon as
reasonably practicable after the date of grant or on such later date as the
Committee shall determine at the time of grant.
ARTICLE 15
TAX OFFSET PAYMENTS
The Committee shall have the authority at the time of any award under this Plan
or anytime thereafter to make Tax Offset Payments to assist associates in paying
income taxes incurred as a result of their participation in this Plan. The Tax
Offset Payments shall be determined by multiplying a percentage established by
the Committee by all or a portion (as the Committee shall determine) of the
taxable income recognized by an associate upon (i) the exercise of a
Nonstatutory Stock Option or a Stock Appreciation Right, (ii) the disposition of
shares received upon exercise of an Incentive Stock Option, (iii) the lapse of
restrictions on Restricted Shares, (iv) the award of Unrestricted Shares, or (v)
payments for Performance Shares or Performance Units. The percentage shall be
established, from time to time, by the Committee at that rate which the
Committee, in its sole discretion, determines to be appropriate and in the best
interests of the Company to assist associates in paying income taxes incurred as
a result of the events described in the preceding sentence. Tax Offset Payments
shall be subject to the restrictions on transferability applicable to Options
and Stock Appreciation Rights under Article 8.
ARTICLE 16
CHANGES IN CONTROL
Upon the occurrence of a Change in Control (as defined below), the following
shall occur:
(1) Options. At the date of such Change in Control, all
outstanding and unvested stock options granted under the Plan
shall immediately and fully vest and become exercisable.
(2) Stock Appreciation Rights. At the date of such Change in
Control, all outstanding and unvested Stock Appreciation
Rights granted under the Plan shall immediately vest and
become exercisable.
(3) Restricted Shares. At the date of such Change in Control,
Restricted Shares granted under the Plan shall be deemed to be
fully vested and the Restricted Period shall be deemed to
expire.
(4) Performance Shares and Performance Units. At the date of such
Change in Control, Performance Shares and Performance Units
granted under the Plan shall be deemed to be fully vested and
payable.
"Change in Control" means the occurrence of any of the following:
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(1) Any "Person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) is or becomes the "Beneficial Owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 25%
or more of the combined voting power of the Corporation's then
outstanding securities (a "25% Shareholder") provided however,
that the term 25% Shareholder shall not include any Person if
such Person would not otherwise be a 25% Shareholder but for a
reduction in the number of outstanding voting shares resulting
from a stock repurchase program or other similar plan of the
Company or from a self-tender offer of the Company, which plan
or tender offer commenced on or after the date hereof,
provided, however, that the term "25% Shareholder" shall
include such Person from and after the first date upon which
(A) such Person, since the date of the commencement of such
plan or tender offer, shall have acquired Beneficial Ownership
of, in the aggregate, a number of voting shares of the Company
equal to 1% or more of the voting shares of the Company then
outstanding, and (B) such Person, together with all affiliates
and associates of such Person, shall Beneficially Own 25% or
more of the voting shares of the Company then outstanding. In
calculating the percentage of the outstanding voting shares
that are Beneficially Owned by a Person for purposes of this
subsection (1), voting Shares that are Beneficially Owned by
such Person shall be deemed outstanding, and voting shares
that are not Beneficially Owned by such Person and that are
subject to issuance upon the exercise or conversion of
outstanding conversion rights, exchange rights, rights,
warrants or options shall not be deemed outstanding.
Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person that would
otherwise be a 25% Shareholder pursuant to the foregoing
provisions of this subsection (1) has become such
inadvertently, and such Person (a) promptly notifies the Board
of Directors of such status and (b)as promptly as practicable
thereafter, either divests of a sufficient number of voting
shares so that such Person would no longer be a 25%
Shareholder, or causes any other circumstance, such as the
existence of an agreement respecting voting shares, to be
eliminated such that such Person would no longer be a 25%
Shareholder as defined pursuant to this subsection (1), then
such Person shall not be deemed to be a 25% Shareholder for
any purposes of this Plan. Any determination made by the Board
of Directors of the Company as to whether any Person is or is
not a 25% Shareholder shall be conclusive and binding; or
(2) A change in composition of the Board of Directors of the
Corporation occurring any time during a consecutive two-year
period as a result of which fewer than a majority of the Board
of Directors are Continuing Directors (for purposes of this
section, the term "Continuing Director" means a director who
was either (A) first elected or appointed as a Director prior
to May 10, 2000; or (B) subsequently elected or appointed as a
director if such director was nominated or appointed by at
least a majority of the then Continuing Directors); or
(3) Any of the following occurs:
(A) a merger or consolidation of the Corporation, other
than a merger or consolidation in which the voting
securities of the Corporation immediately prior to
the merger or consolidation continue to represent
(either by remaining outstanding or being converted
into securities of the surviving entity) 60% or more
of the combined voting power of the Corporation or
surviving entity immediately after the merger or
consolidation with another entity;
(B) a sale, exchange, or other disposition (in a single
transaction or a series of related transactions) of
all or substantially all of the assets of the
Corporation which shall include, without limitation,
the sale of assets aggregating more than 50% of the
assets of the Corporation on a consolidated basis;
(C) a liquidation or dissolution of the Corporation;
(D) a reorganization, reverse stock split, or
recapitalization of the Corporation which would
result in any of the foregoing; or
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(E) a transaction or series of related transactions
having, directly or indirectly, the same effect as
any of the foregoing.
ARTICLE 17
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, the Committee may at any time
make or provide for such adjustments to the Plan, to the number and class of
shares available thereunder or to any outstanding Options, Stock Appreciation
Rights, Restricted Shares or Performance Shares as it shall deem appropriate to
prevent dilution or enlargement of fights, including adjustments in the event of
changes in the number of shares of outstanding Common Stock by reason of stock
dividends, extraordinary cash dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and the like.
ARTICLE 18
AMENDMENT AND TERMINATION
The Board may suspend, terminate, modify or amend the Plan, provided that any
amendment that would (i) materially increase the aggregate number of shares
which may be issued under the Plan or (ii) reduce the exercise price of options
previously granted under the Plan shall be subject to the approval of the
Company's stockholders, except that any such increase or modification that may
result from adjustments authorized by Article 16 does not require such approval.
If the Plan is terminated, the terms of the Plan shall, notwithstanding such
termination, continue to apply to awards granted prior to such termination. No
suspension, termination, modification or amendment of the Plan may, without the
consent of the associate to whom an award shall theretofore have been granted,
adversely affect the fights of such associate under such award.
ARTICLE 19
WRITTEN AGREEMENT
Each award of Options, Stock Appreciation Rights, Restricted Shares, Performance
Shares, Performance Units, Unrestricted Shares and Tax Offset Payments shall be
evidenced by a written agreement, executed by the associate and the Company, and
containing such restrictions, terms and conditions, if any, as the Committee may
require. In the event of any conflict between a written agreement and the Plan,
the terms of the Plan shall govern.
ARTICLE 20
MISCELLANEOUS PROVISIONS
SECTION 20.1. Fair Market Value. For purposes of this Plan, "FAIR MARKET VALUE"
will be determined in accordance with procedures established in good faith by
the Committee.
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SECTION 20.2. Tax Withholding. The Company shall have the right to require
associates or their beneficiaries or legal representatives to remit to the
Company an amount sufficient to satisfy federal, state and local withholding tax
requirements, or to deduct from all payments under this Plan, including Tax
Offset Payments, amounts sufficient to satisfy all withholding tax requirements.
Whenever payments under the Plan are to be made to an associate in cash, such
payments shall be net of any amounts sufficient to satisfy all federal, state
and local withholding tax requirements. The Committee may, in its discretion,
permit an associate to satisfy his or her tax withholding obligation either by
(i) surrendering shares owned by the associate or (ii) having the Company
withhold from shares otherwise deliverable to the associate. Shares surrendered
or withheld shall be valued at their fair market value as of the date on which
income is required to be recognized for income tax purposes. In the case of an
award of Incentive Stock Options, the foregoing fight shall be deemed to be
provided to the associate at the time of such award.
SECTION 20.3. Compliance with Section 16(b) and Section 162(m). In the case of
associates who are or may be subject to Section 16 of the Act, it is the intent
of the corporation that the Plan and any award granted hereunder satisfy and be
interpreted in a manner that satisfies the applicable requirements of Rule
16b-3, so that such persons will be entitled to the benefits of Rule 16b-3 or
other exemptive rules under Section 16 of the Act and will not be subjected to
liability thereunder. If any provision of the Plan or any award would otherwise
conflict with the intent expressed herein, that provision, to the extent
possible, shall be interpreted and deemed amended so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such intent, such
provision shall be deemed void as applicable to associates who are or may be
subject to Section 16 of the Act. If any award hereunder is intended to qualify
as performance-based for purposes of Section 162(m) of the Code, the Committee
shall not exercise any discretion to increase the payment under such award
except to the extent permitted by Section 162(m) and the regulations thereunder.
SECTION 20.4. Successors. The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and businesses of the Company. In the event of any of the foregoing, the
Committee may, at its discretion prior to the consummation of the transaction,
cancel, offer to purchase, exchange, adjust or modify any outstanding awards, at
such time and in such manner as the Committee deems appropriate and in
accordance with applicable law.
SECTION 20.5. General Creditor Status. Associates shall have no right, title, or
interest whatsoever in or to any investments which the Company may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any associate or beneficiary or legal representative of such associate. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the fight of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan.
SECTION 20.6. No Right to Employment. Nothing in the Plan or in any written
agreement entered into pursuant to Article 18, nor the grant of any award, shall
confer upon any associate any right to continue in the employ of the Company or
a subsidiary or to be entitled to any remuneration or benefits not set forth in
the Plan or such written agreement or interfere with or limit the right of the
Company or a subsidiary to modify the terms of or terminate such associate's
employment at any time.
SECTION 20.7. Notices. Notices required or permitted to be made under the Plan
shall be sufficiently made if sent by registered or certified mail addressed (a)
to the associate at the associate's address set forth in the books and records
of the Company or its subsidiaries, or (b) to the Company or the Committee at
the principal office of the Company.
SECTION 20.8. Severability. In the event that any provision of the Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
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SECTION 20.9. Governing Law. To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
SECTION 20.10. Term of Plan. Unless earlier terminated pursuant to Article 18
hereof, the Plan shall terminate on the tenth anniversary of the Distribution.
IN WITNESS WHEREOF, the Company has caused this First Amended and Restated 1999
Stock Option and Performance Incentive Plan to be executed by its duly
authorized officer this 10th day of May, 2000.
TOO, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
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