DESIGNS, INC.
1992 STOCK INCENTIVE PLAN, AS AMENDED
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS.
The name of the plan is the Designs, Inc. 1992 Stock Incentive Plan
(the "Plan"). The purpose of the Plan is to encourage and enable the officers,
employees and directors of Designs, Inc. (the "Company") and its Subsidiaries
upon whose judgment, initiative and efforts the Company largely depends for the
successful conduct of its business to acquire a proprietary interest in the
Company. It is anticipated that providing such persons with a direct stake in
the Company's welfare will assure a closer identification of their interests
with those of the Company, thereby stimulating their efforts on the Company's
behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards", except where referring to a particular
category of grant under the Plan, shall include Incentive Stock
Options, Non-Qualified Stock Options, Conditioned Stock Awards,
Unrestricted Stock Awards and Performance Share Awards.
"Board" means the Board of Directors of the Company.
"Cause" means and shall be limited to a vote of the Board of
Directors at a meeting of the Board of Directors resolving that the
participant should be dismissed as a result of (i) any material breach
by the participant of any agreement to which the participant and the
Company or any Subsidiary are both parties, (ii) any act (other then
retirement) or omission to act by the participant which may have a
material and adverse effect on the business of the Company or any
Subsidiary or on the participant's ability to perform services for the
Company or any Subsidiary, including, without limitation, the
commission of any crime (other than ordinary traffic violations), or
(iii) any material misconduct or neglect of duties by the participant
in connection with the business or affairs of the Company or any
Subsidiary of the Company.
"Change of Control" shall have the meaning set forth in
Section 13.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor Code, and related rules, regulations and
interpretations.
"Committee" shall have the meaning set forth in Section 2.
"Conditioned Stock Award" means Awards granted pursuant to
Section 6.
"Disability" means disability as set forth in Section 22(e)(3)
of the Code.
"Effective Date" means the date on which the Plan is approved
by stockholders as set forth in Section 15.
"Fair Market Value" on any given date means the last reported
sale price at which Stock is traded on such date or, if no Stock is
traded on such date, the most recent date on which Stock was traded, as
reflected in the NASDAQ National Market System or, if applicable, any
national stock exchange on which the Stock is traded.
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of
the Code.
"Non-Employee Director" means a member of the Board who is
not also an employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
"Normal Retirement" means retirement from active employment
with the Company and its Subsidiaries in accordance with the retirement
policies of the Company and its Subsidiaries then in effect.
"Option" or "Stock Option" means any option to purchase shares
of Stock granted pursuant to Section 5.
"Performance Share Award" means Awards granted pursuant to
Section 8.
"Stock" means the Common Stock, $.01 par value per share, of
the Company, subject to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than
the Company) in any unbroken chain of corporations or other entities,
beginning with the Company if each of the corporations or entities
(other than the last corporation or entity in the unbroken chain) owns
stock or other interests possessing 50% or more of the total combined
voting power of all classes of stock or other interests in one of the
other corporations or entities in the chain.
"Unrestricted Stock Award" means Awards granted pursuant to
Section 7.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS.
(a) Committee. The Plan shall be administered by all of the
Non-Employee Director members of the Stock Option Committee of the Board, or any
other committee of not less than two Non-Employee Directors performing similar
functions, as appointed by the Board from time to time (the "Committee"). Each
member of the Committee shall be an "outside director" within the meaning of
Section 162(m) of the Code and the regulations promulgated thereunder and a
"non-employee director" within the meaning of Rule 16-3b(3)(i) promulgated under
the Act, or any successor definition under said Rule.
(b) Powers of Committee. The Committee shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select the officers and other employees of the Company
and its Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent,
if any, of Incentive Stock Options, Non-Qualified Stock Options,
Conditioned Stock, Unrestricted Stock and Performance Shares, or any
combination of the foregoing, granted to any one or more participants.
(iii) to determine the number of shares to be covered by any
Award;
(iv) to determine and modify the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of
any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate the exercisability or vesting of all or any
portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend
the period in which Stock Options may be exercised;
(vii) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or
credit amounts equal to interest (at rates determined by the Committee)
or dividends or deemed dividends on such deferrals; and
(viii) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the administration
of the Plan; to decide all disputes arising in connection with the
Plan; and to otherwise supervise the administration of the Plan
(including the power and authority to waive the requirement set forth
in Section 7(c) of the Plan that an irrevocable written election to
receive Unrestricted Stock, in lieu of directors' fees otherwise due,
be delivered prior to the commencement of the calendar year in which
the Non-Employee Director serves on the Board.
All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION.
(a) Shares Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 4,430,000. For purposes of this
limitation, the shares of Stock underlying any Awards which are forfeited,
canceled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock available for issuance under the Plan. Subject to such overall
limitation, shares may be issued up to such maximum number pursuant to any type
or types of Award, including Incentive Stock Options. Shares issued under the
Plan may be authorized but unissued shares or shares reacquired by the Company.
No individual participant in the Plan may, during any fiscal year of the
Company, be granted one or more Stock Options the sum of which cover more than
75,000 shares of Stock (such amount being subject to adjustment in accordance
with Section 3(b) hereof), provided, however, that an individual participant may
be granted one or more Stock Options the sum of which cover up to 270,000 shares
of Stock (such amount being subject to adjustment in accordance with Section
3(b) hereof) during any fiscal year if all such Stock Options have an exercise
price equal to not less than 200% of Fair Market Value on the date of grant.
(b) Stock Dividends, Mergers, Etc. In the event that after approval of
the Plan by the stockholders of the Company in accordance with Section 15, the
Company effects a stock dividend, stock split or similar change in
capitalization affecting the Stock, the Committee shall make appropriate
adjustments in (i) the number and kind of shares of stock or securities on which
Awards may thereafter be granted, (ii) the number and kind of shares remaining
subject to outstanding Awards, and (iii) the option or purchase price in respect
of such shares. In the event of any merger, consolidation, dissolution or
liquidation of the Company, the Committee in its sole discretion may, as to any
outstanding Awards, make such substitution or adjustment in the aggregate number
of shares reserved for issuance under the Plan and in the number and purchase
price (if any) of shares subject to such Awards as it may determine and as may
be permitted by the terms of such transaction, or accelerate, amend or terminate
such Awards upon such terms and conditions as it shall provide (which, in the
case of the termination of the vested portion of any Award, shall require
payment or other consideration which the Committee deems equitable in the
circumstances), subject, however, to the provisions of Section 13.
(c) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Committee may direct that
the substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances. The shares which may be delivered
under such substitute awards shall be in addition to the maximum number of
shares provided for in Section 3(a) only to the extent that the substitute
Awards are granted in substitution for awards issued under a plan approved by
the stockholders of the entity which issued such predecessor awards.
SECTION 4. ELIGIBILITY.
Participants in the Plan will be such full or part-time officers and
other employees of the Company and its Subsidiaries who are responsible for or
contribute to the management, growth or profitability of the Company and its
Subsidiaries and who are selected from time to time by the Committee, in its
sole discretion. Non-Employee Directors are also eligible to participate in the
Plan but only to the extent provided in Section 5(c) and Section 7 below.
An employee who is employed primarily to render services within the
jurisdiction of a labor union and whose compensation, hours of work, or
condition of employment are determined by collective bargaining with such union
shall not be an Eligible Employee for purposes of this Plan unless the
applicable collective bargaining agreement expressly provides that such employee
shall be eligible to participate in this Plan, in which event, however, such
employee shall be entitled to participate in the Plan only to the extent and on
the terms and conditions specified in such collective bargaining agreement.
SECTION 5. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. To the extent that any option does not
qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock
Option.
No Incentive Stock Option shall be granted under the Plan after April
2, 2007.
(a) Stock Options Granted to Employees. The Committee in its discretion
may grant Stock Options to employees of the Company or any Subsidiary. Stock
Options granted to employees pursuant to this Section 5(a) shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
(i) Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall
be determined by the Committee at the time of grant but shall be not
less than 100% of Fair Market Value on the date of grant whether such
Stock Option be an Incentive Stock Option or a Non-Qualified Stock
Option. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more
than 10% of the combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation and an Incentive Stock
Option is granted to such employee, the option price shall be not less
than 110% of Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Incentive Stock Option shall be exercisable
more than ten years after the date the option is granted. If an
employee owns or is deemed to own (by reason of the attribution rules
of Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Subsidiary or
parent corporation and an Incentive Stock Option is granted to such
employee, the term of such option shall be no more than five years from
the date of grant.
(iii) Exercisability; Rights of a Shareholder. Stock Options
shall become vested and exercisable at such time or times, whether or
not in installments, as shall be determined by the Committee at or
after the grant date. The Committee may at any time accelerate the
exercisability of all or any portion of any Stock Option. An optionee
shall have the rights of a shareholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in
whole or in part, by giving written notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the
purchase price may be made by one or more of the following methods:
(A) In cash, by certified or bank check or other
instrument acceptable to the Committee;
(B) In the form of shares of Stock that are not then
subject to restrictions under any Company plan, if permitted by
the Committee, in its discretion. Such surrendered shares shall
be valued at Fair Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the purchase price;
provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe
as a condition of such payment procedure. Payment instruments
will be received subject to collection.
The delivery of certificates representing shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon receipt from
the Optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price for
such shares and the fulfillment of any other requirements contained in the Stock
Option or applicable provisions of laws.
(v) Termination by Death. If any optionee's employment by the
Company and its Subsidiaries terminates by reason of death, the Stock
Option may thereafter be exercised, to the extent exercisable at the
date of death, by the legal representative or legatee of the optionee,
for a period of 180 days (or such longer period as the Committee shall
specify at any time) from the date of death, or until the expiration of
the stated term of the Option, if earlier.
(vi) Termination by Reason of Disability or Normal Retirement.
(A) Any Stock Option held by an optionee whose employment
by the Company and its Subsidiaries has terminated by reason of
Disability may thereafter be exercised, to the extent it was
exercisable at the time of such termination, for a period of 180
days (or such longer period as the Committee shall specify at any
time) from the date of such termination of employment, or until
the expiration of the stated term of the Option, if earlier.
(B) Any Stock Option held by an optionee whose employment
by the Company and its Subsidiaries has terminated by reason of
Normal Retirement may thereafter be exercised, to the extent it
was exercisable at the time of such termination, for a period of
90 days (or such longer period as the Committee shall specify at
any time) from the date of such termination of employment, or
until the expiration of the stated term of the Option, if
earlier.
(C) The Committee shall have sole authority and
discretion to determine whether a participant's employment has
been terminated by reason of Disability or Normal Retirement.
(D) Except as otherwise provided by the Committee at the
time of grant, the death of an optionee during a period provided
in this Section 5(a)(vi) for the exercise of a Non-Qualified
Stock Option, shall extend such period for 180 days from the date
of death, subject to termination on the expiration of the stated
term of the Option, if earlier.
(vii) Termination for Cause. If any optionee's employment by
the Company and its Subsidiaries has been terminated for Cause, any
Stock Option held by such optionee shall immediately terminate and be
of no further force and effect; provided, however, that the Committee
may, in its sole discretion, provide that such stock option can be
exercised for a period of up to 30 days from the date of termination of
employment or until the expiration of the stated term of the Option, if
earlier.
(viii) Other Termination. Unless otherwise determined by the
Committee, if an optionee's employment by the Company and its
Subsidiaries terminates for any reason other than death, Disability,
Normal Retirement or for Cause, any Stock Option held by such optionee
may thereafter be exercised, to the extent it was exercisable on the
date of termination of employment, for 30 days (or such longer period
as the Committee shall specify at any time) from the date of
termination of employment or until the expiration of the stated term of
the Option, if earlier.
(ix) Annual Limit on Incentive Stock Options. To the extent
required for "incentive stock option" treatment under Section 422 of
the Code, the aggregate Fair Market Value (determined as of the time of
grant) of the Stock with respect to which incentive stock options
granted under this Plan and any other plan of the Company or its
Subsidiaries become exercisable for the first time by an optionee
during any calendar year shall not exceed $100,000.
(x) Form of Settlement. Shares of Stock issued upon exercise
of a Stock Option shall be free of all restrictions under the Plan,
except as otherwise provided in this Plan.
(b) Reload Options. At the discretion of the Committee, Options granted
under this Section 5(a) may include a so-called "reload" feature pursuant to
which an optionee exercising an option by the delivery of a number of shares of
Stock in accordance with Section 5(a)(iv)(B) hereof would automatically be
granted an additional Option (with an exercise price equal to the Fair Market
Value of the Stock on the date the additional Option is granted and with the
same expiration date as the original Option being exercised, and with such other
terms as the Committee may provide) to purchase that number of shares of Stock
equal to the number delivered to exercise the original Option.
(c) Stock Options Granted to Non-Employee Directors.
(i) Grant of Options Upon Election to Board. Each Non-employee
Director who is elected by the stockholders of the Company to the Board
on or subsequent to October 8, 1999 shall automatically be granted,
upon such election, a Non-Qualified Stock Option to purchase 15,000
shares of Stock. Each Non-Employee Director who is re-elected by the
stockholders of the Company to the Board on or subsequent to October 8,
1999 shall automatically be granted, upon each such re-election, a
Non-qualified Stock Option to purchase 15,000 shares of Stock.
(ii) Exercise Price. The exercise price per share for the
Stock covered by a Stock Option granted pursuant to this Section 6(c)
shall be equal to the Fair Market Value of the Stock on the date the
Stock Option is granted.
(iii) Exercise; Termination; Non-transferability.
(A) Options granted under this Section 5(c) shall be
vested at the rate of 33 1/3% of such options shall be
exercisable on the date of grant, an additional 33 1/3% of such
options shall be exercisable on the first anniversary of the
grant thereof, and an additional 33 1/3% of such options shall
become exercisable on the second anniversary of grant thereof;
subject to the provisions of Section 5(c)(iii)(B), any Option so
granted shall be exercisable after the termination of service of
the Non-Employee Director, whether because of death, disability
or otherwise. No Option issued under this Section 5(c) shall be
exercisable after the expiration of ten years from the date upon
which such Option is granted.
(B) The rights of a Non-Employee Director in an Option
granted under Section 5(c) shall terminate 90 days after such
Director ceases to be a Director of the Company or the specified
expiration date, if earlier; provided, however, that if the
Non-Employee ceases to be a Director for Cause, the rights shall
terminate immediately on the date on which he ceases to be a
Director.
(C) Any Option granted to a Non-Employee Director and
outstanding on the date of his or her death may be exercised by
the legal representative or legatee of the optionee for a period
of 180 days from the date of death or until the expiration of the
stated term of the option, if earlier.
(D) Options granted under this Section 5(c) may be
exercised only by written notice to the Company specifying the
number of shares to be purchased. Payment of the full purchase
price of the shares to be purchased may be made by one or more of
the methods specified in Section 5(a)(iv). An optionee shall have
the rights of a shareholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock
Options.
(iv) Limited to Non-Employee Directors. The provisions of this
Section 5(c) shall apply only to Options granted or to be granted to
Non-Employee Directors, and shall not be deemed to modify, limit or
otherwise apply to any other provision of this Plan or to any Option
issued under this Plan to a participant who is not a Non-Employee
Director of the Company. To the extent inconsistent with the provisions
of any other Section of this Plan, the provisions of this Section 5(c)
shall govern the rights and obligations of the Company and Non-Employee
Directors respecting Options granted or to be granted to Non-Employee
Directors.
(d) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the
Committee may permit the optionee to transfer, without consideration for the
transfer, his Non-Qualified Stock Options to members of his immediate family, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners; provided that the transferee agrees in
writng with the Company to be bound by all terms and conditions of the Plan and
the applicable Stock Option.
SECTION 6. CONDITIONED STOCK AWARDS.
(a) Nature of Conditioned Stock Award. The Committee may grant
Conditioned Stock Awards to any employees of the Company or any Subsidiary. A
Conditioned Stock Award is an Award entitling the recipient to acquire, at no
cost or for a purchase price determined by the Committee, shares of Stock
subject to such restrictions and conditions as the Committee may determine at
the time of grant ("Conditioned Stock"). Conditions may be based on continuing
employment and/or achievement of pre-established performance goals and
objectives. In addition, a Conditioned Stock Award may be granted to an employee
by the Committee in lieu of a cash bonus due to such employee pursuant to any
other plan of the Company.
(b) Acceptance of Award. A participant who is granted a Conditioned
Stock Award shall have no rights with respect to such Award unless the
participant shall have accepted the Award within 60 days (or such shorter date
as the Committee may specify) following the award date by making payment to the
Company, if required, by certified or bank check or other instrument or form of
payment acceptable to the Committee in an amount equal to the specified purchase
price, if any, of the shares covered by the Award and by executing and
delivering to the Company a written instrument that sets forth the terms and
conditions of the Conditioned Stock in such form as the Committee shall
determine.
(c) Rights as a Shareholder. Upon complying with Section 6(b) above, a
participant shall have all the rights of a shareholder with respect to the
Conditioned Stock, including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Conditioned Award. Unless the Committee
shall otherwise determine, certificates evidencing shares of Conditioned Stock
shall remain in the possession of the Company until such shares are vested as
provided in Section 6(e) below.
(d) Restrictions. Shares of Conditioned Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment by the
Company and its Subsidiaries for any reason (including death, Disability, Normal
Retirement and for Cause), the Company shall have the right, at the discretion
of the Committee, to repurchase shares of Conditioned Stock with respect to
which conditions have not lapsed at their purchase price, or to require
forfeiture of such shares to the Company if acquired at no cost, from the
participant or the participant's legal representative. The Company must exercise
such right of repurchase or forfeiture not later than the 90th day following
such termination of employment (unless otherwise specified in the written
instrument evidencing the Conditioned Award).
(e) Vesting of Conditioned Stock. The Committee at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
nontransferability of the Conditioned Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Conditioned Stock and shall be deemed "vested." The Committee at any time may
accelerate such date or dates and otherwise waive or, subject to Section 11,
amend any conditions of the Award.
(f) Waiver, Deferral and Reinvestment of Dividends. The written
instrument evidencing the Conditioned Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.
SECTION 7. UNRESTRICTED STOCK AWARDS.
(a) Grant or Sale of Unrestricted Stock. The Committee may, in its sole
discretion, grant (or sell at a purchase price determined by the Committee which
shall in no event be less than 85% of Fair Market Value) to any employees of the
Company or any Subsidiary shares of Stock free of any restrictions under the
Plan ("Unrestricted Stock"). Shares of Unrestricted Stock may be granted or sold
as described in the preceding sentence in respect of past services or other
valid consideration.
(b) Elections to Receive Unrestricted Stock in Lieu of Compensation.
Upon the request of an employee and with the consent of the Committee, each
employee may, pursuant to an irrevocable written election delivered to the
Company no later than the date or dates specified by the Committee, receive a
portion of the cash compensation otherwise due to him in Unrestricted Stock
(valued at Fair Market Value on the date or dates the cash compensation would
otherwise be paid). Such Unrestricted Stock may be paid to the employee at the
same time as the cash compensation would otherwise be paid, or at a later time,
as specified by the employee in the written election.
(c) Elections to Receive Unrestricted Stock in Lieu of Directors' Fees.
Each Non-Employee Director may, pursuant to an irrevocable written election
delivered to the Company no later than December 31 of any calendar year, receive
all or a portion of the directors' fees otherwise due to him in the subsequent
calendar year in Unrestricted Stock (valued at Fair Market Value on the date or
dates the directors' fees would otherwise be paid). Such Unrestricted Stock may
be paid to the Non-Employee Director at the same time the directors' fees would
otherwise have been paid, or at a later time, as specified by the Non-Employee
Director in the written election.
(d) Restrictions on Transfers. The right to receive Unrestricted Stock
may not be sold, assigned, transferred, pledged or otherwise encumbered, other
than by will or the laws of descent and distribution.
SECTION 8. PERFORMANCE SHARE AWARDS.
(a) Nature of Performance Shares. A Performance Share Award is an award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any employees of
the Company or any Subsidiary, including those who qualify for awards under
other performance plans of the Company. The Committee in its sole discretion
shall determine whether and to whom Performance Share Awards shall be made, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Shares; provided, however, that the
Committee may rely on the performance goals and other standards applicable to
other performance-based plans of the Company in setting the standards for
Performance Share Awards under the Plan.
(b) Restrictions of Transfer. Performance Share Awards and all rights
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) Rights as a Shareholder. A participant receiving a Performance
Share Award shall have the rights of a shareholder only as to shares actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant. A participant
shall be entitled to receive a stock certificate evidencing the acquisition of
shares of Stock under a Performance Share Award only upon satisfaction of all
conditions specified in the written instrument evidencing the Performance Share
Award (or in a performance plan adopted by the Committee).
(d) Termination. Except as may otherwise be provided by the Committee
at any time prior to termination of employment, a participant's rights in all
Performance Share Awards shall automatically terminate upon the participant's
termination of employment by the Company and its Subsidiaries for any reason
(including death, Disability, Normal Retirement and for Cause).
(e) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment by the Company and its Subsidiaries, the Committee may
in its sole discretion accelerate, waive or, subject to Section 11, amend any or
all of the goals, restrictions or conditions imposed under any Performance Share
Award.
SECTION 9. TAX WITHHOLDING.
(a) Payment by Participant. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
(b) Payment in Shares. With the approval of the Committee, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due with respect to such Award, or (ii)
transferring to the Company shares of Stock owned by the participant with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due.
SECTION 10. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another;
(b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may at any time amend or discontinue the Plan and the
Committee may at any time amend or cancel any outstanding Award (or provide
substitute Awards at the same or reduced exercise or purchase price or with no
exercise or purchase price, but such price, if any, must satisfy the
requirements which would apply to the substitute or amended Award if it were
then initially granted under this Plan) for the purpose of satisfying changes in
law or for any other lawful purpose, but no such action shall adversely affect
rights under any outstanding Award without the holder's consent. However, no
such amendment, unless approved by the stockholders of the Company, shall be
effective if it would cause the Plan to fail to satisfy the incentive stock
option requirements of the Code or if it would increase the limitation set forth
in Section 3(a) on the number of shares of Stock covered by Options that may be
granted to any individual participant during any fiscal year.
SECTION 12. STATUS OF PLAN.
With respect to the portion of any Award which has not been exercised
and any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the provision of the foregoing sentence.
SECTION 13. CHANGE OF CONTROL PROVISIONS.
(a) Upon the occurrence of a Change of Control as defined in this
Section 13:
(i) Each Stock Option shall automatically become fully
exercisable notwithstanding any provision to the contrary hereof.
(ii) Restrictions and conditions on Awards of Conditioned
Stock shall automatically be deemed waived, and the recipients of such
Awards shall become entitled to receipt of the stock subject to such
Awards.
(b) The Committee may at any time prior to a Change of Control
accelerate the exercisability of any Stock Options, Conditioned Stock, and
Performance Share Awards to the extent it shall in its sole discretion
determine.
(c) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Act) becomes a "beneficial owner" (as such
term is defined in Rule 13d-3 promulgated under the Act) (other than
the Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), directly or indirectly, of securities of the Company
representing thirty-five percent (35%) or more of the combined voting
power of the Company's then outstanding securities; or, in the case of
any person which as of October 20, 2000, is the beneficial owner,
directly or indirectly, of securities of the Company representing more
than [10%] of the combined voting power of the Company's then
outstanding securities, such person shall become the beneficial owner,
directly or indirectly, of securities of the Company representing
[thirty-five percent (35%)] or more of the combined voting power of the
Company's then outstanding securities in addition to the securities
beneficially owned, directly or indirectly, by such person as of
October 20, 2000 (excluding, for the avoidance of doubt, becoming the
beneficial owner of such percentage of securities by reason of any
acquisition, retirement or cancellation of securities by the Company).
(ii) at any time after October 20, 2000, persons who, as of
October 20, 2000, constituted the Company's Board (the "Incumbent
Board") cease for any reason, including without limitation as a result
of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person
becoming a director of the Company subsequent to October 20, 2000 whose
election was approved by, or who was nominated with the approval of, at
least a majority of the directors then comprising the Incumbent Board
shall, for purposes of this Plan, be considered a member of the
Incumbent Board; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or other
entity, other than (a) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than 65% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no "person" (as hereinabove defined) acquires more than 50% of
the combined voting power of the Company's then outstanding securities;
or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
SECTION 14. GENERAL PROVISIONS.
(a) No Distribution; Compliance with Legal Requirements. The Committee
may require each person acquiring shares pursuant to an Award to represent to
and agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange requirements have
been satisfied. The Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.
(b) Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, subject to stockholder approval if
such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan or any
Award under the Plan does not confer upon any employee any right to continued
employment with the Company or any Subsidiary.
SECTION 15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon approval by the holders of a
majority of the shares of capital stock of the Company present or represented
and entitled to vote at a meeting of stockholders.
SECTION 16. GOVERNING LAW.
This Plan shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws.
