THE TALBOTS, INC.
RESTATED DIRECTORS STOCK PLAN
(as amended through May 25, 2000)
1. Purpose. The purpose of The Talbots, Inc. Restated Directors Stock Plan
(the "Plan") is to advance the interests of The Talbots, Inc. (the
"Company") and its shareholders by encouraging increased share
ownership by certain members of the Board of Directors of the Company
(the "Board") in order to promote long-term shareholder value through
continuing ownership of the Company's common shares.
2. Administration. The Plan shall be administered by the Board. The Board
shall have all the powers vested in it by the terms of the Plan, such
powers to include authority (within the limitations described herein)
to prescribe the form of the agreement embodying awards of nonqualified
stock options ("Options") and awards of shares of common stock of the
Company ("Stock Awards") made under the Plan. The Board shall, subject
to the provisions of the Plan, have the right to grant Options and make
Stock Awards under the Plan and shall have the power to construe the
Plan, to determine all questions arising thereunder and to adopt, amend
and revoke such rules and regulations for the administration of the
Plan as it may deem desirable. Any decisions of the Board in the
administration of the Plan, as described herein, shall be final and
conclusive. The Board authorizes each of the President and Chief
Executive Officer, the Chief Financial Officer or the Senior Vice
President, Human Resources (or any other officer of the Company as any
such officer may designate from time to time) to execute and deliver
documents on behalf of the Board. No member of the Board shall be
liable for anything done or omitted to be done by him or her or by any
other member of the Board in connection with the Plan, except for his
or her own willful misconduct and except as otherwise expressly
provided by statute. All members of the Board shall be indemnified by
the Company with respect to any action, determination or interpretation
in connection with the Plan to the fullest extent permitted by law.
3. Participation. Each member of the Board who is not an employee of the
Company (an "Eligible Director") shall be eligible to receive Options
and/or Stock Awards under the Plan.
4. Awards under the Plan.
(a) Type of Awards. Awards under the Plan shall include only (i)
Options, which are rights to purchase shares of common stock
of the Company ("common shares"), subject to the terms,
conditions and restrictions specified in Paragraph 5 below and
(ii) Stock Awards for common shares, which may be issued
subject to the terms and conditions specified in Paragraph 6
below.
(b) Maximum Number of Shares That May be Issued. There may be
issued under the Plan pursuant to the exercise of Options
and/or as Stock Awards an aggregate of not more than 530,000
common shares, subject to adjustment as provided in Paragraph
7 below. If any Option or Stock Award is cancelled or
terminates, or if any Option expires unexercised, in whole or
in part, any common shares that would otherwise have been
issuable pursuant thereto will be available for issuance under
new awards, to the extent permitted by Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In addition, to the extent permitted by Rule 16b-3, the
holder of an award hereunder shall have the right to have
withheld or to tender any common shares to the Company in
connection with the payment of the exercise price of an Option
or the withholding of federal, state or local income taxes or
other taxes upon the exercise of any Option or upon the making
or vesting of any Stock Award, and any such common shares so
withheld or tendered will be available for issuance of new
awards under the Plan.
(c) Reservation of Shares. The Company shall reserve for purposes
of the Plan that number of common shares described in
Paragraph 4(b) above, from its authorized but unissued common
shares or from common shares held in the Company's treasury or
partly from each. No fractional shares shall be issued with
respect to Options or Stock Awards.
(d) Rights with Respect to Shares. An Eligible Director to whom an
Option or Stock Award is granted or made (and any person
succeeding to such Eligible Director's rights under the Plan)
shall have no rights as a shareholder with respect to any
common shares issuable pursuant to any such Option or Stock
Award until the date of the issuance of a stock certificate
for such shares. Except as provided in Paragraph 7 below, no
adjustment shall be made for dividends, distributions or other
rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date
is prior to the date such stock certificate is issued.
5. Non-Qualified Stock Options. Each Option granted under the Plan shall
be evidenced by an agreement in such form as the Board shall prescribe
from time to time in accordance with the Plan and shall comply with the
following terms and conditions:
(a) The Option exercise price shall be the fair market value of
the common shares subject to such Option on the date the
Option is granted, which shall be the closing composite price
on the New York Stock Exchange of a common share on the date
of grant as reported in The Wall Street Journal or, if the New
York Stock Exchange is closed on that date, on the last
preceding date on which the New York Stock Exchange was open
for trading; but in no event will such Option exercise price
per share be less than the par value of a common share.
(b) On and as of June 1 each year and/or at such other date or
dates as may be determined by the Board from time to time,
each Eligible Director shall be granted and shall receive an
Option for the number of common shares set forth opposite such
person's name on Schedule 1 hereof or such other number of
shares or such other date or dates as may be determined by the
Board from time to time. The issuance of Options under this
paragraph is subject to there being sufficient available
shares in such year under Paragraph 4(b). Schedule 1 may be
amended by the Board from time to time to reflect any
successor or additional directors or to change the number of
common shares awarded to any existing, successor or additional
directors.
(c) The Option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and
shall be exercisable during the optionee's lifetime only by
the optionee.
(d) Unless otherwise determined by the Board from time to time in
its discretion, the Option shall not be exercisable:
(i) before the expiration of one year from the date it is
granted or after the expiration of ten years from the
date it is granted, and may be exercised during such
period as follows: one-third (33 1/3%) of the total
number of common shares covered by the Option shall
become exercisable each year beginning with the first
anniversary of the date it is granted, provided that
if an Eligible Director ceases to be a director for
any reason, any Option then held by such person shall
automatically become immediately exercisable in full
on the date when such Eligible Director ceases to be
such director;
(ii) unless notice in writing signed by the optionee (or
other person then entitled to exercise such Option)
is delivered to the Secretary of the Company stating
that such Option, or a specified portion thereof, is
being exercised;
(iii) unless payment in full is made for the common shares
being acquired thereunder at the time of exercise,
such payment to be made
(A) in United States dollars by cash or check, or
(B) in lieu thereof, by tendering to the Company
common shares owned by the person exercising the
Option and having a fair market value equal to
the cash exercise price applicable to such
Option exercise, such fair market value to be
the closing composite price on the New York
Stock Exchange of a common share on the last
trading date preceding the date of exercise, as
reported in The Wall Street Journal, or
(C) by a combination of United States dollars and
common shares as aforesaid; and
(iv) unless the person exercising the Option has been, at
all times during the period beginning with the date
of grant of the Option and ending on the date of such
exercise, an Eligible Director of the Company, except
that
(A) if such person shall cease to be an Eligible
Director for reasons other than death while
holding an Option that has not expired and has
not been fully exercised, such person, at any
time within three months of the date he or she
ceased to be such an Eligible Director (but in
no event after the Option has expired under the
provisions of subparagraph 5(d)(i) above) may
exercise any remaining unexercised portion of
such Option to the extent vested as of the date
such person ceased to be such Eligible Director,
or
(B) if any person to whom an Option has been granted
shall die holding an Option that has not expired
and has not been fully exercised, his or her
executors, administrators, heirs or
distributees, as the case may be, may at any
time within one year after the date of such
death (but in no event after the Option has
expired under the provisions of subparagraph
5(d)(i) above) exercise any remaining
unexercised portion of such Option to the extent
vested as of the date of such death.
6. Stock Awards. The Board shall have the right, in its discretion from
time to time, to make Stock Awards to Eligible Directors, including
without limitation awards of shares without restriction, restricted
shares, performance shares and deferred shares. The Board shall
determine the number of common shares to be issued to an Eligible
Director under any Stock Award and all of the terms, conditions and
restrictions, if any, under such Stock Award. The par value of the
common shares so awarded may be paid by the Company on behalf of such
Eligible Director. Each Stock Award under the Plan shall be evidenced
by an instrument in such form and with such terms, conditions and
restrictions, if any, as the Board may approve from time to time in
accordance with the Plan.
7. Dilution and Other Adjustments.
(a) In the event of any change in the outstanding common shares of
the Company by reason of any stock split, stock dividend,
split-up, recapitalization, merger, consolidation, rights
offering, reorganization, combination or exchange of shares, a
sale by the Company of all or part of its assets, any
distribution to shareholders other than a normal cash
dividend, or other extraordinary or unusual event, the number
or kind of shares that may be issued under the Plan, and all
outstanding Options and Stock Awards, shall be adjusted by the
Board so that the proportionate interest of the holder shall
be maintained as before the occurrence of such event. Such
adjustments by the Board shall be conclusive and binding for
all purposes of the Plan.
(b) In the event of a transaction involving (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving corporation, or (iii)
the sale or disposition of all or substantially all of the
Company's assets, all unvested Options shall immediately vest
and all restrictions on any Stock Awards shall immediately
lapse and, in addition, provision shall be made in connection
with such transaction for the assumption of all outstanding
Options by any successor corporation, or the substitution for
such Options of new options of any successor corporation, with
appropriate adjustment as to the number and kind of shares and
the purchase price for shares thereunder, or, in the
discretion of the Board, the Plan and the Options issued
hereunder shall terminate on the effective date of such
transaction and appropriate provision shall be made for
payment to the participant of an amount in cash equal to the
fair market value of a common share multiplied by the number
of common shares subject to the unexercised Options less the
exercise price for such Options; provided however that in no
event shall the Board take any action or make any
determination under this Paragraph 7(b) which would prevent a
transaction described in clause (a) or (b)(ii) or (iii) above
from being treated as a pooling of interests under generally
accepted accounting principles if the transaction is intended
to be treated as a pooling of interests.
(c) In the event of a "Change in Control Event" as defined in The
Talbots, Inc. 1993 Executive Stock Based Incentive Plan, each
Option to the extent not then fully vested or fully
exercisable shall automatically become fully vested and fully
exercisable and any restrictions on all Stock Awards shall
automatically lapse.
8. Miscellaneous Provisions.
(a) Except as expressly provided for in the Plan, no Eligible
Director or other person shall have any claim or right to be
granted an Option or Stock Award under the Plan. Neither the
Plan nor any action taken hereunder shall be construed as
giving any Eligible Director any right to be retained in the
service of the Company whether as a director or otherwise.
(b) To the extent permitted by law, a participant's rights and
interest under the Plan may not be assigned, transferred,
hypothecated or encumbered in whole or in part, either
directly or by operation of law or otherwise (except in the
event of a participant's death, by will or the laws of descent
and distribution), including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy
or in any other manner, and no such right or interest of any
participant in the Plan shall be subject to any obligation or
liability of such participant.
(c) No common shares shall be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in
compliance with all applicable federal, state, local and
foreign securities, securities exchange and other applicable
laws, rules and requirements, including, without limitation,
registration of all common shares issuable under the Plan with
the Securities and Exchange Commission and the listing of all
such common shares with the applicable national securities
exchange.
(d) It shall be a condition to the obligation of the Company to
issue any shares under any Stock Award or to issue common
shares upon exercise of an Option that the participant (or any
beneficiary or person entitled to act hereunder) pay to the
Company, upon its demand, such amount as may be requested by
the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other
taxes. If the amount requested is not paid, the Company may
refuse to issue any shares under any Option or Stock Award.
(e) The expenses of the Plan shall be borne by the Company.
(f) By accepting any Option, Stock Award or other benefit under
the Plan, each participant and each person claiming under or
through such participant shall be conclusively deemed to have
indicated his or her acceptance and ratification of, and
consent to, any action taken under the Plan by the Company or
the Board.
(g) The appropriate officers of the Company shall cause to be
filed any reports, returns or other information regarding
Options or Stock Awards hereunder or any common shares issued
pursuant thereto as may be required by Section 13 or 15(d) of
the Exchange Act or any other applicable statute, rule or
regulation.
(h) The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and is further intended to be
administered in the manner specified in that Rule, and the
Board shall interpret and administer the provisions of the
Plan or awards granted hereunder in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Plan or
any awards granted hereunder.
9. Amendment or Discontinuance. The Plan may be amended at any time and
from time to time by the Board as the Board shall deem advisable;
provided, however, that no amendment shall become effective without
shareholder approval if such shareholder approval is required by law,
rule or regulation, and provided further, to the extent required by
Rule 16b-3 of the Exchange Act as in effect from time to time, Plan
provisions relating to the amount, price and timing of Options shall
not be amended more than once every six months, except that the
foregoing shall not preclude any amendments to comport with changes in
the Internal Revenue Code of 1986, the Employee Retirement Income
Security Act of 1974, or the respective rules thereunder in effect from
time to time. No amendment of the Plan shall materially and adversely
affect any right of any person with respect to any Option or Stock
Award theretofore granted without such person's written consent. No
amendment may become effective if it would cause the Plan to fail to
meet the applicable requirements of Rule 16b-3.
10. Termination. The Plan shall terminate upon the earlier of the following
dates or events to occur, unless further extended by the Board:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
(b) May 22, 2005.
No termination of the Plan shall materially and adversely affect any of the
rights or obligations of any person, without the consent of such person, under
any Option or Stock Award theretofore granted under the Plan.
<PAGE>
SCHEDULE 1
Eligible Number of Common Shares Covered by
Directors Option
------------------------- ------------------------------------
E. Kennan 4000
M. Willes 4000
T. Tokiwa 3000
Y. Kimura 3000
M. Okada 3000
I. Tsuruta 3000
