Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amendment No. 2 to Form S-1 124 804K
2: EX-1.1 Underwriting Agreement 54 165K
3: EX-2.1 Agreement and Plan of Contribution 54 159K
4: EX-3.2 Amended and Restated Cert. of Incorporation 19 66K
5: EX-3.3 Bylaws of Donna Karan International Inc. 20 42K
6: EX-5.1 Opinion of Proskauer Rose Goetz & Mendelsohn LLP 2 10K
15: EX-10.10 Stockholders Agreement 9 29K
16: EX-10.11 Donna Karen Incentive Compensation Plan 8 33K
7: EX-10.2 1996 Stock Incentive Plan 20 96K
8: EX-10.3 1996 Non-Employee Director Stock Option Plan 17 76K
9: EX-10.4 Registration Rights Agreement 33 106K
10: EX-10.5 Form License Agree. Bet Gab Studio & Donna Karan 55 109K
Co.
11: EX-10.6 Guaranty of Donna Karan International Inc. 3 11K
12: EX-10.7 Form of License Agree Bet Donna Karan & Stephen W 12 35K
13: EX-10.8 Employment Agreement/Donna Karan 20 51K
14: EX-10.9 Employment Agreement/Stephan Weiss 18 46K
17: EX-23.1 Consent of Ernst & Young LLP 1 8K
18: EX-24 Power of Attorney 1 10K
EXHIBIT 10.2
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DONNA KARAN INTERNATIONAL INC.
1996 STOCK INCENTIVE PLAN
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Table of Contents
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I. PURPOSES OF THE PLAN.................................. 1
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II. DEFINITIONS........................................... 1
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III. EFFECTIVE DATE........................................ 5
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IV. ADMINISTRATION........................................ 5
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A. Duties of the Committee......................... 5
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B. Advisors........................................ 5
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C. Determinations.................................. 6
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V. SHARES; ADJUSTMENT UPON CERTAIN EVENTS................ 6
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A. Shares to be Delivered; Fractional Shares....... 6
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B. Number of Shares................................ 6
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C. Adjustments; Recapitalization, etc.............. 6
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VI. TERMS OF OPTIONS...................................... 7
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A. Grant........................................... 7
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B. Exercise Price.................................. 8
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C. Number of Shares................................ 8
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D. Exercisability.................................. 8
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E. Exercise of Options............................. 8
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F. Incentive Stock Option Limitations.............. 9
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G. Buy Out and Settlement Provisions............... 9
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H. Modification, Extension and Renewal
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of Options...................................... 9
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I. Other Terms and Conditions...................... 10
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VII. RESTRICTED SHARES..................................... 10
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A. Restricted Shares................................. 10
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B. Awards and Certificates........................... 10
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VIII. ACCELERATION EVENTS................................... 11
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IX. TERMINATION OF EMPLOYMENT............................. 12
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A. General.......................................... 12
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B. Termination by Company for Cause................. 12
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C. Miscellaneous.................................... 12
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D. Cancellation of Options.......................... 12
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X. NONTRANSFERABILITY OF AWARDS.......................... 13
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XI. RIGHTS AS A STOCKHOLDER............................... 13
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XII. TERMINATION, AMENDMENT AND MODIFICATION............... 13
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XIII. USE OF PROCEEDS....................................... 14
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XIV. GENERAL PROVISIONS.................................... 14
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A. Right to Terminate Employment or
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Consultancy....................................... 14
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B. Trusts, etc....................................... 14
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C. Notices........................................... 14
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D. Severability of Provisions........................ 15
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E. Payment to Minors, Etc............................ 15
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F. Headings and Captions............................. 15
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G. Controlling Law................................... 15
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H. Other Benefits.................................... 15
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I. Costs............................................. 15
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J. Section 16(b) of the Exchange Act................. 15
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K. Death/Disability.................................. 16
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XV. ISSUANCE OF STOCK CERTIFICATES;
LEGENDS; PAYMENT OF EXPENSES.......................... 16
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A. Stock Certificates................................ 16
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B. Legends........................................... 16
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XVI. LISTING OF SHARES AND RELATED MATTERS................. 16
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XVII. WITHHOLDING OF TAXES.................................. 17
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DONNA KARAN INTERNATIONAL INC.
1996 STOCK INCENTIVE PLAN
I. PURPOSES OF THE PLAN
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The purposes of this 1996 Stock Incentive Plan (the "Plan") are to enable
Donna Karan International Inc. (the "Company"), each Designated Parent (as
defined herein) and Designated Subsidiaries (as defined herein) to attract,
retain and motivate certain employees and consultants who are important to the
success and growth of the business of the Company, such Designated Parent and
Designated Subsidiaries and to create a long-term mutuality of interest between
such individuals and the stockholders of the Company by granting Awards (as
defined herein) under the Plan.
II. DEFINITIONS
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In addition to the terms defined elsewhere herein, for purposes of this
Plan, the following terms will have the following meanings when used herein with
initial capital letters:
A. "Agreement" means an agreement evidencing the grant of an Award.
B. "Award" means any Option or Restricted Shares granted pursuant to the
Plan.
C. "Board" means the Board of Directors of the Company.
D. "Cause" means with respect to a Participant's Termination of
Employment, (1) in the case where there is no employment or consulting agreement
between the Company, Designated Parent or Designated Subsidiary (as applicable)
and the Participant, or where there is an employment or consulting agreement,
but such agreement does not define cause (or words of like import), termination
due to a Participant's dishonesty, fraud, insubordination, willful misconduct,
gross negligence, refusal to perform services (for any reason other than illness
or incapacity) or materially unsatisfactory performance of his or her duties for
the Company, Designated Parent or Designated Subsidiary, as may be applicable,
or the Participant's conviction of a felony or other crime involving, in the
sole discretion of the Committee, moral turpitude; or (2) in the case where
there is an employment or consulting agreement between the Company,
Designated Parent or Designated Subsidiary (as applicable) and the Participant,
termination that is or would be deemed to be for cause (or words of like import)
as defined under such agreement. The Committee shall have sole discretion to
determine whether cause exists, and its determination shall be final, binding
and conclusive.
E. "Change In Control" means any of the following:
(a) the acquisition by any "person" (as such term is used in
Section 13(d) or 14(d) of the Exchange Act) other than a person who is a
stockholder of the Company on the effective date of the registration
statement filed under the Securities Act relating to the first public
offering of securities of the Company (an "Initial Stockholder") of 30% or
more of the voting power of securities of Company or the acquisition by an
Initial Stockholder other than an affiliate of Gabrielle Studio, Inc.
(and excluding any such acquisition resulting from a purchase, sale or
transfer of Takinyo Inc. stock by and between any of the current
stockholders of Takinyo Inc.) of an additional 5% of the voting power of
securities of the Company over and above that owned immediately after the
closing date of the initial public offering of the Company's Common Stock;
excluding, however, the following: (x) any acquisition by the Company or a
Subsidiary or an affiliate of any of the foregoing, or (y) any acquisition
by an employee benefit plan (or related trust) sponsored or maintained by
the Company or a Subsidiary; or
(b) any merger or sale of substantially all of the assets of the
Company under circumstances where the holders of 20% or more of the equity
securities of the surviving entity of such transaction were not holders of
the Common Stock of the Company immediately prior to the consummation of
such transaction; or
(c) any change in the composition of the Board of Directors of
the Company not approved by (i) a majority of the Board prior to such
change and (ii) by not less than two directors of the Company who were
directors prior to the time any person who was not an Initial Stockholder
acquired 30% or more of the voting power of securities of the Company.
F. "Code" means the Internal Revenue Code of 1986, as amended and
all rules and regulations promulgated thereunder.
G. "Committee" means the committee appointed by the Board to
administer the Plan, consisting of two or more members of the Board as may be
appointed from time to time by the Board each of whom shall qualify as a
"disinterested person" or "non-employee director" as defined in Rule 16b-3
promulgated under Section 16(b) of the Exchange Act to the extent then required.
H. "Common Stock" means the common stock of the Company, par value
$0.01 per share, any Common Stock into which the Common Stock may be converted
and any Common Stock resulting from any reclassification of the Common Stock.
I. "Company" means Donna Karan International Inc., a Delaware
corporation.
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J. "Consultant" means any executive-level consultant of, or advisor
to, the Company, Designated Parent or Designated Subsidiary as determined by the
Committee.
K. "Designated Parent" means any Parent which has been designated
from time to time by the Board to participate in the Plan.
L. "Designated Subsidiary" means any Subsidiary which has been
designated from time to time by the Board to participate in the Plan.
M. "Disability" means (1) in the case where there is no employment
agreement between the Company, Designated Parent or Designated Subsidiary (as
applicable) and the Participant, or where there is an employment agreement, but
such agreement does not define disability, total and permanent disability, as
defined in Section 22(e)(3) of the Code; or (2) in the case where there is an
employment agreement between the Company, Designated Parent or Designated
Subsidiary (as applicable) and the Participant, disability as defined under such
employment agreement.
N. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
O. "Fair Market Value" of a share of Common Stock means, for
purposes of this Plan, unless otherwise required by any applicable provision of
the Code or any regulations issued thereunder, as of any date, the last sales
prices reported for the Common Stock on the applicable date, (i) as reported by
the principal national securities exchange in the United States on which it is
then traded, or (ii) if not traded on any such national securities exchange, as
quoted on an automated quotation system sponsored by the National Association of
Securities Dealers, or if the sale of the Common Stock shall not have been
reported or quoted on such date, on the first day prior thereto on which the
Common Stock was reported or quoted. If the Common Stock is not readily
tradable on a national securities exchange or any system sponsored by the
National Association of Securities Dealers, its Fair Market Value shall be such
amount as is set by the Committee in good faith.
P. "Incentive Stock Option" means any Option awarded under this Plan
intended to be and designated as an "Incentive Stock Option" within the meaning
of Section 422 of the Code. Notwithstanding anything herein to the contrary,
Incentive Stock Option shall be granted solely to Key Employees and shall not be
granted to Consultants.
Q. "Key Employee" means any person who is an officer or other
valuable employee of the Company, (regardless of title or position) a Designated
Parent or a Designated Subsidiary, as determined by the Committee in its sole
discretion.
R. "Non-Qualified Stock Option" shall mean any Option awarded under
this Plan that is not an Incentive Stock Option.
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S. "Option" means the right to purchase the number of shares granted
in the Option Agreement at a prescribed purchase price on the terms specified in
the Plan.
T. "Parent" means, other than the Company, (i) any corporation in an
unbroken chain of corporations ending with the Company which owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain or (ii) any corporation or
trade or business (including, without limitation, a partnership or limited
liability company) which controls 50% or more (whether by ownership of stock,
assets or an equivalent ownership interest) of the Company.
U. "Participant" means a Key Employee or Consultant who is granted
an Award under the Plan which Award has not expired.
V. "Restricted Shares" means shares of Common Stock or the right to
receive shares of Common Stock, as the case may be, awarded to a Key Employee of
the Company, Designated Parent or a Designated Subsidiary pursuant to Article
VII.
W. "Retirement" means a Termination of Employment without Cause at
or after age 65 (or, with the consent of the Committee, before age 65).
X. "Securities Act" means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.
Y. "Share" means a share of Common Stock.
Z. "Subsidiary" means, other than the Company, (i) any corporation
in an unbroken chain of corporations beginning with the Company which owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain; (ii) any corporation or
trade or business (including, without limitation, a partnership or limited
liability company) which is controlled 50% or more (whether by ownership of
stock, assets or an equivalent ownership interest) by the Company or one of its
Subsidiaries; or (iii) any other entity, approved by the Board as a Subsidiary
under the Plan, in which the Company or any of its Subsidiaries has an equity or
other ownership interest.
AA. "Ten Percent Stockholder" shall mean a person owning at the time
the Option is granted Common Stock of the Company possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of a Designated Parent or Designated Subsidiary.
AB. "Termination of Employment" with respect to an individual means
that individual is no longer actively employed as an employee by the Company, a
Parent or a Subsidiary, irrespective of whether or not such employee is
receiving salary continuance pay, is continuing to participate in other employee
benefit programs or is otherwise receiving severance type payments. With
respect to a Consultant, "Termination of Employment" means that the Consultant
is no longer acting as a Consultant to the Company, Designated Parent or
Designated Subsidiary. In the event an entity shall cease to be a Subsidiary,
there shall be deemed a
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Termination of Employment of any individual who is not otherwise an employee or
Consultant of the Company, a Parent or another Subsidiary at the time the entity
ceases to be a Subsidiary. In the event an entity shall cease to be a Parent,
there shall be deemed a Termination of Employment of any individual who is not
otherwise an employee or Consultant of the Company, another Parent or a
Subsidiary at the time the entity ceases to be a Parent.
III. EFFECTIVE DATE
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The Plan shall become effective on ___________. Grants of Awards by
the Committee under the Plan may be made on or after the Effective Date of the
Plan.
IV. ADMINISTRATION
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A. Duties of the Committee. The Plan shall be administered and
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interpreted by the Committee. The Committee shall have full authority to
interpret the Plan and to decide any questions and settle all controversies and
disputes that may arise in connection with the Plan; to establish, amend and
rescind rules for carrying out the Plan; to administer the Plan, subject to its
provisions; to select Participants in, and grant Awards under, the Plan; to
determine the terms, exercise price and form of exercise payment for each Option
granted under the Plan and the terms and conditions (which need not be
identical) of all Options granted under the Plan; when and how an Award can be
exercised and whether in whole or in installments; to determine whether and to
what extent Incentive Stock Options and Non-Qualified Stock Options, or any
combination thereof, are to be granted hereunder to one or more Key Employees or
Consultants; to prescribe the form or forms of instruments evidencing Awards and
any other instruments required under the Plan (which need not be uniform); and
to make all other determinations and to take all such steps in connection with
the Plan and the Awards as the Committee, in its sole discretion, deems
necessary or desirable. The Committee shall not be bound to any standards of
uniformity or similarity of action, interpretation or conduct in the discharge
of its duties hereunder, regardless of the apparent similarity of the matters
coming before it. Any determination, action or conclusion of the Committee
shall be final, conclusive and binding on all parties. Anything in the Plan to
the contrary notwithstanding, no term of this Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the Plan
under Section 422 of the Code, or, without the consent of the Participants
affected, to disqualify any Incentive Stock Option under such Section 422.
B. Advisors. The Committee may employ such legal counsel,
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consultants and agents as it may deem desirable for the administration of the
Plan, and may rely upon any advice or opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company.
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C. Determinations. Each determination, interpretation or other
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action made or taken pursuant to the provisions of this Plan by the Committee
shall be final, conclusive and binding for all purposes and upon all persons,
including, without limitation, the Participants, the Company, a Designated
Parent and Designated Subsidiaries, directors, officers and other employees of
the Company, a Designated Parent and Designated Subsidiaries, and the respective
heirs, executors, administrators, personal representatives and other successors
in interest of each of the foregoing.
V. SHARES; ADJUSTMENT UPON CERTAIN EVENTS
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A. Shares to be Delivered; Fractional Shares. Shares to be issued
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under the Plan shall be made available, at the sole discretion of the Board,
either from authorized but unissued Shares or from issued Shares reacquired by
the Company and held in treasury. No fractional Shares will be issued or
transferred upon the exercise of any Option. Fractional Shares resulting from
any adjustment in Awards described in Article V(C) or otherwise shall be
aggregated. With respect to any remaining fractional Share, upon exercise of
any Option, the Company shall pay a cash adjustment equal to the pro rata
portion of the Fair Market Value of one Share on the date of exercise.
B. Number of Shares. Subject to adjustment as provided in this
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Article V, the maximum aggregate number of Shares that may be issued under the
Plan shall be 1,600,000. If Options are for any reason cancelled, or expire or
terminate unexercised, the Shares covered by such Options shall again be
available for the grant of Options, subject to the foregoing limit. If
Restricted Shares are forfeited or otherwise do not become vested, the Shares
covered by such Restricted Share Agreement shall again be available for the
grant of Awards, subject to the foregoing limit.
C. Adjustments; Recapitalization, etc.
-----------------------------------
1. The existence of the Plan and the Awards granted hereunder
shall not affect in any way the right or power of the Board or the stockholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting Common
Stock, the dissolution or liquidation of the Company, a Designated Parent or
Designated Subsidiary, any sale or transfer of all or part of their assets or
business or any other corporate act or proceeding. The Committee may make or
provide for such adjustments in the maximum number of Shares specified in
Article V(B), in the number of Shares covered by outstanding Awards granted
hereunder, and/or in the exercise price, grant price or Purchase Price
applicable to such Awards or such other adjustments in the number and kind of
securities received upon the exercise of Options, as the Committee in its sole
discretion may determine is equitably required to prevent dilution or
enlargement of the rights of Participants or to otherwise recognize the effect
that otherwise would result from any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, merger, consolidation,
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spin-off, reorganization, partial or complete liquidation, issuance of rights or
warrants to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing.
2. In the event of a merger or consolidation in which the
Company or a Designated Parent is not the surviving entity or in the event of
any transaction that results in the acquisition of substantially all of the
Company's or a Designated Parent's outstanding Common Stock by a single person
or entity or by a group of persons and/or entities acting in concert, or in the
event of the sale or transfer of all of the Company's or a Designated Parent's
assets (the foregoing being referred to as "Acquisition Events"), then the
Committee may in its sole discretion terminate all outstanding Options effective
as of the consummation of the Acquisition Event by delivering notice of
termination to each Participant at least 20 days prior to the date of
consummation of the Acquisition Event; provided that, during the period from the
date on which such notice of termination is delivered to the consummation of the
Acquisition Event, each Participant shall have the right to exercise in full all
the Options that are then outstanding (without regard to limitations on exercise
otherwise contained in the Options) but contingent on occurrence of the
Acquisition Event, and, provided that, if the Acquisition Event does not take
place within a specified period after giving such notice for any reason
whatsoever, the notice and exercise shall be null and void.
Notwithstanding the foregoing, at the discretion of the Committee, the
provisions contained in this subsection shall be adjusted as they apply to
Options granted to Participants within six months before the occurrence of an
Acquisition Event if the holder of such Option is subject to the reporting
requirements of Section 16(a) of the Exchange Act in such manner as determined
by the Committee, including without limitation, terminating Options at specific
dates after the Acquisition Event, in order to give the Participant the benefit
of the Option. If an Acquisition Event occurs, to the extent the Committee does
not terminate the outstanding Options pursuant to this Article V(C)(2), then the
provisions of Article V(C)(1) shall apply.
3. Except as hereinbefore expressly provided, the issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash, property, labor or services, upon direct
sale, upon the exercise of rights or warrants to subscribe therefor or upon
conversion of shares or other securities, and in any case whether or not for
fair value, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number and class of shares and/or other securities or
property subject to Awards theretofore granted or the exercise price, grant
price or Purchase Price (as hereinafter defined).
VI. TERMS OF OPTIONS
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A. Grant. The Committee may grant Non-Qualified Stock Options or
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Incentive Stock Options, or any combination thereof to Key Employees and may
grant Non-Qualified Stock Options to Consultants. Notwithstanding the
foregoing, that during the calendar year 1996, in
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no event shall the Committee grant Options to Stephan Weiss, Donna Karan, Frank
R. Mori and Tomio Taki. Each Option shall be evidenced by an Option Agreement
in such form as the Committee shall approve from time to time.
B. Exercise Price. The purchase price per Share (the "Purchase
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Price") deliverable upon the exercise of a Non-Qualified Stock Option shall be
determined by the Committee and set forth in a Participant's Option Agreement,
provided that the Purchase Price shall not be less than 100% of the Fair Market
Value of a Share at the time of grant; provided, however, if an Incentive Stock
Option is granted to a Ten Percent Stockholder, the Purchase Price shall be no
less than 110% of the Fair Market Value of a Share.
C. Number of Shares. With respect to an Option granted to a
----------------
Participant, the Option Agreement shall specify the number of Shares underlying
such Option, as determined by the Committee in its sole discretion.
D. Exercisability. At the time of grant, the Committee shall
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specify when and on what terms the Options granted shall be exercisable. In the
case of Options not immediately exercisable in full, the Committee may at any
time accelerate the time at which all or any part of the Options may be
exercised and may waive any other conditions to exercise. No Option shall be
exercisable after the expiration of ten years from the date of grant; provided,
however, the term of an Incentive Stock Option granted to a Ten Percent
Stockholder may not exceed five years. Each Option shall be subject to earlier
termination as provided in Article IX below. Other than on a Change In Control,
no Option which is granted to a Participant who is subject to Section 16(b) of
the Exchange Act shall be exercisable before six months after it is granted
solely to the extent required by Section 16(b) of the Exchange Act.
E. Exercise of Options.
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1. A Participant may elect to exercise all or any portion of
the Participant's Option by giving written notice to the Committee of such
election and of the number of Shares with respect to such Option which
Participant has elected to purchase, accompanied by payment in full of the
aggregate Purchase Price for the number of Shares for which the Option is being
exercised.
2. Shares purchased pursuant to the exercise of Options shall
be paid for at the time of exercise as follows:
(a) in cash or by check, bank draft or money order payable to the
order of Company;
(b) if the Shares are traded on a national securities exchange,
through the delivery of irrevocable instructions to a broker to deliver
promptly to the Company an amount equal to the aggregate Purchase Price; or
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(c) on such other terms and conditions as may be acceptable to
the Committee (which may include payment in full or in part by the transfer
of Shares which, if owned by a Participant who is subject to Section 16(b)
of the Exchange Act, have been held by the Participant for at least six
months solely to the extent required by Section 16(b) of the Exchange Act,
or the surrender of vested Options owned by the Participant) and in
accordance with applicable law.
F. Incentive Stock Option Limitations. To the extent that the
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aggregate Fair Market Value (determined as of the time of grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year under the Plan and/or any
other stock option plan of the Company or any subsidiary or parent corporation
(within the meaning of Section 424 of the Code) exceeds $100,000, such Options
shall be treated as Options which are not Incentive Stock Options. To the
extent that any Option does not qualify as an Incentive Stock Option (whether
because of its provisions or the time or manner of its exercise or otherwise),
such Option or the portion thereof which does not qualify, shall constitute a
separate Non-Qualified Stock Option.
To the extent permitted under Section 422 of the Code, or the
applicable regulations thereunder or any applicable Internal Revenue Service
pronouncement, if (i) a Participant's employment with the Company or Designated
Subsidiary is terminated by reason of death, Disability, Retirement or
Termination of Employment without Cause (except as otherwise provided herein),
and (ii) the portion of any Incentive Stock Option that would be exercisable
during the post-termination period specified under Article IX but for the
$100,000 limitation currently contained in Section 422(d) of the Code, is
greater than the portion of such Stock Option that is immediately exercisable as
an `incentive stock option' during such post-termination period under Section
422, such excess shall be treated as a Non-Qualified Stock Option. If the
exercise of an Incentive Stock Option is accelerated for any reason, any portion
of such Option that is not exercisable as an Incentive Stock Option by reason of
the $100,000 limitation contained in Section 422(d) of the Code shall be treated
as a Non-Qualified Stock Option.
Should any of the foregoing provisions not be necessary in order for
the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend the Plan accordingly,
without the necessity of obtaining the approval of the shareholders of the
Company, except as otherwise required by law.
G. Buy Out and Settlement Provisions. The Committee may at any time
---------------------------------
on behalf of the Company offer to buy out an Option previously granted, based on
such terms and conditions as the Committee shall establish and communicate to
the Participant at the time that such offer is made.
H. Modification, Extension and Renewal of Options. The Committee
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may modify, extend or renew outstanding Options granted under the Plan, or
accept the surrender of outstanding Options (up to the extent not theretofore
exercised) and authorize the granting of new Options in substitution therefor
(to the extent not theretofore exercised).
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I. Other Terms and Conditions. Options may contain such other
--------------------------
provisions, which shall not be inconsistent with any of the foregoing terms of
the Plan, as the Committee shall deem appropriate including, without limitation,
permitting "reloads" such that the same number of Options are granted as the
number of Options exercised, shares used to pay for the exercise price of
Options or shares used to pay withholding taxes ("Reloads"). With respect to
Reloads, the exercise price of the new Stock Option shall be the Fair Market
Value on the date of the "reload" and the term of the Stock Option shall be the
same as the remaining term of the Options that are exercised, if applicable, or
such other exercise price and term as determined by the Committee.
VII. RESTRICTED SHARES
-----------------
Awards granted pursuant to this Article VII shall be evidenced by an
Award Agreement in such form as the Committee shall from time to time approve
and the terms and conditions of such Awards shall be set forth therein.
Restricted Shares may be issued either alone or in addition to other Awards
granted under the Plan.
A. Restricted Shares. The Committee shall determine the eligible
-----------------
persons to whom, and the time or times at which, grants of Restricted Shares
will be made, the number of Shares to be awarded, the price (if any) to be paid
by the recipient, the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards. Notwithstanding the foregoing, during
the calendar year 1996, in no event shall the Committee grant Restricted Shares
to Stephan Weiss, Donna Karan, Frank R. Mori and Tomio Taki. The Committee may
condition the grant of Restricted Shares upon the attainment of specified
performance goals or such other factors as the Committee may determine, in its
sole discretion.
B. Awards and Certificates. The prospective Participant selected to
-----------------------
receive Restricted Shares shall not have any rights with respect to such Award,
unless and until such Participant has delivered a fully executed copy of the
Award Agreement to the Company and has otherwise complied with the applicable
terms and conditions of such Award. Further, such Award shall be subject to the
following conditions:
1. Purchase Price. The purchase price for Restricted Shares
--------------
may be less than their par value and may be zero, to the extent permitted by
applicable law.
2. Acceptance. Awards of Restricted Shares must be accepted
----------
within a period of sixty (60) days (or such shorter period as the Committee may
specify at grant) after the Award date, by executing a Restricted Share Award
Agreement and by paying whatever price (if any) the Committee has designated
thereunder.
3. Certificates. Upon an Award of Restricted Shares, the
------------
Committee may, in its sole discretion, decide to either have the Company or
other agent appointed by the Committee hold the share certificates
representing such Restricted Shares in escrow or issue share certificates to the
Participant.
10
4. Restrictions/Vesting. Restricted Shares may not be sold,
--------------------
assigned, transferred, pledged, hypothecated or otherwise disposed of, except by
will or the laws of descent and distribution within the six (6) month period
following the date the Award is granted or such other period as determined by
the Committee (including no period). Any attempt to dispose of any such Shares
of stock in contravention of such restrictions shall be null and void and
without effect. Unless otherwise provided in the applicable Agreement, a
Participant's Restricted Shares shall be fully vested on the date of the Award.
5. Ownership. Except to the extent otherwise set forth in the Award
---------
Agreement, the Participant shall possess all incidents of ownership of such
shares, subject this Article VII, including the right to receive dividends with
respect to such Shares and to vote and tender such Shares. The Committee, in its
sole discretion, as determined at the time of the Award, may permit or require
the payment of dividends to be deferred.
VIII. ACCELERATION EVENTS
-------------------
Unless otherwise provided in the applicable Agreement, all Options
granted and not previously exercisable shall become vested and fully exercisable
immediately upon the occurrence of a Change In Control and the restrictions to
which Restricted Shares granted prior to the Change In Control are subject shall
lapse as if the applicable Restriction Period had ended upon such Change In
Control.
11
The Committee, in its sole discretion, may provide, as part of the
Agreement or otherwise, for the purchase of any Option granted under the Plan by
the Company, a Designated Parent or a Designated Subsidiary for an amount of
cash equal to the excess of the Change In Control Price (as defined herein) of
the shares of Common Stock covered by such Option, over the aggregate exercise
price or purchase price of such Option. For purposes of this Plan, Change In
Control Price shall mean the higher of (i) the highest price per share of Common
Stock paid in any transaction related to a Change In Control, or (ii) the
highest Fair Market Value at any time during the 60-day period preceding a
Change In Control.
IX. TERMINATION OF EMPLOYMENT
-------------------------
A. General. Unless otherwise provided in the applicable Agreement,
-------
if a Participant's employment or consultancy shall terminate due to Retirement,
Disability or for any reason other than for Cause prior to the complete exercise
of an Option (or deemed exercise thereof), then such Option shall thereafter be
exercisable to the extent such Option is vested and shall remain exercisable for
[ ] [years/months]; provided, however, that no Option may be exercised after
the scheduled expiration date of such Option. Unless otherwise provided in the
Restricted Share Agreement, if a Participant's employment or consultancy shall
terminate due to Retirement, Disability or for any reason other than for Cause
at any time, Restricted Shares shall not be forfeited for any reason and the
restrictions in Article VII(B)(4) shall continue to apply to such Restricted
Shares. Any termination of employment or consultancy by the Company for Cause
will be treated in accordance with the provisions of paragraph (B) below.
B. Termination by Company for Cause. Unless otherwise provided in
--------------------------------
the applicable Agreement, if a Participant's employment or consultancy with the
Company, Parent or a Subsidiary shall be terminated by the Company, Parent or
such Subsidiary for Cause, then all outstanding Options held by such Participant
shall immediately terminate and rights to all Restricted Shares shall be
forfeited immediately.
C. Miscellaneous. The Committee may determine whether any given
-------------
leave of absence constitutes a Termination of Employment. Awards granted under
the Plan shall not be affected by any change of employment so long as the
Participant continues to be an employee of the Company, Parent or a Subsidiary.
D. Cancellation of Options. Except as otherwise provided in Article
-----------------------
VIII, no Options that were not exercisable during the period of employment shall
thereafter become exercisable upon a Termination of Employment for any reason or
no reason whatsoever, and such Options shall terminate and become null and void
upon a Termination of Employment, unless the Committee determines in its sole
discretion that such Options shall be exercisable.
12
X. NONTRANSFERABILITY OF AWARDS
----------------------------
No Award shall be transferable by the Participant otherwise than by
will or under applicable laws of descent and distribution, and during the
lifetime of the Participant may be exercised only by the Participant or his or
her guardian or legal representative. In addition, except as provided above, no
Award shall be assigned, negotiated, pledged or hypothecated in any way (whether
by operation of law or otherwise), and no Award shall be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, negotiate,
pledge or hypothecate any Award, or in the event of any levy upon any Award by
reason of any execution, attachment or similar process contrary to the
provisions hereof, such Award shall immediately terminate and become null and
void.
XI. RIGHTS AS A STOCKHOLDER
-----------------------
A Participant shall have no rights as a stockholder with respect to
any Shares covered by such Participant's Award until such Participant shall have
become the holder of record of such Shares, and no adjustments shall be made for
dividends in cash or other property or distributions or other rights in respect
to any such Shares, except as otherwise specifically provided in this Plan.
XII. TERMINATION, AMENDMENT AND MODIFICATION
---------------------------------------
The Plan shall terminate at the close of business on the tenth
anniversary of the Effective Date (the "Termination Date"), unless terminated
sooner as hereinafter provided, and no Award shall be granted under the Plan on
or after that date. The termination of the Plan shall not terminate any
outstanding Awards that by their terms continue beyond the Termination Date. At
any time prior to the Termination Date, the Committee or Board may amend or
terminate the Plan or suspend the Plan in whole or in part.
The Committee or Board may at any time, and from time to time, amend,
in whole or in part, any or all of the provisions of the Plan (including any
amendment deemed necessary to ensure that the Company complies with any
regulatory requirements referred to in Article XIV), or suspend or terminate it
entirely, retroactively or otherwise; provided, however, that, unless otherwise
-------- -------
required by law or specifically provided herein, the rights of a Participant
with respect to Awards granted prior to such amendment, suspension or
termination, may not, be materially impaired without the consent of such
Participant and, provided further, without the approval of the stockholders of
the Company entitled to vote, solely to the extent required by Section 16(b) of
the Exchange Act, no amendment may be made which would (i) increase the
aggregate number of shares of Common Stock that may be issued under this Plan
(except by operation of Article V) or, with respect to Awards; (ii) decrease the
minimum Purchase Price of any Award; (iii) extend the maximum period during
which an Option may be exercised under Article VI(D) or (iv) effect any change
that would require stockholder approval under Section 16(b) of the Exchange Act.
13
The Committee or the Board may amend the terms of any Award granted,
prospectively or retroactively, but, subject to Article VIII above or as
otherwise provided herein, no such amendment or other action by the Committee or
the Board shall materially impair the rights of any Participant without the
Participant's consent. No modification of an Award shall adversely affect the
status of an Incentive Stock Option as an incentive stock option under Section
422 of the Code. Notwithstanding the foregoing and solely to the extent
required by Section 16(b) of the Exchange Act, neither the Board nor the
Committee may make any determination or interpretation or take any other action
which would cause any member of the Committee to cease to be a "disinterested
person" or "non-employee director" with regard to the Plan for purposes of Rule
16b-3 under the Exchange Act.
XIII. USE OF PROCEEDS
---------------
The proceeds of the sale of Shares subject to Awards under the Plan
are to be added to the general funds of Company and used for its general
corporate purposes as the Board shall determine.
XIV. GENERAL PROVISIONS
------------------
A. Right to Terminate Employment or Consultancy. Neither the
--------------------------------------------
adoption of the Plan nor the grant of Awards shall impose any obligation on the
Company, a Designated Parent or Designated Subsidiaries to continue the
employment or consultancy of any Participant, nor shall it impose any obligation
on the part of any Participant to remain in the employ of the Company,
Designated Parent or Designated Subsidiaries.
B. Trusts, etc. Nothing contained in the Plan and no action taken
------------
pursuant to the Plan (including, without limitation, the grant of any Award
thereunder) shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and any Participant or the executor,
administrator or other personal representative or designated beneficiary of such
Participant, or any other persons. If and to the extent that any Participant or
such Participant's executor, administrator or other personal representative, as
the case may be, acquires a right to receive any payment from the Company
pursuant to the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company.
C. Notices. Any notice to the Company required by or in respect of
-------
this Plan will be addressed to Donna Karan International Inc. at 550 Seventh
Avenue, New York, New York 10018, Attention: General Counsel (or such other
place of business as shall become Donna Karan International Inc. principal
executive offices from time to time). Each Participant shall be responsible for
furnishing the Committee with the current and proper address for the mailing to
such Participant of notices and the delivery to such Participant of agreements,
Shares and payments. Any such notice to the Participant will, if the Company
has received notice that the Participant is then deceased, be given to the
Participant's personal representative if such representative has previously
informed the Company of his status and address (and has provided
14
such reasonable substantiating information as the Company may request) by
written notice under this Article XIV. Any notice required by or in respect of
this Plan will be deemed to have been duly given when delivered in person or
when dispatched by telecopy or one business day after having been dispatched by
a nationally recognized overnight courier service or three business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid. The Company assumes no responsibility or obligation
to deliver any item mailed to such address that is returned as undeliverable to
the addressee and any further mailings will be suspended until the Participant
furnishes the proper address.
D. Severability of Provisions. If any provisions of the Plan shall
--------------------------
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan, and the Plan shall be construed and
enforced as if such provisions had not been included.
E. Payment to Minors, Etc. Any benefit payable to or for the
-----------------------
benefit of a minor, an incompetent person or other person incapable of receipt
thereof shall be deemed paid when paid to such person's guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, the Company and their
employees, agents and representatives with respect thereto.
F. Headings and Captions. The headings and captions herein are
---------------------
provided for reference and convenience only. They shall not be considered part
of the Plan and shall not be employed in the construction of the Plan.
G. Controlling Law. The Plan shall be construed and enforced
---------------
according to the laws of the State of Delaware, without giving effect to rules
governing the conflicts of laws.
H. Other Benefits. No payment under this Plan shall be considered
--------------
compensation for purposes of computing benefits under any retirement plan of the
Company, a Designated Parent or a Designated Subsidiary nor affect any benefits
under any other benefit plan now or subsequently in effect under which the
availability of benefits is related to the level of compensation.
I. Costs. The Company shall bear all expenses included in
-----
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.
J. Section 16(b) of the Exchange Act. All elections and
---------------------------------
transactions under the Plan by persons subject to Section 16 of the Exchange Act
involving shares of Common Stock shall be intended to comply with any applicable
condition under Rule 16b-3 as then in effect. In such event, the Committee may
at any time impose any limitations upon the exercise of an Option or issuance of
Shares or other conditions which, in the Committee's discretion, are necessary
or desirable in order to comply with Section 16(b) and the rules and regulations
thereunder and may establish and adopt written administrative guidelines,
designed to facilitate compliance with Section 16(b) of the Exchange Act, as it
may deem necessary or proper for the administration and operation of the Plan
and the transaction of business thereunder.
15
K. Death/Disability. The Committee may in its discretion require the
----------------
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.
XV. ISSUANCE OF STOCK CERTIFICATES;
LEGENDS; PAYMENT OF EXPENSES
----------------------------
A. Stock Certificates. Upon any exercise of an Option and payment
------------------
of the exercise price as provided in such Option or lapse of restriction on a
Restricted Share, a certificate or certificates for the Shares as to which such
Award has been granted shall be issued by the Company in the name of the person
or persons receiving such Award and shall be delivered to or upon the order of
such person or persons.
B. Legends. All certificates for shares of Common Stock delivered
-------
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed or any national securities
association system upon whose system the Stock is then quoted, any applicable
federal or state securities law, and any applicable corporate law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
If the Board or the Committee determines in its sole discretion, each
Participant shall, upon any exercise or conversion of an Award, execute and
deliver to the Company a written statement, in form satisfactory to the Company,
representing and warranting that such Participant is purchasing or accepting the
Shares then acquired for such Participant's own account and not with a view to
the resale or distribution thereof, that any subsequent offer for sale or sale
of any such Shares shall be made either pursuant to (i) a registration statement
on an appropriate form under the Securities Act, which registration statement
shall have become effective and shall be current with respect to the Shares
being offered and sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, and that in claiming such exemption the
Participant will, prior to any offer for sale or sale of such Shares, obtain a
favorable written opinion, satisfactory in form and substance to the Company,
from counsel approved by the Company as to the availability of such exception.
XVI. LISTING OF SHARES AND RELATED MATTERS
-------------------------------------
If the Company determines, in its discretion, that the listing,
registration, or qualification of the Award or the Shares subject to the Award
upon any securities exchange or under any state or federal securities or other
law or regulation, or the exemption from such listing, registration or
qualification requirements, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition to or in connection
with the granting of
16
an Option, the exercisability of an Award or the issue or purchase of Shares
thereunder or the vesting of Restricted Shares, no Shares shall be issued upon
the exercise of the Option unless the listing, registration, qualification,
exemption, consent or approval has been effected or obtained free of any
conditions not acceptable to the Company. The holder of the Option or
Restricted Share will supply the Company with certificates, representations, and
information that the Company requests and shall otherwise cooperate with the
Company in obtaining the listing, registration, qualification, exemption,
consent or approval. Without limiting the foregoing, no Shares shall be issued
upon the exercise of an Option or vesting of Restricted Shares if the Company or
the Committee determines that the issuance of shares upon exercise or vesting
does not comply with any applicable federal and state securities laws. The
Committee in its sole discretion may require as a condition of exercise of any
Option, an opinion of counsel for the holder of the Option that shares to be
issued upon exercise of the Option are exempt from registrations under the
Securities Act or applicable state "blue sky" laws. If the Company or the
Committee, as part of an offering of securities or otherwise, finds it
desirable, because of federal or state regulatory requirements, to reduce the
period during which any Options may be exercised, the Company or the Committee
may, in its discretion and without the Participant's consent, reduce the
exercise period on not less than 15 days' written notice to the Participant.
XVII. WITHHOLDING OF TAXES
--------------------
The Company shall have the right to deduct from any payment to be made
to a Participant, or to otherwise require, prior to the issuance or delivery of
any shares of Common Stock or the payment of any cash hereunder, payment by the
Participant of, any Federal, state or local taxes required by law to be
withheld.
The Committee may permit any such withholding obligation with regard
to any Participant to be satisfied by reducing the number of shares of Common
Stock otherwise deliverable or by delivering shares of Common Stock already
owned. If the Company is subject to reporting under the Exchange Act, a person
required to file reports under Section 16(a) of the Exchange Act with respect to
securities of the Company may elect to have a sufficient number of shares of
Common Stock withheld to fulfill such tax obligations (hereinafter a
"Withholding Election") only if the election complies with such conditions as
are necessary to prevent the withholding of such shares from being subject to
Section 16(b) of the Exchange Act. To the extent necessary under then current
law, such conditions shall include the following: (x) the withholding election
shall be subject to the disapproval of the Committee and (y) the withholding
election shall be made (i) during the period beginning on the third business day
following the date of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date or is made in advance but takes effect during
such period, (ii) six months before the Award becomes taxable, or (iii) during
any other period in which a withholding election may be made under the
provisions of Rule 16b-3 promulgated pursuant to the Act. Any fraction of a
share of Common Stock required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in cash by the Participant.
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