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Exhibit 10.18
THE STOCK APPRECIATION AND PHANTOM STOCK UNIT PLAN
OF
PAYLESS SHOESOURCE, INC. AND ITS SUBSIDIARIES
FOR
PAYLESS SHOESOURCE INTERNATIONAL EMPLOYEES
Xxxxxxx March 16, 2000
PART I. GENERAL
1. PURPOSE. The purpose of the Plan is to aid Payless ShoeSource, Inc.
and its subsidiaries in attracting, retaining, motivating and rewarding certain
management employees.
2. DEFINITIONS. Whenever used herein, the following terms shall have
the meanings set forth below:
(a) "Agreement" means the agreement between the Company or any
International Subsidiary and a Participant evidencing the award of Stock
Appreciation Units or Phantom Stock Units and containing the terms and
conditions, not inconsistent with the Plan, that are applicable to such
Units.
(b) "Award" means an award of Units under the Plan.
(c) "Exercise Price" means, with respect to a Stock Appreciation
Unit, the Fair Market Value of a share of Stock on the date the Stock
Appreciation Unit is granted.
(d) "Board" means the Board of Directors of Payless ShoeSource,
Inc., a Delaware corporation.
(e) "Committee" means a committee designated by the Board which
shall consist of not less than 2 members of the Board who shall be
appointed by and serve at the pleasure of the Board and who shall be
"outside" directors within the meaning of Section 162(m) of the Code.
(f) "Company" means Payless ShoeSource, Inc., a Delaware
corporation.
(g) "Disability" means a total and permanent disability which
enables the Participant to be eligible for and to receive disability
benefits under (i) the Social Security Act of the United States of America
or (ii) under any comparable governmental arrangements in the country in
which the Participant resides.
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(h) "Fair Market Value" of a share of Stock means the average of
the high and low price of the Stock on the New York Stock Exchange on the
date in question, or if no sales occurred on such day, on the last
preceding day on which Stock was traded.
(i) "International Subsidiary" means any Subsidiary primarily
engaged in business outside of the United States of America.
(j) "Participant" means an individual to whom an Award for Stock
Appreciation Units or a Phantom Stock Units is made under the Plan.
(k) "Phantom Stock Unit" means a non-transferrable,
non-assignable right described in Part II of the Plan awarded by the
Company or any Subsidiary and approved by the Committee under or pursuant
to the Plan which provides for the payment of an amount in cash in
accordance with such terms and conditions, not inconsistent with the Plan,
that are applicable to such Unit.
(l) "Plan" means The Stock Appreciation and Phantom Stock Unit
Plan of Payless ShoeSource, Inc. and Its Subsidiaries For Payless
ShoeSource International Employees.
(m) "Retirement" means "retirement" as that word is defined in
any retirement plan sponsored by an International Subsidiary which is
applicable to the Participant or, if there is no such plan, as defined in
the Company's Profit Sharing Plan.
(n) "Subsidiary" means any company owned, directly or indirectly
by the Company or any subsidiary thereof.
(o) "Stock" means common stock of the Company.
(p) "Stock Appreciation Unit" means a non-transferrable, non-
assignable right described in Part II of the Plan awarded by the Company or
any Subsidiary and approved by the Committee under or pursuant to the Plan
which provides for the payment of an amount in cash in accordance with such
terms and conditions, not inconsistent with the Plan, that are applicable
to such Unit and whose Exercise Price is the Fair Market Value of a share
of Stock on the date of the Award.
(q) "Unit" means a Stock Appreciation Unit or a Phantom Stock
Unit. Each Phantom Stock Unit shall represent the right to receive 100% of
the value of a share of Stock on the day the Unit vests. Each Stock
Appreciation Unit shall represent the right to receive the difference, if
positive, between the Fair Market Value of a share of stock on the date the
Unit is exercised and the
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Exercise Price of the Unit. Units are not shares of stock and do not
entitle Participants to receive Stock or exercise any rights incident to
ownership of Stock, except that the Committee may provide in an agreement
that holders of Phantom Stock Units will receive dividend equivalents if
any cash dividends are paid on its Stock by the Company.
3. ADMINISTRATION. The Plan shall be administered by the
Committee. Subject to all the applicable provisions of the Plan, including,
without limitation, Section 4 of Part I of the Plan, the Committee is authorized
to approve Awards of Units in accordance with the Plan, to construe and
interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, and to make all determinations and take all actions
necessary or advisable for the Plan's administration. The Committee shall act by
vote or written consent of a majority of its members. Whenever the Plan
authorizes or requires the Committee to take any action, make any determination
or decision, or form any opinion, then any such action, determination, decision
or opinion by or of the Committee shall be in the absolute discretion of the
Committee.
4. PARTICIPANTS. The individuals who are eligible to receive
Awards for Units hereunder shall be limited to management employees of any
Subsidiary who, on the date of the award of Units under the Plan, are not
citizens of the United States of America and who are employed and reside out of
the boundaries of the United States of America.
From time to time the Committee shall in its sole discretion, but
subject to all of the provisions of the Plan, determine which eligible employees
will receive Awards of Units under the Plan and the size, terms and conditions
of the Unit or Units to be awarded to each Participant. In any year, the
Committee may approve the award to any eligible employee of Units subject to
differing terms and conditions. Neither the Committee's decision to approve the
award of a Unit to that employee in any other year or to any other employee in
any other year, nor the Committee's decision with respect to the size, terms and
conditions of the Award(s) to be made to an employee in any year, require the
Committee to approve the award of the Unit(s) of the same size or with the same
terms and conditions to such employee in any other year or to any other employee
in any year. The Committee shall not be precluded from approving the award of a
Unit to any eligible employee solely because such employee may previously have
received an Award under the Plan.
5. EMPLOYMENT. In the absence of any specific agreement to the
contrary, no Award of Units to a Participant under the Plan shall affect any
right of the Participant's employer to terminate the Participant's employment at
any time.
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PART II. UNITS
1. UNITS. The Committee may from time to time in its discretion
approve the award of Units to employees who are eligible to receive an Award in
accordance with Section 4 of Part I of the Plan. An Award shall be evidenced by
an Agreement which shall contain such terms and conditions (which may include
vesting provisions and other restrictions not inconsistent with the Plan as the
Committee shall determine); provided, however, that an Award shall satisfy the
requirements set forth in Part II of the Plan.
2. GRANT. An Award may be granted by the Committee and shall be
effective upon the date approved by the Committee.
3. EXERCISE AND VESTING. Stock Appreciation Unit Awards may be
exercised by the Participant only at such time or times, and only upon such
terms and conditions, as shall be set forth in the Agreement relating to such
Stock Appreciation Unit Award. A Phantom Stock Unit Award will vest on the date
or dates as are set forth in the Agreement respecting such Phantom Stock Unit
Award.
4. AMOUNT OF PAYMENT. Upon the exercise of a Stock Appreciation
Unit Award, a Participant shall be entitled to receive the excess of the Fair
Market Value of a share of Stock over the Exercise Price of a Unit with respect
to each Unit exercised. Upon vesting of a Phantom Stock Unit, a participant
shall be entitled to receive an amount for such Unit equal to the Fair Market
Value of a share of Stock on the date the Unit vests.
5. FORM OF PAYMENT. Any amount which becomes payable upon
exercise or vesting of an Award under the Plan shall be paid entirely in cash.
The Committee may determine that amounts shall be payable in United States
dollars or in local currency, converted on such basis and at such conversion
rate as the Committee shall deem reasonable.
6. TERMINATION.
(a) GENERAL. A Stock Appreciation Unit Award shall terminate
as of the earlier of (i) the date of exercise of Award, to the extent that
it is exercised, or (ii) the expiration date specified in the Agreement
with respect to such Award. If an unexercised Stock Appreciation Unit Award
is otherwise exercisable on the date that it expires, and if the Fair
Market Value of Stock with respect to which it was granted, determined as
of the date of such expiration, exceeds the Exercise Price of the Units
(under such Award as set forth in the Stock Appreciation Unit Agreement),
then the Award shall automatically be deemed to have been exercised as of
the date of such expiration.
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(b) TERMINATION OF EMPLOYMENT. If a Participant ceases to be
an employee of the Company or of a Subsidiary, for any reason other than
such Participant's Disability, Retirement or Death, then any Award not
theretofore exercised or vested, as applicable, shall immediately be
terminated and may not thereafter be exercised, and no payment shall be
made hereunder pursuant to such Award. Each Agreement shall provide that
the Committee may terminate any Award prior to the date on which the Unit
is exercised or vested, as applicable, if the Participant engages during
the life of the Award in employment or activities contrary, in the opinion
of the Committee, to the best interests of the Company or of any
Subsidiary.
(c) DISABILITY. If a Participant ceases to be an employee of
the Company or of a Subsidiary by reason of such Participant's Disability,
then the Participant's rights under the Award after the date of such
Disability shall be determined by the provisions of the Agreement
applicable to such Award.
(d) DEATH. If a Participant ceases to be an employee of the
Company or of a Subsidiary by reason of the Participant's death, the
participant's rights under the Award shall be determined by the provisions
of the Agreement applicable to such Award.
(e) RETIREMENT. If a Participant ceases to be an employee of
the Company or of a Subsidiary by reason of the Participant's Retirement,
any unvested Phantom Stock Units shall expire. The right to exercise all or
any portion of any Award of Stock Appreciation Units shall be determined by
the provisions of the Agreement applicable to such Award.
7. NON-ASSIGNABILITY. An Award shall not be transferable (other
than by will or the laws of descent and distribution) and, during the
Participant's lifetime, shall be exercisable by, and payable to, only the
Participant.
8. RESTRICTIONS. Awards shall be subject to the condition that if
at any time the Company shall determine in its discretion that the registration
of the Plan with any regulatory authority, the satisfaction of withholding tax
or other withholding liabilities under the law of any applicable jurisdiction or
the consent or approval of any regulatory body is necessary or desirable as a
condition of, or in connection with, the exercise or vesting of such Award,
then, in any such event, such exercise or vesting shall not be effective unless
such registrations withholding, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
9. REPRICING PROHIBITED. There shall be no grant of a Stock
Appreciation Unit in exchange for a Participant's agreement to cancellation of a
Stock Appreciation Unit with a higher Exercise Price that was previously granted
to such Participant.
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PART III. CANCELLATION AND RESCISSION
1. COMPETITION; CONFIDENTIAL INFORMATION.
(a) Unless a Stock Appreciation Right Agreement (any such
agreement being referred to herein as an "Agreement") specifies otherwise,
the Committee may
(1) cancel at any time any unexercised Stock Appreciation
Unit; or
(2) rescind any exercise of a Stock Appreciation Unit
if the Participant is not in compliance with all other applicable
provisions of the Agreement or the Plan or if, prior to any such
exercise or within six months after such exercise, the Participant
(i) engages in a Competing Business, as such term is defined
in the Agreement; or
(ii) solicits for employment, hires or offers employment to,
or discloses information to or otherwise aids or assists any
other person or entity other than the Company in soliciting
for employment, hiring or offering employment to, any
employee of the Company; or
(iii) takes any action which is intended to harm the Company
or its reputation, which the Company reasonably concludes
could harm the Company or its reputation or which the
Company reasonably concludes could lead to unwanted or
unfavorable publicity to the Company; or
(iv) discloses to anyone outside the Company, or uses in
other than the Company's business, any "confidential
information," as such term is defined in the Agreement.
(b) Upon exercise of Stock Appreciation Unit, the
Participant shall certify on a form acceptable to the Committee that the
Participant is in compliance with the terms and conditions of the Agreement
and the Plan.
(c) The Company shall immediately notify the Participant in
writing of any cancellation of any unexercised Stock Appreciation Unit.
Following receipt of such notice, the Participant shall have no further
rights with respect to such Stock Appreciation Unit.
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(d) The Company shall notify the Participant in writing of any
rescission of an exercise of a Stock Appreciation Unit within one year
after the activity referred to in Part III, Section 1(a). Within ten days
after receiving such a notice from the Company, the Participant shall pay
to the Company the excess of the Fair Market Value of the Stock on the date
of exercise of a Stock Appreciation Unit over the Exercise Price for the
Unit.
2. AGREEMENT BY PARTICIPANT REGARDING DEDUCTION. The Participant
shall agree and consent to a deduction from any amounts the Company or a
Subsidiary owes to the Participant from time to time (including amounts owed as
wages or other compensation, fringe benefits, or vacation pay, as well as any
other amounts owed to the Participant by the Company or a subsidiary), to the
extent of the amounts the Participant owes the Company under this Article III.
Whether or not the Company elects to make any set-off in whole or in part, if
the Company does not recover by means of set-off the full amount owed by the
Participant, calculated as set forth in this Article III, then the Participant
agrees to pay immediately the unpaid balance to the Company.
PART IV. MISCELLANEOUS
1. EFFECTIVE DATE. The Plan shall become effective on May 14,
1997.
2. DURATION OF PLAN. The Plan shall remain in effect until it is
terminated by the Company.
3. WITHHOLDING. The Company or any Subsidiary shall have the
right to deduct from the amount of any payment arising from the exercise or
vesting of an Award any taxes required by applicable law to be withheld from
such amount.
4. UNFUNDED PLAN. The Plan shall be unfunded. Neither the Company
nor any Subsidiary nor the Committee shall be required to segregate any assets
that may at any time be represented by Awards under the Plan. Neither the
Company nor the Committee shall be deemed to be a trustee of any amounts to be
paid under the Plan. Any liability of the Company to any Participant with
respect to an Award shall be based solely upon any contractual obligations
created by the Plan or an Agreement, and no such obligation shall be deemed to
be secured by any pledge or any encumbrance on any property of the Company or of
any Subsidiary.
5. CHANGES IN CAPITAL STRUCTURE. In the event that there is any
change in the capital structure of the Company, through merger, consolidation,
reorganization, recapitalization, spinoff or otherwise, or if there shall be any
dividend on the Stock, payable in such Stock, or if there shall be a stock split
or combination of shares, the number and/or the Exercise Price of the Units
shall be proportionately adjusted by the Board as it deems equitable, in its
absolute discretion, to prevent dilution or enlargement of the Participant's
Award. The issuance of Stock for consideration and
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the issuance of Stock rights shall not be considered a change in the Company's
capital structure. No adjustment provided for in this section will result in
fractional Units.
6. AMENDMENT OR TERMINATION. The Board may, by resolution, amend
or terminate the Plan at any time; provided, however, that the Board may not,
without the consent of the holder of the Unit, alter or impair any Award
previously granted under the Plan except as authorized herein.
Notwithstanding the foregoing, the Board may, by resolution, amend the Plan in
any way that it deems necessary or appropriate in order to make income with
respect to the Plan deductible for United States Federal income tax purposes
under Section 162(m) of the Code without regard to the foregoing proviso and any
such amendment shall be effective as of such date as is necessary to make such
income under the Plan so deductible.
7. CHANGE OF CONTROL. If while unexercised awards remain
outstanding under the Plan:
(a) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") acquires beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that, for purposes of this Section 7, none of the following
shall constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any affiliated company or (iv) any acquisition by any corporation pursuant to
a transaction that complies with Sections 7(c)(A), 7(c)(B) and 7(c)(C) or (v)
any acquisition by the Company which, by reducing the number of shares of
Outstanding Company Common Stock or Outstanding Company Voting Securities,
increases the proportionate number of shares of Outstanding Company Common Stock
or Outstanding Company Voting Securities beneficially owned by any Person to 20%
or more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities; provided, however, that, if such Person shall thereafter become the
beneficial owner of any additional shares of Outstanding Company Common Stock or
Outstanding Company Voting Securities and beneficially owns 20% or more of
either the Outstanding Company Common Sock or the Outstanding Company Voting
Securities, then such additional acquisition shall constitute a Change of
Control; or
(b) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was
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approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(c) a reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination") is consummated, in each case, unless, following such
Business Combination, (A) all or substantially all of the individuals and
entities that were the beneficial owners, respectively, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50%, respectively, of the then-outstanding shares of common stock and
the combined voting power of the then-outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination, (including, without
limitation, a corporation that, as a result of such transaction, owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, (B) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then-outstanding voting
securities of such corporation, except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or
(d) the stockholders of the Company approve of a complete
liquidation or dissolution of the Company.
then from and after the date of the first of the foregoing events to occur, all
outstanding Stock Appreciation Unit Awards held by active employees on such date
shall be exercised in full, whether or not otherwise exercisable, and all
outstanding Phantom Stock Unit Awards held by active employees on such date
shall vest in full, and shall be deemed fully payable.
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