Exhibit 10.18
THE STOCK APPRECIATION AND PHANTOM STOCK UNIT PLAN
OF
PAYLESS SHOESOURCE, INC. AND ITS SUBSIDIARIES
FOR
PAYLESS SHOESOURCE INTERNATIONAL EMPLOYEES
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) "Board" means the Board of Directors of
Payless ShoeSource, Inc.
(d) "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.
(e) "Company" means Payless ShoeSource, Inc.
(f) "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 of
a country which are applicable to the Participant. If
there are no comparable governmental arrangements
applicable to a Participant, he shall be deemed to be
Disabled if he would be eligible for disability
benefits under the Social Security Act of the United
States of America if he were a citizen of that country.
(g) "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.
(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 or
unincorporated organization controlled, 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
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the difference, if positive, between the Fair Market
Value of a share of stock on the date the Unit is
exercised and the 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
residents 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.
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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.
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 a 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.
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(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.
(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 Part 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 Part 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.
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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 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 or
for purposes of comparable income tax laws of another
country 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 "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the
Company, or any company owned, directly or indirectly,
by the shareowners of the Company in substantially the
same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company
representing 50% or more of the combined voting power
of the Company's then outstanding securities;
(b) during any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board, and any new director (other than
a director designated by a person who has entered into
an agreement with the Company to effect a transaction
described in clause (a), (c) or (d) of this Section)
whose election by the Board or nomination for election
by the Company's shareowners was approved by a vote of
at least two-thirds (2/3) of the directors then still
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in office who either were directors at the beginning of
the period or whose election or nomination for election
was previously so approved, cease for any reason to
constitute at least a majority thereof;
(c) the shareowners of the Company approve a
merger or consolidation of the Company with any other
Company, other than (1) a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity) more than 50% of the combined voting power of
the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as
hereinabove defined) acquires more than 50% of the
combined voting power of the Company's then outstanding
securities; or
(d) the shareowners of the Company approve a
plan of complete liquidation of the Company or an
agreement for the sale of disposition by the Company of
all or substantially all of the Company's assets,
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
exercisable 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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