Exhibit 10.1


 


AMENDED
AND RESTATED


 


MOTHERS
WORK, INC.


 


2005
EQUITY INCENTIVE PLAN


 


SECTION 1. 
Purpose;
Definitions.  The purposes
of this Amended and Restated Mothers Work, Inc. 2005 Equity Incentive Plan
(the “Plan”) are to: (a) enable Mothers Work, Inc. (the “Company”)
and its affiliated companies to recruit and retain highly qualified personnel; (b) provide
those personnel with an incentive for productivity; and (c) provide those
personnel with an opportunity to share in the growth and value of the Company.


 


For purposes of the Plan, the
following terms will have the meanings defined below, unless the context
clearly requires a different meaning:


 


(a)  “Affiliate”
means, with respect to a Person, a Person that directly or indirectly controls,
is controlled by, or is under common control with such Person.


 


(b) “Award”
means an award of Options, SARs, Restricted Stock, Restricted Stock Units or
Performance Awards made under this Plan.


 


(c)  “Award
Agreement” means, with respect to any particular Award, the written
document that sets forth the terms of that particular Award.


 


(d) “Board”
means the Board of Directors of the Company, as constituted from time to time; provided, however, that if the Board appoints a Committee to
perform some or all of the Board’s administrative functions hereunder,
references to the “Board” will be deemed to also refer to that Committee in
connection with matters to be performed by that Committee.


 


(e)  “Cause”
means (i) conviction of, or the entry of a plea of guilty or no contest to,
a felony or any other crime that causes the Company or its Affiliates public
disgrace or disrepute, or adversely affects the Company’s or its Affiliates’
operations or financial performance, (ii) gross negligence or willful
misconduct with respect to the Company or any of its Affiliates, including,
without limitation fraud, embezzlement, theft or proven dishonesty in the
course of employment; (iii) alcohol abuse or use of controlled drugs other
than in accordance with a physician’s prescription; or (iv) material
breach of any agreement with or duty owed to the Company or any of its
Affiliates.  Notwithstanding the
foregoing, if a Participant and the Company (or any of its Affiliates) have
entered into an employment agreement, consulting agreement or other similar
agreement that specifically defines “cause,” then with respect to such
Participant, “Cause” shall have the meaning defined in that employment
agreement, consulting agreement or other agreement.


 


(f)  “Change
in Control” means the occurrence of any of the following, in one
transaction or a series of related transactions: (i) any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act)
becoming a “beneficial owner” (as defined in Rule 13d-3 


 

















 


under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than 50% of the voting power of the Company’s then outstanding securities; (ii) a consolidation, share exchange,
reorganization or merger of the Company resulting in the stockholders of the Company
immediately prior to such event not owning at least a majority of the voting
power of the resulting entity’s securities outstanding immediately following
such event; (iii) the sale or other disposition of all or
substantially all the assets of the Company, (iv) a liquidation or
dissolution of the Company, or (v) any similar event deemed by the Board
to constitute a Change in Control for purposes of this Plan.


 


(g) “Code”
means the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto.


 


(h) “Committee”
means a committee appointed by the Board in accordance with Section 2
of the Plan.


 


(i)   “Director”
means a member of the Board.


 


(j)   “Disability”
means a condition rendering a Participant Disabled.


 


(k)  “Disabled”
will have the same meaning as set forth in Section 22(e)(3) of the
Code.


 


(l)   “Exchange
Act” means the Securities Exchange Act of 1934, as amended.


 


(m) “Fair Market Value” means, as of any date: (i) if
the Shares are not then publicly traded, the value of such Shares on that date,
as determined by the Board in its sole and absolute discretion; or (ii) if
the Shares are publicly traded, the closing price for a Share on the principal
national securities exchange on which the Shares are listed or admitted to
trading or, if the Shares are not listed or admitted to trading on any national
securities exchange, but are traded in the over-the-counter market, the closing
sale price of a Share or, if no sale is publicly reported, the average of the
closing bid and asked quotations for a Share, as reported by The Nasdaq Stock
Market, Inc. (“Nasdaq”) or any comparable system or, if the Common
Stock is not listed on Nasdaq or a comparable system, the closing sale price of
a Share or, if no sale is publicly reported, the average of the closing bid and
asked prices, as furnished by two members of the National Association of
Securities Dealers, Inc. who make a market in the Common Stock selected
from time to time by the Company for that purpose.


 


(n) “Incentive
Stock Option” means any Option intended to be an “Incentive Stock Option”
within the meaning of Section 422 of the Code.


 


(o) “Non-Employee
Director” will have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated
by the Securities and Exchange Commission under the Exchange Act, or any
successor definition adopted by the Securities and Exchange Commission; provided, however, that the Board or the Committee may, to
the extent that it deems necessary to comply with Section 162(m) of
the Code or regulations thereunder, require that each “Non-Employee Director”
also be an “outside director” as that term is defined in regulations under Section 162(m) of
the Code.


 


2

















 


(p)  “Non-Qualified
Stock Option” means any Option that is not an Incentive Stock Option.


 


(q)  “Option”
means any option to purchase Shares (including Restricted Stock, if the Board
so determines) granted pursuant to Section 5 hereof.


 


(r)   “Parent”
means, in respect of the Company, a “parent corporation” as defined in Sections 424(e) of
the Code


 


(s)  “Participant”
means an employee, consultant, Director, or other service provider of or to the
Company or any of its respective Affiliates to whom an Award is granted.


 


(t)   “Performance
Award” means Shares or other Awards that, pursuant to Section 10,
are granted, vested and/or settled upon the achievement of specified performance
conditions.


 


(u)  “Person”
means an individual, partnership, corporation, limited liability company,
trust, joint venture, unincorporated association, or other entity or
association.


 


(v)  “Restricted
Stock” means Shares that are subject to restrictions pursuant to Section 8
hereof.


 


(w) “Restricted Stock Unit” means a right granted under and subject to restrictions pursuant to Section 8
hereof.


 


(x)   “SAR” means a stock appreciation right
granted under the Plan and described in Section 6 hereof.


 


(y)  “Shares”
means shares of the Company’s common stock, par value $.01, subject to
substitution or adjustment as provided in Section 3(c) hereof.


 


(z)   “Subsidiary”
means, in respect of the Company, a subsidiary company as defined in
Sections 424(f) and (g) of the Code.


 


SECTION 2. 
Administration. 
The Plan will be administered by the Board; provided,
however, that the Board may at any time appoint a Committee to
perform some or all of the Board’s administrative functions hereunder; and provided further, that the authority of any Committee
appointed pursuant to this Section 2 will be subject to such terms
and conditions as the Board may prescribe and will be coextensive with, and not
in lieu of, the authority of the Board hereunder.


 


Subject to the requirements of
the Company’s by-laws and certificate of incorporation any other agreement that
governs the appointment of Board committees, any Committee established under
this Section 2 will be composed of not fewer than two members, each
of whom will serve for such period of time as the Board determines; provided, however, that if the Company has
a class of securities required to be registered under Section 12 of the Exchange
Act, all members of any Committee established pursuant to this Section 2
will be Non-Employee Directors.  From
time to time the Board may increase the size of the Committee and appoint
additional members thereto, remove members (with or without cause) and appoint
new 


 


3

















 


members in substitution
therefor, fill vacancies however caused, or remove all members of the Committee
and thereafter directly administer the Plan.


 


The Board will have full
authority to grant Awards under this Plan and determine the terms of such
Awards.  Such authority will include the
right to:


 


(a)  select
the persons to whom Awards are granted (consistent with the eligibility
conditions set forth in Section 4);


 


(b)  determine
the type of Award to be granted;


 


(c)  determine
the number of Shares, if any, to be covered by each Award;


 


(d)  establish
the vesting or forfeiture terms of each Award;


 


(e)  establish
the performance conditions relevant to any Performance Award and certify whether
such performance conditions have been satisfied;


 


(f)   determine
whether and under what circumstances an Option may be exercised without a
payment of cash under Section 5(d); and


 


(g)  determine
whether, to what extent and under what circumstances Shares and other amounts
payable with respect to an Award may be deferred either automatically or at the
election of the Participant.


 


The Board will have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it, from time to time, deems advisable; to
establish the terms and form of each Award Agreement; to interpret the terms
and provisions of the Plan and any Award issued under the Plan (and any Award
Agreement); and to otherwise supervise the administration of the Plan.  The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any Award Agreement
in the manner and to the extent it deems necessary to carry out the intent of
the Plan.


 


All decisions made by the Board
pursuant to the provisions of the Plan will be final and binding on all
persons, including the Company and Participants.  No Director will be liable for any good faith
determination, act or omission in connection with the Plan or any Award.


 


4

















 


SECTION 3.  Shares Subject to the Plan.


 


(a)  Shares Subject to the Plan.  The Shares to be subject to or related to
Awards under the Plan will be authorized and unissued Shares of the Company,
whether or not previously issued and subsequently acquired by the Company.  The maximum number of Shares that may be
issued in respect of Awards under the Plan is 500,000.  The Company will reserve for the purposes of
the Plan, out of its authorized and unissued Shares, such number of
Shares.  Notwithstanding the foregoing,
no individual may granted Awards with respect to more than 200,000 Shares in
any calendar year.  In addition, not more
than 250,000 Shares will be issued hereunder in respect of Restricted Stock or
Restricted Stock Units.


 


(b)  Effect
of the Expiration or Termination of Awards. 
If and to the extent that an Option or SAR expires, terminates or is
canceled or forfeited for any reason without having been exercised in full, the
Shares associated with that Option or SAR will again become available for grant
under the Plan.  Similarly, if and to the
extent an Award of Restricted Stock, Restricted Stock Units or a Performance
Award is canceled, forfeited or repurchased for any reason, the Shares subject
to that Award will again become available for grant under the Plan.  In addition, if any Share is withheld
pursuant to Section 12(e) in settlement of a tax withholding
obligation associated with an Award, that Share will again become available for
grant under the Plan.


 


(c)  Other
Adjustment.  In the event of any
recapitalization, stock split or combination, stock dividend, spin-off, merger,
reorganization or other similar event or transaction affecting the Shares,
substitutions or adjustments will be made by the Board to the aggregate number,
class and/or issuer of the securities that may be issued under the Plan, to the
number, class and/or issuer of securities subject to outstanding Awards, and to
the exercise price of outstanding Options or SARs, in each case in a manner
that reflects equitably the effects of such event or transaction.


 


(d)  Change
in Control.  Notwithstanding anything
to the contrary set forth in the Plan, upon or in anticipation of any Change in
Control, the Board may, in its sole and absolute discretion and without the
need for the consent of any Participant, take one or more of the following
actions contingent upon the occurrence of that Change in Control: (i) cause
any or all outstanding Options or SARs to become vested and/or immediately exercisable,
in whole or in part; (ii) cause any or all outstanding Restricted Stock or
Restricted Stock Units  to become
non-forfeitable, in whole or in part; (iii) cancel any Option in exchange
for a substitute option in a manner consistent with the requirements of
Treas. Reg. §1.424-1(a) (notwithstanding the fact that the
original Option may never have been intended to satisfy the requirements for
treatment as an Incentive Stock Option); (iv) cancel any Restricted Stock,
Restricted Stock Units or SAR in exchange for restricted stock, restricted
stock units or stock appreciation rights in respect of the capital stock of any
successor corporation or its parent; (v) cancel any Option or SAR in
exchange for cash and/or other substitute consideration with a value equal to (A) the
number of Shares subject to that Option or SAR, multiplied by (B) the
difference, if any, between the Fair Market Value per Share on the date of the
Change in Control and the exercise price of that Option or SAR; provided, that if the Fair Market Value
per Share on the date of the Change in Control does not exceed the exercise
price of any such Option or SAR, the Board may cancel that Option or SAR
without any payment of consideration therefor; or (vi) cancel any
Restricted Stock Unit in exchange for cash and/or other substitute
consideration with a value equal to the 


 


5

















 


Fair Market Value
per Share on the date of the Change in Control. 
In the discretion of the Board, any cash or substitute consideration
payable upon cancellation of an Award may be subjected to vesting terms
substantially identical to those that applied to the cancelled Award
immediately prior to the Change in Control.


 


SECTION 4. 
Eligibility.  Employees, Directors, consultants, and other
individuals who provide services to the Company or its Affiliates are eligible
to be granted Awards under the Plan;
provided, however, that only employees of the Company, its Parent or
a Subsidiary are eligible to be granted Incentive Stock Options.


 


SECTION 5. 
Options.  Options granted under the Plan may be of two
types: (i) Incentive Stock Options or (ii) Non-Qualified Stock
Options.  Any Option granted under the
Plan will be in such form as the Board may at the time of such grant approve.  Without limiting the generality of Section 3(a),
any or all of the Shares reserved for issuance under Section 3(a) may
be issued in respect of Incentive Stock Options.


 


The Award Agreement evidencing
any Option will incorporate the following terms and conditions and will contain
such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Board deems appropriate in its sole and absolute discretion:


 


(a)  Option
Price.  The exercise price per Share
purchasable under any Option will be determined by the Board and will not be
less than 100% of the Fair Market Value per Share on the date of the
grant.  However, any Incentive Stock
Option granted to any Participant who, at the time the Option is granted, owns
more than 10% of the voting power of all classes of shares of the Company, its
Parent or a Subsidiary will have an exercise price per Share of not less than
110% of Fair Market Value per Share on the date of the grant.


 


(b)  Option
Term.  The term of each Option will
be fixed by the Board, but no Option will be exercisable more than 10 years
after the date the Option is granted. 
However, any Incentive Stock Option granted to any Participant who, at
the time such Option is granted, owns more than 10% of the voting power of all
classes of shares of the Company, its Parent or a Subsidiary may not have a
term of more than five years.  No Option
may be exercised by any person after expiration of the term of the Option.


 


(c)  Exercisability.  Options will vest and be exercisable at such
time or times and subject to such terms and conditions as determined by the
Board.


 


(d)  Method
of Exercise.  Subject to the terms of
the applicable Award Agreement, the exercisability provisions of Section 5(c) and
the termination provisions of Section 7, Options may be exercised
in whole or in part from time to time during their term by the delivery of
written notice to the Company specifying the number of Shares to be
purchased.  Such notice will be
accompanied by payment in full of the purchase price, either by certified or
bank check, or such other means as the Board may accept.  As determined by the Board, in its sole
discretion, payment of the exercise price of an Option may be made in the form
of previously acquired Shares based on the Fair Market Value of the Shares on
the date the Option is exercised; provided, however,
that, in the case of an Incentive Stock Option, the right to make a payment in
the form of previously acquired Shares may be authorized only at the time the
Option is granted.


 


6

















 


No Shares will be issued upon
exercise of an Option until full payment therefor has been made.  A Participant will not have the right to
distributions or dividends or any other rights of a stockholder with respect to
Shares subject to the Option until the Participant has given written notice of
exercise, has paid in full for such Shares, if requested, has given the
representation described in Section 12(a) hereof and fulfills
such other conditions as may be set forth in the applicable Award Agreement.


 


(e)  Incentive
Stock Option Limitations.  In the
case of an Incentive Stock Option, the aggregate Fair Market Value (determined
as of the time of grant) of the Shares 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 plan of the Company, its Parent
or any Subsidiary will not exceed $100,000. 
For purposes of applying the foregoing limitation, Incentive Stock
Options will be taken into account in the order granted.  To the extent any Option does not meet such
limitation, that Option will be treated for all purposes as a Non-Qualified
Stock Option.


 


(f)   Termination
of Service.  Unless otherwise
specified in the applicable Award Agreement, Options will be subject to the
terms of Section 7 with respect to exercise upon or following
termination of employment or other service.


 


(g)  Transferability
of Options.  Except as may otherwise
be specifically determined by the Board with respect to a particular Option: (i) no
Option will be transferable by the Participant other than by will or by the
laws of descent and distribution, and (ii) during the Participant’s
lifetime, an Option will be exercisable only by the Participant (or, in the
event of the Participant’s Disability, by his personal representative).


 


SECTION 6.  Stock Appreciation Rights.


 


(a)  Nature
of Award.  Upon the exercise of a
SAR, its holder will be entitled to receive an amount equal to the excess (if
any) of: (i) the Fair Market Value of the Shares covered by such SAR as of
the date such SAR is exercised, over (ii) the Fair Market Value of the
Shares covered by such SAR as of the date such SAR was granted.  Such amount may be paid in either cash and/or
Shares, as determined by the Board in its sole and absolute discretion.


 


(b)  Terms
and Conditions.  The Award Agreement
evidencing any SAR will incorporate the following terms and conditions and will
contain such additional terms and conditions, not inconsistent with the terms
of the Plan, as the Board deems appropriate in its sole and absolute
discretion:


 


(i)            Term
of SAR.  Unless otherwise specified
in the Award Agreement, the term of a SAR will be ten years.


 


(ii)           Exercisability.  SARs will vest and become exercisable at such
time or times and subject to such terms and conditions as will be determined by
the Board at the time of grant.


 


(iii)          Method of Exercise.  Subject to terms of the applicable Award
Agreement, the exercisability provisions of Section 6(b)(ii)and the
termination provisions of 


 


7

















 


Section 7,
SARs may be exercised in whole or in part from time to time during their term
by delivery of written notice to the Company specifying the portion of the SAR
to be exercised.


 


(iv)          Termination
of Service.  Unless otherwise
specified in the Award Agreement, SARs will be subject to the terms of Section 7
with respect to exercise upon termination of employment or other service.


 


(v)           Non-Transferability.  Except as may otherwise be specifically
determined by the Board with respect to a particular SAR: (A) SARs may not
be sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in
any manner either voluntarily or involuntarily by operation of law, other than
by will or by the laws of descent or distribution, and (B) during the
Participant’s lifetime, SARs will be exercisable only by the Participant (or,
in the event of the Participant’s Disability, by his personal representative).


 


SECTION 7. 
Termination of
Service.  Unless otherwise specified with
respect to a particular Option or SAR in the applicable Award Agreement,
Options or SARs granted hereunder will be exercisable after termination of
service only to the extent specified in this Section 7.


 


(a)  Termination
by Reason of Death.  If a Participant’s
service with the Company or any Affiliate terminates by reason of death, any
Option or SAR held by such Participant may thereafter be exercised, to the
extent then exercisable or on such accelerated basis as the Board may determine
at or after grant, by the legal representative of the estate or by the legatee
of the Participant under the will of the Participant, for a period expiring (i) at
such time as may be specified by the Board at or after grant, or (ii) if
not specified by the Board, then 12 months from the date of death, or (iii) if
sooner than the applicable period specified under (i) or (ii) above,
upon the expiration of the stated term of such Option or SAR.


 


(b)  Termination
by Reason of Disability.  If a
Participant’s service with the Company or any Affiliate terminates by reason of
Disability, any Option or SAR held by such Participant may thereafter be
exercised by the Participant or his personal representative, to the extent it
was exercisable at the time of termination, or on such accelerated basis as the
Board may determine at or after grant, for a period expiring (i) at such
time as may be specified by the Board at or after grant, or (ii) if not
specified by the Board, then 12 months from the date of termination of service,
or (iii) if sooner than the applicable period specified under (i) or (ii) above,
upon the expiration of the stated term of such Option or SAR.


 


(c)  Cause.  If a Participant’s service with the Company
or any Affiliate is terminated for Cause: (i) any Option or SAR not
already exercised will be immediately and automatically forfeited as of the
date of such termination, and (ii) any Shares for which the Company has
not yet delivered share certificates will be immediately and automatically
forfeited and the Company will refund to the Participant the Option exercise
price paid for such Shares, if any.


 


(d)  Other
Termination.  If a Participant’s
service with the Company or any Affiliate terminates for any reason other than
death, Disability or Cause, any Option or SAR held by such Participant may
thereafter be exercised by the Participant, to the extent it was 


 


8

















 


exercisable at the
time of such termination, or on such accelerated basis as the Board may
determine at or after grant, for a period expiring (i) at such time as may
be specified by the Board at or after grant, or (ii) if not specified by
the Board, then 90 days from the date of termination of service, or (iii) if
sooner than the applicable period specified under (i) or (ii) above,
upon the expiration of the stated term of such Option or SAR.


 


SECTION 8.  Restricted Stock.


 


(a)  Issuance.  Restricted Stock may be issued either alone
or in conjunction with other Awards.  The
Board will determine the time or times within which Restricted Stock may be
subject to forfeiture, and all other conditions of such Awards.  The purchase price for Restricted Stock may,
but need not, be zero.  The prospective
recipient of an Award of Restricted Stock will not have any rights with respect
to such Award, unless and until such recipient has delivered to the Company an
executed Award Agreement and has otherwise complied with the applicable terms
and conditions of such Award.


 


(b)  Certificates.  A share certificate will be issued in
connection with each Award of Restricted Stock. 
Such certificate will be registered in the name of the Participant
receiving the Award, and will bear the following legend and/or any other legend
required by this Plan, the Award Agreement or by applicable law:


 


THE
TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS OF THE MOTHERS WORK, INC. 2005 EQUITY
INCENTIVE PLAN AND AN AWARD AGREEMENT ENTERED INTO BETWEEN [THE PARTICIPANT]
AND MOTHERS WORK, INC.  COPIES OF THAT
PLAN AND AGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF MOTHERS WORK, INC.
AND WILL BE MADE AVAILABLE TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE
UPON REQUEST TO THE SECRETARY OF THE COMPANY.


 


Share
certificates evidencing Restricted Stock will be held in custody by the Company
or in escrow by an escrow agent until the restrictions thereon have
lapsed.  As a condition to any Award of
Restricted Stock, the Participant may be required to deliver to the Company a
share power, endorsed in blank, relating to the Shares covered by such Award.


 


(c)  Restrictions
and Conditions.  The Award Agreement
evidencing the grant of any Restricted Stock will incorporate the following
terms and conditions and such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Board deems appropriate in its sole and
absolute discretion:


 


(i)            During
a period commencing with the date of an Award of Restricted Stock and ending at
such time or times as specified by the Board (the “Restriction Period”),
the Participant will not be permitted to sell, transfer, pledge, assign or
otherwise encumber Restricted Stock awarded under the Plan.  The Board may condition the lapse of 


 


9

















 


restrictions on
Restricted Stock upon the continued employment or service of the recipient, the
attainment of specified individual or corporate performance goals, or such
other factors as the Board may determine, in its sole and absolute discretion.


 


(ii)           Except
as provided in this paragraph (ii) or the applicable Award Agreement,
once the Participant has been issued a certificate or certificates for
Restricted Stock, the Participant will have, with respect to the Restricted
Stock, all of the rights of a stockholder of the Company, including the right
to vote the Shares, and the right to receive any cash distributions or
dividends.  The Board, in its sole
discretion, may require cash distributions or dividends to be subjected to the
same Restriction Period as is applicable to the Restricted Stock with respect
to which such amounts are paid, or, if the Board so determines, reinvested in
additional Restricted Stock to the extent Shares are available under Section 3(a) of
the Plan.  Any distributions or dividends
paid in the form of securities with respect to Restricted Stock will be subject
to the same terms and conditions as the Restricted Stock with respect to which
they were paid, including, without limitation, the same Restriction Period.


 


(iii)          Subject to the
provisions of the applicable Award Agreement, if a Participant’s service with
the Company and it Affiliates terminates prior to the expiration of the
applicable Restriction Period, the Participant’s Restricted Stock that then
remains subject to forfeiture will then be forfeited automatically.


 


(iv)          If
and when the Restriction Period expires without a prior forfeiture of the
Restricted Stock subject to such Restriction Period (or if and when the
restrictions applicable to Restricted Stock are removed pursuant to Section 3(d) or
otherwise), the certificates for such Shares will be replaced with new
certificates, without the restrictive legends described in Section 8(b) applicable
to such lapsed restrictions, and such new certificates will be delivered to the
Participant, the Participant’s representative (if the Participant has suffered
a Disability), or the Participant’s estate or heir (if the Participant has
died).


 


SECTION 9.         Restricted Stock Units. 
Subject to the other
terms of the Plan, the Board may grant Restricted Stock Units to eligible
individuals and may impose conditions on such units as it may deem
appropriate.  Each Restricted Stock Unit
shall be evidenced by an Award Agreement in the form that is approved by the
Board and that is not inconsistent with the terms and conditions of the
Plan.  Each Restricted Stock Unit will
represent a right to receive from the Company, upon fulfillment of any
applicable conditions, an amount equal to the Fair Market Value (at the time of
the distribution) of one Share. 
Distributions may be made in cash and/or Shares.  All other terms governing Restricted Stock
Units, such as vesting, time and form of payment and termination of units shall
be set forth in the applicable Award Agreement.


 


SECTION 10.                       Performance Awards.


 


(a)  Performance
Awards Generally. The Board may grant Performance Awards in accordance with
this Section 10.  Performance
Awards may be denominated as a number of Shares, or specified number of other
Awards (or a combination thereof) which may be earned upon achievement or
satisfaction of performance conditions specified by the Board.  In addition, the Board may specify that any
other Award shall constitute a Performance Award by conditioning the vesting or
settlement of the Award upon the achievement or satisfaction of such 


 


10

















 


performance
conditions as may be specified by the Board.  Subject to Section 10(b), the Board
may use such business criteria or other measures of performance as it may deem
appropriate in establishing the relevant performance conditions and may, in its
discretion, adjust such criteria from time to time.


 


(b)  Qualified
Performance-Based Compensation Under Section 162(m).  Performance Awards intended to constitute “qualified
performance-based compensation” under Section 162(m) of the Code will
be granted by the Committee and will be subject to the terms of this Section 10(b).


 


(i)            Specified
Business Criteria.  The grant,
vesting and/or settlement of a Performance Award subject to this Section 10(b) will
be contingent upon achievement of one or more of the following business
criteria (subject to adjustment in accordance with Section 10(b)(ii),
below):


 


(A)          the
attainment of certain target levels of, or a specified percentage increase in:
revenues, income before taxes and extraordinary items, net income, operating
income, earnings before income tax, earnings before interest, taxes,
depreciation and amortization, earning per share, after-tax or pre-tax profits,
operational cash flow, return on capital employed or returned on invested
capital, after-tax or pre-tax return on stockholders’ equity, the price of the
Company’s common stock or a combination of the foregoing;


 


(B)           the
achievement of a certain level of, reduction of, or other specified objectives
with regard to limiting the level of increase in, the Company’s bank debt or
other public or private debt or financial obligations;


 


(C)           the attainment of a
certain level of, reduction of, or other specified objectives with regard to
limiting the level in or increase in all or a portion of controllable expenses
or costs or other expenses or costs; and/or


 


(D)          any other objective
business criteria that would not cause an Award to fail to constitute “qualified
performance-based compensation” under Section 162(m) of the Code.


 


Performance goals may be established on a Company-wide
basis or with respect to one or more business units, divisions, Affiliates, or
products; and in either absolute terms or relative to the performance of one or
more comparable companies or an index covering multiple companies.  The performance goals for a particular
performance period need not be the same for all Participants.


 


(ii)           Adjustments to
Performance Goals.  The Committee may
provide, at the time performance goals are established in accordance with Section
10(b)(i) that adjustments will be made to those performance goals to take
into account, in any objective manner specified by the Committee, the impact of
one or more of the following: (A) gain or loss from all or certain claims
and/or litigation and insurance recoveries, (B) the impairment of tangible
or intangible assets, (C) stock-based compensation expense, (D) extraordinary,
unusual or infrequently occurring events 


 


11

















 


reported in the Company’s public filings, (E) restructuring
activities reported in the Company’s public filings, (F) investments,
dispositions or acquisitions, (G) loss from the disposal of certain
assets, (H) gain or loss from the early extinguishment, redemption, or
repurchase of debt, (I) cash or non-cash charges related to store closing
expenses, (J) changes in accounting principles, or (K) any other
item, event or circumstance that would not cause an Award to fail to constitute
“qualified performance-based compensation” under Section 162(m) of
the Code.  An adjustment described in
this Section 10(b)(ii) may relate to the Company or to
any subsidiary, division or other operational unit of the Company or its
Affiliates, as determined by the Committee at the time the performance goals
are established.  Any adjustment shall be
determined in accordance with generally accepted accounting principles and
standards, unless such other objective method of measurement is designated by
the Committee at the time performance objectives are established.  In addition, adjustments will be made as
necessary to any performance criteria related to the Company’s stock to reflect
changes in corporate capitalization, including a recapitalization, stock split
or combination, stock dividend, spin-off, merger, reorganization or other
similar event or transaction affecting the Company’s stock.


 


(c)  Other
Terms of Performance Awards.  The Board
may specify other terms pertinent to a Performance Award in the applicable
Award Agreement, including terms relating to the treatment of that Award in the
event of a Change in Control prior to the end of the applicable performance period.


 


SECTION 11.                       Amendments
and Termination.  The Board may amend, alter or discontinue the
Plan at any time.  However, except as
otherwise provided in Section 3, no amendment, alteration or
discontinuation will be made which would impair the rights of a Participant
with respect to an Award without that Participant’s consent or which, without
the approval of such amendment within 365 days of its adoption by the Board by
the Company’s stockholders in a manner consistent with Treas. Reg. § 1.422-3,
would: (i) increase the total number of Shares reserved for issuance
hereunder, or (ii) change the persons or class of persons eligible to
receive Awards.


 


SECTION 12.                       General Provisions.


 


(a)  The Board may require each
Participant to represent to and agree with the Company in writing that the
Participant is acquiring securities of the Company for investment purposes and
without a view to distribution thereof and as to such other matters as the
Board believes are appropriate.


 


(b)  All
certificates for Shares or other securities delivered under the Plan will be
subject to such share-transfer orders and other restrictions as the Board may
deem advisable under the rules, regulations and other requirements of the
Securities Act of 1933, as amended, the Exchange Act, any stock exchange upon
which the Shares are then listed, and any other applicable federal or state
securities law, and the Board may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.


 


12

















 


(c)  Nothing
contained in the Plan will prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is
required.


 


(d)  Neither
the adoption of the Plan nor the execution of any document in connection with
the Plan will: (i) confer upon any employee of the Company or an Affiliate
any right to continued employment or engagement with the Company or such
Affiliate, or (ii) interfere in any way with the right of the Company or
such Affiliate to terminate the employment of any of its employees at any time.


 


(e)  No
later than the date as of which an amount first becomes includible in the gross
income of the Participant for federal income tax purposes with respect to any
Award under the Plan, the Participant will pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state or local taxes of any kind required by law to be withheld with respect to
such amount.  Unless otherwise determined
by the Board, the minimum required withholding obligations may be settled with
Shares, including Shares that are part of the Award that gives rise to the
withholding requirement.  The obligations
of the Company under the Plan will be conditioned on such payment or arrangements
and the Company will have the right to deduct any such taxes from any payment
of any kind otherwise due to the Participant.


 


SECTION 13.                       Effective
Date of Plan.  Subject to the approval of the Plan by the
Company’s stockholders within 12 months of the Plan’s adoption by the Board,
the Plan will become effective on the date that it is adopted by the Board.


 


SECTION 14.                       Term
of Plan.  The Plan will continue in effect until
terminated in accordance with Section 11; provided,
however, that no Incentive Stock Option will be granted hereunder on
or after the 10th anniversary of the date of stockholder approval of the Plan
(or, if the stockholders approve an amendment that increases the number of
shares subject to the Plan, the 10th anniversary of the date of such
approval); but provided further, that Incentive
Stock Options granted prior to such 10th anniversary may extend
beyond that date.


 


SECTION 15.                       Invalid
Provisions.  In the event that
any provision of this Plan is found to be invalid or otherwise unenforceable
under any applicable law, such invalidity or unenforceability will not be
construed as rendering any other provisions contained herein as invalid or
unenforceable, and all such other provisions will be given full force and
effect to the same extent as though the invalid or unenforceable provision was
not contained herein.


 


SECTION 16.                       Governing Law.  The Plan and all Awards granted hereunder
will be governed by and construed in accordance with the laws and judicial
decisions of the Commonwealth of Pennsylvania, without regard to the
application of the principles of conflicts of laws.


 


13

















 


SECTION 17.                       Board
Action.  Notwithstanding anything to the contrary set
forth in the Plan, any and all actions of the Board or Committee, as the case may
be, taken under or in connection with the Plan and any agreements, instruments,
documents, certificates or other writings entered into, executed, granted,
issued and/or delivered pursuant to the terms hereof, will be subject to and
limited by any and all votes, consents, approvals, waivers or other actions of
all or certain stockholders of the Company or other persons required by:


 


(a)  the
Company’s Certificate of Incorporation (as the same may be amended and/or
restated from time to time);


 


(b)  the
Company’s Bylaws (as the same may be amended and/or restated from time to
time); and


 


(c)  any
other agreement, instrument, document or writing now or hereafter existing,
between or among the Company and its stockholders or other persons (as the same
may be amended from time to time).


 


SECTION 18.                       Notices.  Any notice to be given to the Company
pursuant to the provisions of this Plan must be given in writing and addressed,
if to the Company, to its principal executive office to the attention of its
Chief Financial Officer (or such other person as the Company may designate in
writing from time to time), and, if to a Participant, to the address contained
in the Company’s personnel files, or at such other address as that Participant
may hereafter designate in writing to the Company.  Any such notice will be deemed duly given: if
delivered personally or via recognized overnight delivery service, on the date
and at the time so delivered; if sent via telecopier or email, on the date and
at the time telecopied or emailed with confirmation of delivery; or, if mailed,
five (5) days after the date of mailing by registered or certified mail.


 


14