Document:

Ex. 10.27 - Compensation Arrangements for Non-Employee Directors

    

Exhibit 10.27

COMPENSATION ARRANGEMENTS FOR NON-EMPLOYEE DIRECTORS

 
Annual Cash Retainers
 
Each Non-Employee Director is paid an annual retainer of $55,000 for service on the Board of Directors of ANN INC. (the “Company”). 

 Each Audit Committee member will receive an additional annual retainer of $15,000 and each Compensation Committee and Nominating and Corporate Governance Committee member will receive an additional annual retainer of $10,000. 

The Chair of the Audit Committee receives an additional annual retainer of $30,000 and the Chairs of the Nominating and Corporate Governance Committee and the Compensation Committee each receive an additional annual retainer of $20,000.

Payment of Cash Retainers

The annual retainers described under the heading “Annual Cash Retainers” shall be earned ratably over the fiscal year and paid in arrears in quarterly installments based on a fiscal quarter by the 15th of the month following the end of each fiscal quarter. In the event a Non-Employee Director ceases serving as a Non-Employee Director, or in the applicable positions described under the heading “Annual Cash Retainers” for any reason, the retainer paid to such Non-Employee Director shall be pro-rated for the portion of such fiscal quarter actually served as a Non-Employee Director, or in such positions, as applicable.

Grant of Restricted Shares of Common Stock 
 
In connection with the Annual Meeting of Stockholders, each Non-Employee Director receives an annual grant of restricted shares of Company Common Stock (“Common Stock”) valued at $115,000 on the “grant date” (determined in accordance with the Policy on Grant of Equity Awards).  

If a Non-Employee Director joins the Board of Directors after an Annual Meeting of Stockholders, the Director shall receive a pro-rated amount of the annual grant of restricted stock, based on the portion of the year the Director served and according to the following schedule:

		
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	if a Non-Employee Director is appointed to the Board within 90 days after an Annual Meeting of Stockholders, the Director shall receive a grant of restricted stock valued at $115,000 on the “grant date” (determined in accordance with the Policy on Grant of Equity Awards); 

		
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	if a Non-Employee Director is appointed to the Board within between 91 days and 270 days after an Annual Meeting of Stockholders, the Director shall receive a grant of restricted stock valued at $57,500 on the “grant date” (determined in accordance with the Policy on Grant of Equity Awards); and 

		
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	if a Non-Employee Director is appointed to the Board 271 or more days after an Annual Meeting of Stockholders, the Director shall not receive any grant of restricted stock prior to the date of the Annual Meeting of Stockholders.

The number of shares granted to each such Director is determined by using the “fair market value” of the Common Stock on the grant date.  The “fair market value” is the closing price of the Common Stock on the preceding business day.  The restricted shares of Common Stock vest on the date of the next Annual Meeting of Stockholders. If a Director ceases to be a Director for any reason prior to the date of the next Annual Meeting of Stockholders, the unvested restricted shares will be forfeited.

Non-Executive Chairman Retainer

The Non-Executive Chairman of the Board receives an additional annual retainer of $125,000, comprised of $60,000 in cash and a grant of restricted shares of Common Stock valued at $65,000 on the “grant date”.  The number of shares granted to the Non-Executive Chairman is determined by the same method as the annual grant to Non-Employee Directors.  The restricted shares of Common Stock vest on the date of the next annual meeting of the Board of Directors.  If the Non-Executive Chairman ceases to be the Non-Executive Chairman for any reason prior to the date of the next annual meeting of the Board of Directors, the unvested restricted shares will be forfeited.

The Non-Executive Chairman’s $60,000 annual cash retainer shall be earned ratably over the fiscal year and paid in arrears in quarterly installments based on a fiscal quarter by the 15th of the month following the end of each fiscal quarter. If the Non-Executive Chairman ceases to be the Non-Executive Chairman for any reason, the retainer paid to such Non-Executive Chairman shall be pro-rated for the portion of the fiscal quarter actually served as a Non-Executive Chairman.

Travel Expense Reimbursements and Other Benefits
 
Directors are entitled to reimbursement of their reasonable travel expenses for attending Board of Directors and Board Committee meetings.  Travel arrangements should be made by calling Ultramar Travel Management International, ANN INC.’s third party travel agency services provider, at 1-866-856-0441.  Directors should identify themselves as members of the Board of Directors when speaking to the Ultramar agent.  The Corporate Secretary’s Office will arrange for reimbursement upon receiving receipts for any related out-of-pocket expenses.

Non-Employee Directors are also eligible to receive discounts on their purchases of the Company’s products under the same terms and conditions available to Company associates.a8ktwothreeyearperforman

1   Exhibit 10.1   FORM OF PERFORMANCE AWARD AGREEMENT   (Fiscal 2014 Long Term Incentive Plan – [Two-Year/Three-Year] Performance Period)   THIS PERFORMANCE AWARD AGREEMENT (this “Agreement”) is made effective   as of the _____ day of ____________ (the “Effective Date”), between Christopher & Banks   Corporation, a Delaware corporation (the “Company”), and _____ (“Employee”).   1. Award.   (a) Performance Share Units.  Pursuant to the Second Amended and Restated   Christopher & Banks Corporation 2005 Stock Incentive Plan (the “Plan”), Employee has been   granted this performance award in the form of performance share units (the “Award”), which   entitles Employee to the number of performance share units (“Units”) equal to the “Target   Award Number” set forth on Exhibit A to this Agreement, subject to adjustment as provided   herein.  Each Unit represents the right to receive one share of the Company’s common stock, par   value $0.01 per share (“Common Stock”) subject to fulfillment of the vesting conditions set forth   in this Agreement and in Exhibit A to this Agreement.  The Units may not be sold, assigned,   transferred or pledged, other than by will or the laws of descent and distribution, and any such   attempted transfer shall be void.   (b) Vesting Schedule.  Subject to the other terms and conditions of this   Agreement and the Plan, this Award will vest, and shares of Common Stock will be awarded to   Employee, in accordance with and to the extent provided in Exhibit A to this Agreement,   following completion of the fiscal year [2015/2016] audit performed by the Company’s   independent registered public accounting firm and a determination, as described in the next   succeeding sentence, by the Compensation Committee (the “Committee”) that all or a portion of   the Units shall vest; provided that, except as otherwise provided in Sections 3, 4, 5 or 6,   Employee has been continuously employed since the Effective Date and through the   Determination Date by the Company or any employing subsidiary of the Company.  The number   of Units that will vest will be based on whether and to what extent the threshold, target or   maximum performance level of each of the performance goals has been achieved, as set forth in   Exhibit A to this Agreement and as determined by the Committee in its sole discretion.  The   Target Award Number will be increased to the “Maximum Award Number” set forth on Exhibit   A to this Agreement if the Company’s performance goals are achieved at the maximum level, or   decreased to zero if the Company’s performance goals are not achieved at the threshold   performance level.  The “Threshold Award Number” set forth on Exhibit A to this Agreement   represents the number of Units that would vest if the Company achieves each of the performance   goals at the threshold level.  Except as set forth on Exhibit A to this Agreement, achievement of   each of the performance goals shall be considered by the Committee independent of the other   performance goals.  Failure to achieve a specific performance goal shall not prohibit vesting of   Units based on achievement of other performance goals.  The day on which the Award is     

 

2   determined to vest pursuant to this Section 1(b) is referred to in this Agreement as the   “Determination Date.”   (c) Plan Controls.  Employee hereby agrees to be bound by all of the terms   and provisions of the Plan, including any term or provision which may conflict with those   contained in this Agreement.  The Plan is hereby incorporated by reference into this Agreement,   and this Agreement is subject in all respects to the terms and conditions of the Plan.  In the event   of any conflict between this Agreement and the Plan, the terms of the Plan shall control.  Except   as otherwise defined herein, capitalized terms contained in this Agreement shall have the same   meaning as set forth in the Plan.    2. Shares of Common Stock.  Subject to the other terms and conditions of this   Agreement and the Plan, upon the Determination Date, Employee shall be entitled to receive, in   accordance with the terms and provisions of the Plan and this Agreement, the number of shares   of Common Stock calculated as provided in Exhibit A to this Agreement and as determined by   the Committee pursuant to Section 1(b).  The Company will issue such shares in book entry   form, or otherwise, of Common Stock to Employee on the Determination Date or as soon as   administratively feasible following such date, but in no event not later than ten (10) business   days following the Determination Date and not later than seventy-five (75) days following the   end of fiscal year [2015/2016].  If the number of shares of Common Stock to be delivered to   Employee is not a whole number, then the number of shares of Common Stock shall be rounded   down to the nearest whole number.  No fractional shares of Common Stock shall be issued upon   vesting of the Award.   Notwithstanding any other provisions of this Agreement, the issuance or delivery   of any shares of Common Stock (whether subject to restrictions or unrestricted) may be   postponed for such period as may be required to comply with applicable requirements of any   national securities exchange or any requirements under any law.  The Company shall not be   obligated to issue or deliver any shares of Common Stock if the issuance or delivery thereof   would constitute a violation of any provision of applicable law or of any regulation of any   governmental authority or any national securities exchange.  In addition, the grant of the Award   and the delivery in the future of any shares of Common Stock pursuant to this Agreement are   subject to any clawback policies the Company may adopt, whether in compliance with the Dodd-   Frank Wall Street Reform and Consumer Protection Act of 2010, Section 10D of the Securities   Exchange Act of 1934 and any applicable rules and regulations of the Securities and Exchange   Commission, or otherwise.   Prior to the distribution of shares of Common Stock with respect to the Units,   Employee shall not have ownership or rights of ownership of or with respect to any shares of   Common Stock underlying the Units.  Notwithstanding the foregoing, Employee shall   accumulate an unvested right to payment of cash dividend equivalents on the shares of Common   Stock underlying the Units if cash dividends are declared by the Company’s Board of Directors   on the Common Stock on or after the Effective Date.  Such dividend equivalents will be in an   amount of cash per Unit equal to the cash dividend paid with respect to one share of outstanding   Common Stock.  Employee shall be entitled solely to payment of accumulated dividend   equivalents with respect to the number of Units equal to the number of shares of Common Stock     

 

3   distributable to Employee pursuant to this Agreement.  Dividend equivalents will be paid to   Employee on the date that the shares of Common Stock, if any, are distributed to the Employee   pursuant to this Agreement.  Employee shall not be entitled to dividend equivalents with respect   to dividends declared prior to the Effective Date.  All dividend equivalents accumulated with   respect to forfeited Units shall be irrevocably forfeited.    3. Termination of Employment.  In the event of termination of Employee’s   employment with the Company or any employing subsidiary of the Company for Cause (as   defined below) prior to the Determination Date, the entire Award shall be forfeited and   immediately cancelled as of the date of such termination of employment.  Except as set forth in   Section 6, in the event of termination of Employee’s employment with the Company or any   employing subsidiary of the Company other than by reason of Retirement (as defined below),   Disability, death or by the Company other than for Cause prior to 50% of the performance period   elapsing, the entire Award shall be forfeited and immediately cancelled as of the date of such   termination of employment.  In the event of termination of Employee’s employment with the   Company or any employing subsidiary of the Company other than by reason of Retirement,   Disability, death or by the Company other than for Cause following 50% or more of the   performance period elapsing, the Committee reserves the right, in its sole discretion, to   determine the extent, if any, to which the Employee shall be entitled to receive up to a pro-rata   portion of the Units (based on the amount of time elapsed between the beginning of the   performance period and the date of termination of Employee’s employment), to be converted   into shares of Common Stock after the end of the performance period to the extent that the   threshold, target or maximum performance level of one or more of the performance goals is   achieved, as set forth in the attached Exhibit A and as determined by the Committee in its sole   discretion.  Except as set forth in Section 6, in the event of Employee’s voluntary resignation of   employment with the Company or any employing subsidiary of the Company at any time prior to   the Determination Date other than by reason of Retirement, Disability or death, the entire Award   shall be forfeited and immediately cancelled as of the date of such termination of employment.   4. Retirement.  Except as set forth in Section 6, in the event of termination of   Employee’s employment with the Company or any employing subsidiary of the Company by   reason of Retirement prior to 50% of the performance period elapsing, the entire Award shall be   forfeited and immediately cancelled as of the date of such termination of employment.  In the   event Employee’s employment is terminated by reason of Retirement following 50% or more of   the performance period elapsing, the Committee reserves the right, in its sole discretion, to   determine the extent, if any, to which the Employee shall be entitled to receive up to a pro-rata   portion of the Units (based on the amount of time elapsed between the beginning of the   performance period and the date the Employee’s employment is terminated) to be converted into   shares of Common Stock after the end of the performance period to the extent that the threshold,   target or maximum performance level of the performance goals is achieved, as set forth in the   attached Exhibit A and as determined by the Committee in its sole discretion.    5. Death or Disability.  Except as set forth in Section 6, in the event Employee’s   employment is terminated prior to the Determination Date by reason of Disability or death, the   Employee or the Employee’s estate, as applicable, shall be entitled to receive up to a pro-rata   portion of the Units (based on the amount of time elapsed between the beginning of the     

 

4   performance period and the date the Employee’s employment is terminated) and the performance   period shall be deemed to end on the date the Employee’s employment is terminated.  The   number of Units that are eligible to vest will be based on the extent of achievement of the   threshold, target or maximum performance level of the performance goals as set forth in the   attached Exhibit A, as adjusted for the truncated performance period and as determined by the   Committee in its sole discretion, and the Company will issue shares of Common Stock, if any, to   Employee or the Employee’s estate, as applicable, no later than thirty (30) days following such   determination by the Committee.  In all events, the Company will issue shares of Common   Stock, if any, not later than seventy-five (75) days following the date of such termination of   employment.   6. Change in Control.  If a Change in Control of the Company occurs prior to the   end of the performance period, then, for purposes of determining the number of Units that are   eligible to vest, the performance period shall be deemed to end on the date of the Change in   Control (the shortened performance period is referred to herein as the “Change in Control   Performance Period”).  The number of Units that are eligible to vest (the “Vesting Eligible   Units”) will be based on the extent of achievement of the threshold, target or maximum   performance level of the performance goals set forth in the attached Exhibit A, as adjusted   proportionally for the Change in Control Performance Period and as determined by the   Committee in its sole discretion.  The Employee’s Vesting Eligible Units shall vest if the   Employee remains as an Employee of the Company or its successor or any affiliate of the   Company or its successor through the end of the original performance period; provided, however   that:    (a) If the Employee’s employment is terminated prior to the end of the   original performance period by reason of Retirement, Disability or death, the Employee or the   Employee’s estate, as applicable, shall be entitled to receive shares of Common Stock, or the   consideration payable per share of Common Stock to holders of Common Stock generally   pursuant to the definitive agreement governing the Change in Control of the Company, with   respect to all of the Vesting Eligible Units as of the date of such termination of employment,   with the Company issuing such shares of Common Stock or other consideration payable, if any,   not later than seventy-five (75) days following the date of such termination of employment, and   (b) If the Employee’s employment is terminated by the Company without   Cause or by the Employee for Good Reason (as defined below) within one hundred-eighty (180)   days prior to a Change in Control of the Company or following a Change in Control of the   Company prior to the end of the original performance period, the Employee shall be entitled to   receive shares of Common Stock, or the consideration payable per share of Common Stock to   holders of Common Stock generally pursuant to the definitive agreement governing the Change   in Control of the Company, with respect to all of the Vesting Eligible Units as of the date of such   termination of employment, with the Company issuing such shares of Common Stock or other   consideration payable, if any, not later than seventy-five (75) days following the date of such   termination of employment.   If the Employee’s employment is terminated following a Change in   Control of the Company prior to the end of the original performance period under any     

 

5   circumstances not described above in this Section 6, the Vesting Eligible Units shall be   immediately and irrevocably forfeited and no shares of Common Stock shall be distributable to   the Employee.   7. Employment Relationship.  Nothing in this Agreement shall be construed as   constituting a commitment, guaranty, agreement, or understanding of any kind or nature that the   Company or its subsidiaries shall continue to employ Employee, and this Agreement shall not   affect in any way the right of the Company or any of its subsidiaries to terminate the   employment of Employee.  For purposes of this Agreement, Employee shall be considered to be   in the employment of the Company as long as Employee remains an employee of either the   Company, any successor corporation or a parent or subsidiary corporation of the Company or   any successor corporation.  Any question as to whether and when there has been a termination of   such employment, and the cause of such termination, shall be determined by the Committee, or   its delegate, as appropriate, and its determination shall be final.   8. Committee’s Powers.  No provision contained in this Agreement shall in any way   terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering   any of the powers, rights or authority vested in the Committee or, to a delegate to the extent of   such delegation, pursuant to the terms of the Plan or resolutions adopted in furtherance of the   Plan, including, without limitation, the right to make certain determinations and elections with   respect to the Units.   9. Income Tax Matters.  In order to comply with all applicable federal, state or local   income tax laws or regulations, the Company may take such action as it deems appropriate to   ensure that all applicable federal, state or local payroll, withholding, income or other taxes,   which are the sole and absolute responsibility of Employee, are withheld or collected from   Employee.  In accordance with the terms of the Plan, and such rules as may be adopted by the   Committee under the Plan, Employee may elect to satisfy Employee’s tax withholding   obligations arising from the receipt of, or the lapse of restrictions relating to, the shares of   Common Stock, by (i) delivering cash, a check (bank check, certified check or personal check)   or a money order payable to the Company, (ii) having the Company withhold a portion of the    shares of Common Stock otherwise to be delivered having a Fair Market Value equal to the   amount of such taxes, (iii) delivering to the Company shares of Common Stock held by   Employee for more than six (6) months (or such period as the Committee may deem appropriate   for accounting purposes or otherwise) having a Fair Market Value equal to the amount of such   taxes, or (iv) a combination of the methods described above, as approved by the Committee or its   designee.  Employee’s election regarding satisfaction of withholding obligations must be made   on or before the date that the amount of tax to be withheld is determined.   10. Binding Effect.  This Agreement shall be binding upon and inure to the benefit of   any successors to the Company and all lawful successors to Employee permitted under the terms   of the Plan.   11. Section 409A Provision.  The parties hereto intend that any payment or benefit   that is provided pursuant to or in connection with this Agreement that is considered to be   deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as     

 

6   amended (the “Code”) shall be paid and provided in a manner, and at such time and form, as   complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable   tax consequences provided therein for non-compliance.  The parties hereto further intend that the   payments hereunder shall, to the maximum extent permissible under Section 409A of the Code,   be exempt from Section 409A of the Code under the short-term deferral exception described in   Treasury Regulation Section 1.409A-1(b)(4) to the extent that all payments are payable no later   than two and a half months after the end of the first taxable year in which the right to the   payment is no longer subject to a substantial risk of forfeiture.  If the Employee is a “specified   employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, any payments to be made or   benefits to be delivered in connection with the Employee’s “Separation from Service” (as   defined below) that constitute deferred compensation subject to Section 409A of the Code shall   not be made until the earlier of (i) the Employee’s death or (ii) six (6) months plus one day after   the Employee’s Separation from Service (the “409A Deferral Period”) as required by Section   409A of the Code.  For purposes of this Agreement, with respect to the timing of any amounts   that constitute deferred compensation subject to Section 409A of the Code that depends on   termination of employment, termination of employment shall mean a “Separation from Service”   within the meaning of Section 409A of the Code where it is reasonably anticipated that no   further services would be performed after such date or that the level of bona fide services the   Employee would perform after that date (whether as an employee or independent contractor)   would permanently decrease to a level less than or equal to twenty percent (20%) of the average   level of bona fide services the Employee performed over the immediately preceding thirty-six   (36) month period.   12. Governing Law.  This Agreement shall be governed by, and construed in   accordance with, the laws of the State of Delaware, without reference to the principles of   conflicts of laws.   13. Defined Terms.  The following terms shall have the meanings ascribed to them   below for purposes of this Agreement:   (a) “Cause” shall mean (i) any fraud, misappropriation or embezzlement by   Employee in connection with or affecting the business of the Company or its affiliates, (ii) any   conviction of (including any plea of guilty or no contest to) a felony or a gross misdemeanor by   Employee, (iii) any gross neglect or persistent neglect by Employee to perform the duties   assigned to Employee or any other act that can be reasonably expected to cause substantial   economic or reputational injury to the Company, or (iv) any material violation of the Company’s   written policies, procedures or codes of conduct by Employee; provided that, in connection with   clauses (iii) and (iv), Employee shall first have received a written notice from the Company’s   Chief Executive Officer or the Board that summarizes and reasonably describes the manner in   which Employee has grossly or persistently neglected his or her duties, engaged in an act   reasonably expected to cause substantial injury, or materially violated a Company policy,   procedure or code of conduct (the “Event”) and, to the extent the Event is capable of being   cured, Employee shall have fourteen (14) calendar days from the date notice of the Event is   delivered to Employee (via electronic mail, regular mail, in person or otherwise) to cure the   same, but the Company is not required to give written notice of, nor shall Employee have a     

 

7   period to cure the same or any similar failure, which was the subject of an earlier written notice   to Employee under this provision.   (b) “Good Reason” shall mean (i) if the Employee is a party to an   employment (or similar) agreement with the Company or any employing subsidiary of the   Company that defines the word “good reason” (or “constructive termination” or similar term),   then Good Reason for purposes of this Agreement shall have the meaning ascribed to it under   that agreement; and (ii) if there is no such agreement or definition, Good Reason means the   Employee has complied with the “Good Reason Process” (hereinafter defined) following the   occurrence of any of the following events without the consent of the Employee: (A) the   assignment to the Employee of duties inconsistent with, or the removal of duties material to the   usual and customary performance of, the Employee’s position (including status, offices, titles,   and reporting requirements), authority, duties, or responsibilities, excluding for this purpose an   isolated, insubstantial, and inadvertent action not taken in bad faith and which is remedied by the   Company promptly after receipt of notice thereof given by the Employee; (B) a reduction in base   salary of 10% or more, except for an across-the-board reduction of not more than 10% per   person, and applicable to all employees of the Company; (C) a material reduction in aggregate   benefits available to the Employee; or (D) the relocation of the office at which the Employee is   principally employed to a location more than 30 miles from such office.   (c) “Good Reason Process” shall mean that (A) the Employee determines that   a Good Reason condition has occurred; (B) the Employee notifies the Company in writing of the   Good Reason condition within ninety (90) days of the first occurrence of such condition; (C)   thirty (30) days following such notice (the “Cure Period”) shall have passed, during which the   Company shall use its best efforts to remedy such condition; (D) notwithstanding the Company’s   efforts, the Good Reason condition continues to exist at the end of the Cure Period; and (E) the   Employee terminates his or her employment within sixty (60) days after the end of the Cure   Period. If the Company cures the Good Reason condition during the Cure Period, Good Reason   shall be deemed not to have occurred.   (d) “Retirement” shall mean the Employee’s voluntary termination of his or   her employment relationship with the Company on a date upon which the sum of Employee’s   age and number of years of employment with the Company equals or exceeds sixty-five (65)   years.   (This space intentionally left blank.)   * * * * * * * * *    

 

8   IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed   by an officer thereunto duly authorized, and Employee has executed this Agreement, all effective   as of the date first above written.   CHRISTOPHER & BANKS CORPORATION   By:    Title:    EMPLOYEE   Signed:      

 

9   EXHIBIT A   (Two-Year Performance Period)   This Exhibit A to the Performance Award Agreement effective as of the _____ day of   ____________ (the “Agreement”) contains the performance requirements for the vesting of the   Award.  Capitalized terms used but not defined herein shall have the same meanings assigned to   them in the Plan and the Agreement.   Number of Performance Share Units   Threshold Award Number Target Award Number Maximum Award Number   Performance Period   Fiscal Year 2014 through Fiscal Year 2015   Performance Goals for the Performance Period   Performance Goal Threshold Target Maximum   Fiscal Year 2015 Operating Margin %   to Sales (weighted as 50%)   Two-Year Compounded Net Sales   Annual Growth Rate (weighted as   30%)   Two-Year Total Shareholder Return as   % of Peer Group (weighted as 20%)    The number of Units earned by Employee for performance between the threshold, target and   maximum performance levels will be linearly interpolated.    The achievement of each of the performance goals shall be considered by the Committee   independent of the other performance goals, except that the Revenue (Compounded Annual   Growth Rate) performance goal shall be subject to a minimum operating margin threshold of   _____% in Fiscal Year 2015.    Operating Margin % is Operating Income (defined as income before interest and taxes as   reported in the Company’s financial statements, but excluding the impact (whether positive   or negative) thereon of any change in accounting standards, impairment charges or   extraordinary items) divided by Net Sales (as reported in the Company’s financial   statements).    Two-Year Compounded Net Sales Annual Growth Rate shall be measured as follows (using   net sales as reported in the Company’s financial statements):    

 

10   Fiscal 2014 Net Sales Fiscal 2015 Net Sales   _________________  -1 + _________________ -1 ÷ 2 = ___%   Fiscal 2013 Net Sales Fiscal 2014 Net Sales    Total Shareholder Return shall be calculated based on the average closing stock price on the   New York Stock Exchange (“NYSE”) (or other primary stock exchange if not the NYSE) for   each of the sixty (60) consecutive-trading day periods either (i) commencing on the first   business day of the Performance Period or (ii) ending on the last business day of the   Performance Period.  The calculation of Total Shareholder Return shall include any   dividends paid during the Performance Period and the appreciation of the stock price during   the Performance Period.     The applicable peer group for purposes of the Two-Year Total Shareholder Return   performance goal will be determined by the Committee on or before the Effective Date.  If a   member of the applicable peer group is acquired or otherwise ceases to exist as a publicly   traded company during the Performance Period, the Committee may adjust the applicable   peer group during the Performance Period if and to the extent it deems it appropriate.   Chief Financial Officer Certification Required as Condition to Vesting   Prior to the Determination Date, the Chief Financial Officer shall certify in writing to the   Committee (i) the Fiscal Year 2015 Operating Margin % to Sales, (ii) the Two-Year Revenue   (Compounded Annual Growth Rate) for Fiscal Years 2014-2015, each based on the Company’s   audited financial statements, and (iii) the Two-Year Total Shareholder Return as % of Peer   Group.  Such certification shall include supporting documentation for each performance goal.    

 

11   EXHIBIT A   (Three-Year Performance Period)   This Exhibit A to the Performance Award Agreement effective as of the _____ day of   ____________ (the “Agreement”) contains the performance requirements for the vesting of the   Award.  Capitalized terms used but not defined herein shall have the same meanings assigned to   them in the Plan and the Agreement.   Number of Performance Share Units   Threshold Award Number Target Award Number Maximum Award Number   Performance Period   Fiscal Year 2014 through Fiscal Year 2016   Performance Goals for the Performance Period   Performance Goal Threshold Target Maximum   Fiscal Year 2016 Operating Margin %   to Sales (weighted as 50%)   Three-Year Compounded Net Sales   Annual Growth Rate (weighted as   30%)   Three-Year Total Shareholder Return   as % of Peer Group (weighted as 20%)    The number of Units earned by Employee for performance between the threshold, target and   maximum performance levels will be linearly interpolated.    The achievement of each of the performance goals shall be considered by the Committee   independent of the other performance goals, except that the Revenue (Compounded Annual   Growth Rate) performance goal shall be subject to a minimum operating margin threshold of   _____% in Fiscal Year 2016.    Operating Margin % is Operating Income (defined as income before interest and taxes as   reported in the Company’s financial statements, but excluding the impact (whether positive   or negative) thereon of any change in accounting standards, impairment charges or   extraordinary items) divided by Net Sales (as reported in the Company’s financial   statements).    Three-Year Compounded Net Sales Annual Growth Rate shall be measured as follows (using   net sales as reported in the Company’s financial statements):    

 

12   Fiscal 2014 NS      Fiscal 2015 NS Fiscal 2016 NS   _____________ -1     +     _____________ -1     +     _____________ -1 ÷ 3 = ___%   Fiscal 2013 NS      Fiscal 2014 NS Fiscal 2015 NS   (NS means Net Sales.)    Total Shareholder Return shall be calculated based on the average closing stock price on the   New York Stock Exchange (“NYSE”) (or other primary stock exchange if not the NYSE) for   each of the sixty (60) consecutive-trading day periods either (i) commencing on the first   business day of the Performance Period or (ii) ending on the last business day of the   Performance Period.  The calculation of Total Shareholder Return shall include any   dividends paid during the Performance Period and the appreciation of the stock price during   the Performance Period.     The applicable peer group for purposes of the Three-Year Total Shareholder Return   performance goal will be determined by the Committee on or before the Effective Date.  If a   member of the applicable peer group is acquired or otherwise ceases to exist as a publicly   traded company during the Performance Period, the Committee may adjust the applicable   peer group during the Performance Period if and to the extent it deems it appropriate.   Chief Financial Officer Certification Required as Condition to Vesting   Prior to the Determination Date, the Chief Financial Officer shall certify in writing to the   Committee (i) the Fiscal Year 2016 Operating Margin % to Sales, (ii) the Three-Year Revenue   (Compounded Annual Growth Rate) for Fiscal Years 2014-2016, each based on the Company’s   audited financial statements, and (iii) the Three-Year Total Shareholder Return as % of Peer   Group.  Such certification shall include supporting documentation for each performance goal.

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