FREDERICK’S OF HOLLYWOOD
GROUP INC.
2003 EMPLOYEE EQUITY INCENTIVE
PLAN
Adopted As Of December 1,
2003
Approved By Stockholders As Of December 1, 2003
Amended and Restated as of December 1, 2006
Assumed by Frederick’s of Hollywood Group Inc. from FOH
Holdings, Inc.
as of January 28, 2008
Termination Date: November 30, 2013
(a)
General Purpose . The Company, by means of the Plan, seeks
to retain and reward the services of the group of persons eligible
to receive Options and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its
Affiliates by providing such persons with the benefits of equity
ownership in the Company, including, without limitation, the
opportunity to benefit from increases in value of the Common Stock
through the granting of Options.
(b)
Eligible Option Recipients . The persons eligible to receive
Options are the Employees, Officers and Independent Directors of
the Company and its Affiliates.
2.
Adoption; Effective Date of Plan . This Plan shall be
effective and Options may be granted hereunder upon this
Plan’s adoption by the Board; provided ,
however , this Plan shall be approved by the Stockholders
within twelve months after the date of the Board’s adoption
of this Plan, and no Option shall be granted under this Plan until
this Plan has been adopted by the Board and approved by the
Stockholders.
3.
Termination of Plan . Unless previously terminated by
the Board, this Plan shall terminate at the close of business on
November 30, 2013 (which is the day before the tenth
anniversary of the adoption of this Plan by the Board), and no
Options shall be granted hereunder after that date, but such
termination shall not affect any Participant’s rights under
an Option already granted to such Participant.
(i) with
respect to an Incentive Stock Option, any parent corporation or
subsidiary corporation of the Company, whether now or hereafter
existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code; and
(ii) with
respect to a Nonstatutory Stock Option, any corporation, limited
liability company or other business entity which is deemed to be a
single employer under Sections 414(b) or (c) of the Code with
Company, except that, for purposes of determining a controlled
group of corporations under Section 414(b),
“50 percent” shall be substituted for
“80 percent” each place it appears in
Section 1563(a)(1), (2) and (3), and in applying
Section 1.414(c)-2, “50 percent” shall be
substituted for “80 percent” each place that it
appears in Section 1.414(c)-2.
(b) “
Board ” means the Board of Directors of the
Company.
(c) “
Change in Control ” means: (i) a
dissolution, liquidation or sale of all or substantially all of the
assets of the Company; (ii) the consummation of a merger or
consolidation of the Company or any direct or indirect subsidiary
of the Company with any other corporation or other entity, other
than a merger or consolidation that results in the voting
securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of
the Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation;
(iii) once the Company becomes a Reporting Company, the
acquisition by any person, entity or group within the meaning of
Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or any
Affiliate of the Company) of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors.
(d) “
Code ” means the Internal Revenue Code of 1986,
as amended, and any Treasury Regulations or other official guidance
issued thereunder.
(e) “
Committee ” means a committee of one or more
members of the Board appointed by the Board in accordance with
subsection 5(c).
(f) “
Common Stock ” means the common stock of the
Company, par value $0.01 per share.
(g) “
Company ” means Frederick’s of Hollywood
Group Inc., a New York corporation.
(h) “
Continuous Service ” means
(i) With
respect to a Nonstatutory Stock Option, the period during which the
Participant’s service with the Company or an Affiliate,
whether as an Employee or Officer, is not
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interrupted or
terminated. The Participant’s Continuous Service shall not be
deemed to have terminated merely because of a change in the
capacity in which the Participant renders service to the Company or
an Affiliate as an Employee or Officer or a change in the entity
for which the Participant renders such service, provided that there
is no interruption or termination of the Participant’s
Continuous Service. For example, a change in status from an
Employee of the Company to an Officer of an Affiliate will not
constitute an interruption of Continuous Service. The Board or the
chief executive officer of the Company, in that party’s sole
discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved
by that party, including sick leave, military leave or any other
personal leave.
(ii) With
respect to an Incentive Stock Option, the period during which the
Employee’s service with the Company, in his or her capacity
as an Employee, is not interrupted or terminated; provided that the
Employee’s Continuous Service will be treated as continuing
intact for a period of ninety (90) days (or for any longer
period during which the Employee’s right to reemployment with
the Company or its Affiliate is guaranteed by statute or by
contract) if the Employee is on military, sick leave or other bona
fide leave of absence.
(i) “
Controlling Shareholder ” shall mean any
Stockholder which, directly or indirectly, owns or controls more
than twenty-five percent (25%) of the voting stock of
Company.
(j) “
Disability ” means (i), with respect to
Incentive Stock Options, a “total and permanent
disability” within the meaning of Section 22(e)(3) of
the Code; and (ii), with respect to Nonstatutory Stock Options, as
defined in the Participant’s employment agreement with the
Company, if any, or, if none, then as defined in any disability
income policies maintained by the Company, if any, and, if none,
then as defined in Section 22(e)(3) of the Code.
(k) “
Employee ” means any person employed by the
Company or an Affiliate as an employee within the meaning of Code
Section 3401(c) and Treasury Regulations issued
thereunder.
(l) “
Exchange Act ” means the Securities Exchange
Act of 1934, as amended.
(m) “
Fair Market Value ” means, as of any date, the
value of the Common Stock determined as follows:
(i) If
(a) the Common Stock is listed on any established stock
exchange traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, or other comparable quotation system and has been
designated as a National Market System (“NMS”)
security, the Fair Market Value of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or market (or the
exchange or market with the greatest volume of trading in the
Common Stock) on the day of determination, or if such exchange or
market is not open for business on such date, on the last market
trading day prior to the day of determination, or (b) the
Common Stock is admitted to
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quotation on
the NASDAQ System but has not been designated as an NMS Security,
Fair Market Value of a share on any date shall be the average of
the highest bid and lowest asked prices of such share on such
system on the last date preceding said date of which both bid and
ask prices were reported, all as reported in The Wall Street
Journal or such other source as the Board deems
reliable.
(ii) In
the absence of such markets for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board or any
Committee thereof (including, without limitation, the Compensation
Committee) if so delegated by the Board pursuant to
Section 5(c); provided, however, such determination shall be
based on the reasonable application of a reasonable valuation
method within the meaning of Section 409A of the
Code.
(iii) Prior
to the Company becoming a Reporting Company, the Fair Market Value
of the Common Stock shall be determined in a manner consistent with
Section 260.140.50 of the Regulations.
Notwithstanding
the foregoing provisions of this subsection 4(e), the determination
of Fair Market Value shall comply with the requirements of
Section 409A of the Code.
(n) “
Incentive Stock Option ” means an option to
purchase Common Stock, which is intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(o) “
Independent Director ” means a person other
than an Officer or Employee of the Company or Controlling
Stockholder or any parent or subsidiary of the Company or
Controlling Stockholder. No director qualifies as an Independent
Director unless the Board of Directors affirmatively determines
that the director does not have a material relationship with the
Company or any parent or subsidiary of the Company that would
interfere with the exercise of independent judgment.
(p) “
Nonstatutory Stock Option ” means an option to
purchase Common Stock, which is not intended to qualify as an
Incentive Stock Option.
(q) “
Officer ” means (i) prior to the Company
becoming a Reporting Company, any person designated by the Company
as an officer and (ii) once the Company becomes a Reporting
Company, a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) “
Option ” means an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.
(s) “
Option Agreement ” means a written agreement
between the Company and an Optionholder evidencing the terms and
conditions of an individual Option grant. Each Option Agreement
shall be subject to the terms and conditions of the
Plan.
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(t) “
Option holder ” means a person to whom an
Option is granted pursuant to the Plan or, if applicable, such
other person who holds an outstanding Option.
(u) “
Participant ” means a person to whom an Option
is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Option.
(v) “
Plan ” means this Frederick’s of
Hollywood Group Inc. 2003 Employee Equity Incentive
Plan.
(w) “
Regulations ” means Title 10 of the California
Code of Regulations.
(x) “
Reporting Company ” means a company that is
subject to the reporting requirements of Section 12, 13 or
15(d) of the Exchange Act.
(y) “
Rule 16b-3 ” means Rule 16b-3
promulgated under the Exchange Act or any successor to Rule 16b-3,
as in effect from time to time.
(z) “
Securities Act ” means the Securities Act of
1933, as amended.
(aa) “
Stockholders ” means the stockholders of the
Company.
(bb) “
Ten Percent Stockholder ” means a person who
owns (or is deemed to own pursuant to Section 424(d) of the Code)
stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any of its
Affiliates.
(a)
Administration by the Board . The Board shall administer the
Plan unless and until the Board delegates administration to a
Committee (such as the Company’s Compensation Committee), as
provided in subsection 5(c). In the event the Plan becomes subject
to Section 162(m) of the Code, the Board (and any Committee
delegated to pursuant to Section 5(c)) shall administer the
Plan, and the Plan shall be interpreted, in a manner consistent
with the requirements thereof (including, without limitation, the
number of options that may be granted to a Participant in any
calendar year).
(b)
Powers of Board . The Board shall have the power, subject
to, and within the limitations of, the express provisions of the
Plan:
(i) To
determine from time to time (a) which of the persons eligible
under the Plan shall be granted Options; (b) when and how each
Option shall be granted; (c) the provisions of each Option
granted (which need not be identical), including the time or times
when a person shall be permitted to receive Common Stock pursuant
to an Option; and (d) the number of shares of Common Stock
with respect to which an Option shall be granted to each such
person.
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(ii) To
construe and interpret the Plan and Options granted under it, and
to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any
Option Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.
(iii) To
amend the Plan or an Option as provided in
Section 13.
(iv) Generally,
to exercise such powers and to perform such acts as the Board deems
necessary or expedient to promote the best interests of the
Company, which are not in conflict with the provisions of the
Plan.
Without
limiting the foregoing, the Board shall also have the authority to
require, as a condition of the granting of any Option, that the
Participant agree not to sell or otherwise dispose of shares of
Common Stock acquired pursuant to the Option for a period of six
(6) months following the date of acquisition of such shares of
Common Stock.
The
Board, or any Committee that the Board delegates its powers to
pursuant to subsection 5(c), may employ such legal counsel,
consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received
from any such counsel, consultant or agent and any computation
received from any such counsel, consultant or agent. The Company
shall pay the expenses incurred by the Board (or such Committee) in
the engagement of such counsel, consultant or agent. No member or
former member of the Board or a Committee (if administration is
delegated to such Committee) shall be liable for any action or
determination made in good faith with respect to the Plan or any
Option.
(c)
Delegation to Committee . The Board may delegate
administration of the Plan to a Committee or Committees of one or
more members of the Board (including, without limitation, the
Compensation Committee), and the term “Committee” shall
apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the
Plan, the powers possessed by the Board, as described in subsection
5(b), including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee
at any time and revest in the Board the administration of the
Plan.
(d)
Effect of Board’s Decision . All determinations,
interpretations and constructions made by the Board in good faith
shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.
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6. Stock
Subject to the Plan .
(a) Share
Reserve . Subject to the provisions of Section 12 relating
to adjustments upon changes in Common Stock, the Common Stock that
may be issued pursuant to Options shall not exceed in the aggregate
1,171,902 shares of Common Stock.
(b)
Reversion of Shares to the Share Reserve . If any Option
shall for any reason expire or otherwise terminate, in whole or in
part, without having been exercised in full, the shares of Common
Stock not acquired under such Option shall revert to and again
become available for issuance under the Plan.
(c)
Source of Shares . The shares of Common Stock subject to the
Plan may be unissued shares or reacquired shares of Common Stock,
bought on the market or otherwise.
(d) Share
Reserve Limitation . Prior to the Company becoming a Reporting
Company and to the extent then required by Section 260.140.45
of the Regulations, the total number of shares of Common Stock
issuable upon exercise of all outstanding Options and the total
number of shares of Common Stock provided for under any stock bonus
or similar plan of the Company shall not exceed the applicable
percentage as calculated in accordance with the conditions and
exclusions of Section 260.140.45 of the Regulations, based on the
shares of Common Stock of the Company that are outstanding at the
time the calculation is made. 1
(a)
General . Options may be granted to Employees, Officers and
Independent Directors. No person who is otherwise eligible shall be
disqualified to receive an Option merely because he or she is
already a stockholder of the Company. Incentive Stock Options may
be granted only to Employees or prospective Employees; provided,
however, that any grant of Incentive Stock Options to a prospective
Employee shall be conditioned on the commencement of employment
with the Company or an Affiliate.
(b) Ten
Percent Stockholders .
(i) A
Ten Percent Stockholder shall not be granted an Incentive Stock
Option unless the exercise price of such Option is at least 110% of
the Fair Market Value of the
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Section 260.140.45 generally provides that
the total number of shares issuable upon exercise of all
outstanding options (exclusive of certain rights) and the total
number of shares called for under any stock bonus or similar plan
shall not exceed a number of shares which is equal to 30% of the
then outstanding shares of the issuer (convertible preferred or
convertible senior common shares counted on an as if converted
basis), exclusive of shares subject to promotional waivers under
Section 260.141, unless a percentage higher than 30% is
approved by at least two-thirds of the outstanding shares entitled
to vote.
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Common Stock
subject to the Option at the date of grant and the Option is not
exercisable after the expiration of five years from the date of
grant.
(ii) Prior
to the Company becoming a Reporting Company, a Ten Percent
Stockholder shall not be granted a Nonstatutory Stock Option unless
the exercise price of such Option is (a) 110% of the Fair
Market Value of the Common Stock at the date of grant or
(b) such lower percentage of the Fair Market Value of the
Common Stock at the date of grant as is permitted by
Section 260.140.41 of the Regulations at the time of the grant
of the Option.
Each Option shall
be in such form and shall contain such terms and conditions as the
Board shall deem appropriate. All Options shall be designated
Incentive Stock Options or Nonstatutory Stock Options at the time
of grant, and, if certificates are issued, a separate certificate
or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option. The provisions of separate
Options need not be identical, but each Option shall include
(through incorporation of provisions hereof by reference in the
Option or otherwise) the substance of each of the following
provisions:
(a)
Term . No Option granted prior to the Company becoming a
Reporting Company shall be exercisable after
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