-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TtCjoMXNc1TvnT9zOnkbq5zUETW977Leh0eUaXxd8tZChhtgS55mYEDXez0tZmc9 ONEzlnt+75InQEuqn+x6eA== 0000792570-98-000005.txt : 19980729 0000792570-98-000005.hdr.sgml : 19980729 ACCESSION NUMBER: 0000792570-98-000005 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 11 REFERENCES 429: 333-00000 FILED AS OF DATE: 19980728 EFFECTIVENESS DATE: 19980728 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAKER J INC CENTRAL INDEX KEY: 0000792570 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-SHOE STORES [5661] IRS NUMBER: 042866591 STATE OF INCORPORATION: MA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-60021 FILM NUMBER: 98672487 BUSINESS ADDRESS: STREET 1: 555 TURNPIKE ST CITY: CANTON STATE: MA ZIP: 02021 BUSINESS PHONE: 6178289300 MAIL ADDRESS: STREET 1: P O BOX 231 CITY: HYDE PARK STATE: MA ZIP: 02136 S-8 1 REGISTRATION STATEMENT Registration No.333- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 J. BAKER, INC. (Exact name of Registrant as specified in Its Charter) Massachusetts 04-2866591 (State or other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 555 Turnpike Street, Canton, Massachusetts 02021 (Address of Principal Executive Offices) (Zip Code) Amended and Restated 1994 Equity Incentive Plan Amended and Restated Directors' 1992 Stock Option Plan Non-Qualified Stock Option Grants (Full title of the Plans) ALAN I. WEINSTEIN J. Baker, Inc. 555 Turnpike Street Canton, Massachusetts 02021 (Name and address of agent for service) (781) 828-9300 (Telephone Number, including Area Code, of Agent for Service) CALCULATION OF REGISTRATION FEE Amount to Proposed maximum Proposed maximum Amount of Title of Securities be regis- offering price aggregate offering registration to be registered tered (1) per share price fee - ---------------------- -------- ------------------- ---------- --------- Common Stock, par 600,000 $10.875 (2) $6,525,000 (2) $1,925.00 value $.50 per share Common Stock, par 100,000 $10.875 (2) $1,087,500 (2) $321.00 value $.50 per share Common Stock, par 100,000 $1.00 (3) $100,000 (3) $30.00 value $.50 per share Common Stock, par 50,000 $8.63 (3) $431,500 (3) $127.00 value $.50 per share
(1) The Registration Statement also covers such additional number of shares which may be issued as a result of anti-dilution adjustments. This Registration Statement also relates to the Rights to purchase shares of Series A Junior Participating Cumulative Preferred Stock of the Registrant which are attached to all shares of Common Stock outstanding as of, and issued subsequent to, January 6, 1995, pursuant to the terms of the Registrant's Shareholder Rights Agreement dated December 15, 1994. Until the occurrence of certain prescribed events, the Rights are not exercisable, are evidenced by the certificates for the Common Stock and will be transferred with and only with such stock. (2) Estimated solely for the purpose of determining the amount of the Registration fee pursuant to Rule 457(c) and (h) and is based upon the average of the high and low prices of the registrant's Common Stock on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation System on July 22, 1998. (3) Based upon the exercise price of the Non-Qualified Stock Option Grants, pursuant to Rule 457(h)(1) under the Securities Act of 1933, as amended. PART II ------- INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. J. Baker, Inc. (the "Company") hereby incorporates by reference the documents listed in (a) through (c) below, which have previously been filed with the Securities and Exchange Commission: (a) The Company's Annual Report on Form 10-K for the Company's fiscal year ended January 31, 1998. (b) The Company's Quarterly Report on Form 10-Q for the Company's fiscal quarter ended May 2, 1998. (c) The description of the Company's Common Stock $.50 par value, contained in the Company's Registration Statement on Form 8-A filed pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended, dated June 2, 1986, including any amendment or report filed for the purpose of updating such description. The description of the Company's Rights to purchase shares of the Company's Series A Junior Participating Cumulative Preferred Stock contained in the Company's Registration Statement on Form 8-A filed pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended, dated December 15, 1994, including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the Company with the Securities and Exchange Commission pursuant to Sections 13(a), (c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing of a post-effective amendment which indicates that all securities offered hereunder have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein or in any other subsequently filed document which also is incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this registration statement. Item 4. Description of Securities. Not Applicable. Item 5. Interests of Named Experts and Counsel. Not Applicable. Item 6. Indemnification of Directors and Officers. As permitted by applicable Massachusetts law, Article 6A of the Company's Restated Articles of Organization, as amended, provides, that the Company shall indemnify, except as limited by law or as otherwise provided in the Company's Articles of Organization, each person who serves or has served as a director or in any other office filled by election or appointment by the stockholders or by the Board of Directors of the Company against all liability fixed by a judgment, order, decree, or award in any action, suit or proceeding, civil or criminal, brought or threatened in or before any court, tribunal, administrative or legislative body or agency incurred by such person in connection with each such action, suit or proceeding in which such person is involved as a result of serving or having served the Company in such capacity or, at the request of the Company, as a director, officer, employer or other agent of any other organization. No indemnification will be provided under Article 6A to such a person with respect to a matter as to which it shall have been adjudicated in any such action, suit or proceeding that such person did not act in good faith in the reasonable belief that such person's action was in the best interests of the Company. Also, in the event that any such action, suit or proceeding is compromised or settled so as to impose any liability or obligation upon such person or upon the Company, no indemnification shall be provided to such person with respect to a matter if the Company has obtained an opinion of counsel that with respect to such matter such person did not act in good faith in the reasonable belief that such person's action was in the best interests of the Company. Article 6F of the Company's Restated Articles of Organization, provides that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of the Director's duty as a director notwithstanding any provision of law imposing such liability; provided, however, that Article 6F also states that the Article shall not eliminate or limit any liability of a Director (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Sections 61 or 62 of the Massachusetts Business Corporation Law, or (iv) with respect to any transaction from which the director derived an improper personal benefit. Article 6F also provides that if the Massachusetts Business Corporation law is subsequently amended to further eliminate or limit the personal liability of directors or to authorize corporate action to further eliminate or limit such liability, then the liability of the directors of the company shall be eliminated or limited to the fullest extent permitted by the Massachusetts Business Corporation Law as so amended. Item 7. Exemption from Registration Claimed. Not Applicable. Item 8. Exhibits. The following is a complete list of Exhibits filed or incorporated by reference as part of this Registration Statement. Exhibits 4.1 Amended and Restated Articles of Organization of the Company, as filed with the Secretary of the Commonwealth of Massachusetts on September 26, 1990 (incorporated herein by reference to Exhibit 3.01 to the Company's Form 10-K Report for the year ended February 2, 1991). 4.2 By-laws of the Company, as amended by the Board of Directors on September 11, 1990 (incorporated herein by reference to Exhibit 19.01 to the Company's Form 10-Q Report for the quarter ended November 3, 1990). 5 * Opinion of Mark T. Beaudouin, counsel to the Company, as to the legality of the securities being registered. 23.1* Consent of Mark T. Beaudouin (included in Exhibit 5). 23.2* Consent of KPMG Peat Marwick LLP. 24* Power of Attorney (included on signature page of this Registration Statement). 99.1*J. Baker, Inc. Amended and Restated 1994 Equity Incentive Plan dated as of March 29, 1994. 99.2*J. Baker, Inc. Amended and Restated 1992 Directors' Stock Option Plan dated as of April 13, 1992. 99.3*Non-Qualified Stock Option Grant Agreement between J. Baker, Inc. and James D. Lee, dated June 5, 1997. 99.4*Non-Qualified Stock Option Grant Agreement between J. Baker, Inc. and Roger J. Osborne, dated June 5, 1997. 99.5*Non-Qualified Stock Option Grant Agreement between J. Baker, Inc. and Stuart M. Glasser, dated September 15, 1997. 99.6*Non-Qualified Stock Option Grant Agreement between J. Baker, Inc. and Stuart M. Glasser, dated September 15, 1997. * Filed herewith Item 9. Undertakings. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i)To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the undersigned registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Canton, Commonwealth of Massachusetts, on July 28, 1998. J. BAKER, INC. By: /s/ Alan I. Weinstein Alan I. Weinstein President and Chief Executive Officer POWER OF ATTORNEY AND SIGNATURES KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alan I. Weinstein and Philip G. Rosenberg, and each of them singly, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement on Form S-8 and to file the same with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as each such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. Signature Capacity Date /s/ Alan I. Weinstein President, Chief July 28, 1998 Alan I. Weinstein Executive Officer and Director (Principal Executive Officer) /s/ Philip G. Rosenberg Executive Vice President, July 28, 1998 Philip G. Rosenberg Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) /s/ Sherman N. Baker Chairman of the Board July 28, 1998 Sherman N. Baker of Directors /s/ J. Christopher Clifford Director July 28, 1998 J. Christopher Clifford /s/ Douglas J. Kahn Director July 28, 1998 Douglas J. Kahn /s/ Harold Leppo Director July 28, 1998 Harold Leppo /s/ David Pulver Director July 28, 1998 David Pulver /s/ Melvin M. Rosenblatt Director July 28, 1998 Melvin M. Rosenblatt /s/ Nancy Ryan Director July 28, 1998 Nancy Ryan
EXHIBIT INDEX Exhibit Number Description of Document 4.1 Amended and Restated Articles of Organization of the Company, as filed with the Secretary of the Commonwealth of Massachusetts on September 26, 1990 (incorporated herein by reference to Exhibit 3.01 to the Company's Form 10-K Report for the year ended February 2, 1991). 4.2 By-laws of the Company, as amended by the Board of Directors on September 11, 1990 (incorporated herein by reference to Exhibit 19.01 to the Company's Form 10-Q Report for the quarter ended November 3, 1990). 5* Opinion of Mark T. Beaudouin, counsel to the Company, as to the legality of the securities being registered, attached. 23.1* Consent of Mark T. Beaudouin (included in Exhibit 5), attached. 23.2* Consent of KPMG Peat Marwick LLP, attached. 24 * Power of Attorney (included on signature page of this Registration Statement), attached. 99.1*J. Baker, Inc. Amended and Restated 1994 Equity Incentive Plan dated as of March 29, 1994, attached. 99.2*J. Baker, Inc. Amended and Restated 1992 Directors' Stock Option Plan dated as of April 13, 1992, attached. 99.3*Non-Qualified Stock Option Grant Agreement between J. Baker, Inc. and James D. Lee, dated June 5, 1997, attached. 99.4*Non-Qualified Stock Option Grant Agreement between J. Baker, Inc. and Roger J. Osborne, dated June 5, 1997, attached. 99.5*Non-Qualified Stock Option Grant Agreement between J. Baker, Inc. and Stuart M. Glasser, dated September 15, 1997, attached. 99.6*Non-Qualified Stock Option Grant Agreement between J. Baker, Inc. and Stuart M. Glasser, dated September 15, 1997, attached. * Filed herewith EX-5 2 OPINION OF GENERAL COUNSEL EXHIBIT 5 OPINION OF MARK T. BEAUDOUIN July 28, 1998 J. Baker, Inc. 555 Turnpike Street Canton, MA 02021 RE: J. Baker, Inc. Amended and Restated 1994 Equity Incentive Plan Amended and Restated 1992 Directors' Stock Option Plan Non-Qualified Stock Option Grants Gentlemen: This opinion is furnished in connection with the registration, pursuant to the Securities Act of 1933 (the "Act"), of 600,000 shares of the Common Stock, par value $.50 per share of J. Baker, Inc. (the "Company") which may be issued under the J. Baker, Inc. Amended and Restated 1994 Equity Incentive Plan, 100,000 shares of the Company's Common Stock, par value $.50 per share, which may be issued under the Amended and Restated 1992 Directors' Stock Option Plan and 150,000 shares of the Company's Common Stock, par value $.50 per share, which may be issued under J. Baker, Inc. Non-Qualified Stock Option Grants (such shares hereinafter collectively referred to as the "Shares"). I have acted as counsel to the Company in connection with the registration of the Shares under the Act. I have examined the Restated Articles of Organization and the By-Laws of the Company, each as amended to date; such records of proceedings of the Company as I deemed material; a Registration Statement on Form S-8 under the Act relating to the Shares (the "Registration Statement"); and such other certificates, records and documents as I have considered necessary for the purposes of this opinion. Based upon the foregoing, I am of the opinion that upon the issuance and delivery of the Shares in accordance with the terms of the Registration Statement and the plan pursuant to which they were issued, the Shares will be legally issued, fully paid and non-assessable shares of the Company's Common Stock. The foregoing assumes that all requisite steps will be taken to comply with the requirements of the Act, applicable requirements of state laws regulating the offer and sale of securities and applicable requirements of the National Association of Securities Dealers, Inc. I understand that this opinion is to be used in connection with the Registration Statement. I consent to the filing of a copy of this opinion with the Registration Statement. Very truly yours, /s/ Mark T. Beaudouin Mark T. Beaudouin General Counsel MTB/tag EX-23 3 CONSENT OF GENERAL COUNSEL EXHIBIT 23.1 CONSENT OF MARK T. BEAUDOUIN Consent of Mark T. Beaudouin: (INCLUDED IN EXHIBIT 5) EX-23 4 CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23.2 CONSENT OF KPMG PEAT MARWICK LLP CONSENT OF INDEPENDENT ACCOUNTANTS The Board of Directors J. Baker, Inc. We consent to the incorporation by reference in this Registration Statement on Form S-8 relating to the J. Baker, Inc. Non-Qualified Stock Option Grants, the Amended and Restated 1992 Directors' Stock Option Plan and the Amended and Restated 1994 Equity Incentive Plan of our report dated March 23, 1998 relating to the consolidated balance sheets of J. Baker, Inc. and subsidiaries as of January 31, 1998 and February 1, 1997 and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for each of the years in the three-year period ended January 31, 1998 which report is included in the Company's Annual Report of Form 10-K pursuant to the Securities Exchange Act of 1934 for the year ended January 31, 1998. /s/ KPMG Peat Marwick LLP KPMG PEAT MARWICK LLP Boston, Massachusetts July 24, 1998 EX-24 5 POWER OF ATTORNEY EXHIBIT 24 POWER OF ATTORNEY Power of Attorney: (INCLUDED ON SIGNATURE PAGE OF THIS REGISTRATION STATEMENT) EX-99 6 AMENDED AND RESTATED 1994 EQUITY INCENTIVE PLAN EXHIBIT 99.1 J. BAKER, INC. AMENDED AND RESTATED 1994 EQUITY INCENTIVE PLAN SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS The name of the plan is the J. Baker, Inc. 1994 Equity Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers and other key employees of J. Baker, Inc. (the "Company") and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's welfare will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company. The following terms shall be defined as set forth below: "Act" means the Securities Exchange Act of 1934, as amended. "Award" or "Awards," except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Unrestricted Stock Awards and Performance Share Awards. "Board" means the Board of Directors of the Company. "Cause" means the occurrence of one or more of the following: (i) employee is convicted of, pleads guilty to, or confesses to any felony or any act of fraud, misappropriation or embezzlement which has an immediate and materially adverse effect on the Company or any Subsidiary, as determined by the Board in good faith in its sole discretion, (ii) employee engages in a fraudulent act to the material damage or prejudice of the Company or any Subsidiary or in conduct or activities materially damaging to the property, business or reputation of the Company or any Subsidiary, all as determined by the Board in good faith in its sole discretion, (iii) any material act or omission by employee involving malfeasance or negligence in the performance of employee's duties to the Company or any Subsidiary to the material detriment of the Company or any Subsidiary, as determined by the Board in good faith in its sole discretion, which has not been corrected by employee within 30 days after written notice from the Company of any such act or omission, (iv) failure by employee to comply in any material respect with the terms of his employment agreement, if any, or any written policies or directives of the Board as determined by the Board in good faith in its sole discretion, which has not been corrected by employee within 30 days after written notice from the Company of such failure, or (v) material breach by employee of his non-competition agreement with the Company, if any, as determined by the Board in good faith in its sole discretion. "Change of Control" is defined in Section 13. "Code" means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations. "Committee" means the Committee of the Board referred to in Section 2. "Disability" means an employee's inability to perform his normal required services for the Company and its Subsidiaries for a period of six consecutive months by reason of the employee's mental or physical disability, as determined by the Committee in good faith in its sole discretion. "Effective Date" means the date on which the Plan is approved by stockholders as set forth in Section 15. "Fair Market Value" on any given date means the closing price per share of Stock on the NASDAQ National Market System, or the principal exchange on which the Stock is traded, on such date (or if no such price is reported on such date, such price as reported on the nearest preceding date on which such price is reported). "Incentive Stock Option" means any Stock Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code. "Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option. "Option" or "Stock Option" means any option to purchase shares of Stock granted pursuant to Section 5. "Outside Director" means a member of the Board who qualifies as such under Section 162(m) of the Code and the regulations promulgated thereunder. "Performance Share Award" means Awards granted pursuant to Section 8. "Restricted Stock Award" means Awards granted pursuant to Section 6. "Retirement" means the employee's termination of employment with the Company and its Subsidiaries after attainment of the age and/or service requirements to qualify for early or normal retirement under the Company's qualified retirement plan. "Stock" means the Common Stock, par value $0.50 per share, of the Company, subject to adjustments pursuant to Section 3. "Subsidiary" means any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities, beginning with the Company if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain. "Unrestricted Stock Award" means Awards granted pursuant to Section 7. SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS AND DETERMINE AWARDS (a) Committee. The Plan shall be administered by two or more Outside Directors appointed from time to time to serve as the Compensation Committee of the Board. No member of the Board shall be liable for any action or determination under the Plan made in good faith. (b) Powers of Committee. The Committee shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority: (i) to select the officers and other employees of the Company and its Subsidiaries to whom Awards may from time to time be granted; (ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Unrestricted Stock Awards and Performance Share Awards, or any combination of the foregoing, granted to any one or more participants; (iii) to determine the number of shares of Stock to be covered by any Award; (iv) to determine and modify the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and participants, and to approve the form of written instruments evidencing the Awards; (v) to accelerate the exercisability or vesting of all or any portion of any Award, with or without conditions; (vi) subject to the provisions of Section 5(a)(ii), to extend the period in which Stock Options may be exercised; (vii) to determine whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the participant and whether and to what extent the Company shall pay or credit amounts constituting interest (at rates determined by the Committee) or dividends or deemed dividends on such deferrals; and (viii) to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan. All decisions and interpretations of the Committee shall be binding on all persons, including the Company and Plan participants. SECTION 3. STOCK ISSUABLE UNDER THE PLAN; RECAPITALIZATIONS; MERGERS; SUBSTITUTE AWARDS (a) Stock Issuable. The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 1,600,000 shares, of which no more than 250,000 shares shall be available for issuance in the form of Restricted Stock Awards, Unrestricted Stock Awards or Performance Share Awards, counted cumulatively, during the term of the Plan. For purposes of the foregoing limitations, the shares of Stock underlying any Awards which are forfeited, cancelled, reacquired by the Company, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan so long as the participants to whom such Awards had been previously granted received no benefits of ownership of the underlying shares of Stock to which the Award related. No more than 100,000 Stock Options may be granted to any one individual participant during any calendar year period. The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company. (b) Recapitalizations. If, through or as a result of any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, the Committee shall make an appropriate or proportionate adjustment in (i) the maximum number and kind of shares reserved for issuance under the Plan and in the form of Restricted Stock Awards, Unrestricted Stock Awards or Performance Share Awards, (ii) the maximum number of Stock Options that can be granted to any one individual participant, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, and (iv) the price for each share subject to any then outstanding Stock Options under the Plan, without changing the aggregate exercise price as to which such Stock Options remain exercisable. The adjustment by the Committee shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Committee in its discretion may make a cash payment in lieu of fractional shares. (c) Mergers. In the event a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Stock are exchanged for securities, cash or other property of any other corporation or business entity or in the event of a liquidation of the Company, the Board, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to outstanding Stock Options: (i) provide that such Stock Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the optionees, provide that all unexercised Stock Options will terminate immediately prior to the consummation of such transaction unless exercised by the optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Stock of the Company will receive upon consummation thereof a payment for each share surrendered in the business combination (the "Merger Price"), make or provide for a cash payment to the optionees equal to the difference between (A) the Merger Price times the number of shares of Stock subject to such outstanding Stock Options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding options in exchange for the termination of such options. (d) Substitute Awards. The Committee may grant Awards under the Plan in substitution for stock and stock based awards held by employees of another corporation who concurrently become employees of the Company or a Subsidiary as the result of a merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation. The Committee may direct that the substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances. SECTION 4. ELIGIBILITY Participants in the Plan will be such full or part-time officers and other employees of the Company and its Subsidiaries who are responsible for or contribute to the management, growth or profitability of the Company and its Subsidiaries and who are selected from time to time by the Committee, in its sole discretion. SECTION 5. STOCK OPTIONS Any Stock Option granted under the Plan shall be in such form as the Committee may from time to time approve. Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. To the extent that any Option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. No Incentive Stock Option shall be granted under the Plan after March 24, 2008. (a) Stock Options Granted to Employees. The Committee in its discretion may grant Stock Options to eligible employees of the Company or any Subsidiary. Stock Options granted to employees pursuant to this Section 5(a) shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable: (i) Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall be determined by the Committee at the time of grant but shall not be less than 100% of the Fair Market Value on the date of grant. If an employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock Option shall be not less than 110% of the Fair Market Value on the grant date. (ii) Option Term. The term of each Stock Option shall be fixed by the Committee, but no Incentive Stock Option shall be exercisable more than ten years after the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the term of such option shall be no more than five years from the date of grant. (iii) Exercisability; Rights of a Stockholder. Stock Options shall become vested and exercisable at such time or times, whether or not in installments, as shall be determined by the Committee at or after the grant date. The Committee may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. (iv) Method of Exercise. Stock Options may be exercised in whole or in part, by giving written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods: (A) In cash, by certified or bank check or other instrument acceptable to the Committee; (B) In the form of shares of Stock that are not then subject to restrictions under any Company plan and that have been held by the optionee for at least six months, if permitted by the Committee in its discretion. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or (C) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure. Payment instruments will be received subject to collection. The delivery of certificates representing the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Stock Option or applicable provisions of laws. (v) Non-transferability of Options. Except as otherwise permitted by the Committee, no Stock Option shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution and all Stock Options shall be exercisable, during the optionee's lifetime, only by the optionee. (vi) Termination by Reason of Death. Any Stock Option held by an optionee whose employment by the Company and its Subsidiaries is terminated by reason of death shall become fully exercisable and may thereafter be exercised by the legal representative or legatee of the optionee, for a period of twelve months (or such longer period as the Committee shall specify at any time) from the date of death, or until the expiration of the stated term of the Option, if earlier. (vii) Termination by Reason of Disability. (A) Any Stock Option held by an optionee whose employment by the Company and its Subsidiaries is terminated by reason of Disability shall become fully exercisable and may thereafter be exercised, for a period of twelve months (or such longer period as the Committee shall specify at any time) from the date of such termination of employment, or until the expiration of the stated term of the Option, if earlier. (B) The Committee shall have sole authority and discretion to determine whether a participant's employment has been terminated by reason of Disability. (C) Except as otherwise provided by the Committee at any time, the death of an optionee during the period provided in this Section 5(a)(vii) for the exercise of a Stock Option shall extend such period for twelve months from the date of death, subject to termination on the expiration of the stated term of the Option, if earlier. (viii) Termination by Reason of Retirement. (A) Any Stock Option held by an optionee whose employment by the Company and its Subsidiaries is terminated by reason of Retirement may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of twenty-four months (or such other period as the Committee shall specify at any time) from the date of such termination of employment, or until the expiration of the stated term of the Option, if earlier. (B) Except as otherwise provided by the Committee at any time, the death of an optionee during a period provided in this Section 5(a)(viii) for the exercise of a Stock Option shall extend such period for twelve months from the date of death, subject to termination on the expiration of the stated term of the Option, if earlier. (ix) Termination for Cause. If any optionee's employment by the Company and its Subsidiaries is terminated for Cause, any Stock Option held by such optionee, including any Stock Option that is exercisable at the time of such termination, shall immediately terminate and be of no further force and effect; provided, however, that the Committee may, in its sole discretion, provide that such Stock Option can be exercised for a period of up to 30 days from the date of termination of employment or until the expiration of the stated term of the Option, if earlier. (x) Other Termination. Unless otherwise determined by the Committee, if an optionee's employment by the Company and its Subsidiaries terminates for any reason other than death, Disability, Retirement, or for Cause, any Stock Option held by such optionee may thereafter be exercised, to the extent it was exercisable on the date of termination of employment, for three months (or such longer period as the Committee shall specify at any time) from the date of termination of employment or until the expiration of the stated term of the Option, if earlier. (xi) Annual Limit on Incentive Stock Options. To the extent required for "incentive stock option" treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its Subsidiaries become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option. (xii) Form of Settlement. Shares of Stock issued upon exercise of a Stock Option shall be free of all restrictions under the Plan, except as otherwise provided in the Plan. SECTION 6. RESTRICTED STOCK AWARDS (a) Nature of Restricted Stock Awards. The Committee may grant Restricted Stock Awards to any employee of the Company or any Subsidiary. A Restricted Stock Award is an Award entitling the recipient to acquire, at no cost or for a purchase price determined by the Committee, shares of Stock subject to such restrictions and conditions as the Committee may determine at the time of grant ("Restricted Stock"). Conditions may be based on continuing employment and/or achievement of pre-established performance goals and objectives. (b) Acceptance of Award. A participant who is granted a Restricted Stock Award shall have no rights with respect to such Award unless the participant shall have accepted the Award within 30 days (or such shorter date as the Committee may specify) following the award date by making payment to the Company, if required, by certified or bank check or other instrument or form of payment acceptable to the Committee in an amount equal to the specified purchase price, if any, of the shares covered by the Award and by executing and delivering to the Company a written instrument that sets forth the terms and conditions of the Restricted Stock Award in such form as the Committee shall determine. (c) Rights as a Stockholder. Upon complying with Section 6(b) above, a participant shall have the rights of a stockholder with respect to the voting of the Restricted Stock, subject to such conditions contained in the written instrument evidencing the Restricted Stock Award. Unless the Committee shall otherwise determine, certificates evidencing the Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in Section 6(e) below. (d) Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the written instrument evidencing the Restricted Stock Award. In the event of termination of employment by the Company and its Subsidiaries for any reason other than death or Disability, the Company shall have the right, at the discretion of the Committee, to repurchase Restricted Stock with respect to which conditions have not lapsed at its purchase price, or to require forfeiture of such shares to the Company if acquired at no cost, from the participant or the participant's legal representative. The Company must exercise such right of repurchase or forfeiture not later than the 90th day following such termination of employment (unless otherwise specified in the written instrument evidencing the Restricted Stock Award). (e) Vesting of Restricted Stock. The Committee at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Stock and the Company's right of repurchase or forfeiture shall lapse. Specifically, an Award of Restricted Stock which is contingent on the attainment of pre-established performance goals shall be subject to a minimum period of one (1) year prior to the lapse of such restriction. An Award of Restricted Stock which is contingent upon continued service with the Company shall be subject to a minimum period of three (3) years prior to the lapse of such restriction. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed "vested." A participant whose employment is terminated for reason of death or Disability shall become fully vested in his Restricted Stock on his termination date to the extent such vesting is otherwise contingent only on continued service with the Company. Where vesting is contingent on attainment of pre-established performance goals, the vesting of Restricted Stock in the case of death or Disability shall remain dependent on the attainment of such goals and shall be determined as of such date or dates specified by the Committee. (f) Waiver, Deferral and Reinvestment of Dividends. The written instrument evidencing the Restricted Stock Award may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Stock. SECTION 7. UNRESTRICTED STOCK AWARDS The Committee may, in its sole discretion, grant (or sell at a purchase price determined by the Committee) an Unrestricted Stock Award to any employee of the Company or any Subsidiary pursuant to which such employee may receive shares of Stock free of any restrictions under the Plan in lieu of any cash compensation to such employee. The aggregate number of shares of Stock to be granted (or sold) in the form of Unrestricted Stock Awards hereunder shall not exceed ten percent (10%) of the aggregate number of shares authorized under the Plan, as the Plan may be amended from time to time. SECTION 8. PERFORMANCE SHARE AWARDS (a) Nature of Performance Share Awards. A Performance Share Award is an award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals. The Committee may make Performance Share Awards independent of or in connection with the granting of any other Award under the Plan. Performance Share Awards may be granted under the Plan to any employees of the Company or any Subsidiary, including those who qualify for awards under other performance plans of the Company. The Committee in its sole discretion shall determine whether and to whom Performance Share Awards shall be made, the performance goals applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded Performance Shares; provided, however, that the Committee may rely on the performance goals and other standards applicable to other performance unit plans of the Company in setting the standards for Performance Share Awards under the Plan. (b) Restrictions on Transfer. Performance Share Awards and all rights with respect to such Awards may not be sold, assigned, transferred, pledged or otherwise encumbered. (c) Rights as a Shareholder. A participant receiving a Performance Share Award shall have the rights of a shareholder only as to shares actually received by the participant under the Plan and not with respect to shares subject to the Award but not actually received by the participant. A participant shall be entitled to receive a stock certificate evidencing the acquisition of shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the written instrument evidencing the Performance Share Award (or in a performance plan adopted by the Committee). (d) Termination. Except as may otherwise be provided by the Committee at any time prior to termination of employment, a participant's rights in all Performance Share Awards shall automatically terminate upon the participant's termination of employment by the Company and its Subsidiaries for any reason. (e) Acceleration, Waiver, Etc. At any time prior to the participant's termination of employment by the Company and its Subsidiaries, the Committee may in its sole discretion accelerate, waive or, subject to Section 11, amend any or all of the goals, restrictions or conditions imposed under any Performance Share Award. SECTION 9. TAX WITHHOLDING (a) Payment by Participant. Each participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant. (b) Payment in Stock. A participant may elect to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company shares of Stock owned by the participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. With respect to any participant who is subject to Section 16 of the Act, the following additional restrictions shall apply: (A) the election to satisfy tax withholding obligations relating to an Award in the manner permitted by this Section 9(b) shall be made either (1) during the period beginning on the third business day following the date of release of quarterly or annual summary statements of sales and earnings of the Company and ending on the twelfth business day following such date, or (2) at least six months prior to the date as of which the receipt of such an Award first becomes a taxable event for Federal income tax purposes; (B) such election shall be irrevocable; (C) such election shall be subject to the consent or disapproval of the Committee; and (D) the Stock withheld to satisfy tax withholding must pertain to an Award which has been held by the participant for at least six months from the date of grant of the Award. SECTION 10. TRANSFER, LEAVE OF ABSENCE, ETC For purposes of the Plan, the following events shall not be deemed a termination of employment: (a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee's right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing. SECTION 11. AMENDMENTS AND TERMINATION The Board may, at any time, amend or discontinue the Plan and the Committee may, at any time, amend or cancel any outstanding Award (or provide substitute Awards at the same or reduced exercise or purchase price or with no exercise or purchase price, but such price, if any, must satisfy the requirements which would apply to the substitute or amended Award if it were then initially granted under this Plan) for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder's consent. Notwithstanding anything to the contrary set forth above, the amendment, cancellation and/or substitution of a Stock Option at a reduced exercise price shall be subject to approval by the Company's stockholders. If and to the extent required by the Act to ensure that Awards granted under the Plan are exempt under Rule 16b-3 promulgated under the Act, Plan amendments shall be subject to approval by the Company's stockholders. SECTION 12. STATUS OF PLAN With respect to the portion of any Award which has not been exercised and any payments in cash, Stock or other consideration not received by a participant, a participant shall have no rights greater than those of a general creditor of the Company unless the Committee shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence. SECTION 13. CHANGE OF CONTROL PROVISIONS Upon the occurrence of a Change of Control as defined in this Section 13: (a) Each outstanding Stock Option shall automatically become fully exercisable notwithstanding any provision to the contrary herein. (b) Each Restricted Stock Award and Performance Share Award shall be subject to such terms, if any, with respect to a Change of Control as have been provided by the Committee in connection with such Award. (c) "Change of Control" shall mean the occurrence of any one of the following events: (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Act (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 30% or more of either (A) the combined voting power of the Company's then outstanding securities having the right to vote in an election of the Company's Board of Directors ("Voting Securities") or (B) the then outstanding shares of Stock of the Company (in either such case other than as a result of an acquisition of securities directly from the Company); or (ii) persons who, as of the Effective Date, constitute the Company's Board of Directors (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Plan, be considered an Incumbent Director; or (iii) the stockholders of the Company shall approve (A) any consolidation or merger of the Company or any Subsidiary where the shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 80% or more of the voting shares of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Stock or other Voting Securities outstanding, increases (x) the proportionate number of shares of Stock beneficially owned by any person to 30% or more of the shares of Stock then outstanding or (y) the proportionate voting power represented by the Voting Securities beneficially owned by any person to 30% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in clause (x) or (y) of this sentence shall thereafter become the beneficial owner of any additional shares of Stock or other Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction), then a "Change of Control" shall be deemed to have occurred for purposes of the foregoing clause (i). SECTION 14. GENERAL PROVISIONS (a) No Distribution; Compliance with Legal Requirements. The Committee may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange or similar requirements have been satisfied. The Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate. (b) Delivery of Stock Certificates. Delivery of stock certificates to participants under this Plan shall be deemed effected for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the participant, at the participant's last known address on file with the Company. (c) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary. SECTION 15. EFFECTIVE DATE OF PLAN This Plan shall become effective upon approval by the holders of a majority of the shares of Stock of the Company present or represented and entitled to vote at a meeting of stockholders. Subject to such approval by the stockholders and to the requirement that no Stock may be issued hereunder prior to such approval, Stock Options and other Awards may be granted hereunder on and after adoption of this Plan by the Board. SECTION 16. GOVERNING LAW This Plan shall be governed by the law of the Commonwealth of Massachusetts except to the extent such law is preempted by Federal law. EX-99 7 AMENDED AND RESTATED 1992 DIRECTORS' STOCK OP.PLN EXHIBIT 99.2 J. BAKER, INC. AMENDED AND RESTATED 1992 DIRECTORS' STOCK OPTION PLAN As Amended through June 10, 1997 1. Purpose. The purpose of this 1992 Directors' Stock Option Plan (the "Plan") of J. Baker, Inc. (the "Company") is to promote the recruiting and retention of highly qualified outside directors and to strengthen the commonality of interest between directors and stockholders. Except where the context otherwise requires, the term "Company" shall include all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. Administration. The Plan will be administered by the Board of Directors of the Company, whose construction and interpretation of the terms and provisions of the Plan shall be final and conclusive. Grants of stock options under the Plan and the amount and nature of the awards to be granted shall be automatic and non-discretionary in accordance with Section 5. However, all questions of interpretation of the Plan or of any options issued under it shall be determined by the Board of Directors and such determination shall be final and binding upon all persons having an interest in the Plan. No director shall be liable for any action or determination under the Plan made in good faith. 3. Participation in the Plan. Directors of the Company who are not employees of the Company shall be eligible to be granted options under the Plan. 4. Stock Subject to the Plan. (a) The maximum number of shares which may be issued under the Plan shall be 200,000 shares of the Company's Common Stock, $.50 par value per share ("Common Stock"), subject to adjustment as provided in Section 9. (b) If any outstanding option under the Plan for any reason expires or is terminated without having been exercised in full, the shares allocable to the unexercised portion of such option shall again become available for grant pursuant to the Plan. (c) All options granted under the Plan shall be non-qualified options which are not intended to meet the requirements of Section 422 of the Code. 5. Terms, Conditions and Form of Options. Each option granted under the Plan shall be evidenced by a written agreement in such form as the Board of Directors shall from time to time approve, which agreements shall comply with and be subject to the following terms and conditions: (a) Option Grant Dates. Options shall be granted automatically to all eligible directors as follows: (i) each director who is eligible for participation shall be granted an option to purchase 2,500 shares of Common Stock on the close of business on the fifth business day following approval of the Plan by the holders of a majority of the shares of Common Stock present or represented at a meeting of the Company's stockholders duly called and held in accordance with the Company's by-laws and applicable law; (ii) each person who becomes an eligible director after the date of stockholder approval of the Plan shall be granted an option to purchase 2,500 shares of Common Stock on the close of business on the date of his or her initial election to the Board of Directors; and (iii) each eligible director shall be granted an additional option to purchase 2,500 shares of Common Stock for each fiscal year on the close of business on the fifth business day following the Company's annual meeting of stockholders, provided he or she is an eligible director on the date of grant. (b) Option Exercise Price. The option exercise price per share for each option granted under the Plan shall equal the closing price per share of the Company's Common Stock on the NASDAQ System, or the principal exchange on which the Common Stock is then listed, on the date of grant (or if no such price is reported on such date, such price as reported on the nearest preceding date on which such price is reported). (c) Options Non-Transferable. Each option granted under the Plan by its terms shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution and shall be exercised during the lifetime of the optionee only by such optionee. (d) Exercise Period. Each option may be exercised at any time and from time to time, in whole or in part, prior to the tenth anniversary of the date of grant. (e) Exercise Procedure. Options may be exercised only by written notice to the Company at its principal office accompanied by payment of the full consideration for the shares as to which they are exercised. (f) Payment of Purchase Price. Payment of the exercise price may be made, at the election of the optionee, (i) by delivery of cash or a check to the order of the Company in an amount equal to the exercise price, (ii) by delivery to the Company of shares of Common Stock of the Company already owned and held by the optionee for at least twelve months and having a fair market value equal in amount to the exercise price of the options being exercised, or (iii) by any combination of such methods of payment. The fair market value of any shares of Common Stock which may be delivered upon exercise of an option shall be determined by the Company as of the date that such shares are delivered. 6. Assignments. The rights and benefits under the Plan may not be assigned except as provided in Section 5. 7. [THIS SECTION INTENTIONALLY LEFT BLANK] 8. Limitation of Rights. (a) No Right to Continue as a Director. Neither the Plan, nor the granting of an option nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain a director for any period of time. (b) No Stockholder Rights with respect to Options. An optionee shall have no rights as a stockholder with respect to the shares covered by his or her option until the date of the issuance to him or her of a stock certificate therefor, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such certificate is issued. 9. Adjustment Provisions. (a) Recapitalizations. If, through or as a result of any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, an appropriate and proportionate adjustment may be made in (x) the maximum number and kind of shares reserved for issuance under the Plan, (y) the number and kind of shares or other securities subject to any then outstanding options under the Plan, and (z) the price for each share subject to any then outstanding options under the Plan, without changing the aggregate purchase price as to which such options remain exercisable. (b) Mergers. In the event of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity or in the event of a liquidation of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to outstanding options: (i) provide that such options shall be assumed or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the optionees, provide that all unexercised options will terminate immediately prior to the consummation of such transaction unless exercised by the optionee within a specified period following the date of such notice, and/or (iii) in the event of a merger under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the merger (the "Merger Price"), make or provide for a cash payment to the optionees equal to the difference between (A) the Merger Price times the number of shares of Common Stock subject to such outstanding options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding options in exchange for the termination of such options. 10. Amendment of the Plan. (a) The provisions of Sections 3, 5 (a) and 5 (b) of the Plan shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, or the rules thereunder. Subject to the foregoing, the Board of Directors may at any time, and from time to time, modify or amend the Plan in any respect. (b) The termination or any modification or amendment of the Plan shall not, without the consent of an optionee, affect his or her rights under an option previously granted to him or her. With the consent of the optionees affected, the Board of Directors may amend outstanding option agreements in a manner not inconsistent with the Plan. The Board of Directors shall have the right to amend or modify the terms and provisions of the Plan and of any outstanding option to the extent necessary to ensure the qualification of the Plan under Rule 16b-3 under the Securities Exchange Act of 1934, or any successor rule ("Rule 16b-3"). 11. Withholding. The optionee shall pay any federal, state or local taxes of any kind required by law to be paid with respect to any shares issued upon exercise of options under the Plan. The Company shall have the right to deduct from payments of any kind otherwise due to the optionee any such taxes required by law to be withheld with respect to any shares issued upon exercise of options under the Plan. Subject to the prior approval of the Company, which may be withheld by the Company in its sole discretion, the optionee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company to withhold shares of Common Stock otherwise issuable pursuant to the exercise of an option or (ii) by delivering to the Company shares of Common Stock already owned by the optionee. The shares so delivered or withheld shall have a fair market value equal to such withholding obligation. The fair market value of the shares used to satisfy such withholding obligation shall be determined by the Company as of the date that the amount of tax to be withheld is to be determined. An optionee who has made an election pursuant to this Section 11 may only satisfy his or her withholding obligation with shares of Common Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements. Notwithstanding the foregoing, no election to use shares for the payment of withholding taxes shall be effective unless made in compliance with any applicable requirements of Rule 16b-3. 12. Notice. Any written notice to the Company required by any of the provisions of the Plan shall be addressed to the Chief Executive Officer of the Company and shall become effective when it is received. 13. Effective Date and Duration of the Plan. (a) Effective Date. The Plan shall become effective when adopted by the Board of Directors, but no options granted under the Plan shall become exercisable unless and until the Plan shall have been approved by the Company's stockholders. If such stockholder approval is not obtained within twelve months after the date of the Board's adoption of the Plan, all options granted under the Plan shall terminate and no further options shall be granted under the Plan. Amendments to the Plan not requiring stockholder approval shall become effective when adopted by the Board of Directors; amendments requiring stockholder approval shall become effective when adopted by the Board of Directors, but no option issued after the date of such amendment shall become exercisable (to the extent that such amendment to the Plan was required to enable the Company to grant such option to a particular optionee) unless and until such amendment shall have been approved by the Company's stockholders. If such stockholder approval is not obtained within twelve months of the Board's adoption of such amendment, any options granted on or after the date of such amendment shall terminate to the extent that such amendment to the Plan was required to enable the Company to grant such option to a particular optionee. Subject to this limitation, options may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan. (b) Termination. Unless earlier terminated pursuant to Section 9, the Plan shall terminate on the date on which all shares available for issuance under the Plan (as the Plan may be amended from time to time to increase the number of available shares) shall have been issued pursuant to the exercise of options granted under the Plan. 14. General Obligations. (a) Investment Representations. The Company may require any person to whom an option is granted, as a condition of exercising such option, to give written assurances in substance and form satisfactory to the Company to the effect that such person is acquiring the Common Stock subject to the option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws. (b) Compliance With Securities Laws. Each option shall be subject to the requirements that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject to such option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares thereunder, such option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such conditions shall have been effected or obtained on conditions acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration, qualification, consent or approval, or to satisfy such condition. 15. Governing Law. The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the Commonwealth of Massachusetts. Adopted by the Board of Directors on April 13, 1992 Amended by the Board of Directors on June 10, 1997 EX-99 8 NON-QUALIFIED STOCK OPTION GRANT EXHIBIT 99.3 NON-QUALIFIED OPTION TO PURCHASE SHARES OF COMMON STOCK OF J. BAKER, INC. 20,000 June 5, 1997 - --------------- ------------ No. of Shares Date Pursuant to a vote ratified and confirmed at a meeting of its Board of Directors held on June 10, 1997, J. Baker, Inc. (the "Company") hereby grants to James D. Lee (the "Optionee") a Non-qualified Stock Option to purchase prior to June 5, 2007 (the "Expiration Date") all or any part of 20,000 shares of common stock of the Company (the "Option Shares") at a price of $1.00 per share subject to the terms and conditions contained herein. This Option is intended to be, and shall be treated as, a non-qualified stock option, and is not an incentive stock option under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). 1. Vesting. Subject to the provisions of Section 3 hereof, this Option shall become vested and exercisable with respect to the following whole number of Option Shares according to the timetable set forth below and shall continue to be exercisable by the Optionee at any time or times prior to the Expiration Date: Number of Shares Becoming Cumulative Years After Available for Number of Date of Grant Exercise Shares Available ________________________________________________________________________________________ Less than 1 year 0 0 At least 1 year 2,000 2,000 At least 2 years 3,000 5,000 At least 3 years 4,000 9,000 At least 4 years 5,000 14,000 At least 5 years 6,000 20,000
2. Manner of Exercise. The Optionee may exercise this Option only in the following manner: From time to time prior to the Expiration Date of this Option, the Optionee may give written notice to the Company of his election to purchase some or all of the Option Shares purchasable at the time of such notice. Said notice shall specify the number of shares to be purchased and shall be accompanied by payment therefor in cash or, subject to the discretion of the Company, in shares of the Company's common stock, valued at their fair market value on the date of exercise as determined by the closing price of the Company's common stock on the NASDAQ stock market for the immediately preceding trading day. No certificates for the shares so purchased will be issued to the Optionee until the Company has completed all steps required by law to be taken in connection with the issue and sale of the shares, including without limitation, the registration of such shares under the Securities Act of 1933 and, if the Company deems it necessary or appropriate, receipt of a representation from the Optionee upon each exercise of this Option that he is purchasing the shares for his own account and not with a view to any resale or distribution thereof, the legending of any certificate representing said shares, and the imposition of a stop transfer order with respect thereto, to prevent a resale or distribution in violation of Federal or State securities laws. If requested upon the exercise of the Option, certificates for shares may issued in the name of the Optionee jointly with another person with rights of survivorship or in the name of the executor or administrator of his estate, and the foregoing representations shall be modified accordingly. 3. Transferability and Termination. Except as provided in the following sentence, this Option is personal to the Optionee, is not transferable by the Optionee in any manner by operation of law or otherwise, and is exercisable, during the Optionee's lifetime, only by him. (a) In the event the Optionee dies before the Expiration Date, this Option may be exercised by the Optionee's personal representatives prior to the earlier of (i) the first anniversary of his death or (ii) the Expiration Date, but only to the extent that this Option was exercisable by the Optionee on the date of his death. (b) In the event the Optionee's employment terminates by reason of Disability, this option shall be exercisable, to the extent exercisable on the date of termination for a period of 12 months from the date of termination or until the expiration date, if earlier. (c) If the Optionee's employment terminates for Cause, any option held by the Optionee shall immediately terminate and be of no further force and effect. If the Optionee's employment terminates for any reason other than death, Disability or Cause, this option may be exercised, to the extent exercisable on the date of termination, for a period of three (3) months from the date of termination or until the Expiration Date, if earlier. For purposes of this Option, "Disability" shall mean the Optionee's inability to perform his normal required services for the Company and its Subsidiaries for a period of six consecutive months by reason of the Optionee's mental or physical disability as determined by the Company, in good faith. For purposes of this Option, "Cause" shall mean the occurrence of one or more of the following: (i) Optionee is convicted of, pleads guilty to, or confesses to any felony or any act of fraud, misappropriation or embezzlement which has an immediate and materially adverse effect on the Company or any Subsidiary, as determined by the Board in good faith in its sole discretion, (ii) Optionee engages in a fraudulent act to the material damage or prejudice of the Company or any subsidiary or in conduct or activities materially damaging to the property, business or reputation of the Company or any Subsidiary, all as determined by the Board in good faith in its sole discretion, (iii) any material act or omission by Optionee involving malfeasance or negligence in the performance of Optionee's duties to the Company or any Subsidiary to the material detriment of the Company or any Subsidiary, as determined by the Board in good faith in its sole discretion, which has not been corrected by Optionee within 30 days after written notice from the Company of any such act or omission, (iv) failure by Optionee to comply in any material respect with the terms of his employment agreement, if any, or any written policies or directives of the Board as determined by the Board in good faith in its sole discretion, which has not been corrected by Optionee within 30 days after written notice from the Company of such failure, or (v) material breach by Optionee of his noncompetition agreement with the Company, if any, as determined by the Board in good faith in its sole discretion. 4. Option Shares. The shares of stock which are the subject of this Option are shares of the Common Stock of the Company as constituted on the date of this Option, subject to adjustment as provided in this Section 4. The terms of this Option and the number of shares subject to this Option shall be equitably adjusted in such manner as to prevent dilution or enlargement of option rights in the following instances: (a) the declaration of a dividend payable to the holders of Common Stock in stock of the same class; (b) a split-up of the Common Stock or a reverse split thereof; and (c) a recapitalization of the Company under which shares of one or more different classes of stock are changed into or distributed in exchange for or upon the Common Stock without payment of any valuable consideration by the holders thereof. The terms of any such adjustment shall be conclusively determined by the Board of Directors. 5. Effect of Change of Control. In the case of the occurrence of certain Change of Control Events, outstanding Options will become immediately exercisable in full. A Change of Control Event includes (i) any person or group, with certain exceptions, acquiring the beneficial ownership of 30% or more of either the voting securities of the Company or the then outstanding shares of the Company; (ii) a change in the composition of a majority of the Company's Board of Directors as it is composed on the date hereof unless the selection or nomination of each of the new members was approved by a majority of the members of the Company's Board of Directors who were members on the date hereof; or (iii) approval by the Company's stockholders of a consolidation or merger where the stockholders of the Company would not beneficially own at least 80% of the voting stock of the corporation issuing cash or securities, any plan for the liquidation or dissolution of the Company, or the sale of all or substantially all of the Company's assets; or (iv) the sale of the Company's Licensed Discount Division in its entirety as a going concern or the discontinuance of the operation of the Licensed Discount Division and the commencement of liquidation of the Divisions licenses, inventory and fixed assets. 6. No Special Employment Rights. This Option will not confer upon the Optionee any right with respect to continued employment by the Company or a Subsidiary, nor will it interfere in any way with any right of the Optionee's employer to terminate the Optionee's employment at any time. 7. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares of Common Stock that may be purchased by exercise of this Option unless and until a certificate or certificates representing such shares of Common Stock are duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 8. Tax Withholding. No later than the date as of which part or all of the value of any shares of Common Stock received by the Optionee first becomes includable in the Optionee's gross income for Federal tax purposes, the Optionee shall make arrangements with the Company regarding the payment of any Federal, state or local taxes required to be withheld with respect to such income. 9. Miscellaneous. Notices hereunder shall be mailed or delivered to the Company at its principal place of business, 555 Turnpike Street, Canton, Massachusetts 02021 and shall be mailed or delivered to the Optionee at his address set forth below, or in either case at such other address as one party may subsequently furnish to the other party in writing. This Option shall be governed by the laws of the Commonwealth of Massachusetts without giving effect to the choice of law principles thereof. J. BAKER, INC. /s/Alan I. Weinstein Name: Alan I. Weinstein Title: President and C.E.O. Receipt is acknowledged of the foregoing Option and its terms and conditions are hereby agreed to: Dated: June 5, 1997 /s/James D. Lee ------------- --------------- James D. Lee 1148 High Street Westwood, MA 02090 EX-99 9 NON-QUALIFIED STOCK OPTION GRANT EXHIBIT 99.4 NON-QUALIFIED OPTION TO PURCHASE SHARES OF COMMON STOCK OF J. BAKER, INC. 20,000 June 5, 1997 - --------------- ------------ No. of Shares Date Pursuant to a vote ratified and confirmed at a meeting of its Board of Directors held on June 10, 1997, J. Baker, Inc. (the "Company") hereby grants to Roger J. Osborne (the "Optionee") a Non-qualified Stock Option to purchase prior to June 5, 2007 (the "Expiration Date") all or any part of 20,000 shares of common stock of the Company (the "Option Shares") at a price of $1.00 per share subject to the terms and conditions contained herein. This Option is intended to be, and shall be treated as, a non-qualified stock option, and is not an incentive stock option under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). 1. Vesting. This Option shall be fully vested and exercisable with respect to all of the Option Shares from and after April 30, 2000 if, and only if (i) the Company's Work 'N Gear Division achieves earnings before interest, taxes, depreciation, amortization and overhead of $8.1 million for the fiscal year ending on or about February 1, 2000, and (ii) the Optionee is still employed by the Company as of April 30, 2000. Subject to the terms of this Section 1 and Section 3 hereof, this option shall continue to be exercisable by the Optionee at any time or times prior to the Expiration Date. 2. Manner of Exercise. The Optionee may exercise this Option only in the following manner: From time to time prior to the Expiration Date of this Option, the Optionee may give written notice to the Company of his election to purchase some or all of the Option Shares purchasable at the time of such notice. Said notice shall specify the number of shares to be purchased and shall be accompanied by payment therefor in cash or, subject to the discretion of the Company, in shares of the Company's common stock, valued at their fair market value on the date of exercise as determined by the closing price of the Company's common stock on the NASDAQ stock market for the immediately preceding trading day. No certificates for the shares so purchased will be issued to the Optionee until the Company has completed all steps required by law to be taken in connection with the issue and sale of the shares, including without limitation, the registration of such shares under the Securities Act of 1933 and, if the Company deems it necessary or appropriate, receipt of a representation from the Optionee upon each exercise of this Option that he is purchasing the shares for his own account and not with a view to any resale or distribution thereof, the legending of any certificate representing said shares, and the imposition of a stop transfer order with respect thereto, to prevent a resale or distribution in violation of Federal or State securities laws. If requested upon the exercise of the Option, certificates for shares may issued in the name of the Optionee jointly with another person with rights of survivorship or in the name of the executor or administrator of his estate, and the foregoing representations shall be modified accordingly. 3. Transferability and Termination. Except as provided in the following sentence, this Option is personal to the Optionee, is not transferable by the Optionee in any manner by operation of law or otherwise, and is exercisable, during the Optionee's lifetime, only by him. (a) In the event the Optionee dies before the Expiration Date, this Option may be exercised by the Optionee's personal representatives prior to the earlier of (i) the first anniversary of his death or (ii) the Expiration Date, but only to the extent that this Option was exercisable by the Optionee on the date of his death. (b) In the event the Optionee's employment terminates by reason of Disability, this option shall be exercisable, to the extent exercisable on the date of termination for a period of 12 months from the date of termination or until the expiration date, if earlier. (c) If the Optionee's employment terminates for Cause, any option held by the Optionee shall immediately terminate and be of no further force and effect. If the Optionee's employment terminates for any reason other than death, Disability or Cause, this option may be exercised, to the extent exercisable on the date of termination, for a period of three (3) months from the date of termination or until the Expiration Date, if earlier. For purposes of this Option, "Disability" shall mean the Optionee's inability to perform his normal required services for the Company and its Subsidiaries for a period of six consecutive months by reason of the Optionee's mental or physical disability as determined by the Company, in good faith. For purposes of this Option, "Cause" shall mean the occurrence of one or more of the following: (i) Optionee is convicted of, pleads guilty to, or confesses to any felony or any act of fraud, misappropriation or embezzlement which has an immediate and materially adverse effect on the Company or any Subsidiary, as determined by the Board in good faith in its sole discretion, (ii) Optionee engages in a fraudulent act to the material damage or prejudice of the Company or any subsidiary or in conduct or activities materially damaging to the property, business or reputation of the Company or any Subsidiary, all as determined by the Board in good faith in its sole discretion, (iii) any material act or omission by Optionee involving malfeasance or negligence in the performance of Optionee's duties to the Company or any Subsidiary to the material detriment of the Company or any Subsidiary, as determined by the Board in good faith in its sole discretion, which has not been corrected by Optionee within 30 days after written notice from the Company of any such act or omission, (iv) failure by Optionee to comply in any material respect with the terms of his employment agreement, if any, or any written policies or directives of the Board as determined by the Board in good faith in its sole discretion, which has not been corrected by Optionee within 30 days after written notice from the Company of such failure, or (v) material breach by Optionee of his noncompetition agreement with the Company, if any, as determined by the Board in good faith in its sole discretion. 4. Option Shares. The shares of stock which are the subject of this Option are shares of the Common Stock of the Company as constituted on the date of this Option, subject to adjustment as provided in this Section 4. The terms of this Option and the number of shares subject to this Option shall be equitably adjusted in such manner as to prevent dilution or enlargement of option rights in the following instances: (a) the declaration of a dividend payable to the holders of Common Stock in stock of the same class; (b) a split-up of the Common Stock or a reverse split thereof; and (c) a recapitalization of the Company under which shares of one or more different classes of stock are changed into or distributed in exchange for or upon the Common Stock without payment of any valuable consideration by the holders thereof. The terms of any such adjustment shall be conclusively determined by the Board of Directors. 5. Effect of Change of Control. In the case of the occurrence of certain Change of Control Events, outstanding Options will become immediately exercisable in full. A Change of Control Event includes (i) any person or group, with certain exceptions, acquiring the beneficial ownership of 30% or more of either the voting securities of the Company or the then outstanding shares of the Company; (ii) a change in the composition of a majority of the Company's Board of Directors as it is composed on the date hereof unless the selection or nomination of each of the new members was approved by a majority of the members of the Company's Board of Directors who were members on the date hereof; or (iii) approval by the Company's stockholders of a consolidation or merger where the stockholders of the Company would not beneficially own at least 80% of the voting stock of the corporation issuing cash or securities, any plan for the liquidation or dissolution of the Company, or the sale of all or substantially all of the Company's assets. 6. No Special Employment Rights. This Option will not confer upon the Optionee any right with respect to continued employment by the Company or a Subsidiary, nor will it interfere in any way with any right of the Optionee's employer to terminate the Optionee's employment at any time. 7. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares of Common Stock that may be purchased by exercise of this Option unless and until a certificate or certificates representing such shares of Common Stock are duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 8. Tax Withholding. No later than the date as of which part or all of the value of any shares of Common Stock received by the Optionee first becomes includable in the Optionee's gross income for Federal tax purposes, the Optionee shall make arrangements with the Company regarding the payment of any Federal, state or local taxes required to be withheld with respect to such income. 9. Miscellaneous. Notices hereunder shall be mailed or delivered to the Company at its principal place of business, 555 Turnpike Street, Canton, Massachusetts 02021 and shall be mailed or delivered to the Optionee at his address set forth below, or in either case at such other address as one party may subsequently furnish to the other party in writing. This Option shall be governed by the laws of the Commonwealth of Massachusetts without giving effect to the choice of law principles thereof. J. BAKER, INC. /s/Alan I. Weinstein Name: Alan I. Weinstein Title: President and C.E.O. Receipt is acknowledged of the foregoing Option and its terms and conditions are hereby agreed to: Dated: June 5, 1997 /s/Roger J. Osborne ------------- ------------------- Roger J. Osborne 25 Hidden Valley Road Marshfield, Massachusetts 02052 EX-99 10 NON-QUALIFIED STOCK OPTION GRANT EXHIBIT 99.5 NON-QUALIFIED OPTION TO PURCHASE SHARES OF COMMON STOCK OF J. BAKER, INC. 60,000 September 15, 1997 - --------------- ------------------ No. of Shares Date Pursuant to a vote of the Compensation Committee (the "Committee") of the Board of Directors of J. Baker, Inc. (the "Company") held on September 15, 1997, the Company hereby grants to Stuart M. Glasser (the "Optionee") effective as of the date hereof a Non-qualified Stock Option (the "Option") to purchase prior to September 15, 2007 (the "Expiration Date") all or any part of 60,000 shares of common stock of the Company (the "Option Shares") at a price of $1.00 per share subject to the terms and conditions contained herein. This Option is intended to be, and shall be treated as, a non-qualified stock option, and is not an incentive stock option under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). 1. Vesting. Subject to the provisions of Section 4 hereof, this Option shall become vested and exercisable with respect to the following whole number of Option Shares according to the timetable set forth below and shall continue to be exercisable by the Optionee at any time or times prior to the Expiration Date: Number of Shares Becoming Cumulative Available for Number of Vesting Date Exercise Shares Available --------------------------------------------------------------------------------------- September 14, 1998 30,000 30,000 September 14, 1999 30,000 60,000
Notwithstanding the foregoing, this Option shall become vested and fully exercisable upon a "Change of Control", as defined herein. 2. Manner of Exercise. The Optionee may exercise this Option only in the following manner: From time to time prior to the Expiration Date of this Option, the Optionee may give written notice to the Company of his election to purchase some or all of the Option Shares purchasable at the time of such notice. Said notice shall specify the number of shares to be purchased and shall be accompanied by payment therefor in cash or, subject to the discretion of the Company, in shares of the Company's common stock that have been held by the Optionee for at least six months and that are not subject to any restrictions under any Company plan. Such shares shall be valued at their fair market value on the date of exercise as determined by the closing price of the Company's common stock on the NASDAQ stock market for the immediately preceding trading day. Alternatively, the Optionee may deliver to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure. The delivery of certificates representing the Option Shares will be contingent upon the Company's receipt from the Optionee of full payment for the Option Shares, as set forth above and any agreement, statement or other evidence that is reasonably required to cause the issuance of Common Stock to be purchased pursuant to the exercise of Options hereunder and any subsequent resale of the shares of Common Stock to be in compliance in all reasonable respects with applicable laws and governmental or regulatory agency regulations. With respect to the exercise of any Option hereunder, the Company shall proceed diligently and in an expeditious manner to effect the issuance and delivery of certificates representing the Option Shares. 3. Non-transferability of Option. Except as provided in the following sentence, this Option is personal to the Optionee, is not transferable by the Optionee in any manner by operation of law or otherwise, and is exercisable, during the Optionee's lifetime, only by him. 4. Termination of Employment. If the Optionee's employment by the Company or a subsidiary of the Company is terminated, the period within which to exercise the Option may be subject to earlier termination as set forth below. (a) Termination Due to Death - If the Optionee's employment terminates by reason of death, any Option held by the Optionee shall immediately become fully exercisable and may thereafter be exercised by the Optionee's legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier. (b) Termination Due to Disability - If the Optionee's employment terminates by reason of Disability (as defined in Section 13(e) of Optionee's Employment Agreement dated as of September 15, 1997 (the "Employment Agreement")), any Option held by the Optionee shall become immediately fully exercisable and may thereafter be exercised by the Optionee for a period of 12 months from the date of termination or until the Expiration Date, if earlier. The death of the Optionee during the 12-month period provided in this Section 4(b) shall extend such period for another 12 months from the date of death or until the Expiration Date, if earlier. (c) Termination Due to Retirement - If the Optionee's employment terminates by reason of Retirement, any Option held by the Optionee may be exercised, to the extent exercisable on the date of termination, for a period of 24 months from the date of termination or until the Expiration Date, if earlier. The death of the Optionee during the 24-month period provided in this Section 4(c) shall extend such period for another 12 months from the date of death or until the Expiration Date, if earlier. "Retirement" as referred to herein shall mean the Optionee's termination of employment with the Company and/or its subsidiaries after attainment of the age and/or service requirements to qualify for early or normal retirement under the Company's qualified retirement plan. (d) Termination for Cause - If the Optionee's employment terminates for Cause (as defined in Section 13(c) of the Employment Agreement), any unexercised Option held by the Optionee shall immediately terminate and be of no further force and effect. (e) Termination Without Cause - If the Optionee's employment is terminated by the Company without Cause, any Option held by the Optionee shall immediately become fully vested and exercisable with respect to all of the Option Shares for a period of ninety (90) days from the date of termination or until the Expiration date, if earlier. Thereafter, any Option held by the Optionee shall terminate and be of no further force or effect. (f) Termination for Good Reason - If the Optionee terminates his employment for "good reason" (as defined in Section 13(a) of the Employment Agreement) upon giving the Company at least ninety (90) days notice of his intention to do so, any Option held by the Optionee shall immediately become fully vested and exercisable with respect to all of the Option Shares for a period of ninety (90) days from the effective date of termination or until the Expiration Date, if earlier. Thereafter, any Option held by the Optionee shall terminate and be of no further force or effect. In the event the Optionee terminates his employment for "good reason" upon less than ninety (90) days notice to the Company, the provisions of Section 4(i) shall apply. (g) Termination after Change of Control - In the event the Company re-assigns the Optionee such that the Optionee ceases reporting to the current Chief Executive Officer of the Company, the Optionee may terminate his employment with the Company within six (6) months of such re-assignment and any Option held by the Optionee shall immediately become fully vested and exercisable with respect to all of the Option Shares for a period of ninety (90) days from the date of termination or until the Expiration Date, if earlier; provided that (A) the Optionee's notice of such termination occurs after a Change of Control (as defined herein)and (B) the Optionee gives at least ninety (90) days notice of such termination. Upon expiration of ninety (90) days from the date of termination, any Option held by the Optionee shall terminate and be of no further force or effect. (h) Termination for Non-extension of Employment Term - In the event the Optionee's timely written request to extend the term of his employment by one (1) year pursuant to Section 14 of the Employment Agreement is not accepted by the Company, the Optionee shall be entitled to resign from employment effective as of the end of the Term (as defined in Section 7 of the Employment Agreement). Upon such resignation, any Option held by the Optionee shall immediately become fully vested and exercisable with respect to all of the Option Shares for a period of ninety (90) days from the effective date of termination or until the Expiration date, if earlier. Thereafter, any Option held by the Optionee shall terminate and be of no further force or effect. (i) Other Termination - If the Optionee's employment terminates for any reason other than those set forth in subparagraphs (a)-(h) above, and unless otherwise determined by the Committee, any Option held by the Optionee may be exercised, to the extent exercisable on the date of termination, for a period of three months from the date of termination or until the Expiration Date, if earlier. Any portion of the Option that is not exercisable on the date of termination shall terminate as of such date and be of no further force or effect. For purposes of this Option a "Change of Control" shall mean the occurrence of any one of the following events: (i) any "person," as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act") (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 12B-2 under the Act), directly or indirectly, of securities of the Company representing 30% or more of either (A) the combined voting power of the Company's then outstanding securities having the right to vote in an election of the Company's Board of Directors ("Voting Securities") or (B) the then outstanding shares of the common stock, par value $.50 per share, of the Company (the "Stock")(in either such case other than as a result of acquisition of securities directly from the Company); or (ii) persons who, as of June 7, 1994, constituted the Company's Board of Directors (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to such date whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Plan, be considered an Incumbent Director; or (iii) the stockholders of the Company shall approve (A) any consolidation or merger of the Company or any subsidiary where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 80% or more of the voting shares of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as a result of an acquisition of securities by the Company which, by reducing the number of shares of Stock or other Voting Securities outstanding, increases (x) the proportionate number of shares of Stock beneficially owned by any person to 30% or more of the shares of Stock then outstanding or (y) the proportionate voting power represented by the Voting Securities beneficially owned by any person to 30% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in clause (x) or (y) of this sentence shall thereafter become the beneficial owner of any additional shares of Stock or other Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction), then a "Change of Control" shall be deemed to have occurred for purposes of the foregoing clause (i). 5. Option Shares. The shares of stock which are the subject of this Option are shares of the Common Stock of the Company as constituted on the date of this Option, subject to adjustment as provided in this Section 5. The terms of this Option and the number of shares subject to this Option shall be equitably adjusted in such manner as to prevent dilution or enlargement of option rights in the following instances: (a) the declaration of a dividend payable to the holders of Common Stock in stock of the same class; (b) a split-up of the Common Stock or a reverse split thereof; and (c) a recapitalization of the Company under which shares of one or more different classes of stock are changed into or distributed in exchange for or upon the Common Stock without payment of any valuable consideration by the holders thereof. The terms of any such adjustment shall be conclusively determined by the Board of Directors. 6. Mergers. In the event of a consolidation or merger or sale of all or substantially all of the assets of the Company in which the outstanding shares of Stock are exchanged for securities, cash or other property of any other corporation or business entity or in the vent of a liquidation of the Company, the Board, or the board of directors of any corporation assuming the obligations of the company, may, in its discretion, take any one or more of the following actions, as to outstanding Stock Options: (i) provide that such Stock Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the optionee, provide that all unexercised Stock Options will terminate immediately prior to the consummation of such transaction unless exercised by the optionee within a specified period following the date of such notice, and/or (iii) int eh event of a business combination under the terms of which holders of the Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination (the "Merger Price"), make or provide for a cash payment to the optionees equal to the difference between (A) the Merger Price times the number of shares of Stock subject to such outstanding Stock Options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding options in exchange for the termination of such options. 7. No Special Employment Rights. This Option will not confer upon the Optionee any right with respect to continued employment by the Company or a Subsidiary, nor will it interfere in any way with any right of the Optionee's employer to terminate the Optionee's employment at any time. 8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares of Common Stock that may be purchased by exercise of this Option unless and until a certificate or certificates representing such shares of Common Stock are duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. Tax Withholding. With respect to the exercise of all or any part of the Option Shares granted hereunder, the Optionee shall promptly contact the Company regarding the payment of any Federal, state or local taxes required to be withheld in connection with such exercise. 10. Miscellaneous. Notices hereunder shall be mailed or delivered to the Company at its principal place of business, 555 Turnpike Street, Canton, Massachusetts 02021 and shall be mailed or delivered to the Optionee at his address set forth below, or in either case at such other address as one party may subsequently furnish to the other party in writing. This Option shall be governed by the laws of the Commonwealth of Massachusetts without giving effect to the choice of law principles thereof. J. BAKER, INC. /s/Alan I. Weinstein Name: Alan I. Weinstein Title: President and Chief Executive Officer Receipt is acknowledged of the foregoing Option and its terms and conditions are hereby agreed to: Dated:September 15, 1997 /s/Stuart M. Glasser Stuart M. Glasser 318 Beacon Street Boston, Massachusetts 02116 EX-99 11 NON-QUALIFIED STOCK OPTION GRANT EXHIBIT 99.6 NON-QUALIFIED OPTION TO PURCHASE SHARES OF COMMON STOCK OF J. BAKER, INC. 50,000 September 15, 1997 - --------------- ------------------ No. of Shares Date Pursuant to a vote of the Compensation Committee (the "Committee") of the Board of Directors of J. Baker, Inc. (the "Company") held on September 9, 1997, the Company hereby grants to Stuart M. Glasser (the "Optionee") effective as of the date hereof a Non-qualified Stock Option (the "Option") to purchase prior to September 15, 2007 (the "Expiration Date") all or any part of 50,000 shares of common stock of the Company (the "Option Shares") at a price of $8.625 per share subject to the terms and conditions contained herein. This Option is intended to be, and shall be treated as, a non-qualified stock option, and is not an incentive stock option under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). 1. Vesting. Subject to the provisions of Section 4 hereof, this Option shall become vested and exercisable with respect to the following whole number of Option Shares according to the timetable set forth below and shall continue to be exercisable by the Optionee at any time or times prior to the Expiration Date: Number of Shares Becoming Cumulative Available for Number of Vesting Date Exercise Shares Available --------------------------------------------------------------------------------------- September 14, 1998 12,500 12,500 September 14, 1999 12,500 25,000 September 14, 2000 12,500 37,500 September 14, 2001 12,500 50,000
Notwithstanding the foregoing, this Option shall become vested and fully exercisable upon a "Change of Control", as defined herein. 2. Manner of Exercise. The Optionee may exercise this Option only in the following manner: From time to time prior to the Expiration Date of this Option, the Optionee may give written notice to the Company of his election to purchase some or all of the Option Shares purchasable at the time of such notice. Said notice shall specify the number of shares to be purchased and shall be accompanied by payment therefor in cash or, subject to the discretion of the Company, in shares of the Company's common stock that have been held by Optionee for at least six months and that are not subject to any restrictions under any Company plan. Such shares shall be valued at their fair market value on the date of exercise as determined by the closing price of the Company's common stock on the NASDAQ stock market for the immediately preceding trading day. Alternatively, the Optionee may deliver to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure. The delivery of certificates representing the Option Shares will be contingent upon the Company's receipt from the Optionee of full payment for the Option Shares, as set forth above and any agreement, statement or other evidence that is reasonably required to cause the issuance of Common Stock to be purchased pursuant to the exercise of Options hereunder and any subsequent resale of the shares of Common Stock to be in compliance in all reasonable respects with applicable laws and governmental or regulatory agency regulations. With respect to the exercise of any Option hereunder, the Company shall proceed diligently and in an expeditious manner to effect the issuance and delivery of certificates representing the Option Shares. 3. Non-transferability of Option. Except as provided in the following sentence, this Option is personal to the Optionee, is not transferable by the Optionee in any manner by operation of law or otherwise, and is exercisable, during the Optionee's lifetime, only by him. 4. Termination of Employment. If the Optionee's employment by the Company or a subsidiary of the Company is terminated, the period within which to exercise the Option may be subject to earlier termination as set forth below. (a) Termination Due to Death - If the Optionee's employment terminates by reason of death, any Option held by the Optionee shall immediately become fully exercisable and may thereafter be exercised by the Optionee's legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier. (b) Termination Due to Disability - If the Optionee's employment terminates by reason of Disability (as defined in Section 13(e) of Optionee's Employment Agreement dated as of September 15, 1997 (the "Employment Agreement")), any Option held by the Optionee shall become immediately fully exercisable and may thereafter be exercised by the Optionee for a period of 12 months from the date of termination or until the Expiration Date, if earlier. The death of the Optionee during the 12-month period provided in this Section 4(b) shall extend such period for another 12 months from the date of death or until the Expiration Date, if earlier. (c) Termination Due to Retirement - If the Optionee's employment terminates by reason of Retirement, any Option held by the Optionee may be exercised, to the extent exercisable on the date of termination, for a period of 24 months from the date of termination or until the Expiration Date, if earlier. The death of the Optionee during the 24-month period provided in this Section 4(c) shall extend such period for another 12 months from the date of death or until the Expiration Date, if earlier. "Retirement" as referred to herein shall mean the Optionee's termination of employment with the Company and/or its subsidiaries after attainment of the age and/or service requirements to qualify for early or normal retirement under the Company's qualified retirement plan. (d) Termination for Cause - If the Optionee's employment terminates for Cause (as defined in Section 13(c) of the Employment Agreement), any unexercised Option held by the Optionee shall immediately terminate and be of no further force and effect. (e) Termination Without Cause - If the Optionee's employment is terminated by the Company without Cause, any Option held by the Optionee shall immediately become fully vested and exercisable with respect to all of the Option Shares for a period of ninety (90) days from the date of termination or until the Expiration date, if earlier. Thereafter, any Option held by the Optionee shall terminate and be of no further force or effect. (f) Termination for Good Reason - If the Optionee terminates his employment for "good reason" (as defined in Section 13(a) of the Employment Agreement) upon giving the Company at least ninety (90) days notice of his intention to do so, any Option held by the Optionee shall immediately become fully vested and exercisable with respect to all of the Option Shares for a period of ninety (90) days from the effective date of termination or until the Expiration Date, if earlier. Thereafter, any Option held by the Optionee shall terminate and be of no further force or effect. In the event the Optionee terminates his employment for "good reason" upon less than ninety (90) days notice to the Company, the provisions of Section 4(i) shall apply. (g) Termination after Change of Control - In the event the Company re-assigns the Optionee such that the Optionee ceases reporting to the current Chief Executive Officer of the Company, the Optionee may terminate his employment with the Company within six (6) months of such re-assignment and any Option held by the Optionee shall immediately become fully vested and exercisable with respect to all of the Option Shares for a period of ninety (90) days from the date of termination or until the Expiration Date, if earlier; provided that (A) the Optionee's notice of such termination occurs after a Change of Control (as defined herein)and (B) the Optionee gives at least ninety (90) days notice of such termination. Upon expiration of ninety (90) days from the date of termination, any Option held by the Optionee shall terminate and be of no further force or effect. (h) Termination for Non-extension of Employment Term - In the event the Optionee's timely written request to extend the term of his employment by one (1) year pursuant to Section 14 of the Employment Agreement is not accepted by the Company, the Optionee shall be entitled to resign from employment effective as of the end of the Term (as defined in Section 7 of the Employment Agreement). Upon such resignation, any Option held by the Optionee shall immediately become fully vested and exercisable with respect to all of the Option Shares for a period of ninety (90) days from the effective date of termination or until the Expiration date, if earlier. Thereafter, any Option held by the Optionee shall terminate and be of no further force or effect. (i) Other Termination - If the Optionee's employment terminates for any reason other than those set forth in subparagraphs (a)-(h) above, and unless otherwise determined by the Committee, any Option held by the Optionee may be exercised, to the extent exercisable on the date of termination, for a period of three months from the date of termination or until the Expiration Date, if earlier. Any portion of the Option that is not exercisable on the date of termination shall terminate as of such date and be of no further force or effect. For purposes of this Option a "Change of Control" shall mean the occurrence of any one of the following events: (i) any "person," as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act") (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 12B-2 under the Act), directly or indirectly, of securities of the Company representing 30% or more of either (A) the combined voting power of the Company's then outstanding securities having the right to vote in an election of the Company's Board of Directors ("Voting Securities") or (B) the then outstanding shares of the common stock, par value $.50 per share, of the Company (the "Stock")(in either such case other than as a result of acquisition of securities directly from the Company); or (ii) persons who, as of June 7, 1994, constituted the Company's Board of Directors (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to such date whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Plan, be considered an Incumbent Director; or (iii) the stockholders of the Company shall approve (A) any consolidation or merger of the Company or any subsidiary where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 80% or more of the voting shares of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as a result of an acquisition of securities by the Company which, by reducing the number of shares of Stock or other Voting Securities outstanding, increases (x) the proportionate number of shares of Stock beneficially owned by any person to 30% or more of the shares of Stock then outstanding or (y) the proportionate voting power represented by the Voting Securities beneficially owned by any person to 30% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in clause (x) or (y) of this sentence shall thereafter become the beneficial owner of any additional shares of Stock or other Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction), then a "Change of Control" shall be deemed to have occurred for purposes of the foregoing clause (i). 5. Option Shares. The shares of stock which are the subject of this Option are shares of the Common Stock of the Company as constituted on the date of this Option, subject to adjustment as provided in this Section 5. The terms of this Option and the number of shares subject to this Option shall be equitably adjusted in such manner as to prevent dilution or enlargement of option rights in the following instances: (a) the declaration of a dividend payable to the holders of Common Stock in stock of the sameclass; (b) a split-up of the Common Stock or a reverse split thereof; and (c) a recapitalization of the Company under which shares of one or more different classes of stock are changed into or distributed in exchange for or upon the Common Stock without payment of any valuable consideration by the holders thereof. The terms of any such adjustment shall be conclusively determined by the Board of Directors. 6. Mergers. In the event of a consolidation or merger or sale of all or substantially all of the assets of the Company in which the outstanding shares of Stock are exchanged for securities, cash or other property of any other corporation or business entity or in the event of a liquidation of the Company, the Board, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to outstanding Stock Options: (i) provide that such Stock Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the optionee, provide that all unexercised Stock Options will terminate immediately prior to the consummation of such transaction unless exercised by the optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination (the "Merger Price"), make or provide for a cash payment to the optionee equal to the difference between (A) the Merger Price times the number of shares of Stock subject to such outstanding Stock Options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding options in exchange for the termination of such options. 7. No Special Employment Rights. This Option will not confer upon the Optionee any right with respect to continued employment by the Company or a Subsidiary, nor will it interfere in any way with any right of the Optionee's employer to terminate the Optionee's employment at any time. 8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares of Common Stock that may be purchased by exercise of this Option unless and until a certificate or certificates representing such shares of Common Stock are duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. Tax Withholding. With respect to the exercise of all or any part of the Option Shares granted hereunder, the Optionee shall promptly contact the Company regarding the payment of any Federal, state or local taxes required to be withheld in connection with such exercise. 10. Miscellaneous. Notices hereunder shall be mailed or delivered to the Company at its principal place of business, 555 Turnpike Street, Canton, Massachusetts 02021 and shall be mailed or delivered to the Optionee at his address set forth below, or in either case at such other address as one party may subsequently furnish to the other party in writing. This Option shall be governed by the laws of the Commonwealth of Massachusetts without giving effect to the choice of law principles thereof. J. BAKER, INC. /s/Alan I. Weinstein Name: Alan I. Weinstein Title: President and Chief Executive Officer Receipt is acknowledged of the foregoing Option and its terms and conditions are hereby agreed to: Dated: September 15, 1997 /s/Stuart M. Glasser ------------------ -------------------- Stuart M. Glasser 318 Beacon Street Boston, Massachusetts 02116 -----END PRIVACY-ENHANCED MESSAGE-----