EX-10 2 ex10.htm EXHIBIT 10(e)

DILLARD’S, INC.

2000 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN

WHEREAS, the Board of Directors of the Company deems it in the best interest of the Company that Key
Employees and Outside Directors of the Company be given an opportunity to acquire a stake in the growth of the
Company as a means of assuring their maximum effort and continued association and employment with the Company; and

WHEREAS, the Board of Directors believes that the Company can best obtain these and other benefits by
granting stock options to such Key Employees and Outside Directors;

NOW, THEREFORE, BE IT RESOLVED:

That the Dillard's, Inc. 2000 Incentive and Nonqualified Stock Option Plan be adopted, and that it be
effective commencing May 20, 2000.

1. Purpose. The purpose of the Dillard's, Inc. 2000 Incentive and Nonqualified Stock Option Plan
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is to encourage ownership of stock in the Company by Key Employees and Outside Directors, and thereby cause such
Key Employees and Outside Directors to increase their efforts on behalf of the Company, to effect savings, and to
otherwise promote the best interests of the Company. It is intended that options granted under this Plan to Key
Employees will qualify as Incentive Stock Options, provided, however, that Nonqualified Stock Options may also be
granted to Key Employees and Outside Directors which do not qualify as Incentive Stock Options.

2. Definitions. As used herein, the following definitions shall apply.
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a. "Board" shall mean the Board of Directors of the Company.

b. "Common Stock" shall mean Common Stock, Class A, $.01 par value per share, of the
Company.
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c. "Code" shall mean the Internal Revenue Code of 1986, as amended.

d. "Committee" shall mean the Committee appointed by the Board in accordance with
paragraph 4(a) of the Plan.

e "Company" shall mean Dillard's, Inc.

f. "Continuous Employment" or "Continuous Status as an Employee" shall mean the absence of
any interruption or termination of employment by the Company. Employment shall not be considered interrupted in
the case of sick leave, military leave, or any other leave of absence approved by the Company.

g. "Effective Date" shall mean May 20, 2000.

h "Employee" shall mean any person employed on a full-time basis by the Company or of any
subsidiaries of the Company (as defined inss.425(f) of the Code).

i. "Incentive Stock Option" shall mean an Option which meets the requirements ofss.422(b)
of the Code.
j. "Key Employee" shall mean an Employee who, in the opinion of the Committee, can
contribute significantly to the growth and profitability of, or perform services of major importance to, the
Company or any subsidiaries of the Company.

k. "Nonqualified Stock Option" means an Option which does not receive the special tax
treatment received by an Incentive Stock Option.

l. "Option" shall mean a right to acquire Common Stock which is granted pursuant to this
Plan.

m. "Option Agreement" shall mean a written agreement which sets forth the terms of each
Option and is signed by an authorized officer of the Company.

n. "Optioned Stock" shall mean Common Stock subject to an Option granted pursuant to this
Plan.

o. "Optionee" shall mean an Employee or Outside Director who receives an Option.

p. "Outside Director" shall mean a member of the Board who is not also an Employee.

q. "Plan" shall mean the Dillard's, Inc.2000 Incentive and Nonqualified Stock Option Plan.

r. "Share" shall mean one share of the Common Stock.

3. Shares Subject to the Plan. Except as otherwise required by the provisions of paragraph 13
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hereof, the aggregate number of Shares of Common Stock deliverable upon the exercise of Options pursuant to the
Plan shall not exceed seven million (7,000,000) Shares. Such Shares may either be authorized but unissued or
treasury shares. If an Option should expire or become unexercisable for any reason without having been exercised
in full, the unpurchased Shares which were subject thereto shall, unless the Plan shall have been terminated, be
available for the grant of other Options under the Plan. No Optionee may receive options covering more than one
million (1,000,000) shares in any single fiscal year of the Company under the Plan.

4. Administration of the Plan.
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a. Composition of Committee. The Plan shall be administered by the Executive Compensation
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and Stock Option Committee or any successor thereto of the Board or such other committee as determined by the
Board (the "Committee"). The Committee shall solely be composed of two (2) or more "outside directors" of the
Board within the meaning ofss.162(m) of the Code and applicable Treasury Regulations, or any successor to such
provisions, and who are also "non-employee directors" within the meaning of Rule 16b-3, or any successor to such
Rule, of the Securities Exchange Commission.

b. Powers of the Committee. The Committee is authorized (but only to the extent not
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contrary to the express provisions of the Plan or to resolutions adopted by the Board) to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to the Plan, to determine the terms and conditions
upon which Options may be exercised, to determine the form and content of Option Agreements, to construe and
interpret the Plan and Option Agreements, to accelerate the exercisability of any Option, to make such other
determinations necessary or advisable for the administration of the Plan and shall have and may exercise such
other power and authority as may be delegated to it by the Board from time to time. A majority of the entire
Committee shall constitute a quorum, and the action of a majority of the members present at any meeting at which a
quorum is present shall be deemed the action of the Committee. The Committee shall, from time to time, have the
power to designate from among the Key Employees and Outside Directors the persons to whom Options will be
granted. Such designation shall be in the absolute discretion of the Committee, and shall be final without
approval of the Board or the stockholders. On the occasion of the designation of the Optionees, the Committee may
grant additional Options to Optionees then holding Options, to some of them, or may grant Options solely or
partially to new Optionees. As of the date of grant, the Committee shall fix the number of Shares to be optioned
and whether the Option shall be treated as an Incentive Stock Option or as a Nonqualified Stock Option; however,
no Option shall be treated as an Incentive Stock Option ten (10) years from the date this Plan is adopted by the
Board or the date the Plan is approved by the stockholders of the Company, whichever is earlier. In addition, to
the extent the aggregate fair market value (determined at the time the Option is granted) of Shares treated as
acquired pursuant to Incentive Stock Options which are exercisable by the Optionee for the first time during any
calendar year (under all incentive stock option plans of the Company or subsidiaries thereof (as defined in
ss.425(f) of the Code)) exceeds $100,000, such Options (taking them into account in the order in which they were
granted) shall not be treated as Incentive Stock Options. In making the determination as to whom Options shall be
granted, and as to the number of Shares to be covered by such Options, the Committee shall take into account the
duties and responsibilities of the proposed Optionees, their present and potential contribution to the success of
the Company, their past record, and such other factors as the Committee shall deem relevant in connection with
accomplishing the purposes of this Plan. Certain officers of the Company as designated by the Committee are
hereby authorized to execute Option Agreements on behalf of the Company and to cause them to be delivered to the
Optionees or other participants.

c. Effect of Committee's Decision. All decisions, determinations, and interpretations of
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the Committee shall be final and conclusive on all persons affected thereby.

5. Option Price. The exercise price of Incentive Stock Options granted under the Plan shall not be
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less than one hundred percent (100%) of the fair market value of a Share on the date the Option is granted, or, if
the Optionee owns (within the meaning ofss.425(d) of the Code) ten percent (10%)or more of the total combined
voting power of all classes of stock of the Company, one hundred ten percent (110%) of the fair market value of a
Share on the date the Option is granted. The exercise price of Nonqualified Stock Options granted under the Plan
shall be determined by the Committee in its complete discretion, but in no event shall the exercise price of
Nonqualified Stock Options be less than one hundred percent (100%) of the fair market value of a Share on the date
the Option is granted. The fair market value of a Share on a particular date shall be deemed to be the mean
between the highest and lowest sales prices per share of the Common Stock on the principal national securities
exchange on which the Common Stock may be listed from time to time on that date or, in either case, if there shall
have been no sale on that date on the last preceding date on which such sale or sales were effected on such
exchange. In the event that the method just described for determining the fair market value of the Shares shall
not remain consistent with the provisions of the Code and applicable Treasury Regulations, then the fair market
value per Share shall be determined by such other method consistent with the Code or Treasury Regulations as the
Committee shall in its discretion elect and apply at the time of grant of the Options concerned.

6. Term of Option and Limitations on Exercise. Subject to the terms of the Plan, the Committee
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shall, in its discretion, establish the term of each Option granted pursuant to the Plan. Notwithstanding the
foregoing, (a) an Incentive Stock Option granted under the Plan by its terms shall not be exercisable after the
expiration of seven (7) years from the date such Option is granted, or, five (5) years if the Optionee owns
(within the meaning ofss.425(d) of the Code) ten percent (10%) or more of the total combined voting power of all
classes of stock of the Company, and (b) a Nonqualified Stock Option granted under the Plan by its terms shall not
be exercisable after the expiration of seven (7) years from the date such option is granted. The Committee may
also, in its discretion, establish a period or periods during which an Option may not be exercised in whole or in
part or any other limitation or restriction, subject to the terms of the Plan, which the Committee may determine
as a condition precedent to exercising an Option, including such provisions as deemed advisable to permit
qualification of Options as Incentive Stock Options.

7. Procedures for Exercise. Any Option granted hereunder shall be exercisable at such times and
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under such conditions as shall be permissible under the terms of the Plan and of the Option granted to an
Optionee. An Option may not be exercised for a fractional Share. An Option granted pursuant to the Plan may be
exercised, subject to provisions relating to its termination and limitations on its exercise, only by (a) written
notice to exercise the Option with respect to a specified number of Shares, and (b)(i) payment to the Company
(contemporaneously with delivery of each such notice), in cash or Common Stock, of the amount of the Option price
of the number of Shares with respect to which the Option is then being exercised, or (ii) causing the Company to
receive from a broker funds to pay for the option upon the broker's receipt of stock certificates from the
Company. Each such notice and payment shall be delivered, or mailed by prepaid registered or certified mail,
addressed to the Treasurer of the Company at the Company's executive offices.

8. Reload Options. If payment for Shares upon the exercise of an Option ("Original Option") is
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made in the form of Common Stock, the Optionee shall be granted on the date of exercise an Option ("Reload
Option") to purchase the number of Shares that equals the number of Shares tendered to the Company. The number of
Shares tendered shall include Common Stock which is tendered in order to satisfy applicable tax withholding
obligations. The price per Share at which each Reload Option may be exercised shall be equal to the fair market
value of the Shares on the date of grant of the Reload Option. The term of each Reload Option shall expire on the
same date as that of the Original Option. Reload Options shall not be granted to (a) an Optionee who was formerly
an Employee and is no longer employed by the Company, (b) an Optionee who was formerly an Outside Director and is
no longer a member of the Board, or (c) any other person other than the Optionee.

9. Exercise During Employment or Following Death. Unless otherwise provided in the Option
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Agreement, an Option may be exercised by an Optionee who is an Employee only while the Optionee is an Employee and
has maintained Continuous Status as an Employee since the date of the grant of the Option, or after the
termination of the Optionee's status as an Employee within one (1) year after such termination (but not later than
the date on which the Option would otherwise expire) if the Optionee becomes Disabled, as determined by the
Committee, or for any other termination within three (3) months after such termination (but not later than the
date on which the Option would otherwise expire), except if the Optionee would have been entitled to exercise the
Option immediately prior to death, such Option of the deceased Optionee may be exercised within twelve (12) months
(but not later than the date on which the Option would otherwise expire) from the date of death by the personal
representatives of the Optionee's estate, or person or persons to whom the Optionee's rights under such Option
shall have passed by will or by laws of descent and distribution. The Committee's determination whether an
Optionee's employment has ceased, and the effective date thereof, shall be final and conclusive on all persons
affected thereby.

10. Form of Stock Certificates. Stock certificates to be issued or transferred pursuant to Options
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granted under this Plan shall be made in favor of the Optionee, or the Optionee and Optionee's spouse as joint
tenants.

11. Optionee's Certification. If the underlying Shares are not registered under the Securities Act
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of 1933 and applicable state securities laws at the time of exercise of an Option, then the Optionee shall agree
that the Optionee will purchase the Shares under such Option for investment and not with any present intention to
re-sell the same, and shall agree to sign a certificate to such effect at the time of exercising the Option.

12. Non-Transferability of Options. Options granted under the Plan may not be sold, pledged,
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assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and
distribution. Notwithstanding the foregoing sentence to the contrary, the Committee may, in its sole discretion,
permit an Optionee to transfer all or a portion of an Option to the Optionee's family members, a trust or
partnership for the benefit of the Optionee's family members or to a charity. An Option may be exercised, during
the lifetime of the Optionee, only by the Optionee.

13. Effect of Change in Stock Subject to the Plan. In the event that each of the outstanding Shares
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of Common Stock (other than Shares held by dissenting shareholders) shall be changed into or exchanged for a
different number or kind of Shares of stock of the Company or another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, stock dividend, split-up, combination of Shares, or otherwise),
then, in the sole discretion of the Committee, there shall be substituted for each Share of Common Stock then
under Option or available for Option the number and kind of Shares of stock into which each outstanding Share of
Common Stock (other than Shares held by dissenting shareholders) shall be so changed or for which each such Share
shall be so exchanged, together with an appropriate adjustment of the Option Price. In the event there shall be
any other change in the number of, or kind of, issued Shares of Common Stock, or of any stock or other securities
into which such Common Stock shall have been changed, or for which it shall have been exchanged, then if the
Committee shall, in its sole discretion, determine that such change equitably requires an adjustment in the
number, or kind, or Option price of Shares then subject to an Option or available for Option, such adjustment
shall be made by the Board and shall be effective and binding for all purposes of this Plan.

14. Time of Granting Options. The date of grant of an Option under the Plan shall, for all
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purposes, be the date reflected on the written grant of the Option to the Optionee. An Option Agreement shall be
given to each Employee or Outside Director to whom an Option is so granted within a reasonable time after the date
of such grant.

15. Modification of Options. At any time and from time to time the Committee may modify any
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outstanding Option, provided no such modification shall impair the Option without the consent of the holder of the
Option. The Committee may not at any time lower the option price of any outstanding Option or cancel outstanding
Options for reissuance in a transaction which would cause the Plan to be a variable plan in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" or Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation".
Any Incentive Stock Options outstanding under the Plan may be amended, if necessary, in order to retain such
qualification.

16. Tax Withholding. The Company shall have the right to deduct or withhold any taxes required by
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law to be withheld upon the exercise of an Option. The Committee may require the Optionee (or, in the event of the
death of the Optionee, the personal representatives of the Optionee's estate, or person or persons to whom the
Optionee's rights under such Option shall have passed by will or by laws of descent and distribution) to remit to
the Company the amount of any taxes required to be withheld, or, in lieu thereof, the Company may withhold (or the
Optionee may be provided the opportunity to elect to tender) the number of shares of Common Stock equal in fair
market value to the amount required to be withheld.

17. Amendment and Termination of the Plan. The Committee or Board of Directors may amend, alter or
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discontinue the Plan, but no amendment or alteration shall be made without the approval of the stockholders of the
Company if such approval is necessary to comply with the performance-based compensation exception underss.162(m) of
the Code and applicable Treasury Regulations. No amendment, alteration or discontinuation of the Plan shall
adversely affect any Options granted prior to the time of such amendment, alteration or discontinuation.

18. Conditions Upon Issuance of Shares. Shares must not be issued with respect to any Option
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granted under the Plan unless the issuance and delivery of such Shares shall comply with all relevant provisions
of law, including, without limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and the requirements of any stock exchange upon which
the Shares may then be listed. Inability of the Company to obtain from any regulatory body or authority deemed by
the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder shall relieve the
Company of any liability in respect of the non-issuance or sale of such Shares. As a condition to the exercise of
an Option, the Company may require the person exercising an Option to make such representations or warranties as
may be necessary to assure the availability of an exemption from the registration requirements of federal or state
securities law.

19. Reservation of Shares. The Company, during the term of this Plan, will reserve and keep
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available a number of Shares sufficient to satisfy the requirements of the Plan.