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1128916v.3
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a party other than the
Registrant
Check the appropriate box:
Preliminary proxy statement Confidential For Use
of the Commission
Only, (as permitted,
by Rule 14a-6(e)(2))
X Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule
14a-11(c)or
Rule 14a-12
LIFETIME HOAN CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of filing fee (Check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-6 (i)
(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11
(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule and
the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
LIFETIME HOAN CORPORATION
One Merrick Avenue
Westbury, New York 11590
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 8, 2000
Notice is hereby given that the Annual Meeting of Stockholders
of Lifetime Hoan Corporation, a Delaware corporation (the "Company"),
will be held at the offices of the Company, One Merrick Avenue,
Westbury, New York 11590 on Thursday June 8, 2000, at 10:30 a.m.,
local time, for the following purposes:
(1) To elect a board of six directors to
serve until the next Annual Meeting of
Stockholders or until their successors are
duly elected and qualified;
(2) To approve and ratify the appointment of Ernst & Young LLP
as the independent auditors of the Company;
(3) To approve and ratify the Lifetime Hoan Corporation 2000
Incentive Bonus Compensation Plan (the "Bonus Plan");
(4) To approve and ratify the Lifetime Hoan Corporation 2000
Long-Term Incentive Plan (the "2000 Plan");
(5) To transact such other business as may properly come
before the meeting, or any adjournment(s) or postponement(s)
thereof.
Stockholders of record at the close of business on April 14,
2000 are entitled to notice of and to vote at the Annual Meeting and
any adjournment(s) or postponement(s) thereof. A complete list of
the stockholders entitled to vote at the Annual Meeting will be
available for examination by any stockholder at the Company's
offices, One Merrick Avenue, Westbury, New York 11590, for any
purpose germane to such meeting, during ordinary business hours, for
a period of at least 10 days prior to the Annual Meeting.
By Order of the Board of Directors
Craig Phillips, Secretary
Westbury, New York
April 28, 2000
THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL
STOCKHOLDERS TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN AS
PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN THE ACCOMPANYING REPLY
ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR
PROXIES AND VOTE IN PERSON.
LIFETIME HOAN CORPORATION
One Merrick Avenue
Westbury, New York 11590
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held on June 8, 2000
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors
(the "Board") of Lifetime Hoan Corporation, a Delaware corporation
(the "Company"), for use at the Annual Meeting of Stockholders of the
Company (the "Meeting") to be held on the date, at the time and place
and for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. The Company's principal offices are located
at One Merrick Avenue, Westbury, New York 11590 and its telephone
number is (516) 683-6000. Stockholders of record at the close of
business on April 14, 2000 are entitled to notice of and to vote at
the Meeting. This Proxy Statement and the accompanying Proxy shall
be mailed to stockholders on or about May 10, 2000.
THE MEETING
Voting at the Meeting
On April 14, 2000, there were 11,634,746 shares of the Company's
common stock, $.01 par value (the "Common Stock"), issued and
outstanding. Each share of Common Stock entitles the holder thereof
to one vote on all matters submitted to a vote of stockholders at the
Meeting.
A majority of the Company's outstanding shares of Common Stock
represented at the Meeting, in person or by proxy, shall constitute a
quorum. Assuming a quorum is present, (1) the affirmative vote of a
plurality of the shares so represented is necessary for the election
of directors; 2) the affirmative vote of a majority of the shares so
represented is necessary to approve and ratify the appointment of
Ernst & Young LLP as the independent auditors of the Company;(3) the
affirmative vote of a majority of the shares so represented is
necessary to approve and ratify the Bonus Plan and (4) the
affirmative vote of a majority of the shares so represented is
necessary to approve and ratify the 2000 Plan.
Proxies and Proxy Solicitation
All shares of Common Stock represented by properly executed
proxies will be voted at the Meeting in accordance with the
directions marked on the proxies, unless such proxies have previously
been revoked. If no directions are indicated on such proxies, they
will be voted for the election of each nominee named below under
"Election of Directors", for the approval and ratification of the
appointment of Ernst & Young LLP as the independent auditors of the
Company, for the approval and ratification of the Bonus Plan and for
the approval and ratification of the 2000 Plan. If any other matters
are properly presented at the Meeting for action, the proxy holders
will vote the proxies (which confer discretionary authority upon such
holders to vote on such matters) in accordance with their best
judgment. Each proxy executed and returned by a stockholder may be
revoked at any time before it is voted by timely submission of a
written notice of revocation or by submission of a duly executed
proxy bearing a later date (in either case directed to the Secretary
of the Company), or, if a stockholder is present at the Meeting, he
may elect to revoke his proxy and vote his shares personally.
Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction
of business. If a stockholder, present in person or by proxy,
abstains on any matter, such stockholder's shares of Common Stock
will not be voted on such matter. Thus, an abstention from voting on
any matter has the same legal effect as a vote "against" the matter,
even though the stockholder may interpret such action differently.
Except for determining the presence or absence of a quorum for the
transaction of business, broker non-votes are not counted for any
purpose in determining whether a matter has been approved.
The Company will bear the cost of preparing, printing,
assembling and mailing the proxy, Proxy Statement and other material
which may be sent to stockholders in connection with this
solicitation. It is contemplated that brokerage houses will forward
the proxy materials to beneficial holders at the request of the
Company. In addition to the solicitation of proxies by the use of
the mails, officers and regular employees of the Company may solicit
proxies by telephone without additional compensation. The Company
will reimburse such persons for their reasonable out-of-pocket
expenses in accordance with the regulations of the Securities and
Exchange Commission.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial
ownership of the Common Stock as of April 14, 2000 (except where
otherwise noted) based on a review of information filed with the
United States Securities and Exchange Commission ("SEC") and the
Company's stock records with respect to (a) each person known to be
the beneficial owner of more than 5% of the outstanding shares of
Common Stock, (b) each Director or nominee for a directorship of the
Company, (c) each executive officer of the Company named in the
Summary Compensation Table, and (d) all executive officers and
directors of the Company as a group. Unless otherwise stated, each
of such persons has sole voting and investment power with respect to
such shares.
Percent of
Outstanding
Shares
Amount and Nature of Beneficially
Name and Address Beneficial Ownership Owned (12)
Milton L. Cohen (1) 1,863,773(2) 15.9%
Jeffrey Siegel (1) 1,433,905(3) 12.2%
Ronald Shiftan 965,350(4) 8.2%
c/o The Port Authority of NY & NJ
One World Trade Center, 67 West
New York, NY 10048
Pamela Staley 962,423(5) 8.3%
1200 S. Gaylord
Denver, CO 80210
Craig Phillips (1) 931,792(6) 8.0%
Howard Bernstein (1) -0- -
Robert McNally (1) 68,000(7) *
Bruce Cohen (1) 18,118(8) *
Royce & Associates, Inc. 1,090,980(9) 8.7%
1414 Avenue of the Americas
New York, NY 10019
Wellington Management Co., LLP 736,000(10) 5.8%
75 State Street
Boston, MA 02109
All Directors and Executive
Officers as a Group (7 persons)5,280,938(11) 43.9%
* Less than 1%
(1)The address of such individuals is c/o the Company, One Merrick
Avenue, Westbury, NY 11590.
(2)Includes 53,185 shares issuable upon the exercise of options which
are exercisable within 60 days. Does not include 973,396, shares
owned by nineteen separate irrevocable trusts for the benefit of Mr.
Milton L. Cohen's children, their spouses and his grandchildren. Mr.
Cohen, who is not a trustee of such trusts, disclaims beneficial
ownership of the shares held by the trusts.
(3)Includes 80,864 shares issuable upon the exercise of options which
are exercisable within 60 days. Does not include 962,423 shares
owned by ten separate irrevocable trusts for the benefit of Mr.
Siegel's children, nieces and nephews. Mr. Siegel, who is not a
trustee of such trusts, disclaims beneficial ownership of the shares
held by the trusts.
(4)Includes (i) 180,186 shares issuable upon the exercise of options
which are exercisable within 60 days; (ii) 143,256 shares held by
certain of the trusts referred to in footnote (2) above, over which
Mr. Shiftan has sole voting control and sole power to dispose of the
shares held by the trusts; and (iii) 641,908 shares held by certain
of the trusts referred to in footnote (2) above, over which Mr.
Shiftan has shared voting control, and under certain circumstances,
the sole power to dispose of the shares held by the trusts. Mr.
Shiftan disclaims beneficial ownership of the shares held by the
trusts.
(5) Includes 962,423 shares for which Ms. Staley is the sole
trustee of the trusts referred to in footnote (3) above over which
she has sole voting control and sole power to dispose of said shares.
Ms. Staley disclaims beneficial ownership of the shares held by the
trusts.
(6)Includes 28,278 shares held under a trust of which Mr. Phillips is
a beneficiary and 5,100 shares issuable upon the exercise of options
which are exercisable within 60 days. Excludes 7,600 shares issuable
upon the exercise of options which are not exercisable within 60
days.
(7)Includes 60,000 shares issuable upon the exercise of options which
are exercisable within 60 days. Does not include 114,000 shares
issuable upon the exercise of options which are not exercisable
within 60 days.
(8) Includes 15,268 shares issuable upon the exercise of options
which are exercisable within 60 days. Does not include 10,000 shares
issuable upon the exercise of options which are not exercisable
within 60 days. Does not include 211,347 shares held in certain of
the trusts referred to in footnote (2). Includes 2,850 shares held
by three trusts over which Mr. Bruce Cohen has sole voting control.
(9) Amount and Nature of Beneficial Ownership and Percent of
Outstanding Shares Beneficially Owned is based on Schedule 13G dated
February 10, 2000 filed with the SEC reporting beneficial ownership
of securities of the Company held by Royce and Associates Inc. as of
December 31, 1999. Does not include 6,998 shares owned by an
affiliated company.
(10) Amount and Nature of Beneficial Ownership and Percent of
Outstanding Shares Beneficially Owned is based on Schedule 13G dated
February 14, 2000 filed with the SEC reporting beneficial ownership
of securities of the Company held by Wellington Management Co., LLP
as of December 31, 1999.
(11) Includes 394,603 shares issuable upon the exercise of options
which are exercisable within 60 days. Does not include 131,600
shares issuable upon the exercise of options which are not
exercisable within 60 days.
(12) Calculated on the basis of 11,634,746 shares of Common Stock
outstanding, except that shares underlying options exercisable within
60 days are deemed to be outstanding for purposes of calculating the
beneficial ownership of securities owned by the holders of such
options.
To the knowledge of the Company, no arrangement exists, the
operation of which might result in a change of control of the
Company.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A board of six directors is to be elected at the Meeting to hold
office until the next Annual Meeting of Stockholders, or until their
successors are duly elected and qualified. The following nominees
have been recommended by the Board of Directors. It is the intention
of the persons named in the enclosed proxy to vote the shares covered
thereby for the election of the six persons named below, unless the
proxy contains contrary instructions:
Director or Executive
Officer of the Company
Name Age Position or its Predecessor Since
Milton L. Cohen 71 Chairman of the Board, 1958
Chief Executive Officer
and a Director. Mr. Milton
Cohen has held the position
of Chairman of the Board and
Chief Executive Officer since
1958. From 1958 to 1999, Mr.
Milton Cohen was President of
the Company.
Jeffrey Siegel 57 President and a Director. Mr. 1967
Siegel has held the position of
President since 1999. Prior to
becoming President, since 1967,
Mr. Siegel was Executive Vice
President of the Company.
Bruce Cohen 42 Executive Vice President 1998
and a Director. Mr. Bruce
Cohen has held the position of
Executive Vice President since
1999. Prior to becoming
the Executive Vice President,
since 1991, Mr. Bruce Cohen was
Vice President - National Sales
Manager of the Company.
Craig Phillips 50 Vice-President - Manufacturing, 1973
Secretary and a Director
Ronald Shiftan 55 Director. Mr. Shiftan has served 1991
as Deputy Executive Director of
The Port Authority of New York &
New Jersey since September 1998.
Prior to becoming Deputy Executive
Director of the Port Authority of
New York & New Jersey, he had, since
1996, been Chairman of Patriot Group,
LLC, a financial advisory firm.
Prior thereto, Mr. Shiftan held
executive management positions in
venture capital, investment banking
and financial advisory firms.
Howard Bernstein 79 Director. Mr. Bernstein has been 1992
a member of the firm of
Certified Public Accountants, Cole,
Samsel & Bernstein LLC (and its
predecessors) for approximately
forty-nine years.
Milton L. Cohen is the father of Bruce Cohen.
Jeffrey Siegel and Craig Phillips are cousins.
The Company has no reason to believe that any of the nominees
will not be a candidate or will be unable to serve. However, should
any of the foregoing nominees become unavailable for any reason, the
persons named in the enclosed proxy intend to vote for such other
persons as the present Board may nominate.
The Board recommends that stockholders vote FOR the election of
the nominated directors, and signed proxies which are returned will
be so voted unless otherwise instructed on the proxy card.
INFORMATION CONCERNING THE BOARD OF DIRECTORS OF LIFETIME HOAN
The directors of the Company are elected annually by the
stockholders of the Company. They will serve until the next annual
meeting of the stockholders of the Company or until their successors
have been duly elected and qualified or until their earlier
resignation or removal.
Directors who are not employees of the Company receive an annual
fee of $5,000 plus $1,000 for each meeting of the Board attended.
Directors who are employees of the Company do not receive
compensation for such services. The officers and directors of the
Company have entered into indemnification agreements with the
Company.
The Board has established an Audit Committee, the members of
which are Messrs. Ronald Shiftan (Chairman) and Howard Bernstein.
The Audit Committee meets with the Company's independent auditors
during the course of their audit to review audit procedures and
receive recommendations and reports from the auditors. In addition,
the Audit Committee monitors all corporate activities to assure
conformity with good practice and government regulations. The Audit
Committee held two meetings during the year ended December 31, 1999.
The Board has established a Compensation Committee, the members
of which are Messrs. Milton L. Cohen (Chairman) and Jeffrey Siegel.
The Compensation Committee reviews and establishes the general
compensation practices and policies of the Company and approves
procedures for the administration thereof, including such matters as
the total salary and fringe benefit programs. The Compensation
Committee held two meetings during the year ended December 31, 1999.
The Board has established a Stock Option Committee, the members
of which are Messrs. Milton L. Cohen (Chairman) and Jeffrey Siegel.
The Stock Option Committee is responsible for administering the
Company's 1991 Stock Option Plan. The Board also established the 1996
Incentive Stock Option Plan Committee, the members of which are
Messrs. Ronald Shiftan (Chairman) and Howard Bernstein. The 1996
Incentive Stock Option Plan Committee is responsible for
administering the 1996 Incentive Stock Option Plan. Subject to
stockholder approval and ratification, the 1996 Incentive Stock Plan
Committee will also serve as the Bonus Plan Committee, which
administers the Bonus Plan and as the 2000 Plan Committee, which
administers the 2000 Plan. The Stock Option Committees each held
three meetings during the year ended December 31, 1999.
The Board does not have a standing nominating committee; rather,
the Board as a whole performs the functions which would otherwise be
delegated to such a committee.
The Board of Directors held four meetings during the fiscal year
ended December 31, 1999.
Each director attended every Board Meeting and every meeting of
the committee(s) on which he served.
CERTAIN TRANSACTIONS
On April 6, 1984, the Company, pursuant to its 1984 Stock Option
Plan, which has since been terminated, issued options to Messrs.
Milton L. Cohen, Jeffrey Siegel and Craig Phillips, officers and
directors of the Company. On December 17, 1985, such individuals
exercised their options and the following table reflects the numbers
of shares issued (the "Option Shares"), the aggregate purchase price,
average price per share and method of payment.
Number of
Shares of Aggregate Average
Common Stock Purchase Price per
Name Issued Price Share Cash Notes
Milton L. Cohen 1,713,204 $469,120 $ 0.27 $46,912 $422,208
Jeffrey Siegel 1,390,860 382,720 0.27 38,272 344,448
Craig Phillips 519,334 149,120 0.27 14,912 134,208
Total 3,623,398 $1,000,960 $100,096 $900,864
The promissory notes issued by Messrs. Milton L. Cohen, Jeffrey
Siegel, and Craig Phillips all bear interest at the rate of 9% per
annum, are secured by such individuals' respective Option Shares and
were originally due and payable on December 17, 1995. In December
1995, the Board of Directors determined to extend the due dates of
the notes to December 31, 2000. The interest has been paid each year
when due.
In August 1998, Mr. Shiftan was paid $200,000 and received a
fully vested option to purchase 100,000 shares of Common Stock at
$10.63 per share as a financial advisory fee in connection with the
Company's acquisition of Roshco, Inc.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information concerning
the compensation of the Company's Chairman of the Board and Chief
Executive Officer and each of its other most highly compensated
executive officers whose annual compensation for the fiscal year
ended December 31, 1999 exceeded $100,000 (the "Named Executive
Officers") for services during the fiscal years ended December 31,
1999, 1998 and 1997:
Annual Compensation Long-Term
Compensation
No. of
Name and Shares of
Common
Stock
Underlying
Stock All other
Principal Position Year Salary Bonus Options Compensation
Milton L. Cohen 1999 699,998 $304,042 -- $6,017 (1)
Chairman and Chief 1998 726,921 $833,901(4) -- $5,882 (1)
Executive Officer 1997 699,998 $626,310(5) 9,185 $5,875 (1)
Jeffrey Siegel 1999 400,010 $304,042 -- --
President 1998 415,395 $833,901(4) -- --
1997 400,010 $626,310(5) 9,185 --
Bruce Cohen 1999 201,000 $90,000(6) 10,000 --
Executive V President1998 191,077 $90,000(7) -- $56,050 (2)
Craig Phillips
Vice President 1999 200,000 -- -- --
Distribution 1998 200,962 -- -- --
And Secretary 1997 168,270 -- 5,000 --
Robert McNally (3) 1999 200,000 15,000(6) 24,000 --
Vice President 1999 196,269 20,000(7) -- --
Finance and
Treasurer 1997 $31,985 -- 150,000 --
(1) Represents the current dollar value of premiums paid for split
dollar life insurance by the Company on behalf of Mr. Milton L.
Cohen.
(2) Represents compensation from the exercise of nonqualified stock
options.
(3) Mr. McNally joined the Company in October 1997.
(4) Includes $320,901 accrued in 1998 and paid in 1999 for each of
Messrs. Milton L. Cohen and Jeffrey Siegel.
(5) Includes $132,310 accrued in 1997 and paid in 1998 for each of
Messrs. Milton L. Cohen and Jeffrey Siegel.
(6) Such amounts were accrued in 1999 and paid in 2000.
(7) Such amounts were accrued in 1998 and paid in 1999.
Mr. Milton L. Cohen, Chairman of the Board and Chief Executive
Officer, and Mr. Jeffrey Siegel, President of the Company, each have
an outstanding loan to the Company for $362,859 (the maximum amount
of outstanding in the case of each of Messrs. Cohen and Siegel during
the fiscal year ended December 31, 1999). These loans do not bear
interest and are due on December 31, 2001. The loans are being paid
back through payroll deductions beginning in the second quarter of
2000.
Option/SAR Grants in Last Fiscal Year
Individual Grants
No. of Shares % of Total
of Common Options
Stock Granted to Grant Date
Name Underlying Employees in Excerise Expiration Present
Options Fiscal Year Price Date Value
Granted
Bruce Cohen 10,000 5.31% $5.50 12/7/2009 $3,800(a)
Robert McNally 24,000 12.73% %5.50 12/7/2009 $9,120(a)
_______________
(a) Option values reflect Black-Scholes model output for options.
The assumptions used in the model were expected volatility of .072,
risk-free rate of return of 5.88%, a dividend yield of 4.68% and an
expected option life of 5 years.
Aggregated Option/SAR Exercises in the Last Fiscal Year and Fiscal
Year-End Option/SAR Values
The following table sets forth certain information with respect
to each exercise of stock options during the fiscal year ended
December 31, 1999 by each of the named executive officers and the
number and value of unexercised options held by each of the Named
Executive Officers as of December 31, 1999:
Number of Shares
of Common Stock
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options/SARs at In-The-Money Options/SARS
Name Exercise Realized December 31, 1999 at December 31, 1999 (1)
Exercisable Unexercisable Exercisable Unexercisable
Milton L. Cohen-- -- 53,185 -- $0 --
Jeffrey Siegel-- -- 80,864 -- $0 --
Robert McNally-- -- 60,000 114,000 $0 $0
Craig Phillips-- -- 5,100 7,600 $0 $0
Bruce Cohen -- -- 15,268 10,000 $4,161 $0
(1) Calculated based on the difference between the closing sale
price of the Common Stock, as reported on the Nasdaq National Market
on December 31, 1999 ($5.25), and the exercise price of each option
multiplied by the number of shares of Common Stock underlying such
option.
BOARD COMPENSATION COMMITTEE REPORT
ON
EXECUTIVE COMPENSATION2
It is the responsibility of the Compensation Committee (the
"Committee") to advise the Board relative to the salaries, stock
options and bonuses granted to the named executive officers.
Milton L. Cohen, Chairman of the Board and Chief Executive
Officer, and Jeffrey Siegel, President of the Company, entered into
new employment agreements with the Company in April 1996 and such
agreements were amended June 1997. The agreements replaced those
entered into in 1984, which had been amended in 1991.
The Committee determined that the new compensation packages
should include a significant portion of performance-based
compensation. Accordingly, the base salaries of these executives
were reduced and the Company adopted the 1996 Incentive Bonus
Compensation Plan. According to such plan, the Chairman of the Board
and President of the Company will be entitled to bonuses based on a
percentage of the Company's annual net income. The Committee
believes that net income is one indication of the performance of the
Chairman of the Board and President. See "1996 Incentive Bonus
Compensation Plan". The Company also adopted the Lifetime Hoan
Corporation 1996 Incentive Stock Option Plan which authorizes the
issuance of options to officers of the Company and its subsidiaries.
In evaluating the merit of the base salaries pursuant to the new
employment agreements, the Committee took into consideration that
these individuals were responsible for the development and
implementation of the strategies which have enabled the Company to
compete effectively in its market. Moreover, the Committee evaluated
the operating responsibility of each individual, his experience in
the housewares industry, his expertise in overseas purchasing and the
amount of time spent abroad. The Committee also examined the impact
each individual had on the profitability and future growth of the
Company.
Craig Phillips, Vice President - Distribution of the Company,
entered into a new employment agreement with the Company in April
1997. This agreement replaced an agreement entered into in April
1996.
The Board intends to provide other key executives with
compensation packages sufficient to attract and retain other such key
executives. Such compensation packages will provide for salary at a
level which is commensurate with the responsibility of each
individual, and his or her prior experience. Such salaries should be
comparable to the salaries of other companies of comparable size and
nature. Salary reviews are done annually. Bonuses and stock options
may be awarded in accordance with performance, results and
competitive compensation packages.
The Board has ratified the Compensation Committee's evaluation
of the 1999 compensation and performances of Mr. Milton L. Cohen
(Chief Executive Officer), Mr. Jeffrey Siegel (President), Mr. Bruce
Cohen (Executive Vice President), Mr. Craig Phillips (Vice President-
Distribution) and Mr. Robert McNally (Vice President-Finance)in
light of the criteria outlined above. The Committee and the Board
believe that the Company's performance in a challenging retail
environment underscores the contributions of these individuals and
that their hands-on leadership has been an essential element of this
success.
Compensation Committee
of the Board of Directors
Milton L. Cohen
Jeffrey Siegel
Compensation Committee
Interlocks and Insider Participation
Milton L. Cohen and Jeffrey Siegel, who are members of the
Compensation Committee, are executive officers of the Company. Mr.
Milton L. Cohen and Mr. Jeffrey Siegel issued promissory notes to the
Company in payment for shares of Common Stock purchased upon exercise
of certain stock options in 1985, the due dates of which promissory
notes were extended in 1995. The terms of such promissory notes are
described in "Certain Transactions" above.
PERFORMANCE GRAPH
The following graph compares the cumulative total return on
the Company's Common Stock with the Nasdaq Market Value Index and
the Housewares Index - Media General Industry Group. The
comparisons in this table are required by the Securities and
Exchange Commission and, therefore, are not intended to forecast or
be inductive of possible future performance of the Company's Common
Stock.
LIFETIME HOAN CORPORATION
Cumulative Total Stockholder Return for the Period December 31,
1994 through December 31, 1999. 3
Nasdaq Media
Lifetime Market General
Period Hoan Index Index
12/31/94 100.00 100.00 100.00
12/31/95 86.60 129.71 121.74
12/31/96 110.01 161.18 151.01
12/31/97 102.40 197.16 201.18
12/31/98 103.51 278.08 182.97
12/31/99 57.41 490.46 150.67
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements
Effective April 7, 1996, the Company entered into new
employment agreements with Messrs. Milton L. Cohen, Chairman of the
Board and Chief Executive Officer, and Jeffrey Siegel, President of
the Company, providing for annual salaries of $700,000 and
$400,000, respectively, and for the payment to them of bonuses
pursuant to the Company's 1996 Incentive Bonus Compensation Plan.
The employment agreements will continue in force until April 6,
2001, and thereafter for additional periods of one year unless
terminated by either the Company or the executive. The agreements
provide for, among other things, standard fringe benefit
arrangements, such as disability benefits, insurance and an
accountable expense allowance. The employment agreements also
provide that if the Company is merged or otherwise consolidated
with any other organization or substantially all of the assets of
the Company are sold or control of the Company has changed (the
transfer of 50% or more of the outstanding stock of the Company)
which is followed in the case of each executive by: (i) the
termination of his employment agreement, other than for cause; (ii)
the diminution of his duties or change in executive position; (iii)
the diminution of his compensation (other than a general reduction
to all employees); or (iv) the relocation of his principal place of
employment to other than the New York Metropolitan Area, the
Company is obligated to pay to such executive or his estate the
base salary required pursuant to the employment agreement for the
balance of the term. The employment agreements also contain
restrictive covenants preventing each executive from competing with
the Company for a period of five years from the earlier of the
termination of such executive's employment (other than a
termination by the Company without cause) or the expiration of his
employment agreement.
Effective April 7, 1997, Mr. Phillips and the Company entered
into an agreement providing for Mr. Phillip's employment by the
Company as its Vice-President-Manufacturing at a current annual
salary of $200,000. The agreement which expires April 2000,
provides for, among other things, standard fringe benefit
arrangements, such as disability benefits, insurance and an
accountable expense allowance.
1996 Incentive Bonus Compensation Plan
The Company had adopted a 1996 Incentive Bonus Compensation
Plan (the "1996 Plan"). The 1996 Plan provided for the award of a
bonus, with respect to each of the ten fiscal years of the Company
beginning with the 1996 fiscal year, to the Chairman of the Board
and the Chief Executive Officer and President of the Company
providing they were then in the employ of the Company. As
discussed below, the 1996 Plan has been terminated.
1991 Stock Option Plan and 1996 Incentive Stock Option Plan
The Board adopted the Company's 1991 Stock Option Plan as a
means to attract, retain and motivate key personnel. In addition,
the Board adopted the Company's 1996 Incentive Stock Option Plan as a
means to retain and motivate the Chairman of the Board and the
President and Chief Executive Officer. As discussed below, and
subject to stockholder approval and ratification, the Board has
approved the 2000 Plan. The 2000 Plan is intended to replace the
Company's existing stock option plans. If the 2000 Plan is
approved, no further options will be granted under the Company's 1991
Stock Option Plan or the Company's 1996 Incentive Stock Option Plan;
however the terms of those stock option plans will continue to govern
options that remain outstanding under those stock option plans.
Limitation on Directors' Liability
The Company's Restated Certificate of Incorporation contains
provisions which eliminate the personal liability of its directors
for monetary damages resulting from breaches of their fiduciary
duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law,
violations under Section 174 of the Delaware General Corporation
Law or for any transaction from which the director derived an
improper personal benefit.
The Company has entered into indemnification agreements with
each of its officers and directors which provide that the Company
will indemnify the indemnitee against expenses, including
reasonable attorney's fees, judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with any civil or criminal action or administrative
proceeding arising out of the performance of his duties as an
officer, director, employee or agent of the Company. Such
indemnification is available if the acts of the indemnitee were in
good faith, if the indemnitee acted in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal proceeding, the
indemnitee had no reasonable cause to believe his conduct was
unlawful.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon the Company's review of the copies of such
reports furnished to the Company, the Company believes that required
filings under Section 16(a) of the Securities Exchange Act of 1934,
applicable to the Company's executive officers and greater than 10%
beneficial owners were timely filed during the fiscal year ended
December 31, 1999, except that a Form 5 reporting changes in the
beneficial ownership of trusts of which Bruce Cohen is the trustee,
an acquisition by gift of common stock to a trust his benefit, and a
grant of options was filed in April 2000, a Form 5 reporting Milton
Cohen's transfer by gift of common stock to trusts for the benefit of
his children and grandchildren was filed in April 2000, a Form 5
reporting Robert McNally's grant of options was filed in April 2000,
and a Form 5 reporting Jeffrey Siegel's transfer by gift to certain
members of his family was filed in April 2000.
PROPOSAL NO. 2
APPROVAL AND RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to stockholder approval and ratification, the Board has
reappointed the firm of Ernst & Young LLP as the independent auditors
to audit the Company's financial statements for the fiscal year ended
December 31, 2000. Ernst & Young LLP has audited the Company's
financial statements since 1984. If the stockholders do not approve
and ratify this appointment, other independent auditors will be
considered by the Board.
Representatives of Ernst & Young LLP are expected to be present
at the annual meeting and will have the opportunity to make a
statement if they desire and to respond to appropriate questions.
The Board recommends that stockholders vote FOR the approval and
ratification of the appointment of Ernst & Young, LLP.
PROPOSAL NO. 3
APPROVAL OF THE COMPANY'S
2000 INCENTIVE BONUS COMPENSATION PLAN
General
At the Annual Meeting, stockholders will be asked to approve the
Board's adoption of the Bonus Plan. Section 162(m) of the Internal
Revenue Code of 1986 (the "Code") generally disallows a public
company's tax deduction in excess of $1 million for compensation paid
to certain executive officers of the Company, subject to several
exceptions, including an exception for compensation paid under a
stockholder-approved plan that is "performance-based" within the
meaning of Section 162(m). The Bonus Plan provides a means for the
payment of performance-based cash bonuses to certain key executives
of the Company while preserving the Company's tax deduction with
respect to the payment thereof.
The Bonus Plan, has replaced the existing 1996 Plan, which has
been terminated. Unlike the 1996 Plan, which limited participation
to two designated senior executive positions and under which the
award opportunity was fixed as a percentage of net income, the Bonus
Plan affords the Company more flexibility to designate participants
and define award opportunities.
The Bonus Plan has been adopted by a unanimous vote of the Board
of Directors, effective for the performance periods commencing on or
after January 1, 2000, subject to stockholder approval. Should
Stockholder approval not be obtained, the Bonus Plan will be void,
and any awards outstanding under the Bonus Plan will be canceled.
The Board of Directors believes that, as a matter of general
policy, the Company's incentive compensation plans should be
structured to facilitate compliance with Section 162(m), but that the
Company should reserve the right to establish separate annual and
other incentive compensation arrangements for certain executive
officers that may not comply with Section 162(m) if it determines, in
its sole discretion, that to do so would be in the best interests of
the Company and the stockholders.
The principal terms of the Bonus Plan are summarized below, and
a copy of the Plan is annexed to this proxy statement as Annex A.
The summary of the Bonus Plan set forth below is not intended to be a
complete description thereof, and such summary is qualified in its
entirety by the actual text of the Bonus Plan to which reference is
made.
Summary Description of the Bonus Plan
The purpose of the Bonus Plan is (i) to retain and motivate key
executives of the Company who have been designated as participants in
the Bonus Plan for a given performance period (generally, any period
used to determine whether the established goals have been attained,
which may be one or more fiscal years or portions thereof), by
providing them with the opportunity to earn bonus awards that are
based on the extent to which specified performance goals for such
performance period have been achieved or exceeded and (ii) to
structure bonus opportunities in a way that will qualify the awards
as "performance-based" for purposes of Section 162(m) so that the
Company will be entitled to a tax deduction on the payment of such
incentive awards to certain executive officers.
The Bonus Plan will be administered by the Bonus Plan Committee
(in such capacity, the "Bonus Plan Committee"), consisting of at
least two non-employee directors, each of whom is intended to qualify
as an "outside director" within the meaning of Section 162(m) of the
Code. The Bonus Plan Committee has broad administrative authority to,
among other things, designate participants, establish performance
goals and performance periods, determine the effect of termination of
employment and "change in control" transactions (as defined in the
Bonus Plan) prior to the payment of an award, and interpret and
administer the Bonus Plan. Ronald Shiftan and Howard Bernstein have
been appointed to serve on the Bonus Plan Committee.
Participants in the Bonus Plan for any given performance period
may include any key employee of the Company or a subsidiary who is an
executive officer of the Company and who is designated as a
participant for such period by the Bonus Plan Committee. The
participants in the Bonus Plan for any given period will be
designated by the Bonus Plan Committee, in its sole discretion,
before the end of the 90th day of each performance period or the date
on which 25% of such performance period has been completed (such
period, the "Applicable Period"). This determination may vary from
period to period, and will be based primarily on the Bonus Plan
Committee's judgment as to which executive officers are likely to be
subject to the limitations of Section 162(m) as of the end of such
performance period, and which are reasonably expected to have
compensation in excess of $1 million.
Within the Applicable Period, the Bonus Plan Committee will
specify the applicable performance criteria and targets to be used
under the Bonus Plan for such performance period. These performance
criteria may vary from participant to participant and will be based
on one or more of the following Company, subsidiary, operating unit,
or division financial performance measures: pre-tax or after-tax net
income; operating income; gross revenue; profit margin; stock price
or cash flows; or strategic business criteria consisting of one or
more objectives based upon meeting specified revenue, market
penetration, geographic business expansion goals, cost targets, and
goals relating to acquisitions or divestitures. These performance
criteria or goals may be (i) expressed on an absolute or relative
basis; (ii) based on internal targets; (iii) based on comparison(s)
with prior performance; (iv) based on comparison(s) to capital,
stockholders' equity, shares outstanding, assets or net assets;
and/or (v) based on comparison(s) to the performance of other
companies. For example, an income-based performance measure could be
expressed in a number of ways, such as net earnings per share, or
return on equity, and with reference to meeting or exceeding a
specific target, or with reference to growth above a specified level,
such as prior year's performance, or current or previous peer group
performance. The Bonus Plan provides that the achievement of such
goals must be substantially uncertain at the time they are
established, and awards are subject to the Bonus Plan Committee's
right to reduce the amount of any award payable as a result of such
performance as discussed below.
The target bonus opportunity for each participant may be
expressed as a dollar-denominated amount or by reference to a
formula, such as a percentage share of a bonus pool to be created
under the Bonus Plan, provided that, if a pool approach is used, the
total bonus opportunities represented by the shares designated for
the participants may not exceed 100% of the pool, and the Bonus Plan
Committee has the sole discretion to reduce (but not increase) the
actual bonuses awarded under the Bonus Plan. The actual bonus awarded
to any given participant at the end of a performance period will be
based on the extent to which the applicable financial performance
goals for such performance period are achieved, as determined by the
Bonus Plan Committee. The maximum bonus payable under the Bonus Plan
to any one individual in any one calendar year is $5 million.
The Board of Directors may at any time amend or terminate the
Bonus Plan, provided that (i) without the participant's written
consent, no such amendment or termination will adversely affect the
annual bonus rights (if any) of any already designated participant
for a given performance period once the participant designations and
performance goals for such performance period have been announced;
and (ii) the Board of Directors will be authorized to make any
amendments necessary to comply with applicable regulatory
requirements, including, without limitation, Section 162(m).
Amendments to the Bonus Plan will require stockholder approval only
if required under Section 162(m).
New Plan Benefits
The Bonus Plan Committee has designated Milton L. Cohen, the
Company's Chairman of the Board and Chief Executive Officer, and
Jeffrey Siegel, the Company's President, as participants in the Bonus
Plan for 2000. The Bonus Plan Committee has awarded each a bonus
opportunity which is a function of 3.5% of net income of the Company
for the year, before any charges for taxes and before any provision
for compensation payable to either participant for the year, stock
options or extraordinary items, all as determined and calculated by
the Corporation's auditors using the same principles, methods and
conventions which shall then be used in the preparation of the
Company's audited financial statements.
Federal Income Tax Consequences
The following is a brief description of the federal income tax
consequences generally arising with respect to awards that may be
granted under the Bonus Plan. This discussion is intended for the
information of stockholders considering how to vote at the annual
meeting and not as tax guidance to individuals who may participate in
the Bonus Plan.
Under present federal income tax law, participants will
generally realize ordinary income equal to the amount of the award
received under the Bonus Plan in the year of such receipt. The
Company will receive a deduction for the amount constituting ordinary
income to the participant, provided that the participant's total
compensation is below the Section 162(m) limit or the Bonus Plan
award satisfies the requirements of the performance-based exception
of Section 162(m) of the Code. It is the Company's intention that the
Bonus Plan be adopted and administered in a manner that preserves the
Company's deductibility of compensation under Section 162(m) of the
Code.
The Board recommends that stockholders vote FOR the approval of
the Board's adoption of the Bonus Plan, and signed proxies which are
returned will be so voted unless otherwise instructed on the proxy
card.
PROPOSAL NO. 4
APPROVAL OF THE COMPANY'S 2000 LONG-TERM INCENTIVE PLAN
The Board has adopted the 2000 Plan. The 2000 Plan is intended
to replace the Company's existing stock option plans. Adoption of
the 2000 Plan will enable us to continue to use stock options (and
other stock-based awards) as a means to attract, retain and motivate
our key personnel. The Board's adoption of the 2000 Plan and all
awards granted under the 2000 Plan are conditioned upon stockholder
approval. If the 2000 Plan is approved, no further options will be
granted under the existing stock option plans; however the terms of
the existing stock option plans will continue to govern options that
remain outstanding under those plans. As of April 27, 2000, a total
of 1,095,479 shares of Common Stock were subject to options
outstanding under the existing stock option plans.
Description of the Plan
The Plan is set forth as Annex B to this Proxy Statement, and
the description of the 2000 Plan contained herein is qualified in its
entirety by reference to Annex B.
The purpose of the 2000 Plan is to provide a means to attract,
retain, motivate and reward selected directors, officers, employees
and consultants of the Company and its parents and subsidiaries by
increasing their ownership interests in the Company. Awards under
the 2000 Plan may be granted by a committee of the Board (the
"Committee") and may include: (i) options to purchase shares of
Common Stock, including incentive stock options ("ISOs"),
non-qualified stock options or both; (ii) stock appreciation rights
("SARs"), whether in conjunction with the grant of stock options or
independent of such grant, or stock appreciation rights that are only
exercisable in the event of a change in control of the Company or
upon other events; (iii) restricted stock, consisting of shares that
are subject to forfeiture based on the failure to satisfy
employment-related restrictions; (iv) deferred stock, representing
the right to receive shares of stock in the future; (v) bonus stock
and awards in lieu of cash compensation; (vi) dividend equivalents,
consisting of a right to receive cash, other awards, or other
property equal in value to dividends paid with respect to a specified
number of shares of Common Stock, or other periodic payments; or
(vii) other awards not otherwise provided for, the value of which are
based in whole or in part upon the value of Common Stock. Awards
granted under the 2000 Plan are generally not assignable or
transferable except by the laws of descent and distribution.
The flexible terms of the 2000 Plan are intended to, among other
things, permit the Committee to impose performance conditions with
respect to any award, thereby requiring forfeiture of all or part of
any award if performance objectives are not met, or linking the time
of exercisability or settlement of an award to the achievement of
performance conditions. For awards intended to qualify as
"performance-based compensation" within the meaning of Section 162(m)
of the Internal Revenue Code (see below), such performance objectives
shall be based solely on (i) annual return on capital, (ii) annual
earnings or earnings per share, (iii) annual cash flow provided by
operations, (iv) changes in annual revenues, (v) stock price and/or
(v) strategic business criteria, consisting of one or more objectives
based on meeting specified revenue, market penetration, geographic
business expansion goals, cost targets, and goals relating to
acquisitions or divestitures.
The Committee, which will administer the 2000 Plan, will have
the authority, among other things, to: (i) select the directors,
officers and other employees and consultants entitled to receive
awards under the 2009 Plan; (ii) determine the form of awards, or
combinations thereof, and whether such awards are to operate on a
tandem basis or in conjunction with other awards; (iii) determine the
number of shares of Common Stock or units or rights covered by an
award; and (iv) determine the terms and conditions of any awards
granted under the 2000 Plan, including any restrictions or
limitations on transfer, any vesting schedules or the acceleration
thereof and any forfeiture provision or waiver thereof. The exercise
price at which shares of Common Stock may be purchased pursuant to a
grant of stock options under the 2000 Plan is to be determined by the
Committee at the time of grant in its discretion, which discretion
includes the ability to set an exercise price that is below the fair
market value of the shares of Common Stock covered by such grant at
the time of grant.
The number of shares of Common Stock that may be subject to
outstanding awards granted under the 2000 Plan may not exceed
1,750,000. In addition, no individual may receive awards in any one
calendar year relating to more than 500,000 shares of Common Stock.
The 2000 Plan may be amended, altered, suspended, discontinued,
or terminated by the Board without stockholder approval unless such
approval is required by law or regulation or under the rules of any
stock exchange or automated quotation system on which Common Stock is
then listed or quoted. Thus, stockholder approval will not
necessarily be required for amendments which might increase the cost
of the 2000 Plan or broaden eligibility. Stockholder approval will
not be deemed to be required under laws or regulations that condition
favorable tax treatment on such approval, although the Board may, in
its discretion, seek stockholder approval in any circumstances in
which it deems such approval advisable.
No awards have been granted under the 2000 Plan. Awards that
may in the future be received by or allocated to the chief executive
officer, the four other most highly compensated executive officers,
or to such other groups of persons, cannot be determined at this
time.
Federal Tax Consequences
The following is a brief description of the federal income tax
consequences generally arising with respect to awards that may be
granted under the 2000 Plan. This discussion is intended for the
information of stockholders considering how to vote at the special
meeting and not as tax guidance to individuals who participate in the
2000 Plan.
The grant of an option or SAR (including a stock-based award in
the nature of a purchase right) will create no tax consequences for
the participant or the Company. A participant will not recognize
taxable income upon exercising an ISO (except that the alternative
minimum tax may apply) and the Company will receive no deduction at
that time. Upon exercising an option other than an ISO (including a
stock-based award in the nature of a purchase right), the participant
must generally recognize ordinary income equal to the difference
between the exercise price and fair market value of the freely
transferable and nonforfeitable stock received. In each case, the
Company will generally be entitled to a deduction equal to the amount
recognized as ordinary income by the participant.
A participant's disposition of shares acquired upon the exercise
of an option, SAR or other stock-based award in the nature of a
purchase right generally will result in capital gain or loss measured
by the difference between the sale price and the participant's tax
basis in such shares (or the exercise price of the option in the case
of shares acquired by exercise of an ISO and held for the applicable
ISO holding periods). Generally, there will be no tax consequences
to the Company in connection with a disposition of shares acquired
upon exercise of an option or other award, except that the Company
will generally be entitled to a deduction (and the participant will
recognize ordinary income) if shares acquired upon exercise of an ISO
are disposed of before the applicable ISO holding periods have been
satisfied.
With respect to awards granted under the 2000 Plan that may be
settled either in cash or in stock or other property that is either
not restricted as to transferability or not subject to a substantial
risk of forfeiture, the participant must generally recognize ordinary
income equal to the cash or the fair market value of stock or other
property received. The Company will generally be entitled to a
deduction for the same amount. With respect to awards involving
stock or other property that is restricted as to transferability and
subject to a substantial risk of forfeiture, the participant must
generally recognize ordinary income equal to the fair market value of
the shares or other property received at the first time the shares or
other property become transferable or not subject to a substantial
risk of forfeiture, whichever occurs earlier. The Company will
generally be entitled to a deduction in an amount equal to the
ordinary income recognized by the participant. A participant may
elect to be taxed at the time of receipt of shares or other property
rather than upon lapse of restrictions on transferability or
substantial risk of forfeiture, but if the participant subsequently
forfeits such shares or property he will not be entitled to any tax
deduction, including a capital loss, for the value of the shares or
property on which he previously paid tax. Such election must be made
and filed with the Internal Revenue Service within thirty days of the
receipt of the shares or other property.
Section 162(m) of the Internal Revenue Code generally disallows
a public company's tax deduction for compensation to the chief
executive officer and the four other most highly compensated
executive officers in excess of $1 million. Compensation that
qualifies as "performance-based compensation" is excluded from the $1
million deductibility cap, and therefore remains fully deductible by
the company that pays it. Assuming the 2000 Plan is approved by
stockholders at the Annual Meeting, the Company believes that options
granted with an exercise price at least equal to 100% of the fair
market value of the underlying Common Stock at the date of grant, and
other awards the settlement of which is conditioned upon achievement
of performance goals (based on performance criteria described above),
will qualify as such "performance-based compensation," although other
awards under the 2000 Plan may not so qualify.
The Board of Directors recommends that stockholders vote FOR the
approval of the Board's adoption of the 2000 Plan, and signed proxies
which are returned will be so voted unless otherwise instructed on
the proxy card.
STOCKHOLDER PROPOSALS
A stockholder proposal intended to be presented at the Company's
2001 Annual Meeting of Stockholders must be received by the Company
at its principal executive offices on or before January 6, 2001, to
be included in the Company's proxy statement and proxy relating to
that meeting.
OTHER MATTERS
The Management of the Company does not know of any matters
other than those stated in this Proxy Statement which are to be
presented for action at the Meeting. If any other matters should
properly come before the Meeting, it is intended that proxies in the
accompanying form will be voted on any such other matters in
accordance with the judgement of the persons voting such proxies.
Discretionary authority to vote on such matters is conferred by such
proxies upon the persons voting them.
Financial statements for the Company are included in the
Annual Report of the Company for the fiscal year ended December 31,
1999 which accompanies this Proxy Statement.
Upon the written request of any person who on the record date
was a record owner of Common Stock of the Company, or who represents
in good faith that he or she was on such date a beneficial owner of
such Common Stock, the Company will send to such person, without
charge, a copy of its Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, including financial statements and
schedules, as filed with the Securities and Exchange Commission.
Requests for this report should be directed to Robert McNally, Vice
President, Treasurer and CFO, Lifetime Hoan Corporation, One Merrick
Avenue, Westbury, New York 11590.
By Order of the Board of Directors,
Craig Phillips, Secretary
Dated: April 28, 2000
ANNEX A
LIFETIME HOAN CORPORATION
2000 INCENTIVE BONUS COMPENSATION PLAN
1. Purpose. The purpose of this 2000 Incentive Bonus Compensation
Plan (the "Plan") of Lifetime Hoan Corporation (the "Company") is
(i) to retain and motivate key senior executives of the Company who
have been designated as Participants in the Plan for a given
Performance Period, by providing them with the opportunity to earn
bonus awards that are based on the extent to which specified
performance goals for such Performance Period have been achieved or
exceeded; and (ii) to structure such bonus opportunities in a way
that will qualify the awards made as "performance-based" for purposes
of Section 162(m) of the Internal Revenue Code of 1986, as amended
(or any successor section) so that the Company will be entitled to a
tax deduction on the payment of such incentive awards to such
employees.
2. Definitions. As used in the Plan, the following terms shall the
meanings set forth below:
(a) "Annual Base Salary" shall mean the amount of base salary
paid to a Participant for a given year, adjusted to include the
amount of any base salary deferrals for such year, unless the Plan
Committee otherwise specifies at the time that the Participant's
award opportunity for a given Performance Period is established.
(b) "Applicable Period" shall mean, with respect to any
Performance Period, a period commencing on or before the first day of
such Performance Period and ending no later than the earlier of (i)
the 90th day of such Performance Period, or (ii) the date on which
25% of such Performance Period has been completed. Any action
required under the Plan to be taken with the period specified in the
preceding sentence may be taken at a later date if, but only if, the
regulations under Section 162(m) of the Code are hereafter amended,
or interpreted by the Internal Revenue Service, to permit such later
date, in which case the term "Applicable Period" shall be deemed
amended accordingly.
(c) "Board" shall mean the Board of Directors of the Company as
constituted from time to time.
(d) "Cause" shall mean "cause" as defined in any employment
agreement then in effect between the Participant and the Company or
if not defined therein or, if there shall be no such agreement,
where the Participant: (i) commits any act of fraud, willful
misconduct or dishonesty in connection with his employment or which
injures the Company or its direct or indirect subsidiaries; (ii)
breaches any other material provision of any agreement between the
Participant and the Company or a subsidiary of the Company relating
to the Participant's employment or breaches any fiduciary duty to the
Company or its direct or indirect subsidiaries; (iii) fails, refuses
or neglects to timely perform any material duty or obligation
relating to his position; (iv) commits a material violation of any
law, rule, regulation or by-law of any governmental authority (state,
federal or foreign), any securities exchange or association or other
regulatory or self-regulatory body or agency applicable to the
Company or its direct or indirect subsidiaries or any general policy
or directive of the Company or its direct or indirect subsidiaries
communicated in writing to the Participant; or (v) is charged with a
crime involving moral turpitude, dishonesty, fraud or unethical
business conduct, or a felony.
(e) "Change of Control" shall mean:
(i) the date of the acquisition by any "person"
(within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act),
excluding the Company or any of its subsidiaries or
affiliates or any employee benefit plan sponsored by any of
the foregoing, of beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of 20% or more of
either (x) the then outstanding shares of common stock of
the Company or (y) the then outstanding voting securities
entitled to vote generally in the election of directors; or
(ii) the date the individuals who constitute the
Board as of the effective date of the Plan (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the members of the Board, provided that any
individual becoming a director subsequent to the effective
date of this Agreement whose election, or nomination for
election by the Company's stockholders, was approved by a
vote of at least a majority of the directors then
comprising the Incumbent Board (other than any individual
whose nomination for election to Board membership was not
endorsed by the Company's management prior to, or at the
time of, such individual's initial nomination for election)
shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or
(iii) the consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of
all or a substantial portion of the Company's assets, a
reverse stock split of outstanding voting securities, the
issuance of shares of stock of the Company in connection
with the acquisition of the stock or assets of another
entity, provided, however, that a Change of Control shall
not occur under this clause (iii) if consummation of the
transaction would result in at least 80% of the total
voting power represented by the voting securities of the
Company (or, if not the Company, the entity that succeeds
to all or substantially all of the Company's business)
outstanding immediately after such transaction being
beneficially owned (within the meaning of Rule 13d-3
promulgated pursuant to the Exchange Act) by at least 75%
of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to
other such continuing holders not substantially altered in
the transaction.
(f) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(g) "Committee" or "Plan Committee" shall mean the committee
for the board consisting solely of two or more non-employee directors
(each of whom is intended to qualify as an "outside director" within
the meaning of Section 162(m) of the Code) designated by the Board as
the committee responsible for administering and interpreting the
Plan.
(h) "Company" shall mean Lifetime Hoan Corporation, a
corporation organized under the laws of the State of Delaware, and
any successor thereto.
(i) "Disability" shall mean "disability" as defined in any
employment agreement then in effect between the Participant and the
Company or if not defined therein or if there shall be no such
agreement, as defined in the Company's long-term disability plan as
in effect from time to time, or if there shall be no plan or if not
defined therein, the Participant's becoming physically or mentally
incapacitated and consequent inability for a period of 120 days in
any twelve consecutive month period to perform his duties to the
Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(k) "Executive Officer" shall have the meaning set forth in
Rule 3b-7 promulgated under the Securities Exchange Act of 1934, in
each case as amended from time to time.
(l) "Individual Award Opportunity" shall mean the performance-
based award opportunity for a given Participant for a given
Performance Period as specified by the Plan Committee within the
Applicable Period, which may be expressed in dollars or on a formula
basis that is consistent with the provisions of the Plan.
(m) "Negative Discretion" shall mean the discretion authorized
by the Plan to be applied by the Committee to eliminate, or reduce
the size of, a bonus award otherwise payable to a Participant for a
given Performance Period, provided that the exercise of such
discretion would not cause the award to fail to qualify as
"performance-based compensation" under Section 162(m) of the Code.
By way of example and not by way of limitation, in no event shall any
discretionary authority granted to the Committee by the Plan
including, but not limited to, Negative Discretion, be used (i) to
provide for an award under the Plan in excess of the amount payable
based on actual performance versus the applicable performance goals
for the Performance Period in question, or in excess of the maximum
individual award limit specified in Section 6(b) below, or (ii) to
increase the amount otherwise payable to any other Participant.
(n) "Participant" shall mean, for any given Performance Period
with respect to which the Plan is in effect, each key employee of the
Company (including any subsidiary, operating unit or division) who is
an Executive Officer of the Company and who is designated as a
Participant in the Plan for such Performance Period by the Committee
pursuant to Section 4 below.
(o) "Performance Period" shall mean any period commencing on
or after January 1, 2000 for which performance goals are set under
Section 5 and during which performance shall be measured to determine
whether such goals have been met for purposes of determining whether
a Participant is entitled to payment of a bonus under the Plan. A
Performance Period may be coincident with one or more fiscal years of
the Company, or a portion thereof.
(p) "Plan" or "Section 162(m) Plan" shall mean the Lifetime
Hoan Corporation Section 162(m) Bonus Plan as set forth in this
document, and as amended from time to time.
(q) "Retirement" shall mean any termination of employment with
the Company and its subsidiaries (other than a termination by the
Company (or any of its subsidiaries) for Cause) that (i) qualifies as
a "retirement" event under the terms of any tax-qualified retirement
plan maintained by the Company in which the Participant participates,
and (ii) is approved in writing as a "Retirement" event for purposes
of this Plan by (or pursuant to procedures established by) the Plan
Committee.
3. Administration.
(a) General. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law (including, but
not limited to, Section 162(m) of the Code), and in addition to any
other express powers and authorizations conferred on the Committee by
the Plan, the Committee shall have the full power and authority,
after taking into account, in its sole and absolute discretion, the
recommendations of the Company's senior management:
(i) to designate (within the
Applicable Period) the Participants in the Plan and
the individual award opportunities and/or, if
applicable, bonus pool award opportunities for such
Performance Period;
(ii) to designate (within the
Applicable Period) and thereafter administer the
performance goals and other award terms and conditions
that are to apply under the Plan for such Performance
Period;
(iii) to determine and certify
the bonus amounts earned for any given Performance
Period, based on actual performance versus the
performance goals for such Performance Period, after
making any permitted Negative Discretion adjustments;
(iv) to decide (within the
Applicable Period) any issues that are not resolved
under the express terms of the Plan relating to the
impact on the bonus awards for such Performance Period
of (A) a termination of employment (due to death,
Disability, Retirement, voluntary termination (other
than Retirement), termination by the Company other
than for Cause, or termination by the Company for
Cause), provided, in each case, that no payment shall
be made for any given Performance Period prior to the
time that the Plan Committee certifies, pursuant to
Section 6(c)(i) below, that the applicable performance
goals for such Performance Period have been met or (B)
a Change of Control;
(v) to decide whether, under what
circumstances and subject to what terms bonus payouts
are to be paid on a deferred basis, including
automatic deferrals at the Committee's election as
well as elective deferrals at the election of
Participants;
(vi) to adopt, revise, suspend,
waive or repeal, when and as appropriate, in its sole
and absolute discretion, such administrative rules,
guidelines and procedures for the Plan as it deems
necessary or advisable to implement the terms and
conditions of the Plan;
(vii) to interpret and administer
the terms and provisions of the Plan and any award
issued under the Plan (including reconciling any
inconsistencies, correcting any defaults and
addressing any omissions in the Plan or any related
instrument or agreement); and
(viii) to otherwise supervise the
administration of the Plan.
It is intended that all amounts payable to Participants under the
Plan who are "covered employees" within the meaning of Treas. Reg.
Sec. 1.162-27(c)(2) (as amended from time to time) shall constitute
"qualified performance-based compensation" within the meaning of
Section 162(m) of the Code and Treas. Reg. Sec. 1.162-27(e) (as
amended from time to time), and, to the maximum extent possible, the
Plan and the terms of any awards under the Plan shall be so
interpreted and construed.
(b) Binding Nature of Committee Decisions. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations and other decisions made under or with respect to the
Plan or any award under the Plan shall be within the sole and
absolute discretion of the Committee, and shall be final, conclusive
and binding on all persons, including the Company, any Participant,
and any award beneficiary or other person having, or claiming, any
rights under the Plan.
(c) Other. No member of the Committee shall be liable for any
action or determination (including, but limited to, any decision not
to act) made in good faith with respect to the Plan or any award
under the Plan. If a Committee member intended to qualify as an
"outside director" under Section 162(m) of the Code does not in fact
so qualify, the mere fact of such non-qualification shall not
invalidate any award or other action made by the Committee under the
Plan which otherwise was validly made under the Plan.
4. Plan Participation.
(a) Participant Designations By Plan Committee. For any given
Performance Period, the Plan Committee, in its sole and absolute
discretion, shall, within the Applicable Period, designate those key
employees of the Company (including its subsidiaries, operating units
and divisions) who shall be Participants in the Plan for such
Performance Period. Such Participant designations shall be made by
the Plan Committee, in its sole and absolute discretion, based
primarily on its determination as to which key employees:
(i) are likely to be Executive
Officers of the Company as of the last day of the
fiscal year for which the Company would be entitled to
a Federal tax deduction for payment of the award in
respect of such Performance Period;
(ii) are reasonably expected by
the Plan Committee to have individual compensation for
such fiscal year that may be in excess of $1 million,
excluding any compensation that is grandfathered for
Section 162(m) purposes or is otherwise excluded for
Section 162(m) purposes based on an existing or other
"performance-based" plan other than this Plan; and
(iii) are reasonably expected by
the Plan Committee to be "covered employees" for such
fiscal year for Section 162(m) purposes,
and such other consideration as the Committee deems appropriate, in
its sole and absolute discretion.
(b) Impact Of Plan Participation. An individual who is a
designated Participant in the Section 162(m) Plan for any given
Performance Period shall not also participate in the Company's
general bonus plans for such Performance Period, if such
participation would cause any award hereunder to fail to qualify as
"performance-based" under Section 162(m).
5. Performance Goals.
(a) Setting Of Performance Goals. For a given Performance
Period, the Plan Committee shall, within the Applicable Period, set
one or more objective performance goals for each Participant and/or
each group of Participants and/or each bonus pool (if any). Such
goals shall be based exclusively on one or more of the following
corporate-wide or subsidiary, division or operating unit financial
measures:
(1) pre-tax or after-tax net income,
(2) operating income,
(3) gross revenue,
(4) profit margin,
(5) stock price,
(6) cash flow(s),
(7) strategic business criteria, consisting of
one or more objectives based on meeting specified
revenue, market penetration, geographic business
expansion goals, cost targets, and goals relating to
acquisitions or divestitures,
or any combination thereof (in each case before or after such
objective income and expense allocations or adjustments as the
Committee may specify within the Applicable Period). Each such goal
may be expressed on an absolute and/or relative basis, may be based
on or otherwise employ comparisons based on current internal targets,
the past performance of the Company (including the performance of one
or more subsidiaries, divisions and/or operating units) and/or the
past or current performance of other companies, and in the case of
earnings-based measures, may use or employ comparisons relating to
capital (including, but limited to, the cost of capital),
shareholders' equity and/or shares outstanding, or to assets or net
assets. In all cases, the performance goals shall be such that they
satisfy any applicable requirements under Treas. Reg. Sec. 1.162-
27(e)(2) (as amended from time to time) that the achievement of such
goals be "substantially uncertain" at the time that they are
established, and that the award opportunity be defined in such a way
that a third party with knowledge of the relevant facts could
determine whether and to what extent the performance goal has been
met, and, subject to the Plan Committee's right to apply Negative
Discretion, the amount of the award payable as a result of such
performance.
(b) Impact Of Extraordinary Items Or Changes In Accounting.
The measures used in setting performance goals set under the Plan for
any given Performance Period shall be determined in accordance with
GAAP and a manner consistent with the methods used in the Company's
audited financial statements, without regard to (i) extraordinary
items as determined by the Company's independent public accountants
in accordance with GAAP, (ii) changes in accounting, unless, in each
case, the Plan Committee decides otherwise within the Applicable
Period or (iii) non-recurring acquisition expenses and restructuring
charges.
6. Bonus Pools, Award Opportunities And Awards.
(a) Setting Of Individual Award Opportunities. At the time
that annual performance goals are set for Participants for a given
Performance Period (within the Applicable Period), the Plan Committee
shall also establish each Individual Award Opportunity for such
Performance Period, which shall be based on the achievement of stated
target performance goals, and may be stated in dollars or on a
formula basis (including, but not limited to, a designated share of a
bonus pool or a multiple of Annual Base Salary), provided:
(i) that the designated shares of
any bonus pool shall not exceed 100% of such pool; and
(ii) that the Plan Committee, in
all cases, shall have the sole and absolute
discretion, based on such factors as it deems
appropriate, to apply Negative Discretion to reduce
(but not increase) the actual bonus awards that would
otherwise actually be payable to any Participant on
the basis of the achievement of the applicable
performance goals.
(b) Maximum Individual Bonus Award. Notwithstanding any other
provision of this Plan, the maximum bonus payable under the Plan to
any one individual in any one calendar year shall be $5 million.
(c) Bonus Payments. Subject to the following, bonus awards
determined under the Plan for given Performance Period shall be paid
to Participants in cash, as soon as practicable following the end of
the Performance Period to which they apply, provided:
(i) that no such payment shall be
made unless and until the Plan Committee, based on the
Company's audited financial results for such
Performance Period (as prepared and reviewed by the
Company's independent public accountants), has
certified (in the manner prescribed under applicable
regulations) the extent to which the applicable
performance goals for such Performance Period have
been satisfied, and has made its decisions regarding
the extent of any Negative Discretion adjustment of
awards (to the extent permitted under the Plan);
(ii) that the Plan Committee may
specify that a portion of the actual bonus award for
any given Performance Period shall be paid on a
deferred basis, based on such award payment rules as
the Plan Committee may establish and announce for such
Performance Period;
(iii) that the Plan Committee may
require (if established and announced within the
Applicable Period), as a condition of bonus
eligibility (and subject to such exceptions as the
Committee may specify within the Applicable Period)
that Participants for such Performance Period must
still be employed as of end of such Performance Period
and/or as of the later date that the actual bonus
awards for such Performance Period are announced, in
order to be eligible for an award for such Performance
Period; and
(iv) that, within the Applicable
Period and subject to Section 6(c)(i) above, the
Committee may adopt such forfeiture, pro-ration or
other rules as it deems appropriate, in its sole and
absolute discretion, regarding the impact on bonus
award rights of a Participant's death, Disability,
Retirement, voluntary termination (other than
Retirement), termination by the Company other than for
Cause, or termination by the Company for Cause.
7. General Provisions.
(a) Plan Amendment Or Termination. The Board may at any time
amend or terminate the Plan, provided that (i) without the
Participant's written consent, no such amendment or termination shall
adversely affect the bonus rights (if any) of any already designated
Participant for a given Performance Period once the Participant
designations and performance goals for such Performance Period have
been announced, (ii) the Board shall be authorized to make any
amendments necessary to comply with applicable regulatory
requirements (including, without limitation, Section 162(m) of the
Code), and (iii) the Board shall submit any Plan amendment to the
Company's stockholders for their approval if and to the extent such
approval is required under Section 162(m) of the Code.
(b) Applicable Law. All issues arising under the Plan shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, applied without regard to conflict of law principles.
(c) Tax Withholding. The Company (and its subsidiaries) shall
have right to make such provisions and take such action as it may
deem necessary or appropriate for the withholding of any and all
Federal, state and local taxes that the Company (or any of its
subsidiaries) may be required to withhold.
(d) No Employment Right Conferred. Participation in the Plan
shall not confer on any Participant the right to remain employed by
the Company or any of its subsidiaries, and the Company and its
subsidiaries specifically reserve the right to terminate any
Participant's employment at any time with or without cause or notice.
(e) Impact of Plan Awards on Other Plans. Plan awards shall
not be treated as compensation for purposes of any other compensation
or benefit plan, program or arrangement of the Company or any
subsidiary, unless and except to the extent that the Board or its
Compensation Committee so determines in writing. Neither the
adoption of the Plan nor the submission of the Plan to the Company's
stockholders for their approval shall be construed as limiting the
power of the Board or the Plan Committee to adopt such other
incentive arrangements as it may otherwise deem appropriate.
(f) Beneficiary Designations. Each Participant shall designate
in a written form filed with the Committee the beneficiary (or
beneficiaries) to receive the amounts (if any) payable under the Plan
in the event of the Participant's death prior to the bonus payment
date for a given Performance Period. Any such beneficiary
designation may be changed by the Participant at any time without the
consent of the beneficiary (unless otherwise required by law) by
filing a new written beneficiary designation with the Committee. A
beneficiary designation shall be effective only if the Company is in
receipt of the designation prior to the Participant's death. If no
effective beneficiary designation is made, the beneficiary of any
amounts die shall be the Participant's estate.
(g) Costs & Expenses. All award and administrative costs and
expenses of the Plan shall be borne by the Company.
(h) Non-Transferability of Rights. Except as and to the extent
required by law, a Participant's rights under the Plan may not be
assigned or transferred in whole or in part either directly or by
operation of law or otherwise (except, pursuant to Section 7(f)
above, in the event of the Participant's death), including, but not
limited to, by way of execution, levy, garnishment, attachment,
pledge, bankruptcy or in any other manner, and no such right of the
Participant shall be subject to any obligation or liability of the
Participant other than any obligation or liability owed by the
Participant to the Company (or any of its subsidiaries).
8. Effective Date; Prior Plan.
The Plan shall be effective for Performance Periods commencing
on and after January 1, 2000 and shall remain effective until
terminated by the Board; provided, however, that the continued
effectiveness of the Plan shall be subject to the approval of the
Company's stockholders at such times and in such manner as may be
required pursuant to Section 162(m). The Plan shall replace the
Company's 1996 Incentive Bonus Compensation Plan (the "1996 Plan")
and no further awards shall be made thereunder.
ANNEX B
LIFETIME HOAN CORPORATION
2000 LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of this 2000 Long-Term Incentive Plan (the
"Plan") of Lifetime Hoan, a Delaware corporation (the "Company"), is
to advance the interests of the Company and its stockholders by
providing a means to attract, retain, motivate and reward directors,
officers, employees and consultants of and service providers to the
Company and its affiliates and to enable such persons to acquire or
increase a proprietary interest in the Company, thereby promoting a
closer identity of interests between such persons and the Company's
stockholders.
2. Definitions. The definitions of awards under the Plan,
including Options, SARs (including Limited SARs), Restricted Stock,
Deferred Stock, Stock granted as a bonus or in lieu of other awards,
Dividend Equivalents and Other Stock-Based Awards as are set forth in
Section 6 of the Plan. Such awards, together with any other right or
interest granted to a Participant under the Plan, are termed
"Awards." For purposes of the Plan, the following additional terms
shall be defined as set forth below:
(a) "Award Agreement" means any written agreement, contract, notice
or other instrument or document evidencing an Award.
(b) "Beneficiary" shall mean the person, persons, trust or trusts
which have been designated by a Participant in his or her most recent
written beneficiary designation filed with the Committee to receive
the benefits specified under the Plan upon such Participant?s death
or, if there is no designated Beneficiary or surviving designated
Beneficiary, then the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to receive such
benefits.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be
deemed to include regulations thereunder and successor provisions and
regulations thereto.
(e) "Committee" means the committee appointed by the Board to
administer the Plan, or if no committee is appointed, the Board.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the
Exchange Act shall be deemed to include rules thereunder and
successor provisions and rules thereto.
(g) "Fair Market Value" means, with respect to Stock, Awards, or
other property, the fair market value of such Stock, Awards, or other
property determined by such methods or procedures as shall be
established from time to time by the Committee, provided, however,
that if the Stock is listed on a national securities exchange or
quoted in an interdealer quotation system, the Fair Market Value of
such Stock on a given date shall be based upon the last sales price
at the end of regular trading or, if unavailable, the average of the
closing bid and asked prices per share of the Stock at the end of
regular trading on such date (or, if there was no trading or
quotation in the Stock on such date, on the next preceding date on
which there was trading or quotation) as provided by one of such
organizations.
(h) "ISO" means any Option that is designated as an incentive stock
option within the meaning of Section 422 of the Code, and qualifies
as such.
(i) "Parent" means any "person" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) that controls the Company,
either directly or indirectly through one or more intermediaries.
(j) "Participant" means a person who, at a time when eligible under
Section 5 hereof, has been granted an Award under the Plan.
(k) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
and applicable to the Plan and Participants, promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange
Act.
(l) "Stock" means the Company?s Common Stock, and such other
securities as may be substituted for Stock pursuant to Section 4.
(m) "Subsidiary" means each entity that is controlled by the Company
or a Parent, either directly or indirectly through one or more
intermediaries
3. Administration.
(a) Authority of the Committee. Except as otherwise provided below,
the Plan shall be administered by the Committee. The Committee shall
have full and final authority to take the following actions, in each
case subject to and consistent with the provisions of the Plan:
(i) to select persons to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each
such person;
(iii) to determine the number of Awards to be granted, the number
of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not
limited to, any exercise price, grant price or purchase price, any
restriction or condition, any schedule for lapse of restrictions or
conditions relating to transferability or forfeiture, exercisability
or settlement of an Award, and waivers or accelerations thereof,
performance conditions relating to an Award (including performance
conditions relating to Awards not intended to be governed by Section
7(f) and waivers and modifications thereof), based in each case on
such considerations as the Committee shall determine), and all other
matters to be determined in connection with an Award;
(iv) to determine whether, to what extent and under what
circumstances an Award may be settled, or the exercise price of an
Award may be paid, in cash, Stock, other Awards, or other property,
or an Award may be canceled, forfeited, or surrendered;
(v) to determine whether, to what extent and under what
circumstances cash, Stock, other Awards or other property payable
with respect to an Award will be deferred either automatically, at
the election of the Committee or at the election of the Participant;
(vi) to determine the restrictions, if any, to which Stock received
upon exercise or settlement of an Award shall be subject (including
lock-ups and other transfer restrictions), may condition the delivery
of such Stock upon the execution by the Participant of any agreement
providing for such restrictions;
(vii) to prescribe the form of each Award Agreement, which need
not be identical for each Participant;
(viii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and
any Award, rules and regulations, Award Agreement or other instrument
hereunder; and
(x) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board shall perform
the functions of the Committee for purposes of granting awards to
directors who serve on the Committee, and the Board may perform any
function of the Committee under the Plan for any other purpose,
including without limitation for the purpose of ensuring that
transactions under the Plan by Participants who are then subject to
Section 16 of the Exchange Act in respect of the Company are exempt
under Rule 16b-3. In any case in which the Board is performing a
function of the Committee under the Plan, each reference to the
Committee herein shall be deemed to refer to the Board, except where
the context otherwise requires.
(b) Manner of Exercise of Committee Authority. Any action of the
Committee with respect to the Plan shall be final, conclusive and
binding on all persons, including the Company, its Parent and
Subsidiaries, Participants, any person claiming any rights under the
Plan from or through any Participant and stockholders, except to the
extent the Committee may subsequently modify, or take further action
not consistent with, its prior action. If not specified in the Plan,
the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may
thereafter be modified by the Committee (subject to Section 8(e)).
The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as
limiting any power or authority of the Committee. Except as provided
under Section 7(f), the Committee may delegate to officers or
managers of the Company, its Parent or Subsidiaries the authority,
subject to such terms as the Committee shall determine, to perform
such functions as the Committee may determine, to the extent
permitted under applicable law.
(c) Limitation of Liability; Indemnification. Each member of the
Committee shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him by any officer or other
employee of the Company , its Parent or Subsidiaries, the Company?s
independent certified public accountants or any executive
compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan. No
member of the Committee, or any officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any
action, determination or interpretation taken or made in good faith
with respect to the Plan, and all members of the Committee and any
officer or employee of the Company acting on its behalf shall, to the
extent permitted by law, be fully indemnified and protected by the
Company with respect to any such action, determination or
interpretation.
4. Stock Subject to Plan.
(a) Amount of Stock Reserved. The total number of shares of Stock
that may be subject to outstanding Awards shall be 1,750,000. In no
event shall the number of shares of Stock delivered upon the exercise
of ISOs exceed 1,750,000; provided, however, that shares subject to
ISOs shall not be deemed delivered if such ISOs are forfeited, expire
or otherwise terminate without delivery of shares to the Participant.
If an Award valued by reference to Stock may only be settled in cash,
the number of shares to which such Award relates shall be deemed to
be Stock subject to such Award for purposes of this Section 4(a).
Any shares of Stock delivered pursuant to an Award may consist, in
whole or in part, of authorized and unissued shares, treasury shares
or shares acquired in the market on a Participant?s behalf.
(b) Annual Per-Participant Limitations. During any calendar year,
no Participant may be granted Awards that may be settled by delivery
of more than 500,000 shares of Stock, subject to adjustment as
provided in Section 4(c). In addition, with respect to Awards that
may be settled in cash (in whole or in part), no Participant may be
paid during any calendar year cash amounts relating to such Awards
that exceed the greater of the Fair Market Value of the number of
shares of Stock set forth in the preceding sentence at the date of
grant or the date of settlement of the Award. This provision sets
forth two separate limitations, so that Awards that may be settled
solely by delivery of Stock will not operate to reduce the amount of
cash-only Awards, and vice versa; nevertheless, Awards that may be
settled in Stock or cash must not exceed either limitation.
(c) Adjustments. In the event that the Committee shall determine
that any recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase or exchange
of Stock or other securities, Stock dividend or other special, large
and non-recurring dividend or distribution (whether in the form of
cash, securities or other property), liquidation, dissolution, or
other similar corporate transaction or event, affects the Stock such
that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any
or all of (i) the number and kind of shares of Stock reserved and
available for Awards under Sections 4(a) and 4(b), including shares
reserved for ISOs, (ii) the number and kind of shares of outstanding
Restricted Stock or other outstanding Awards in connection with which
shares have been issued, (iii) the number and kind of shares that may
be issued in respect of other outstanding Awards and (iv) the
exercise price, grant price or purchase price relating to any Award.
(or, if deemed appropriate, the Committee may make provision for a
cash payment with respect to any outstanding Award). In addition,
the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including,
without limitation, cancellation of unexercised or outstanding
Awards, or substitution of Awards using stock of a successor or other
entity) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence)
affecting the Company, its Parent or any Subsidiary or the financial
statements of the Company, its Parent or any Subsidiary, or in
response to changes in applicable laws, regulations, or accounting
principles.
5. Eligibility. Directors, officers and employees of the Company
or its Parent or any Subsidiary, and persons who provide consulting
or other services to the Company, its Parent or any Subsidiary deemed
by the Committee to be of substantial value to the Company or its
Parent and Subsidiaries, are eligible to be granted Awards under the
Plan. In addition, persons who have been offered employment by, or
agreed to become a director of, the Company, its Parent or any
Subsidiary, and persons employed by an entity that the Committee
reasonably expects to become a Subsidiary of the Company, are
eligible to be granted an Award under the Plan.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on
any Award or the exercise thereof such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the
Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment or service of the
Participant. Except as expressly provided by the Committee
(including for purposes of complying with the requirements of the
Delaware General Corporation Law relating to lawful consideration for
the issuance of shares), no consideration other than services will be
required as consideration for the grant (but not the exercise) of any
Award.
(b) Options. The Committee is authorized to grant options to
purchase Stock on the following terms and conditions ("Options"):
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed
to be paid, the form of such payment, including, without limitation,
cash, Stock, other Awards or awards granted under other Company plans
or other property (including notes or other contractual obligations
of Participants to make payment on a deferred basis, such as through
"cashless exercise" arrangements, to the extent permitted by
applicable law), and the methods by which Stock will be delivered or
deemed to be delivered to Participants.
(iii) Termination of Employment. The Committee shall determine
the period, if any, during which Options shall be exercisable
following a Participant?s termination of his employment relationship
with the Company, its Parent or any Subsidiary. For this purpose,
unless otherwise determined by the Committee, any sale of a
Subsidiary of the Company pursuant to which it ceases to be a
Subsidiary of the Company shall be deemed to be a termination of
employment by any Participant employed by such Subsidiary. Unless
otherwise determined by the Committee, (x) during any period that an
Option is exercisable following termination of employment, it shall
be exercisable only to the extent it was exercisable upon such
termination of employment, and (y) if such termination of employment
is for cause, as determined in the discretion of the Committee, all
Options held by the Participant shall immediately terminate.
(iv) Sale of the Company. Upon the consummation of any transaction
whereby the Company (or any successor to the Company or substantially
all of its business) becomes a wholly-owned Subsidiary of any
corporation, all Options outstanding under the Plan shall terminate,
unless such other corporation shall continue or assume the Plan as it
relates to Options then outstanding (in which case such other
corporation shall be treated as the Company for all purposes
hereunder, and, pursuant to Section 4(c), the Committee of such other
corporation shall make appropriate adjustment in the number and kind
of shares of Stock subject thereto and the exercise price per share
thereof to reflect consummation of such transaction). If the Plan is
not to be so assumed, the Company shall notify the Participant of
consummation of such transaction at least ten days in advance
thereof.
(v) Options Providing Favorable Tax Treatment. The Committee may
grant Options that may afford a Participant with favorable treatment
under the tax laws applicable to such Participant, including, but not
limited to ISOs. If Stock acquired by exercise of an ISO is sold or
otherwise disposed of within two years after the date of grant of the
ISO or within one year after the transfer of such Stock to the
Participant, the holder of the Stock immediately prior to the
disposition shall promptly notify the Company in writing of the date
and terms of the disposition and shall provide such other information
regarding the disposition as the Company may reasonably require in
order to secure any deduction then available against the Company?s or
any other corporation?s taxable income. The Company may impose such
procedures as it determines may be necessary to ensure that such
notification is made. Each Option granted as an ISO shall be
designated as such in the Award Agreement relating to such Option.
(c) Stock Appreciation Rights. The Committee is authorized to grant
stock appreciation rights on the following terms and conditions
("SARs"):
(i) Right to Payment. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of Stock on the date
of exercise (or, if the Committee shall so determine in the case of
any such right other than one related to an ISO, the Fair Market
Value of one share at any time during a specified period before or
after the date of exercise), over (B) the grant price of the SAR as
determined by the Committee as of the date of grant of the SAR,
which, except as provided in Section 7(a), shall be not less than the
Fair Market Value of one share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of
exercise, method of settlement, form of consideration payable in
settlement, method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem
with any other Award, and any other terms and conditions of any SAR.
Limited SARs that may only be exercised upon the occurrence of a
change in control of the Company may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may determine.
Limited SARs may be either freestanding or in tandem with other
Awards.
(d) Restricted Stock. The Committee is authorized to grant Stock
that is subject to restrictions based on continued employment on the
following terms and conditions ("Restricted Stock"):
(i) Grant and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any,
as the Committee may impose, which restrictions may lapse separately
or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. Except
to the extent restricted under the terms of the Plan and any Award
Agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder
including, without limitation, the right to vote Restricted Stock or
the right to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under
criteria established by the Committee) during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company;
provided, however, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating
to Restricted Stock will be waived in whole or in part in the event
of termination resulting from specified causes.
(iii) Certificates for Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Stock are
registered in the name of the Participant, such certificates may bear
an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, the Company may
retain physical possession of the certificate, in which case the
Participant shall be required to have delivered a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends. Dividends paid on Restricted Stock shall be either
paid at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of
such dividends, or the payment of such dividends shall be deferred
and/or the amount or value thereof automatically reinvested in
additional Restricted Stock, other Awards, or other investment
vehicles, as the Committee shall determine or permit the Participant
to elect. Stock distributed in connection with a Stock split or
Stock dividend, and other property distributed as a dividend, shall
be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such Stock or
other property has been distributed, unless otherwise determined by
the Committee.
(e) Deferred Stock. The Committee is authorized to grant units
representing the right to receive Stock at a future date subject to
the following terms and conditions ("Deferred Stock"):
(i) Award and Restrictions. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected
by the Participant). In addition, Deferred Stock shall be subject to
such restrictions as the Committee may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at
earlier specified times, separately or in combination, in
installments or otherwise, as the Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under
criteria established by the Committee) during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as
provided in the Award Agreement evidencing the Deferred Stock), all
Deferred Stock that is at that time subject to such forfeiture
conditions shall be forfeited; provided, however, that the Committee
may provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Deferred Stock will be waived in whole or in
part in the event of termination resulting from specified causes.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The
Committee is authorized to grant Stock as a bonus, or to grant Stock
or other Awards in lieu of Company obligations to pay cash under
other plans or compensatory arrangements.
(g) Dividend Equivalents. The Committee is authorized to grant
awards entitling the Participant to receive cash, Stock, other Awards
or other property equal in value to dividends paid with respect to a
specified number of shares of Stock ("Dividend Equivalents").
Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award. The Committee may provide that
Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Stock, Awards
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may
specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject
to limitations under applicable law, to grant such other Awards that
may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Stock and factors
that may influence the value of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock,
Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee and Awards
valued by reference to the book value of Stock or the value of
securities of or the performance of specified Subsidiaries ("Other
Stock Based Awards"). The Committee shall determine the terms and
conditions of such Awards. Stock issued pursuant to an Award in the
nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration, paid for at such times, by such
methods, and in such forms, including, without limitation, cash,
Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other
Award under the Plan, may be granted pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with or in
substitution for any other Award granted under the Plan or any award
granted under any other plan of the Company, its Parent or
Subsidiaries or any business entity to be acquired by the Company or
a Subsidiary, or any other right of a Participant to receive payment
from the Company its Parent or Subsidiaries. Awards granted in
addition to or in tandem with other Awards or awards may be granted
either as of the same time as or a different time from the grant of
such other Awards or awards.
(b) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee; provided, however, that in no
event shall the term of any ISO or an SAR granted in tandem therewith
exceed a period of ten years from the date of its grant (or such
shorter period as may be applicable under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms of the Plan
and any applicable Award Agreement, payments to be made by the
Company, its Parent or Subsidiaries upon the grant, exercise or
settlement of an Award may be made in such forms as the Committee
shall determine, including, without limitation, cash, Stock, other
Awards or other property, and may be made in a single payment or
transfer, in installments or on a deferred basis. Such payments may
include, without limitation, provisions for the payment or crediting
of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents in respect of installment
or deferred payments denominated in Stock.
(d) Rule 16b-3 Compliance.
(i) Six-Month Holding Period. Unless a Participant could otherwise
dispose of equity securities, including derivative securities,
acquired under the Plan without incurring liability under Section
16(b) of the Exchange Act, equity securities acquired under the Plan
must be held for a period of six months following the date of such
acquisition, provided that this condition shall be satisfied with
respect to a derivative security if at least six months elapse from
the date of acquisition of the derivative security to the date of
disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security.
(ii) Other Compliance Provisions. With respect to a Participant who
is then subject to Section 16 of the Exchange Act in respect of the
Company, the Committee shall implement transactions under the Plan
and administer the Plan in a manner that will ensure that each
transaction by such a Participant is exempt from liability under Rule
16b-3, except that such a Participant may be permitted to engage in a
non-exempt transaction under the Plan if written notice has been
given to the Participant regarding the non-exempt nature of such
transaction. The Committee may authorize the Company to repurchase
any Award or shares of Stock resulting from any Award in order to
prevent a Participant who is subject to Section 16 of the Exchange
Act from incurring liability under Section 16(b). Unless otherwise
specified by the Participant, equity securities, including derivative
securities, acquired under the Plan which are disposed of by a
Participant shall be deemed to be disposed of in the order acquired
by the Participant.
(e) Loan Provisions. With the consent of the Committee, and subject
at all times to, and only to the extent, if any, permitted under and
in accordance with, laws and regulations and other binding
obligations or provisions applicable to the Company, the Company may
make, guarantee or arrange for a loan or loans to a Participant with
respect to the exercise of any Option or other payment in connection
with any Award, including the payment by a Participant of any or all
federal, state or local income or other taxes due in connection with
any Award. Subject to such limitations, the Committee shall have
full authority to decide whether to make a loan or loans hereunder
and to determine the amount, terms and provisions of any such loan or
loans, including the interest rate to be charged in respect of any
such loan or loans, whether the loan or loans are to be with or
without recourse against the borrower, the terms on which the loan is
to be repaid and conditions, if any, under which the loan or loans
may be forgiven.
(f) Performance-Based Awards. The Committee may, in its discretion,
designate any Award the exercisability or settlement of which is
subject to the achievement of performance conditions as a
performance-based Award subject to this Section 7(f), in order to
qualify such Award as "qualified performance-based compensation"
within the meaning of Code Section 162(m) and regulations thereunder.
The performance objectives for an Award subject to this Section 7(f)
shall consist of one or more business criteria and a targeted level
or levels of performance with respect to such criteria, as specified
by the Committee but subject to this Section 7(f). Performance
objectives shall be objective and shall otherwise meet the
requirements of Section 162(m)(4)(C) of the Code. Business criteria
used by the Committee in establishing performance objectives for
Awards subject to this Section 7(f) shall be selected from among the
following:
(1) Annual return on capital;
(2) Annual earnings or earnings per share;
(3) Annual cash flow provided by operations;
(4) Increase in stock price;
(5) Changes in annual revenues; and/or
(6) Strategic business criteria, consisting of one or more
objectives based on meeting specified revenue, market penetration,
geographic business expansion goals, cost targets, and goals
relating to acquisitions or divestitures.
The levels of performance required with respect to such business
criteria may be expressed in absolute or relative levels.
Performance objectives may differ for such Awards to different
Participants. The Committee shall specify the weighting to be given
to each performance objective for purposes of determining the final
amount payable with respect to any such Award. The Committee may, in
its discretion, reduce the amount of a payout otherwise to be made in
connection with an Award subject to this Section 7(f), but may not
exercise discretion to increase such amount, and the Committee may
consider other performance criteria in exercising such discretion.
All determinations by the Committee as to the achievement of
performance objectives shall be in writing. The Committee may not
delegate any responsibility with respect to an Award subject to this
Section 7(f).
8. General Provisions.
(a) Compliance With Laws and Obligations. The Company shall not be
obligated to issue or deliver Stock in connection with any Award or
take any other action under the Plan in a transaction subject to the
requirements of any applicable securities law, any requirement under
any listing agreement between the Company and any national securities
exchange or automated quotation system or any other law, regulation
or contractual obligation of the Company until the Company is
satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. Certificates representing
shares of Stock issued under the Plan will be subject to such
stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company,
including any requirement that a legend or legends be placed thereon.
In addition, the Company may adopt policies that impose restrictions
on the timing of exercise of Options, SARs or other Awards (e.g., to
enforce compliance with Company-imposed black-out periods).
(b) Limitations on Transferability. Awards and other rights under
the Plan will not be transferable by a Participant except by will or
the laws of descent and distribution or to a Beneficiary in the event
of the Participant?s death, shall not be pledged, mortgaged,
hypothecated or otherwise encumbered, or otherwise subject to the
claims of creditors, and, in the case of ISOs and SARs in tandem
therewith, shall be exercisable during the lifetime of a Participant
only by such Participant or his guardian or legal representative;
provided, however, that such Awards and other rights (other than ISOs
and SARs in tandem therewith) may be transferred to one or more
transferees during the lifetime of the Participant to the extent and
on such terms as then may be permitted by the Committee.
(c) No Right to Continued Employment or Service. Neither the Plan
nor any action taken hereunder shall be construed as giving any
employee, director or other person the right to be retained in the
employ or service of the Company, its Parent or any Subsidiary, nor
shall it interfere in any way with the right of the Company, its
Parent or any Subsidiary to terminate any employee?s employment or
other person?s service at any time or with the right of the Board or
stockholders to remove any director.
(d) Taxes. The Company, its Parent and Subsidiaries are authorized
to withhold from any Award granted or to be settled, any delivery of
Stock in connection with an Award, any other payment relating to an
Award or any payroll or other payment to a Participant amounts of
withholding and other taxes due or potentially payable in connection
with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company, its
Parent and Subsidiaries and Participants to satisfy obligations for
the payment of withholding taxes and other tax obligations relating
to any Award. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect
thereof in satisfaction of a Participant?s tax obligations.
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate the Plan or the Committee?s
authority to grant Awards under the Plan without the consent of
stockholders or Participants, except that any such action shall be
subject to the approval of the Company?s stockholders at or before
the next annual meeting of stockholders for which the record date is
after such Board action if such stockholder approval is required by
any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Stock may then be
listed or quoted, and the Board may otherwise, in its discretion,
determine to submit other such changes to the Plan to stockholders
for approval; provided, however, that, without the consent of an
affected Participant, no such action may materially impair the rights
of such Participant under any Award theretofore granted to him (as
such rights are set forth in the Plan and the Award Agreement). The
Committee may waive any conditions or rights under, or amend, alter,
suspend, discontinue, or terminate, any Award theretofore granted and
any Award Agreement relating thereto; provided, however, that,
(subject to Section 4(c)) without the consent of an affected
Participant, no such action may materially impair the rights of such
Participant under such Award (as such rights are set forth in the
Plan and the Award Agreement). Notwithstanding the foregoing, the
Board or the Committee may take any action (including actions
affecting or terminating outstanding Awards) to the extent necessary
for a business combination in which the Company is a party to be
accounted for under the pooling-of-interests method of accounting
under Accounting Principles Board Opinion No. 16 (or any successor
thereto). The Board or the Committee shall also have the authority
to establish separate sub-plans under the Plan with respect to
Participants resident in a particular jurisdiction (the terms of
which shall not be inconsistent with those of the Plan) if necessary
or desirable to comply with the applicable laws of such jurisdiction.
(f) No Rights to Awards; No Stockholder Rights. No person shall
have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Participants and
employees. No Award shall confer on any Participant any of the
rights of a stockholder of the Company unless and until Stock is duly
issued or transferred and delivered to the Participant in accordance
with the terms of the Award or, in the case of an Option, the Option
is duly exercised.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or
any Award shall give any such Participant any rights that are greater
than those of a general creditor of the Company; provided, however,
that the Committee may authorize the creation of trusts or make other
arrangements to meet the Company?s obligations under the Plan to
deliver cash, Stock, other Awards, or other property pursuant to any
Award, which trusts or other arrangements shall be consistent with
the "unfunded" status of the Plan unless the Committee otherwise
determines with the consent of each affected Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board nor any submission of the Plan or amendments thereto to the
stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such
other compensatory arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee
shall determine whether cash, other Awards, or other property shall
be issued or paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the
Plan, any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the
State of Delaware, without giving effect to principles of conflicts
of laws, and applicable federal law.
(k) Effective Date; Plan Termination. The Plan shall become
effective as of the date of its adoption by the Board, and shall
continue in effect until terminated by the Board; provided, however,
that if approval of such adoption by the Company?s shareholders is
not obtained within 12 months of the date of such adoption, the Plan
shall terminate ab initio, and any Awards then outstanding shall be
canceled.
_______________________________
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
2 The material in this report is not soliciting material, is not
deemed filed with the Securities and Exchange Commission and is not
incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, whether or not made before or after the date of this Proxy
Statement and irrespective of any general incorporation language in
such filing.
3 Assumes $100 invested on December 31, 1994 and assumes dividends
reinvested. Measurement points are at the last trading day of the
fiscal years ended December 1999, 1998, 1997, 1996, and 1995. The
material in this chart is not soliciting material, is not deemed
filed with the Securities and Exchange Commission and is not
incorporated by reference in any filing of the Company under the
Securities Act of 1993, as amended, or the Securities Exchange Act of
1934, as amended whether or not made before or after the date of this
Proxy Statement and irrespective of any general incorporation
language in such filing. A list of the companies included in the
housewares index will be furnished by the Company to any stockholder
upon written request to the Vice President, Finance and Treasurer.