FOR BETTER LIVING, INC.
Performance Recognition Plan
Effective December 25, 1993
ARTICLE I
TITLE AND PURPOSE
This plan shall be known as the "For Better Living, Inc. Performance
Recognition Plan" and units granted under the Plan shall be known as Performance
Recognition Units. The purpose of this Plan is to provide (i) a long-term
performance incentive to certain officers, key employees, directors and
consultants of the Company and its subsidiaries and (ii) a means of attracting
and retaining the services of persons of outstanding abilities to serve in such
capacities.
ARTICLE II
DEFINITIONS
2.1. Appreciated Book Value shall mean the book value, calculated as
provided in Section 6.1, of a Unit as of any Valuation Date following the grant
of such Unit to a Participant.
2.2. Appreciated Fair Market Value shall mean the value, calculated as
provided in Section 6.2, of a Unit as of any Valuation Date following the grant
of such Unit to a Participant.
2.3. Base Book Value shall mean the book value, calculated as provided
in Section 6.1, of a Unit as of the Valuation Date coinciding with or
immediately preceding the Grant Date of such Unit.
2.4. Base Fair Market Value shall mean the value, calculated as
provided in Section 6.2, of a Unit as of the Valuation Date immediately
preceding or coinciding with the Grant Date of such Unit.
2.5. Board of Directors or Board shall mean the Board of Directors of
the Company.
2.6. Committee shall mean the group of individuals appointed and
acting in accordance with Article IX.
2.7. Common Stock shall mean the common stock of the company.
2.8. Company shall mean For Better Living, Inc., a Delaware
corporation.
2.9. Employment and Termination of Employment shall have the usual
meaning of such terms in referring to regular employees of the Company or its
subsidiaries. In the case of a participant other than a regular employee, such
as a director, consultant, or officer who serves the Company on a part-time
basis, "employment" shall mean the continuance of such relationship, and
"termination of employment" shall mean the termination of all significant
relationships between such Participant and the Company, but not a change in
nature of the relationship; for example, it shall not be deemed "termination of
employment" if a director is not reelected to the Board but continues as a
consultant to the Company or as an officer or full time employee of the Company.
Similarly, it shall not be deemed "termination of employment" if a participant
who has been a regular employee becomes, instead, a director, consultant or
part-time officer of the Company.
2.10. Fiscal Year shall mean the fiscal year of the Company.
2.11. Grant Date shall mean the date on which the Committee grants a
Unit or Units to a Participant.
2.12. Participant shall mean a person who has been selected to
participate in the Plan by the Committee pursuant to Article III.
2.13. Permanent and Total Disability shall mean the total and permanent
incapacity, as determined by the Committee based upon reasonable evidence, of a
Participant to render substantial services to the Company by reason of mental or
physical disability.
2.14. Plan shall mean the For Better Living Inc. Performance
Recognition Plan.
2.15. Change of Control shall mean the acquisition of 50% or more of
the issued and outstanding shares of voting stock of the Company by one
individual or entity, who or
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which is not the owner of such shares at the date of this Plan, or any
reorganization, merger, consolidation, sale of assets or like transaction or
series of transactions following which the former shareholders of the Company
own less than 50% of the voting power of the surviving or resulting entity, or
(as the case may be) the Company, or a surviving entity controlled by the former
shareholders of the Company owns less than 50% of the assets or earning power of
the Company as it existed prior to such transaction or series of transactions.
2.16. Unit shall mean one Performance Recognition Unit granted under
this Plan.
2.17. Unit Account shall mean the account maintained by the Committee
for each Participant in accordance with Article V.
2.18. Valuation Date shall mean the last day of each Fiscal Quarter
and such other dates as may be approved by the Committee.
ARTICLE III
PARTICIPATION
Eligibility for participation in the Plan shall be determined by the
Committee and the Participants in the Plan shall be selected by the Committee
from time to time at such intervals as the Committee deems appropriate.
ARTICLE IV
GRANT OF UNITS
The Committee may from time to time grant Units to a Participant. A
Participant may receive more than one grant of Units.
The Units shall be used solely as a device for the measurement and
determination of the amounts to be paid as benefits under this Plan. The Units
shall not be treated as property or as a trust fund of any kind. All amounts at
any time attributable to the Units or allocated to a Participant's Unit Account
shall be and remain the sole property of the Company, and each Participant's
rights in
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the Units and Unit Account is limited to the right to receive cash as herein
provided.
The Committee shall establish a Unit Account for each Participant,
which account shall be a memorandum account on the books of the Company. Each
grant of Units to a Participant under this Plan shall be credited to his Unit
Account.
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ARTICLE VI
VALUATION
6.1. Determination of Book Value. The Base Book Value of a Unit shall
be the consolidated shareholders' equity of the Company as reflected in the
Company's regularly prepared financial statements in accordance with generally
accepted accounting principles, consistently applied, divided by one-tenth of
the number of outstanding shares of Common Stock. The Appreciated Book Value of
a Unit shall be its book value determined as provided in the foregoing sentence
(using the same divisor) subject to the following adjustments: shareholders'
equity shall be increased by (i) cash dividends paid and (ii) the amount of any
distributions to shareholders (including any repurchases, redemptions or
retirements of shares), and shareholders' equity shall be reduced by any
additions to such equity arising from the issuance of shares or other capital
contributions, in either case occurring subsequent to the Valuation Date as of
which the Base Book Value of the Unit in question was determined.
Notwithstanding the generality of the foregoing, with respect to Units granted
prior to 1/1/94, consolidated shareholder's equity shall not include the effect
of the adjustment made to the Company's financial statements in the first
quarter of 1994 as a result of the application of PASB Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investment in Debt and
Equity Securities."
6.2. Determination of Fair Market Value. The Base Fair Market Value of
a Unit shall be ten times the last quoted closing price for the Common Stock on
the last trading day preceding the Valuation Date in question on which there was
trading in the Common Stock. The Appreciated Fair Market Value of a Unit shall
be determined in the same way as the Base Fair Market Value but shall be
adjusted to reflect stock dividends, stock splits or like capital adjustments
occurring subsequent to the Valuation Date as of which the Base Fair Market
Value was determined, and any other adjustments deemed equitable by the
Committee in determination of Appreciated Fair Market Value shall be made as
directed or approved by the Committee, which may (among other things) apply such
methods and information as it may deem appropriate for ascertaining the market
value of
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a share of stock at any particular date if quoted trading prices are not readily
available.
6.3. Powers of the Committee. In making any determination for
purposes of this Plan as to the determinations of book value, appreciated fair
market value, or other determination respecting the units, the Committee shall
have the power to fix and alter, from time to time in its discretion, the
computational methods and formulae to be used in arriving at such
determinations, for the purpose of providing, as nearly as possible, in the sole
judgment of the Committee, mathematical determinations which carry out the
intent and purposes of this Plan after taking into account such factors as may
have arisen over the life of the Units and which may not have been specifically
provided for herein.
ARTICLE VII
VESTING
7.1. Vesting Schedule. The interest of a Participant in his Units
shall vest and become nonforfeitable according to the following schedule:
Anniversary of Percentage
Grant Date Vested
-------------- ----------
1st 10%
2nd 20%
3rd 30%
4th 40%
5th 50%
6th 60%
7th 70%
8th 80%
9th 90%
10th 100%
7.2. Early Vesting. Notwithstanding the provisions of Section 7.1,
the interest of a Participant in his Units shall be 100% vested upon (i) his
attainment of age 65, (ii) his death, (iii) his Permanent and Total Disability,
[(iv) the occurrence of a Change of Control,] or [(v) the occurrence of a sale
or other disposition of the division or subsidiary of the Company in which the
Participant is
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primarily employed or engaged, unless the Participant remains in the employ of
the Company or another one of its subsidiaries for one year or more following
such sale or other disposition.]
7.3. Fully-Vested Units. Fully Vested Units are Units that are 100%
vested. Notwithstanding the vesting schedule provisions of Section 7.1., the
Committee may grant fully Vested Units to a Participant or may determine and
provide that Units previously granted to a Participant are henceforth fully
vested Units. Fully Vested Units are still subject to the maturity provisions of
Section 8.1.2.
ARTICLE VIII
BENEFITS
8.1.1. Amount and Timing of Benefits on Termination. Upon a
Participant's termination of employment with the Company, his Units will be
treated as retired and he shall become entitled to a payment from the Company.
With respect to each Unit, the amount of such payment shall be equal to the
greater of (a) or (b) where
(a) is equal to the difference (if a positive number) between the
Appreciated Book Value, as of the Valuation Date immediately preceding the date
of termination of employment, and the Base Book Value of such Unit multiplied by
his vested percentage determined under Article VII of the Plan, and
(b) is equal to the difference (if a positive number) between the
Appreciated Fair Market Value, as of the Valuation Date immediately preceding
the date of termination of employment, and the Base Fair Market Value of such
Unit multiplied by his vested percentage determined under Article VII of the
Plan.
8.1.2. Amount and Timing of Benefits on Maturity of Units. Units
mature on the first to occur of the following:
(i) the tenth anniversary of their grant date; or
(ii) one of the events triggering the early vesting of Units
under the provisions of Section 7.2.
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Upon the maturity of a Unit, the participant shall become entitled to a
payment from the Company with respect to such Unit in an amount equal to 100% of
the greater of (a) or (b), as defined in Section 8.1.1, above, and, upon payment
of such amount, said matured Units shall be retired.
8.2. Manner of Payment. Except as otherwise provided in Section 8.3,
payment shall be in the form of a cash lump sum payment on or before the first
day of the third month beginning after the Participant's termination of
employment or the maturity of the Unit, as the case may be.
Notwithstanding the generality of the foregoing, a Participant may
elect to defer receipt or all or any portion of a cash lump sum otherwise
payable to participant upon maturity of Units, and, instead, have said amount
credited to Participant's account in the For Better Living, Inc. Deferred
Compensation Plan. Participant's election to so defer shall be in writing and
shall be delivered to the Committee on or before the first day of the second
month beginning after the maturity of the Units, but in no case later than
Participant's receipt of the cash lump sum.
8.3. Company's Right to Withhold. The Company shall have the right to
deduct from any payment any federal, state or local taxes required by law to be
withheld with respect to such payments.
8.4. Forfeitures. Upon termination of a Participant's employment with
the Company, the unvested portion of Units previously granted to the Participant
shall be deemed retired and shall cease to exist and the Company shall not
thereafter be obligated to the Participant with respect thereto.
ARTICLE IX
ADMINISTRATION
9.1. The Committee. The Compensation Committee of the Company's Board
of Directors, as it shall be constituted from time to time, shall serve as the
committee hereunder.
9.2 Committee Action. The Committee shall, for the purpose of
administering the Plan, choose a Secretary who may be, but is not required to
be, a member of the
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Committee, who shall keep minutes of the Committee's proceedings and all records
and documents pertaining to the Committee's administration of the Plan. A member
of the Committee shall not vote or act upon any matter which relates solely to
himself as a Participant in this Plan. The Secretary may execute any certificate
or other written direction on behalf of the Committee. Any act which this plan
authorizes or requires the Committee to do may be done by a majority of its
members. The action of such majority, expressed from time to time by a vote at a
meeting or by unanimous written consent of Committee members without a meeting,
shall constitute the action of the Committee.
9.3. Rights and Duties. Subject to the limitations of this Plan, the
Committee shall be charged with the general administration of this Plan and the
responsibility for carrying out its provisions, and shall have powers necessary
to accomplish those purposes, including, but not by way of limitation, the
following:
(a) To construe, interpret and administer the Plan;
(b) To select the Participants to be granted Units under the Plan;
(c) To determine the number of Units included in each grant;
(d) To determine the time or times when Units will be granted;
(e) To make all other determinations required by this Plan;
(f) To compute and certify the amount of benefits payable to
Participants;
(g) To authorize all payments pursuant to the Plan;
(h) To maintain all the necessary records for the administration of
the plan;
(i) To make the and publish rules for the administration,
interpretation and regulation of the plan;
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(j) To communicate to each Participant annually, as soon as
practicable after the close of each Fiscal Year, the number of Units credited to
his Unit Account and his vested percentages in such Units; and
(k) To establish claims procedures consistent with regulations of the
Secretary of Labor for presentation of claims by Participants and Beneficiaries
for Plan benefits, consideration of such claims, review of claim denials and
issuance of a decision on review. Such claims procedures shall at a minimum
consist of the following:
(1) The Committee shall notify Participants and, where
appropriate, Beneficiaries of their right to claim benefits under the
claims procedures, shall make forms available for filing of such
claims, and shall provide the name of the person or persons with whom
such claims should be filed;
(2) The Committee shall establish procedures for action
upon claims initially made and the communication of a decision to the
claimant promptly and, in any event, not later than 90 days after the
claim is received by the Committee, unless special circumstances
require an extension of time for processing the claim. If an extension
is required, notice of the extension shall be furnished to the claimant
prior to the end of the initial 90-day period, which notice shall
indicate the reasons for the extension and the expected decision date.
The extension shall not exceed 90 days. The claim may be deemed by the
claimant to have been denied for purposes of further review described
below in the event a decision is not furnished to the claimant within
the period described in the three preceding sentences. Every claim for
benefits which is denied shall be denied by written notice set forth in
a manner calculated to be understood by the claimant and shall state
(i) the specific reason or reasons for the denial, (ii) specific
reference to any provisions of this Plan on which the denial is based,
(iii) description of any additional material or information necessary
for the claimant to perfect his claim with an explanation of why such
material or information is necessary, and (iv) an explanation of the
procedure for
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further reviewing the denial of the claim under the Plan;
(3) The Committee shall establish a procedure for review
of claim denials, such review to be undertaken by the Committee. The
review given after denial of any claim shall be a full and fair review
with the claimant or his duly authorized representative having 60 days
after receipt of denial of his claim to request such review, the right
to review all pertinent documents and the right to submit issues and
comments in writing; and
(4) The Committee shall establish a procedure for issuance
of a decision by the Committee not later than 60 days after receipt of
a request for review from a claimant unless special circumstances, such
as the need to hold a hearing, require a longer period of time, in
which case a decision shall be rendered as soon as possible but not
later than 120 days after receipt of the claimant's request for review.
The decision on review shall be in writing and shall include specific
reasons for the decision written in a manner calculated to be
understood by the claimant with specific reference to any provisions of
this plan on which the decision is based.
The determination of the Committee in good faith as to any disputed
question or controversy and the Committee's calculation of benefits payable to
Participant shall be conclusive. In performing its duties, the Committee shall
be entitled to rely on information, opinions, reports or statements prepared or
presented by: (i) officers of employees of the Company whom the Committee
believes to be reliable and competent as to such matters; and (ii) counsel (who
may be employees of the Company), independent accountants and other persons as
to matters which the Committee believes to be within such persons' professional
or expert competence. The Committee shall be fully protected with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
persons.
9.4. Indemnity and Liability. All expenses of the Committee shall be
paid by the Company, and the Company shall furnish the Committee with such
clerical and other assistance as is necessary in the performance of its duties.
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No member of the Committee shall be liable for any act or omission of any other
member of the Committee nor for any act or omission on his own part, excepting
only his own willful misconduct or gross negligence. To the extent permitted by
law, the Company shall indemnify and save harmless each member of the Committee
against any and all expenses and liabilities arising out of his membership on
the Committee, excepting only expenses and liabilities arising out of his own
willful misconduct or gross negligence.
ARTICLE X
PLAN CHANGES TERMINATION
It is the expectation of the Company that this Plan shall be continued
indefinitely, but continuance of this Plan is not assumed as a contractual
obligation of the Company. The Board of Directors shall have the right to amend
this Plan in whole or in part from time to time or may at any time suspend or
terminate this Plan; provided, however, that no amendment or termination shall
cancel or otherwise adversely affect in any way any Participant's rights with
respect to Units previously granted or to any amounts previously credited to his
Unit Account. Such amendments shall be stated in an instrument in writing and
all Participants shall be bound thereby.
ARTICLE XI
MISCELLANEOUS
11.1. Receipt or Release. Any payment to any Participant in accordance
with the provisions of this Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Committee and the Company, and, to the
extent permitted by law, the Committee may require such Participant, as a
condition precedent to such payment, to execute a receipt and release to such
effect.
11.2. Limitation on Participant's Rights. Participation in this Plan
shall not give any Participant the right to be retained in the employ of the
Company or any rights or interest other than as herein provided. No Participant
shall have any right to any payment or benefit hereunder except to the extent
provided in this Plan. The
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rights of any Participant as an employee of the Company shall not be enlarged,
guaranteed or affected by reason of any of the provisions of the Plan. The
Company reserves the right to terminated the Participant's employment without
any liability for any claim against the Company under this Plan, except for
payment of vested benefits to the extent expressly provided herein with respect
to Units granted hereunder. This Plan and such Units shall create only a
contractual obligation on the part of the Company as to such amounts and shall
not be construed as creating a trust. This Plan, in and of itself, has no
assets. Participants shall have only the rights of general unsecured creditors
of the Company with respect to amounts credited to and benefits payable from
their Unit Accounts.
11.3. Beneficiaries.
(a) Upon forms provided by the Committee each Participant shall
designate in writing the Beneficiary or Beneficiaries (as defined in Section
11.3(b)) whom such Participant desires to receive any payments payable after his
death. A Participant may from time to time change his designated Beneficiary or
Beneficiaries without the consent of such Beneficiary or Beneficiaries by filing
a new designation in writing with the Committee. However, if a married
Participant wishes to designate a person other than his spouse as Beneficiary,
such designation shall be consented to in writing by the spouse. Notwithstanding
the foregoing, spousal consent shall not be necessary if it is established that
the required consent cannot be obtained because the spouse cannot be located or
because of other circumstances prescribed by the Committee. The Company and the
Committee may rely on the Participant's designation of a Beneficiary or
Beneficiaries last filed in accordance with the terms of this Plan.
(b) A Participant's "Beneficiary" or "Beneficiaries" shall be the
person or persons, including a trustee, personal representative or other
fiduciary, last designated in writing by the Participant in accordance with the
provisions of Section 11.3(a) to receive the payments specified hereunder in the
event of the Participant's death. If there is no valid Beneficiary designation
in effect that complies with the provisions of Section 11.3(a), or if there is
no surviving designated Beneficiary, then the Participant's surviving spouse
shall be the Beneficiary. If
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there is no surviving spouse to receive any payments payable in accordance with
the preceding sentence, the duly appointed and currently acting personal
representative of the Participant's probate estate (which shall include either
the Participant's probate estate or living trust) shall be the Beneficiary. In
any case where there is no such personal representative of the Participant's
estate duly appointed and acting in that capacity within 90 days after the
Participant's death (or such extended period as the Committee determines as
reasonably necessary to allow such personal representative to be appointed, but
not to exceed 180 days after the Participant's death), then the Beneficiary or
Beneficiaries shall be the person or persons who can verify by affidavit or
court order to the satisfaction of the Committee that they are legally entitled
to receive the payment specified hereunder. In the event any amount is payable
under this Plan to a minor, payment shall not be made to the minor, but instead
shall be paid (a) to that person's then living parent(s) to act as custodian,
(b) if that person's parents are then divorced and one parent is the sole
custodial parent, to such custodial parent, or (c) if no parent of that person
is then living, to a custodian selected by the Committee to hold the funds for
the minor under the Uniform Transfers or Gifts to Minors Act in effect in the
jurisdiction in which the minor resides. If no parent is living and the
Committee decides not to select another custodian to hold the funds for the
minor, then payment shall be made to the duly appointed and currently acting
guardian of the estate for the minor or, if no guardian of the estate for the
minor is duly appointed and currently acting within 60 days after the date the
amount becomes payable, payment shall be deposited with the court having
jurisdiction over the estate of the minor. Subject to the foregoing, any
payments which would have been payable to any Participant if he had lived shall
be paid to the Participant's Beneficiary or Beneficiaries in the same amounts
and on the same dates as such payments would have been paid to the Participant
had he lived (and terminated his employment with the Company on the date of his
death).
11.4. Benefits Not Assignable; Obligations Binding Upon Successors.
Benefits of a Participant under this Plan shall not be assignable or
transferable and any purported transfer, assignment, pledge or other encumbrance
or attachment of any payments or benefits under this Plan, other than by
operation of law or pursuant to Section 11.3,
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shall not be permitted or recognized. Obligations of the Company under this Plan
shall be binding upon successors of the Company.
11.5. California Law Governs; Severability. The validity of this Plan
or any of its provisions shall be construed, administered and governed in all
respects under and by the laws of the State of California. If any provisions of
this instrument shall be held by a court of competent jurisdiction to be invalid
or unenforceable, the remaining provisions hereof shall continue to be fully
effective.
11.6. Headings Not Part of Plan. Headings and subheadings in this
Plan are inserted for reference only and are not to be considered in the
construction of the provisions hereof.
11.7. Gender. The masculine pronoun and adjective shall be deemed to
include the feminine.
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IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute this Plan document as of December 25, 1993.
FOR BETTER LIVING, INC.
By
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By
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