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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
LET'S TALK CELLULAR & WIRELESS, INC.
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(Name of Registrant as Specified In Its Charter)
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(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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(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:
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LET'S TALK CELLULAR & WIRELESS, INC.
800 BRICKELL AVENUE, SUITE 400
MIAMI, FLORIDA 33131
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 13, 1999
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To the Shareholders of
Let's Talk Cellular & Wireless, Inc.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders
(the "Annual Meeting") of Let's Talk Cellular & Wireless, Inc., a Florida
corporation (the "Company"), will be held at 10:00 A.M. local time, on
Wednesday, January 13, 1999, at the conference room in the Company's executive
offices at 800 Brickell Avenue, Suite 400, Miami, Florida 33131 for the
following purposes:
(1) To elect three members to the Company's Board of Directors to
hold office until the Company's 2001 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
(2) To approve amendments to the Company's 1997 Executive
Incentive Compensation Plan (the "Incentive Plan") to increase
the number of shares available for grant by 1,000,000 shares
to a total of 1,310,000 shares; and
(3) To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on November 19,
1998 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
BRETT BEVERIDGE
CO-CHAIRMAN OF THE BOARD
David Eisenberg
CO-CHAIRMAN OF THE BOARD
Miami, Florida
December 11, 1998
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
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LET'S TALK CELLULAR & WIRELESS, INC.
800 BRICKELL AVENUE, SUITE 400
MIAMI, FLORIDA 33131
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PROXY STATEMENT
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FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 13, 1999
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Let's Talk Cellular & Wireless, Inc., a Florida
corporation (the "Company"), of proxies from the holders of the Company's
common stock, par value $.01 per share (the "Common Stock"), for use at the 1998
Annual Meeting of Shareholders of the Company to be held on January 13, 1999, or
at any adjournments or postponements thereof (the "Annual Meeting"), pursuant to
the enclosed Notice of Annual Meeting of Shareholders. The approximate date that
this Proxy Statement and the enclosed proxy are first being sent to shareholders
is December 11, 1998. Shareholders should review the information provided herein
in conjunction with the Company's 1998 Annual Report to Shareholders which
accompanies this Proxy Statement. The Company's principal executive offices are
located at 800 Brickell Avenue, Suite 400, Miami, Florida 33131, and its
telephone number is (305) 358-8255.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) To elect three members to the Company's Board of Directors to
serve until the Company's 2001 Annual Meeting of Shareholders
or until their successors are duly elected and qualified;
(2) To approve amendments to the Company's 1997 Executive
Incentive Compensation Plan to increase the number of shares
available for grant by 1,000,000 shares to a total of
1,310,000 shares; and
(3) To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth
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above) will be voted (1) FOR the election of the three nominees for director
named below, (2) FOR increasing the number of shares available for grant
pursuant to the 1997 Executive Incentive Compensation Plan, and (3) by the
proxies in their discretion upon any other proposals as may properly come before
the Annual Meeting. In the event a shareholder specifies a different choice by
means of the enclosed proxy, such shareholder's shares will be voted in
accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on November 19,
1998 as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 8,749,762 shares of Common Stock issued and outstanding,
all of which are entitled to be voted at the Annual Meeting. Each share of
Common Stock is entitled to one vote on each matter submitted to shareholders
for approval at the Annual Meeting. Shareholders do not have the right to
cumulate their votes for directors.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. Any other matter that may be submitted to a vote of the
shareholders will be approved if the number of shares of Common Stock voted in
favor of the matter exceeds the number of shares voted against the matter,
unless the matter is one for which a greater vote is required by law or the
Company's Articles of Incorporation or Bylaws. If less than a majority of
outstanding shares of Common Stock are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting to another
date, time or place, and notice need not be given of the new date, time or place
if the new date, time or place is announced at the meeting before an adjournment
is taken.
The Board of Directors in advance of any meeting may, but need not,
appoint one or more inspectors of election or judges of the vote, as the case
may be, to act at the meeting or any adjournment thereof. If any inspector or
inspectors, or judge or judges, are not appointed, the person presiding at the
meeting may, but need not, appoint one or more inspectors or judges. In case any
person who may be appointed as an inspector or judge fails to appear or act, the
vacancy may be filled by the Board of Directors in advance of the meeting, or at
the meeting by the person presiding thereat. The inspectors or judges, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots and
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate votes, ballots and consents determine
the result, and do such acts as are proper to conduct the election or vote with
fairness to all shareholders. On request of the person presiding at the meeting,
the inspector or inspectors or judge or judges, if any, shall make a report in
writing of any challenge, question or matter determined by him or them, and
execute a certificate of any fact found by him or them.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth as of November 19, 1998 certain
information regarding the beneficial ownership of voting Common Stock by (i)
each person or "group" (as that term is defined in Section 13(d)(3) of the
Exchange Act) known by the Company to be the beneficial owner of more than 5% of
the voting Common Stock, (ii) each executive officer of the Company, (iii) each
director and Nominee and (iv) all directors and executive officers as a group (9
persons). Except as otherwise indicated, the Company believes, based on
information furnished by such persons, that each person listed below has sole
voting and investment power over the shares of Common Stock shown as
beneficially owned, subject to community property laws, where applicable.
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BENEFICIAL OWNERSHIP
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NAME AND ADDRESS(1) SHARES(2) PERCENTAGE(3)
- ------------------- --------- -------------
HIG Investment Group, L.P.(4) ...................................... 3,778,115 43.2%
Brett Beveridge(5) ................................................. 953,873 10.8%
David Eisenberg(6) ................................................. 25,300 *
Daniel M. Cammarata(7) ............................................. -- *
Anthony Tamer(8) ................................................... 3,778,115 43.2%
Sami Mnaymneh(8) ................................................... 3,778,115 43.2%
John P. Bolduc(8) .................................................. 3,778,115 43.2%
Douglas F. Berman(8)(9) ............................................ 3,782,500 43.2%
Allan Sorensen(10) ................................................. 177,339 2.0%
Jonathan I. Kislak(11) ............................................. 5,000 *
All directors and executive officers of the Company as a group
(9 persons)..................................................... 4,974,012 56.0%
Nicolas Molina(12) ................................................. 953,873 10.8%
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* Less than 1%
(1) Unless otherwise indicated, the address of each of the beneficial owners
is c/o the Company, 800 Brickell Avenue, Suite 400, Miami, Florida 33166.
(2) Beneficial ownership for this purpose has been determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and
is based on the possession of either sole or shared power to vote or to
direct the voting of, or sole or shared power to dispose or to direct the
disposition of, the shares of Common Stock indicated. Beneficial ownership
as determined in this manner does not necessarily mean that such person
has or shares in the economic benefits associated with ownership of the
shares of Common Stock. Except as otherwise indicated, each person has
reported that he or she has sole voting and sole dispositive power with
respect to the shares of Common Stock shown as beneficially owned.
(3) The percentage shown as beneficially owned by each person or group
represents the total number of shares of Common Stock shown in the
adjacent column divided by the sum of (i) the number of issued and
outstanding shares of Common Stock as of November 19, 1998, and (ii) all
shares of Common Stock, if any, issuable, upon the exercise of stock
options held by such person (but no other person) or group, as applicable,
that were exercisable on November 19, 1998, or which will become
exercisable within 60 days thereafter.
(4) Includes 2,137,850 shares (24.4%) held of record by HIG Fund V ("Fund V")
and 1,640,265 shares (18.7%) held of record by Texas Cellular Partners LP
("TCP"). HIG Investment Group, LP is the controlling shareholder of Fund V
and the controlling shareholder of TCP's general partner.
(5) Includes (i) 842,965 shares directly owned, and (ii) 110,908 shares that
would be outstanding upon the exercise of currently exercisable stock
options. Excludes 39,468 shares subject to unvested options.
(6) Includes 25,300 shares directly owned. Excludes 400,000 shares subject to
unvested options which were approved for issuance to Mr. Eisenburg subject
to approval of proposal No. 2 of this proxy.
(7) Excludes 40,000 shares subject to unexercisable options.
(8) Reflects shares held of record by Fund V and TCP. See footnote (4).
(9) Includes 4,385 shares that would be outstanding upon the exercise of
currently exercisable stock options. Excludes 8,771 shares subject to
unvested options.
(10) Includes (i) 160,339 shares directly owned, and (ii) 17,000 shares that
would be outstanding upon the exercise of currently exercisable stock
options. The address of Mr. Sorensen is c/o Interim Services, 2050
Spectrum Boulevard, Ft. Lauderdale, Florida 33309.
(11) Includes 5,000 shares that would be outstanding upon the exercise of
currently exercisable stock options. The address of Mr. Kislak is c/o
Kislak National Bank, 7900 Miami Lakes Drive West, Miami Lakes, Florida
33016.
(12) Includes (i) 842,965 shares directly owned, and (ii) 110,908 shares that
would be outstanding upon the exercise of currently exercisable stock
options. The address of Mr. Molina is c/o Buchanan Ingersoll, 19495
Biscayne Boulevard, Suite 606, Aventura, Florida 33180-2320.
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by SEC regulation to
furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filings with respect to the Company's
1998 fiscal year were timely filed.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Company's Articles of Incorporation provide that the Board of
Directors shall consist of not less than one member, with the exact number to be
fixed from time to time by the Board of Directors. The Articles of Incorporation
divide the Board of Directors into three classes, with regular staggered
three-year terms and initial terms of one, two and three years for each of the
classes of directors. The current classes of the Board of Directors and their
terms of office are as follows:
CLASS DIRECTORS TERM EXPIRES IN
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III David Eisenberg 2000
III Brett Beveridge 2000
II Jonathan I. Kislak 1999
II Sami Mnaymneh 1999
II Anthony Tamer 1999
I Allan Sorensen 1998
I John P. Bolduc 1998
I Douglas F. Berman 1998
The three directors serving in Class I have terms expiring at the
Annual Meeting. The Class I directors currently serving on the Board, Messrs.
Sorensen, Bolduc and Berman, have been nominated by the Board of Directors for
re-election to three-year terms at the Annual Meeting. Each Class I director
elected at the Annual Meeting will serve for a term expiring at the Company's
2001 Annual Meeting of Shareholders or when his successor has been duly elected
and qualified. The Board of Directors has no reason to believe that any nominee
will refuse or be unable to accept election; however, in the event that any
nominee is unable to accept election or if any other unforeseen contingencies
should arise, each proxy that does not direct otherwise will be voted for the
remaining nominees, if any, and for such other person(s) as may be designated by
the Board of Directors.
APPROVAL OF AN AMENDMENT TO THE 1997 EXECUTIVE INCENTIVE COMPENSATION PLAN TO
INCREASE THE NUMBER OF SHARES ISSUABLE UNDER SUCH PLAN
(PROPOSAL NO. 2)
The Company's 1997 Executive Incentive Compensation Plan (the "Plan")
was adopted by the Board of Directors and became effective on November 24, 1997,
subject to approval by the Company's shareholders, which was obtained on August
15, 1997. The total number of shares of Common Stock that may be issued under
the Plan is 310,000 (SEE "Shares Subject to the Plan" below).
As of November 19, 1998, options to purchase 245,477 shares of Common
Stock were outstanding or approved to be granted under the Plan, at exercise
prices of $7.00 to $17.50 per share, leaving 64,523 shares
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available for future awards. No other types of awards have been granted under
the Plan. No such outstanding options are currently exercisable, and no shares
of Common Stock have been issued pursuant to awards under the Plan since its
inception.
In November 1998, the Company recruited David Eisenberg to become its
new Chief Executive Officer and Co-Chairman of the Board. The terms of Mr.
Eisenberg's employment provide that he will receive options to acquire 400,000
shares of the Company's common stock at varying prices and subject to time
vesting. The grant of such options is subject to the approval by the Company's
shareholders of the increase in the number of shares of Common Stock that may be
issued under the Plan.
On November 25, 1998, the Board of Directors unanimously adopted an
amendment to the Plan, subject to approval of the shareholders, to increase the
number of shares of Common Stock that may be issued under the Plan by 1,000,000
shares. The Board of Directors approved this amendment to increase the number of
shares issuable under the Plan to ensure that the Company can continue to grant
awards under the Plan to high-quality executives, employees and other eligible
Plan participants at levels determined appropriate by the Company and to provide
incentives for such individuals to continue to expend their maximum efforts in
the creation of shareholder value and accomplish the other purposes of the Plan.
If approved by the shareholders, the aggregate number of shares of Common Stock
authorized for issuance pursuant to the Plan will be increased from 310,000
shares to 1,310,000 shares.
If this proposal is adopted, paragraph (a) of Section 4 of the Plan
would be amended to read, in its entirety, as follows:
"(a) LIMITATION ON OVERALL NUMBER OF SHARES SUBJECT TO AWARDS.
Subject to adjustment as provided in Section 10(c) hereof, the total
number of shares of Stock reserved and available for delivery in
connection with Awards under the Plan shall be the sum of (i)
1,310,000, plus (ii) the number of shares with respect to Awards
previously granted under the Plan that terminate without being
exercised, expire, are forfeited or canceled, and the number of shares
of Stock that are surrendered in payment of any Awards or any tax
withholding with regard thereto. Any shares of Stock delivered under
the Plan may consist, in whole or in part, of authorized and unissued
shares or treasury shares. Subject to adjustment as provided in Section
10(c) hereof, in no event shall the aggregate number of shares of Stock
which may be issued pursuant to ISOs exceed 1,310,000 shares."
The affirmative vote of a majority of the shares of outstanding Common
Stock entitled to vote at the Annual Meeting is required to approve this
proposal to amend the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL 2 TO AMEND THE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE THEREUNDER BY 1,000,000 SHARES.
The essential features of the Plan, as amended as described herein, are
summarized below. This summary is qualified in its entirety by reference to the
full text of the Plan, as so amended, which appears as Exhibit 10.1 to this
Proxy Statement.
PURPOSES
The purposes of the Plan are to assist the Company and its subsidiaries
in attracting, motivating, retaining and rewarding high-quality executives and
other employees, directors and independent contractors by enabling such
individuals to acquire or increase a proprietary interest in the Company, as
well as providing such individuals with annual and long-term performance
incentives to expend their maximum efforts in the creation of shareholder value.
Such an eligible individual who receives an award under the Plan is referred to
as a "Participant."
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TYPES OF AWARDS
The Company may grant to Participants the following types of awards
under the Plan:
o stock options, which may be either "incentive stock options" ("ISOs"),
which qualify for special tax treatment in accordance with Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or stock
options other than ISOs,
o stock appreciation rights ("SARs"),
o restricted stock,
o deferred stock,
o bonus stock and awards in lieu of cash obligations,
o dividend equivalents,
o other stock-based awards, and
o performance or annual incentive awards.
SHARES SUBJECT TO THE PLAN
Subject to adjustment for certain corporate changes (SEE
"Administration" below), the total number of shares of Common Stock available
for grant under the Plan, prior to the amendment described herein, is 310,000
shares. Shares subject to awards previously granted under the Plan that
terminate without being exercised or expire or are forfeited, and the number of
shares that are surrendered in payment of any awards under the Plan or any tax
withholding requirements are included within the total number of shares
available for grant under the Plan. Shares of Common Stock that may be delivered
under the Plan may be either authorized and unissued shares or treasury shares.
A Participant may not receive any type of award under the Plan for more than
100,000 shares annually, subject to adjustment as described under
"Administration" below. In addition, a Participant may not earn a
performance-based award, or any other award which may be settled in cash, for
more than $2,000,000 in any fiscal year, or $5,000,000 in respect of any
multi-year performance period.
The shareholders are being asked to approve an amendment to the Plan to
include an additional 1,000,000 shares to be available for grant under the Plan.
ADMINISTRATION
A committee designated by the Board of Directors comprised of at least
two directors, each of whom is a non-employee director and an outside director,
within the meanings of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Act"), and Section 162(m) of the Code, respectively, if required
for exemptions under such provisions (the "Committee"), administers the Plan.
The Committee has full and final authority to:
o grant awards to eligible individuals under the Plan,
o determine the type, number and other terms and conditions of such awards,
o prescribe the terms of award agreements,
o prescribe rules and regulations for administration of the Plan,
o construe and interpret the Plan and award agreements,
o correct any defects, supply omissions or reconcile inconsistencies in the
Plan or any such agreement,
o postpone the delivery of Common Stock or other payment under an award
under certain conditions specified in the Plan, and
o make all other decisions and determinations necessary or advisable for
administration of the Plan.
The Board of Directors may exercise any power of the Committee except as
required to comply with Rule 16b-3 under the Act or Section 162(m) of the Code
or expressly provided in the Plan.
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The Committee will make adjustments in the number and kind of shares of
Common Stock which may be delivered under the Plan (including annual
per-Participant limitations) and the number and kind of shares of Common Stock
and price with respect to outstanding awards, and provision for the payment of
cash or other property with respect to outstanding awards, in an equitable
manner to prevent dilution or enlargement of the rights of Participants under
the Plan resulting from any dividend or other distribution, recapitalization,
stock split, reorganization, merger, consolidation, spin-off, combination,
liquidation or other similar corporate transaction affecting the Common Stock.
In addition, the Plan authorizes the Committee, subject to certain limitations
specified in the Plan, to adjust awards under the Plan in recognition of unusual
or nonrecurring events affecting the Company or any subsidiary, changes in
applicable laws, regulations, accounting principles, and tax rates or business
conditions, or the performance of comparable organizations, economic and
business conditions, personal performance of a Participant and any other
circumstances deemed relevant.
The Plan originally became effective on November 24, 1997. The Plan
will terminate when no shares of Common Stock remain available for issuance
under the Plan and the Company has no further rights or obligations with respect
to outstanding awards under the Plan. The Board of Directors may amend, suspend
or terminate the Plan, or the Committee's authority to grant awards under the
Plan, without approval of the Company's shareholders, subject, however, to
approval by the shareholders if required by any applicable law, regulation or
rule, or if the Board of Directors otherwise determines to submit any such
change to the shareholders for approval. The Board of Directors or the Committee
may amend, suspend or terminate, or waive any conditions or rights under, any
outstanding award or related agreement under the Plan. However, no such changes
or termination of the Plan or any such awards may materially and adversely
affect the rights of any Participant under any then outstanding award under the
Plan, unless required for "pooling of interest" accounting to be available to
the Company for a corporate transaction.
TERMS OF AWARDS UNDER THE PLAN
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS ("SARS"). Stock options
granted under the Plan give a Participant the right to purchase a specified
number of shares of Common Stock at a stated exercise price during a specified
exercise period. Such options may be either ISOs or options not intended to
qualify for special "incentive stock option" treatment under the Code (SEE
"Certain Federal Income Tax Consequences" below). Only employees of the Company
or a subsidiary of the Company are eligible to receive ISOs under the Plan. A
SAR granted under the Plan gives a Participant the right to receive the amount
by which the fair market value of a share of Common Stock on the date of
exercise exceeds the grant price of the SAR. The Committee may grant "limited
SARs" under the Plan, which are SARs that are exercisable only in connection
with a change in control of the Company or another event specified by the
Committee (SEE "Change in Control" below). SARs may be granted either alone or
in tandem with options under the Plan. The exercise price per share subject to
an option and the grant price of a SAR are determined by the Committee, but, in
the case of an ISO or a SAR, may not be less than the fair market value of a
share of Common Stock on the date of grant. Each option and SAR granted under
the Plan is exercisable after the period or periods determined by the Committee
not exceeding ten years from the date of grant. However, an ISO granted to an
individual who owns (or is deemed to own) more than 10% of the combined voting
power of all classes of stock of the Company, or any parent corporation of the
Company, must have an exercise price of at least 110% of the fair market value
of the Common Stock subject to such ISO on its grant date and a term of no more
than five years. Options may be exercised under the Plan by payment of the
exercise price in cash, shares of Common Stock, outstanding awards, pursuant to
a "cashless exercise" procedure, a note of the individual exercising the option
or such other method determined by the Committee.
RESTRICTED STOCK AND DEFERRED STOCK. Restricted stock is the grant of
shares of Common Stock under the Plan to a Participant which may not be sold or
disposed of, and which may be forfeited in the event of termination of the
Participant's employment or failure to achieve specified performance goals,
prior to the end of a restriction period specified by the Committee. A
Participant granted restricted stock generally has all the rights of a
shareholder of the Company; however, the Committee may require that dividends
paid on such restricted stock will be subject to similar restrictions or applied
to the purchase of additional awards under the Plan. An award of deferred stock
under the Plan confers upon a Participant the right to receive shares of Common
Stock or cash at the end of a specified deferral period, subject to possible
forfeiture of the deferred stock in the event of termination of
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the Participant's employment or failure to achieve specified performance goals
prior to the end of a specified deferral period. An award of deferred stock
carries no shareholder rights prior to the actual issuance of shares of Common
Stock under such award.
BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The Committee is
authorized to grant shares of Common Stock as a bonus, free of restrictions, or
to grant shares of Common Stock or other awards in lieu of cash under the Plan,
subject to such terms as the Committee may specify.
DIVIDEND EQUIVALENTS AND OTHER STOCK-BASED AWARDS. Dividend equivalents
granted under the Plan entitle the Participant to receive cash, Common Stock,
other awards under the Plan or other property with a value equal to dividends
paid on a specified number of shares of Common Stock, or other periodic
payments. Such dividend equivalents may be granted either alone or in connection
with other awards under the Plan. The Committee is authorized to grant awards
that are denominated or payable in, valued by reference to, or otherwise based
on or related to, shares of Common Stock. Such other stock-based awards may
include, for example, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Common Stock, purchase rights for
shares of Common Stock, awards with value and payment contingent upon
performance by the Company or any other factors designated by the Committee, and
awards valued by reference to the book value of shares of Common Stock or the
value of securities of or the performance of specified subsidiaries or business
units of the Company. The Committee determines the terms and conditions of such
awards.
PERFORMANCE OR ANNUAL INCENTIVE AWARDS. The Committee may grant awards
under the Plan that are based upon the achievement of preestablished performance
goals and that may be settled in cash, Common Stock, other awards or other
property, in the discretion of the Committee. The Committee may establish
unfunded performance or annual award pools for purposes of measuring Company
performance in connection with performance or annual incentive awards under the
Plan. Performance periods applicable to such awards may be from one to ten
years, as specified by the Committee. Performance conditions applicable to
awards intended to qualify as "performance-based compensation," for purposes of
Section 162(m) of the Code, shall be based upon one or more of the business
criteria specified in the Plan.
OTHER TERMS OF AWARDS UNDER THE PLAN. The Committee may accelerate, or
permit the deferral of, the settlement or payment of awards under the Plan, and
cash may be paid in lieu of Common Stock in connection with any such
acceleration, in the discretion of the Committee. Awards may be granted by the
Committee in substitution or exchange for any other awards surrendered by a
Participant, including awards granted by a company acquired by the Company or
its subsidiary. Awards granted under the Plan generally may not be pledged or
otherwise encumbered and are not transferable except by will or by the laws of
descent and distribution, or to a designated beneficiary upon the Participant's
death; however, the Committee may, in its discretion, and subject to any terms
and conditions it may impose, permit lifetime transfers of awards, other than
ISOs and any related SARs, by Participants under the Plan. The Committee may
provide that a portion of any shares of Common Stock or other property to be
distributed with respect to any award under the Plan, or any other payment to a
Participant, will be withheld (or previously acquired shares of Common Stock or
other property surrendered by the Participant) to satisfy withholding or other
tax obligations.
The fair market value of a share of Common Stock for purposes of the
Plan is determined by the Committee and is generally the closing sale price per
share reported on the principal stock exchange or market on which the Common
Stock is traded on the date as of which such value is being determined or the
last previous day on which a sale was reported.
CHANGE IN CONTROL
Awards may provide for the following to occur in the event of a "change
in control" of the Company:
o awards become fully exercisable and vested,
o SARs become exercisable for cash based upon the change in control price,
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o restrictions, deferral of settlement or other forfeiture conditions
applicable to any award shall lapse and such awards shall become fully
vested, and
o any outstanding performance goals and conditions to which an award is
subject will be deemed met.
A "change in control" of the Company is deemed to have occurred for
purposes of the Plan upon:
o approval by the shareholders of a reorganization, merger, consolidation or
other corporate transactions with respect to which persons who were
shareholders of the Company immediately prior to such transaction do not,
immediately thereafter, own more than fifty percent of the combined voting
power of the resulting company,
o a liquidation or dissolution of the Company,
o a sale of all or substantially all of the assets of the Company, or
o individuals who constituted the Board of Directors as of the date of the
Plan's adoption (including subsequently-elected directors approved by the
incumbent Board of Directors, other than in connection with an election
contest relating to the Board of Directors), ceasing to constitute at
least a majority of the Board of Directors.
"Change in control price" means an amount in cash equal to the higher of:
(i) the highest price per share paid in cash and/or other property in any
corporate transaction triggering a change in control of the Company, or
(ii) the highest fair market value per share of Common Stock at any time during
the 60-day period preceding the 60-day period following a change in
control of the Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain significant United States
Federal income tax consequences, under the Code, as in effect on the date of
this summary, applicable to the Company and a Participant in connection with the
grant and exercise of options and other awards under the Plan. This summary is
not intended to be exhaustive, and, among other things, does not describe state,
local or foreign tax consequences, or the effect of gift, estate or inheritance
taxes. References to the "Company" in this summary of tax consequences shall
mean the Company or the subsidiary of the Company that employs the Participant,
as the case may be.
The grant of stock options under the Plan will not result in taxable
income to Participants or an income tax deduction for the Company. However, the
transfer of Common Stock to Participants upon exercise of their options may or
may not give rise to taxable income to the Participants and tax deductions for
the Company, depending upon whether the options are ISOs or options not intended
to qualify as "incentive stock options" under the Code ("NQOs").
The exercise of a NQO generally results in immediate recognition of
taxable ordinary income by the NQO holder and a corresponding tax deduction for
the Company in the amount by which the fair market value of the shares of Common
Stock purchased, on the date of such exercise, exceeds the aggregate option
price. Any appreciation or depreciation in the fair market value of such shares
after the date of such exercise will generally result in a capital gain or loss
to the NQO holder at the time he or she disposes of such shares.
In general, the exercise of an ISO is exempt from income tax (although
not from the alternative minimum tax) and does not result in a tax deduction for
the Company at any time unless the ISO holder disposes of the Common Stock
purchased thereby within two years of the date such ISO was granted or one year
of the date of such exercise (a "disqualifying disposition"). If these holding
period requirements under the Code are satisfied, and if the ISO holder has been
an employee of the Company at all times from the date of grant of the ISO to the
day three months before such exercise (or twelve months in the case of
termination of employment due to disability), then such ISO holder will
recognize any gain or loss upon disposition of such shares as capital gain or
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loss. However, if the ISO holder makes a disqualifying disposition of any such
shares, he or she will generally be obligated to report as taxable ordinary
income for the year in which such disposition occurred the excess, with certain
adjustments, of the fair market value of the underlying stock on the date the
ISO was exercised over the option price paid. The Company would be entitled to a
tax deduction in the same amount so reported by the ISO holder. Any additional
gain realized by such ISO holder on such a disqualifying disposition of such
shares would be capital gain. If the total amount realized in a disqualifying
disposition is less than the exercise price of the ISO, the difference would be
a capital loss for the ISO holder.
The granting of SARs and deferred stock under the Plan does not produce
immediate taxable income to the Participant or a tax deduction for the Company.
Upon exercise of a SAR, or payment of deferred stock, the amount of any cash,
and the fair market value as of the exercise or payment date of any shares of
Common Stock, received by the Participant, are generally taxable to the
Participant as ordinary income and deductible by the Company.
A Participant generally will not recognize any taxable income upon the
award of restricted stock under the Plan which is not transferable and is
subject to a substantial risk of forfeiture. Generally, a Participant will
recognize taxable compensation income at the first time such stock becomes
transferable or no longer subject to a substantial risk of forfeiture, in an
amount equal to the fair market value of such shares on the date the
restrictions lapse. However, a Participant may elect to recognize taxable
compensation income upon the award of restricted stock under the Plan based on
the fair market value of the shares of Common Stock subject to such award on the
date of such award. A Participant who makes such an election will not recognize
additional income when the restrictions applicable to such restricted stock
lapse. Assuming compliance with the applicable withholding requirements, the
Company will be entitled to a tax deduction equal to the amount of ordinary
income recognized by a Participant in connection with his or her restricted
stock award in the Company's taxable year in which such Participant recognizes
such income.
The payment of bonuses or other compensation in Common Stock or other
property to a Participant under the Plan is generally immediately taxable to the
Participant and deductible by the Company. However, if such Common Stock or
other property is not transferable and is subject to a substantial risk of
forfeiture, the tax consequences to the Participant and the Company will be
similar to the tax consequences of awards of restricted stock, as described
above.
Under Section 162(m) of the Code, the Company may be limited as to
Federal income tax deductions to the extent that total annual compensation in
excess of $1 million is paid to the Chief Executive Officer of the Company or
any one of the other four highest paid executive officers who are employed by
the Company on the last day of the Company's taxable year. However, certain
"performance-based compensation" the material terms of which are disclosed to
and approved by the Company's shareholders is not subject to this deduction
limitation. The Company has structured the Plan with the intention that
compensation resulting from options and SARs granted under the Plan with
exercise or grant prices equal to the fair market value of the Common Stock
subject to such options and SARs on the date of grant, as well as performance or
annual incentive awards under the Plan granted to Participants who are likely to
be covered by Section 162(m) of the Code, as determined by the Committee, would
be qualified performance-based compensation and deductible without regard to the
limitations otherwise imposed by Section 162(m) of the Code. Additionally, the
Plan allows the Committee to grant other types of awards that would qualify as
such performance-based compensation.
Under certain circumstances, accelerated vesting or exercise of options
and other awards granted to Participants under the Plan in connection with a
"change in control" of the Company might be deemed an "excess parachute payment"
for purposes of the golden parachute payment provisions of Section 280G of the
Code. To the extent it is so considered, the Participant would be subject to an
excise tax equal to 20% of the amount of the excess parachute payment, and the
Company would be denied a tax deduction for the excess parachute payment.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers, directors and key employees of the Company are
as follows:
NAME AGE POSITION
---- --- --------
Brett Beveridge 34 President and Co-Chairman of the Board
David Eisenberg 62 Chief Executive Officer and Co-Chairman
of the Board
Daniel M. Cammarata 37 Chief Financial Officer
Anthony Tamer 41 Director
Sami Mnaymneh 37 Director
John P. Bolduc 34 Director
Douglas F. Berman 32 Director
Allan Sorensen 60 Director
Jonathan I. Kislak 50 Director
BRETT BEVERIDGE is a co-founder of the Company and serves as
Co-Chairman of the Board of Directors and President of the Company. Since the
inception of the Company in 1989, Mr. Beveridge has been a director and an
executive officer of the Company and has been primarily responsible for the
Company's retail operations, marketing, merchandising, distribution, carrier and
vendor relationships and other general operational matters. Prior to the
formation of the Company, Mr. Beveridge was a Divisional Sales Manager for Bally
Corporation's health club division in Miami, Florida from 1984 to 1988.
DAVID EISENBERG joined the Company in November 1998 as Co-Chairman of
the Board of Directors and Chief Executive Officer of the Company. Prior to
joining the Company, Mr. Eisenberg was Chairman, President and Chief Executive
Officer of Chief Auto Parts, Inc., a retail auto parts chain of 550 stores
located primarily in Texas and California. Prior to accepting the position of
Chief in November, 1992, Mr. Eisenberg was President and Chief Executive Officer
of Eisenberg & Associates, Inc., a retail consulting firm, located in
Springfield, Virginia. Mr. Eisenberg spend 38 years of his retail career with
Peoples Drug Stores, a retail drug chain with 500 stores located in the
Mid-Atlantic states. At Peoples Drug Stores, Mr. Eisenberg served in various
positions, most recently as President and Chief Operating Officer. Mr.
Eisenberg serves on the Board of Directors of Helmac Products, the American
Friends of the Hebrew University, and Children's National Medical Center in
Washington, D.C. and Dallas, Texas. Mr. Eisenberg also serves as Chairman of the
Board of Directors for Samuels Jewelers.
DANIEL M. CAMMARATA has served as Chief Financial Officer of the
Company since March 1998. From 1989 to 1998, Mr. Cammarata served in various
accounting positions, most recently as Controller, of Pueblo XTRA International,
Inc., a multi-location retailer. Prior to joining Pueblo, Mr. Cammarata was an
audit manager at Ernst and Young.
ANTHONY TAMER has been a director of the Company since June 1996 and a
Managing Director of HIG Capital Management, Inc., an affiliate of HIG
Investment Group, L.P. since 1993. Mr. Tamer was previously a Partner at Bain &
Company ("Bain") from 1986 to 1993. Mr. Tamer attended Harvard Business School
where he was awarded a Master in Business Administration degree. He also holds a
Master degree in Electrical Engineering from Stanford University, and a Bachelor
degree in Electrical Engineering from Rutgers University.
SAMI MNAYMNEH has been a director of the Company since June 1997 and a
Managing Director of HIG Capital Management, Inc., an affiliate of HIG
Investment Group, L.P. since 1993. Mr. Mnaymneh was previously a Managing
Director at The Blackstone Group from 1990 to 1993 and prior to such time was a
Vice President in the Mergers and Acquisitions Group at Morgan Stanley & Co. Mr.
Mnaymneh attended Columbia University in New York, where he was elected to Phi
Beta Kappa. He subsequently attended Harvard Business School and Harvard Law
School where he was awarded a Master in Business Administration degree and a
Juris Doctor degree, respectively, with honors.
JOHN P. BOLDUC has been a director of the Company since June 1997 and a
Managing Director of HIG Capital Management, Inc., an affiliate of HIG
Investment Group, L.P. since 1993. Prior to joining HIG, Mr. Bolduc was with
Bain from 1990 to 1993. Mr. Bolduc has a Master in Business Administration from
the Darden
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Graduate School of Business at the University of Virginia and a Bachelor of
Science degree in Computer Engineering from Lehigh University.
DOUGLAS F. BERMAN has been a director of the Company since June 1997
and a Managing Director of HIG Capital Management, Inc., an affiliate of HIG
Investment Group, L.P., since 1998. From 1996 to 1998, Mr. Berman served as Vice
President of HIG Capital Management, Inc. Prior to joining HIG Capital
Management, Mr. Berman was with Bain from 1992 to 1996. Mr. Berman is a graduate
of the Wharton School of the University of Pennsylvania, where he received a
Master in Business Administration. He also holds a B.A. in Economics from the
University of Virginia, where he was elected to Phi Beta Kappa.
ALLAN SORENSEN has served as a Director of the Company since 1994 and
previously was Vice Chairman of the Board. Mr. Sorensen is also a director of
Republic Services, Inc. (NYSE) and West Mark Inc. (NASDAQ). He is also the
Co-founder and Vice Chairman of the Board of Interim Health Care, Inc. which was
spun-off from Interim Services, Inc. (NYSE) in October 1997. Prior to that, Mr.
Sorensen served as a director and various capacities as President, Chief
Executive Officer and Chairman of Interim Services, Inc. from 1967 to 1997. He
was a member of the Board of Directors of H&R Block, Inc. (NYSE) from 1979 until
September 1993 when Interim Services was spun off in an initial public offering.
He is the past five-term Chairman of the Board and a director of the Home Health
Services and Staffing Association (HHSSA). He is a past president and member of
the Board of Directors of the National Association of Temporary & Staffing
Services (NATSS) and recipient of their 1992 Leadership Award.
JONATHAN I. KISLAK has served as a director of the Company since April,
1998. He is also chairman, director and president of Skylake Bankshares, Inc., a
role he has held since 1993 and from 1981 to 1989. Since 1991, Mr. Kislak has
served as president of Kislak Capital Corporation and since 1995 has served as
president and chairman of the executive committee of Kislak National Bank. In
addition, he served from 1989 to 1991 as Deputy Under Secretary for Small
Community and Rural Development for the U.S. Department of Agriculture.
Mr. Kislak received a bachelors degree in Economics from Harvard College.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended July 31, 1998, the Company's
Board of Directors held 9 meetings and took certain actions by written consent.
During the 1998 fiscal year, Messrs. Sami Mnaymneh and John Bolduc attended
fewer than 75 percent of the meetings of the Board of Directors held during the
period they served on the Board.
Messrs. Sorensen and Kislak are members of the Audit Committee, which
held one meeting subsequent to fiscal 1998. Mr. Kislak is Chairman of the Audit
Committee. The duties and responsibilities of the Audit Committee include (i)
recommending to the full Board the appointment of the Company's auditors and any
termination of engagement, (ii) reviewing the plan and scope of audits, (iii)
reviewing the Company's significant accounting policies and internal controls,
(iv) administering the Company's compliance programs, and (v) having general
responsibility for all related auditing matters.
The Compensation Committee consists of Messrs. Sorensen, Kislak and
Berman. Mr. Sorensen is Chairman of the Compensation Committee. The Compensation
Committee is responsible for reviewing and approving the Company's executive
compensation policies and practices and supervising the administration of the
Company's employee benefit plans, including the Plan. The Compensation Committee
did not meet during fiscal 1998.
DIRECTOR COMPENSATION
Directors who are not employees of the Company or HIG Capital
Management, Inc. are paid a fee of $2,000 or $500, respectively, for each Board
or Committee meeting attended, except that directors do not receive fees for
attendance at Committee meetings held on the same day as a Board meeting. Each
independent director was awarded options to acquire 5,000 shares of Common Stock
at an exercise price of $17.50 per share. Directors who are employees of the
Company do not receive any compensation for their service as directors. The
Company also reimburses all directors for out-of-pocket expenses incurred in
attending Board and Committee meetings.
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On July 7, 1998, the Company entered into a Consulting Agreement with
Allan Chresten Sorensen which provides for him to furnish consulting services as
requested by the Board of the Company, for which Mr. Sorensen is paid $5,000 per
month plus options to acquire 12,000 shares of Common Stock at an exercise price
of $7.00 per share. The term of the agreement is six months. During fiscal 1998,
Mr. Sorensen earned consulting fees of $5,000.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company,
for services rendered during the past year to the Company's Chief Executive
Officer and certain other officers whose total 1998 salary and bonus exceeded
$100,000 (the "Named Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
-------------------------------------------------------- ------------
SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)
------------------ ----- --------- -------- --------------- ------------
Nicolas Molina 1998 $210,955 -- $34,637(2) 59,202(3)
Chief Executive Officer 1997 $198,000 $25,000 $33,960(2) 91,174
(Resigned 10/9/98)
Brett Beveridge 1998 $210,955 -- 32,296(2) 59,202(3)
President and Co-Chairman 1997 $198,000 $25,000 34,800(2) 91,174
of the Board
Anne Gozlan 1998 $121,960 $10,000 -- 16,445(3)
Chief Financial Officer 1997 $100,000 -- -- 40,000(4)
(Resigned 5/21/98)
- -----------
(1) The column for "All other Compensation" has been omitted because there is
no compensation required to be reported in such column.
(2) Represents the value of perquisites and other personal benefits, including
premium payments and related expense for life insurance, disability
insurance and group health insurance totaling $23,145 and $23,413 for
1998, $19,927 and $20,199 for 1997 for Messrs. Molina and Beveridge,
respectively.
(3) See "Option Grants Table" below for additional information about these
options.
(4) Represents a stock bonus consisting of an aggregate of 13,000 shares of
Common Stock, 6,500 shares of which vested in May 1997 and 6,500 shares of
which vested in June 1997.
OPTION GRANTS, EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to grants of
options to purchase shares of Common Stock during the fiscal year ended July 31,
1998 to the Named Officers. The amounts shown as potential realizable values on
the options are based on assumed annualized rates of appreciation in the price
of the Common Stock of 0%, 5% and 10% over the term of the options, as set forth
in rules of the Securities and Exchange Commission. Actual gains, if any, on
stock option exercises are dependent on future performance of the Common Stock.
There can be no assurance that the potential realizable values reflected in this
table will be achieved.
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STOCK OPTION GRANTS IN THE FISCAL YEAR ENDED JULY 31, 1998
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (1)
---------------------------------------------------------------- ----------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION
NAME (#) IN FISCAL YEAR ($/SHARE) DATE 0%($) 5%($) 10%($)
- ---- --------------- ---------------- ----------- ---------- ----- ----- ------
Nicolas Molina.......... 59,202 18.2 $12.00 11/23/07 -- -- 143,724
Brett Beveridge......... 59,202 18.2 $12.00 11/23/07 -- -- 143,724
Anne Gozlan............. 16,445 5.1 $12.00 11/23/07 -- -- 39,923
- ------------------
(1) The Company determined that the Common Stock had a fair market value of
$12.00 on the date of grant.
The following table sets forth information concerning the value of
unexercised options as of July 31, 1998 held by the Company's Named Officers. No
options were exercised during fiscal 1998.
YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
------------------------- ----------------------------
Nicolas Molina...................... 91,174/150,376 0
Brett Beveridge..................... 91,174/150,376 0
Anne Gozlan......................... 0/0 0
- ----------
(1) On July 31, 1998, the exercise price of all options exceeded the market
price of the Common Stock.
EXECUTIVE INCENTIVE COMPENSATION PLAN
The 1997 Executive Incentive Compensation Plan is described in Proposal No. 2.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Securities and Exchange Commission's rules relating to the
disclosure of executive compensation require that the Proxy Statement include
certain information about "insider" participation on compensation committees and
about specific kinds of "interlocking" relationships between the compensation
committees of different companies, under the foregoing caption. All members of
the Compensation Committee are outside directors (not employees of Company), and
no such interlocking relationships exist.
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EMPLOYMENT AGREEMENTS
Effective June 27, 1997, the Company amended and restated the
employment agreement with Mr. Beveridge which provides for his employment as the
President of the Company. The agreement provides for a five year term with a
base salary of $210,000 per year, to be increased annually by the greater of the
annual increase in the consumer price index or 5%, as well as annual bonuses of
not less than $50,000, subject to the achievement of reasonable performance
targets set by the Board. Upon termination of his employment by the Company for
reasons other than death, disability or cause, Mr. Beveridge shall be entitled
to receive the greater of (i) his salary and bonus for the remainder of the
employment period or (ii) two years' salary and bonus, except that these amounts
shall be reduced by any amounts of earned income the executive may be receiving
from any new employer.
On July 7, 1998, the Company entered into an employment agreement with
Mr. Cammarata which provides for his employment as Chief Financial Officer of
the Company. The term of the agreement is two years with a base salary of
$150,000 per year, to be increased annually by the greater of the annual
increase in the consumer index price or 5%, as well as annual bonuses of up to
20% at the Company's sole discretion. Upon termination of his employment by the
Company for reasons other than death, disability or cause, Mr. Cammarata shall
be entitled to $300,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 27, 1997, the Company entered into a consulting agreement with
HIG Capital Management, Inc. an affiliate of the general partner of TCP, to
provide management, consulting and financial services. The agreement, as amended
and restated on October 8, 1997, requires that the Company pay $350,000 per
year, payable in monthly installments. This agreement expired effective December
1, 1997 as a result of the completion of the Company's IPO. For the year ended
July 31, 1998 and 1997, the Company paid approximately $117,000 and $29,000,
respectively, under this agreement.
In accordance with this consulting agreement, the Company paid HIG
Capital Management Inc. an investment banking fee of $840,000 as a result of the
completion of the IPO.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee consists of Messrs. Sorensen, Kislak
(appointed June 8, 1998) and Berman (appointed on June 8, 1998). The Chairman of
the Compensation Committee is Mr. Sorensen. The Compensation Committee is
responsible for reviewing and approving the Company's executive compensation
policies and practices and supervising the administration of the Company's
employee benefit plans, including the Executive Incentive Compensation Plan,
although its actions with respect to such Plan are subject to the approval of
the full Board of Directors. The Compensation Committee did not formally meet
during fiscal 1998.
Compensation Principles
The goal of the Company is to structure its compensation arrangements
for executive officers in a manner that will promote the Company's profitability
and enhance stockholder value. In designing its compensation arrangements to
achieve this goal, the Company is guided by the following objectives:
o attracting and retaining qualified and dedicated executives who are
essential to the long-term success of the Company;
o providing compensation packages that are competitive with the
compensation arrangements offered by comparable companies,
including the Company's competitors;
o tying a significant portion of an executive officer's compensation
to Company and individual performance; and
o directly aligning the interests of management with the interests of
the stockholders through stock-based compensation arrangements.
In 1998, the components of the Company's executive compensation
arrangements consisted of salary, cash bonuses and stock option awards pursuant
to the Executive Incentive Compensation Plan.
Executive Officer Compensation
As a general matter, the Company believes that the interests of the
Company and its stockholders are best served by maintaining a flexible approach
to executive compensation. In this regard, the Company tends to rely on
subjective criteria rather than preestablished formulae.
SALARY. The salary level for the Company's executive officers generally
is determined annually. A base salary level is established for each executive
officer by reference to salaries historically paid by the Company to its
executive officers and to salaries paid to executive officers holding comparable
positions with comparable companies in the Company's geographic region.
ANNUAL BONUS. Decisions regarding bonuses to executives are made
annually. As with the Company's other compensation practices, the receipt of a
bonus is dependent, for the most part, upon a subjective evaluation of corporate
performance and of the contribution of the particular individual to the
attainment of such performance. In certain situations, bonuses are determined
by defined performance measures of the Company.
The bonuses paid to the named executive officers for 1998 are set forth
in the Summary Compensation Table.
EXECUTIVE INCENTIVE COMPENSATION. Prior to its initial public offering
in 1998, the Company adopted the Executive Incentive Compensation Plan under
which 310,000 shares of the Company's Common Stock have been reserved for
issuance to executive officers and key employees, as determined by the
Compensation Committee. The Company awarded options to purchase, in the
aggregate, 245,477 shares of Common Stock to its executive officers and other
key employees during 1998. With respect to the options awarded, the Committee
determined, on a subjective basis, and based upon the recommendations of Messrs.
Beveridge and Molina, that such awards were appropriate to reward such officers
and key employees for superior performance and to provide financial incentives
for such officers and employees to continue to perform in a superior manner.
Compensation of the Chief Executive Officer
The Company's decisions regarding compensation of its Chief Executive
Officer are guided by the same policies and considerations that govern
compensation of the Company's other executive officers. Mr. Molina's salary in
1998 was set at a level that the Committee along with the full Board of
Directors determined was appropriate in light of the Company's size and
development.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended,
precludes any public corporation from taking a deduction for compensation in
excess of $1 million paid to its chief executive officer or any of its other
executive officers. Certain performance-based compensation, however, is exempt
from the deduction limit. No formal policy has been adopted by the Company with
respect to minimizing the risk that compensation paid to its executive officers
will exceed the deduction limit. The Company does not anticipate that any
compensation paid to its executive officers in 1999 will exceed the limit
imposed by Section 162(m).
Allan Sorensen
Jonathan I. Kislak
Douglas F. Berman
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Ernst & Young LLP, independent public accountants, served
as the Company's independent public accountants for the fiscal year ended July
31, 1998. One or more representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting. Such representatives will have the opportunity to
make a statement if they desire to do so and are expected to be available to
respond to appropriate questions from shareholders.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's Common Stock from November 24, 1997, the date of the initial
public offering of the Common Stock, with the cumulative total return of (i) the
Standard & Poor's Small Cap 600 and (ii) Standard & Poor Specialty Retail
Industry Stock Index. The graph assumes that the value of the investment in the
Company's Common Stock and each index was $100 and that all dividends were
reinvested.
CUMULATIVE TOTAL RETURN
-----------------------
11/24/97 7/31/98
LET'S TALK CELLULAR & WIRELESS, INC. 100.00 38.02
S&P SMALLCAP 600 100.00 103.30
S&P RETAIL (SPECIALTY) 100.00 88.39
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
-15-
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INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal to be included in the
Company's proxy statement for the Company's 1999 Annual Meeting of Shareholders
must deliver a proposal in writing to the Company's principal executive offices
between June 14, 1999 and August 13, 1999.
By Order of the Board of Directors
Brett Beveridge
CO-CHAIRMAN OF THE BOARD
David Eisenberg
CO-CHAIRMAN OF THE BOARD
Miami, Florida
December 11, 1998
-16-
19
Appendix A
LET'S TALK CELLULAR & WIRELESS, INC.
1997 EXECUTIVE INCENTIVE COMPENSATION PLAN
20
LET'S TALK CELLULAR AND WIRELESS, INC.
1997 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purpose ................................................................... 1
2. Definitions ............................................................... 1
3. Administration ............................................................ 4
(a) Authority of the Committee .......................................... 4
(b) Manner of Exercise of Committee Authority ........................... 4
(c) Limitation of Liability ............................................. 5
4. Stock Subject to Plan ..................................................... 5
(a) Limitation on Overall Number of Shares Subject to Awards ............ 5
(b) Application of Limitations .......................................... 5
5. Eligibility; Per-Person Award Limitations ................................. 5
6. Specific Terms of Awards .................................................. 6
(a) General ............................................................. 6
(b) Options ............................................................. 6
(c) Stock Appreciation Rights ........................................... 7
(d) Restricted Stock .................................................... 8
(e) Deferred Stock ...................................................... 9
(f) Bonus Stock and Awards in Lieu of Obligations .......................10
(g) Dividend Equivalents ................................................10
(h) Other Stock-Based Awards ............................................10
7. Certain Provisions Applicable to Awards ...................................11
(a) Stand-Alone, Additional, Tandem, and Substitute Awards ..............11
(b) Term of Awards ......................................................11
(c) Form and Timing of Payment Under Awards; Deferrals ..................11
(d) Exemptions from Section 16(b) Liability .............................12
8. Performance and Annual Incentive Awards ...................................12
(a) Performance Conditions ..............................................12
(b) Performance Awards Granted to Designated Covered Employees ..........12
(c) Annual Incentive Awards Granted to Designated Covered Employees .....14
(d) Written Determinations ..............................................15
(e) Status of Section 8(b) and Section 8(c) Awards Under
Code Section 162(m)..................................................15
9. Change in Control .........................................................16
(a) Effect of "Change in Control." ......................................16
(b) Definition of "Change in Control ....................................16
(c) Definition of "Change in Control Price." ............................17
10. General Provisions ........................................................17
(a) Compliance With Legal and Other Requirements ........................17
(b) Limits on Transferability; Beneficiaries ............................17
(c) Adjustments .........................................................18
(d) Taxes ...............................................................18
(e) Changes to the Plan and Awards ......................................19
(i)
21
(f) Limitation on Rights Conferred Under Plan ...........................19
(g) Unfunded Status of Awards; Creation of Trusts .......................19
(h) Nonexclusivity of the Plan ..........................................20
(i) Payments in the Event of Forfeitures; Fractional Shares .............20
(j) Governing Law .......................................................20
(k) Plan Effective Date and Stockholder Approval; Termination of Plan ...20
(ii)
22
LET'S TALK CELLULAR & WIRELESS, INC.
1997 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of this 1997 Executive Incentive Compensation
Plan (the "Plan") is to assist Let's Talk Cellular & Wireless, Inc. (the
"Company") and its subsidiaries in attracting, motivating, retaining and
rewarding high-quality executives and other employees, officers, Directors and
independent contractors enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's stockholders, and providing
such persons with annual and long term performance incentives to expend their
maximum efforts in the creation of shareholder value. The Plan is also intended
to qualify certain compensation awarded under the Plan for tax deductibility
under Section 162(m) of the Code (as hereafter defined) to the extent deemed
appropriate by the Committee (or any successor committee) of the Board of
Directors of the Company.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.
(a) "Annual Incentive Award" means a conditional right granted to
a Participant under Section 8(c) hereof to receive a cash payment, Stock or
other Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
(c) "Beneficiary" means 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 to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" means Change in Control as defined with
related terms in Section 9 of the Plan.
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(g) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall consist solely
of at least two directors, each of whom shall be (i) a "non-employee director"
within the meaning of Rule 16b-3 under the Exchange Act, unless administration
of the Plan by "non-employee directors" is not then required in order for
exemptions under Rule 16b-3 to apply to transactions under the Plan, and (ii) an
"outside director" within the meaning of Section 162(m) of the Code, unless
administration of the Plan by "outside directors" is not then required in order
to qualify for tax deductibility under Section 162(m) of the Code.
(j) "Corporate Transaction" means a Corporate Transaction as
defined in Section 9(b)(i) of the Plan.
(k) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(l) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified deferral period.
(m) "Director" means a member of the Board.
(n) "Disability" means a permanent and total disability (within
the meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(o) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g) hereof, 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, or other periodic payments.
(p) "Effective Date" means the effective date of the Plan, which
shall be [ ].
(q) "Eligible Person" means each Executive Officer of the Company
(as defined under the Exchange Act) and other officers, Directors and employees
of the Company or of any Subsidiary, and independent contractors with the
Company or any Subsidiary. The foregoing notwithstanding, only employees of the
Company or any Subsidiary shall be an Eligible Persons for purposes of receiving
any Incentive Stock Options. An employee on leave of absence may be considered
as still in the employ of the Company or a Subsidiary for purposes of
eligibility for participation in the Plan.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
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24
(s) "Executive Officer" means an executive officer of the Company
as defined under the Exchange Act.
(t) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any given date shall be the closing sale price per share reported on a
consolidated basis for stock listed on the principal stock exchange or market on
which Stock is traded on the date as of which such value is being determined or,
if there is no sale on that date, then on the last previous day on which a sale
was reported.
(u) "Incentive Stock Option" or "ISO" means any Option intended to
be designated as an incentive stock option within the meaning of Section 422 of
the Code or any successor provision thereto.
(v) "Incumbent Board" means the Incumbent Board as defined in
Section 9(b)(ii) of the Plan.
(w) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.
(x) "Option" means a right granted to a Participant under Section
6(b) hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(y) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.
(z) "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.
(aa) "Participant" means a person who has been granted an Award
under the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(bb) "Performance Award" means a right, granted to a Eligible
Person under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.
(cc) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.
(dd) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
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25
(ee) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(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
(ff) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
(gg) "Stock Appreciation Rights" or "SAR" means a right granted to
a Participant under Section 6(c) hereof.
(hh) "Subsidiary" means any corporation or other entity in which
the Company has a direct or indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding securities or interests of
such corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by
the Committee; provided, however, that except as otherwise expressly provided in
this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under the
Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.
(b) Manner of Exercise of Committee Authority. The Committee, and
not the Board, shall exercise sole and exclusive discretion on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final, conclusive and binding on
all persons, including the Company, its subsidiaries, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons claiming
rights from or through a Participant, and stockholders. The express grant of any
specific power to the Committee or the Board, and the taking of any action by
the Committee or the Board, shall not be construed as limiting any power or
authority of the Committee or the Board. The Committee or the Board may delegate
to officers or managers of the Company or any subsidiary, or committees thereof,
the authority, subject to such terms as the Committee or the Board shall
determine, (i) to perform administrative
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26
functions, (ii) with respect to Participants not subject to Section 16 of the
Exchange Act, to perform such other functions as the Committee or the Board may
determine, and (iii) with respect to Participants subject to Section 16, to
perform such other functions of the Committee or the Board as the Committee or
the Board may determine to the extent performance of such functions will not
result in the loss of an exemption under Rule 16b-3 otherwise available for
transactions by such persons, in each case to the extent permitted under
applicable law and subject to the requirements set forth in Section 8(d). The
Committee or the Board may appoint agents to assist it in administering the
Plan.
(c) Limitation of Liability. The Committee and the Board, and each
member thereof, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any executive officer, other
officer or employee of the Company or a Subsidiary, the Company's independent
auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee and the Board, and any officer or employee of the
Company or a subsidiary acting at the direction or on behalf of the Committee or
the Board, shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.
4. Stock Subject to Plan.
(a) LIMITATION ON OVERALL NUMBER OF SHARES SUBJECT TO AWARDS.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be the sum of (i) 1,310,000, plus (ii) the number of shares
with respect to Awards previously granted under the Plan that terminate without
being exercised, expire, are forfeited or canceled, and the number of shares of
Stock that are surrendered in payment of any Awards or any tax withholding with
regard thereto. Any shares of Stock delivered under the Plan may consist, in
whole or in part, of authorized and unissued shares or treasury shares. Subject
to adjustment as provided in Section 10(c) hereof, in no event shall the
aggregate number of shares of Stock which may be issued pursuant to ISOs exceed
1,310,000 shares.
(b) Application of Limitations. The limitation contained in
Section 4(a) shall apply not only to Awards that are settleable by the delivery
of shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.
5. Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than [ ] shares of Stock, subject to adjustment as provided in
Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h),
8(b) and 8(c). In addition, the maximum amount that may be earned as an
Annual Incentive Award or other cash Award in any fiscal year by any one
Participant shall be [$ ],
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27
and the maximum amount that may be earned as a Performance Award or other cash
Award in respect of a performance period by any one Participant shall be [$ ].
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 or the Board may impose on
any Award or the exercise thereof, at the date of grant or thereafter (subject
to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee or the Board shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award. The Committee or the Board (subject to
Section 10(e)) shall retain full power and discretion to accelerate, waive or
modify, at any time, any term or condition of an Award that is not mandatory
under the Plan. Except in cases in which the Committee or the Board is
authorized to require other forms of consideration under the Plan, or to the
extent other forms of consideration must be paid to satisfy the requirements of
Florida law, no consideration other than services may be required for the grant
(but not the exercise) of any Award.
(b) Options. The Committee and the Board each is authorized to
grant Options to Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee or
the Board, provided that such exercise price shall not, in the case
of Incentive Stock Options, be less than 100% of the Fair Market
Value of the Stock on the date of grant of the Option and shall not,
in any event, be less than the par value of a share of Stock on the
date of grant of such Option. If an employee owns or is deemed to
own (by reason of the attribution rules applicable under Section
424(d) of the Code) more than 10% of the combined voting power of
all classes of stock of the Company or any Parent Corporation and an
Incentive Stock Option is granted to such employee, the option price
of such Incentive Stock Option (to the extent required by the Code
at the time of grant) shall be no less than 110% of the Fair Market
Value of the Stock on the date such Incentive Stock Option is
granted.
(ii) Time and Method of Exercise. The Committee or the Board
shall determine the time or times at which or the circumstances
under which an Option may be exercised in whole or in part
(including based on achievement of performance goals and/or future
service requirements), the time or times at which Options shall
cease to be or become exercisable following termination of
employment or upon other conditions, the methods by which such
exercise price may be paid or deemed to be paid (including in the
discretion of the Committee or the Board a cashless exercise
procedure), the form of such payment, including, without limitation,
cash, Stock, other Awards or awards granted under other plans of the
Company or any subsidiary, or other property (including notes or
other contractual obligations of Participants to make payment on a
deferred basis), and
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the methods by or forms in which Stock will be delivered or
deemed to be delivered to Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the
Code. Anything in the Plan to the contrary notwithstanding, no term
of the Plan relating to ISOs (including any SAR in tandem therewith)
shall be interpreted, amended or altered, nor shall any discretion
or authority granted under the Plan be exercised, so as to
disqualify either the Plan or any ISO under Section 422 of the Code,
unless the Participant has first requested the change that will
result in such disqualification. Thus, if and to the extent required
to comply with Section 422 of the Code, Options granted as Incentive
Stock Options shall be subject to the following special terms and
conditions:
(A) the Option shall not be exercisable more than ten
years after the date such Incentive Stock Option is granted;
provided, however, that if a Participant owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock
of the Company or any Parent Corporation and the Incentive Stock
Option is granted to such Participant, the term of the Incentive
Stock Option shall be (to the extent required by the Code at the
time of the grant) for no more than five years from the date of
grant; and
(B) The aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares of
stock with respect to which Incentive Stock Options granted under
the Plan and all other option plans of the Company or its Parent
Corporation during any calendar year exercisable for the first time
by the Participant during any calendar year shall not (to the
extent required by the Code at the time of the grant) exceed
$100,000.
(c) Stock Appreciation Rights. The Committee and the Board each is
authorized to grant SAR's to Participants on the following terms and conditions:
(i) Right to Payment. A 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, in the case of a "Limited SAR" that may be
exercised only in the event of a Change in Control, the Fair Market
Value determined by reference to the Change in Control Price, as
defined under Section 9(c) hereof), over (B) the grant price of the
SAR as determined by the Committee or the Board. The grant price of
an SAR shall not be less than the Fair Market Value of a share of
Stock on the date of grant except as provided under Section 7(a)
hereof.
(ii) Other Terms. The Committee or the Board shall determine
at the date of grant or thereafter, the time or times at which and
the circumstances under which a SAR may be exercised in whole or in
part (including based on
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achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or
become exercisable following termination of employment or upon other
conditions, the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which
Stock will be delivered or deemed to be delivered to Participants,
whether or not a SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any SAR. Limited
SARs that may only be exercised in connection with a Change in
Control or other event as specified by the Committee or the Board,
may be granted on such terms, not inconsistent with this Section
6(c), as the Committee or the Board may determine. SARs and Limited
SARs may be either freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee and the Board each is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject
to such restrictions on transferability, risk of forfeiture and
other restrictions, if any, as the Committee or the Board may
impose, which restrictions may lapse separately or in combination at
such times, under such circumstances (including based on achievement
of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee or the Board may
determine at the date of grant or thereafter. 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 the
right to vote the Restricted Stock and the right to receive
dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee or the Board). During the
restricted period applicable to the Restricted Stock, subject to
Section 10(b) below, the Restricted Stock may not be sold,
transferred, pledged, hypothecated, margined or otherwise encumbered
by the Participant.
(ii) Forfeiture. Except as otherwise determined by the
Committee or the Board at the time of the Award, upon termination of
a Participant's employment during the applicable restriction period,
the Participant's Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company;
provided that the Committee or the Board 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 shall be waived in whole or in part in the event
of terminations resulting from specified causes, and the Committee
or the Board may in other cases waive in whole or in part the
forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee or the
Board shall determine. If certificates representing Restricted Stock
are registered in the name of the Participant, the Committee or the
Board may require that such certificates bear an
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30
appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, that the Company
retain physical possession of the certificates, and that the
Participant deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an
Award of Restricted Stock, the Committee or the Board may require
that any cash dividends paid on a share of Restricted Stock be
automatically reinvested in additional shares of Restricted Stock or
applied to the purchase of additional Awards under the Plan. Unless
otherwise determined by the Committee or the Board, 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.
(e) Deferred Stock. The Committee and the Board each is authorized
to grant Deferred Stock to Participants, which are rights to receive Stock,
cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of
Deferred Stock shall occur upon expiration of the deferral period
specified for such Deferred Stock by the Committee or the Board (or,
if permitted by the Committee or the Board, as elected by the
Participant). In addition, Deferred Stock shall be subject to such
restrictions (which may include a risk of forfeiture) as the
Committee or the Board may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals
and/or future service requirements), separately or in combination,
in installments or otherwise, as the Committee or the Board may
determine. Deferred Stock may be satisfied by delivery of Stock,
cash equal to the Fair Market Value of the specified number of
shares of Stock covered by the Deferred Stock, or a combination
thereof, as determined by the Committee or the Board at the date of
grant or thereafter. Prior to satisfaction of an Award of Deferred
Stock, an Award of Deferred Stock carries no voting or dividend or
other rights associated with share ownership.
(ii) Forfeiture. Except as otherwise determined by the
Committee or the Board, upon termination of a Participant's
employment during the applicable deferral period thereof to which
forfeiture conditions apply (as provided in the Award agreement
evidencing the Deferred Stock), the Participant's Deferred Stock
that is at that time subject to deferral (other than a deferral at
the election of the Participant) shall be forfeited; provided that
the Committee or the Board 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
shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee or the Board may
in other cases waive in whole or in part the forfeiture of Deferred
Stock.
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31
(iii) Dividend Equivalents. Unless otherwise determined by the
Committee or the Board at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of Deferred
Stock shall be either (A) paid with respect to such Deferred Stock
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 (B) deferred with respect to such Deferred Stock and
the amount or value thereof automatically deemed reinvested in
additional Deferred Stock, other Awards or other investment
vehicles, as the Committee or the Board shall determine or permit
the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee
and the Board each is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of Company obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to Section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of Stock or other Awards are
exempt from liability under Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee or the Board.
(g) Dividend Equivalents. The Committee and the Board each is
authorized to grant Dividend Equivalents to a Participant 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,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board 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 or the Board may
specify.
(h) Other Stock-Based Awards. The Committee and the Board each is
authorized, subject to limitations under applicable law, to grant to
Participants 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,
as deemed by the Committee or the Board 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 or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or business units. The Committee
or the Board shall determine the terms and conditions of such Awards. Stock
delivered 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 or the Board shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).
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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 or the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary, 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 or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee or the Board shall require
the surrender of such other Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any subsidiary, in which the value of Stock subject to the Award is equivalent
in value to the cash compensation (for example, Deferred Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price "discounted" by
the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee or the Board; provided that in no
event shall the term of any Option or SAR exceed a period of ten years (or such
shorter term as may be required in respect of an ISO under Section 422 of the
Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to
the terms of the Plan and any applicable Award agreement, payments to be made by
the Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee or the Board
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. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or the Board or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee or the Board (subject to
Section 10(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee or the Board. Payments may
include, without limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.
(d) Exemptions from Section 16(b) Liability. It is the intent of
the Company that this Plan comply in all respects with applicable provisions of
Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject
to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such
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transaction, such provision will be construed or deemed amended to the extent
necessary to conform to the applicable requirements of Rule 16b-3 or Rule
16a-1(c)(3) so that such Participant shall avoid liability under Section 16(b).
In addition, the purchase price of any Award conferring a right to purchase
Stock shall be not less than any specified percentage of the Fair Market Value
of Stock at the date of grant of the Award then required in order to comply with
Rule 16b-3.
8. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise
or receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee or
the Board. The Committee or the Board may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 8(b) and 8(c) hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). If and to the
extent required under Code Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m), shall be exercised by the Committee and not the Board.
(b) Performance Awards Granted to Designated Covered Employees. If
and to the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to be
a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect to each
of such criteria, as specified by the Committee consistent with this
Section 8(b). Performance goals shall be objective and shall
otherwise meet the requirements of Code Section 162(m) and
regulations thereunder including the requirement that the level or
levels of performance targeted by the Committee result in the
achievement of performance goals being "substantially uncertain."
The Committee may determine that such Performance Awards shall be
granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must
be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different
Participants.
(ii) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect
to the total stockholder return and earnings per share criteria),
shall be used exclusively by the Committee in establishing
performance goals for such Performance Awards: (1) total stockholder
return; (2) such total stockholder return as compared to total
return (on a
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comparable basis) of a publicly available index such as, but not
limited to, the Standard & Poor's 500 Stock Index or the S&P
Specialty Retailer Index; (3) net income; (4) pretax earnings; (5)
earnings before interest expense, taxes, depreciation and
amortization; (6) pretax operating earnings after interest expense
and before bonuses, service fees, and extraordinary or special
items; (7) operating margin; (8) earnings per share; (9) return on
equity; (10) return on capital; (11) return on investment; (12)
operating earnings; (13) working capital or inventory; and (14)
ratio of debt to stockholders' equity. One or more of the foregoing
business criteria shall also be exclusively used in establishing
performance goals for Annual Incentive Awards granted to a Covered
Employee under Section 8(c) hereof that are intended to qualify as
"performanced-based compensation under Code Section 162(m).
(iii) Performance Period; Timing For Establishing Performance
Goals. Achievement of performance goals in respect of such
Performance Awards shall be measured over a performance period of up
to ten years, as specified by the Committee. Performance goals shall
be established not later than 90 days after the beginning of any
performance period applicable to such Performance Awards, or at such
other date as may be required or permitted for "performance-based
compensation" under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall
be based upon the achievement of a performance goal or goals based
on one or more of the business criteria set forth in Section
8(b)(ii) hereof during the given performance period, as specified by
the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Performance Award pool as a
percentage of any of such business criteria, a percentage thereof in
excess of a threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such business criteria.
(v) Settlement of Performance Awards; Other Terms. Settlement
of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise
to be made in connection with such Performance Awards. The Committee
shall specify the circumstances in which such Performance Awards
shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a performance
period or settlement of Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered
Employees. If and to the extent that the Committee determines that an Annual
Incentive Award to be granted to an Eligible Person who is designated by the
Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
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exercise and/or settlement of such Annual Incentive Award shall be contingent
upon achievement of preestablished performance goals and other terms set forth
in this Section 8(c).
(i) Annual Incentive Award Pool. The Committee may establish an
Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool
shall be based upon the achievement of a performance goal or goals
based on one or more of the business criteria set forth in Section
8(b)(ii) hereof during the given performance period, as specified by
the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award pool
as a percentage of any such business criteria, a percentage thereof
in excess of a threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end
of the 90th day of each fiscal year, or at such other date as may be
required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the
Committee shall determine the Eligible Persons who will potentially
receive Annual Incentive Awards, and the amounts potentially payable
thereunder, for that fiscal year, either out of an Annual Incentive
Award pool established by such date under Section 8(c)(i) hereof or
as individual Annual Incentive Awards. In the case of individual
Annual Incentive Awards intended to qualify under Code Section
162(m), the amount potentially payable shall be based upon the
achievement of a performance goal or goals based on one or more of
the business criteria set forth in Section 8(b)(ii) hereof in the
given performance year, as specified by the Committee; in other
cases, such amount shall be based on such criteria as shall be
established by the Committee. In all cases, the maximum Annual
Incentive Award of any Participant shall be subject to the
limitation set forth in Section 5 hereof.
(iii) Payout of Annual Incentive Awards. After the end of each
fiscal year, the Committee shall determine the amount, if any, of
(A) the Annual Incentive Award pool, and the maximum amount of
potential Annual Incentive Award payable to each Participant in the
Annual Incentive Award pool, or (B) the amount of potential Annual
Incentive Award otherwise payable to each Participant. The Committee
may, in its discretion, determine that the amount payable to any
Participant as a final Annual Incentive Award shall be reduced
from the amount of his or her potential Annual Incentive Award,
including a determination to make no final Award whatsoever. The
Committee shall specify the circumstances in which an Annual
Incentive Award shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of a
fiscal year or settlement of such Annual Incentive Award.
(d) Written Determinations. All determinations by the Committee as
to the establishment of performance goals, the amount of any Performance Award
pool or potential
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individual Performance Awards and as to the achievement of performance goals
relating to Performance Awards under Section 8(b), and the amount of any Annual
Incentive Award pool or potential individual Annual Incentive Awards and the
amount of final Annual Incentive Awards under Section 8(c), shall be made in
writing in the case of any Award intended to qualify under Code Section 162(m).
The Committee may not delegate any responsibility relating to such Performance
Awards or Annual Incentive Awards if and to the extent required to comply with
Code Section 162(m).
(e) Status of Section 8(b) and Section 8(c) Awards Under Code
Section 162(m). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.
9. Change in Control.
(a) Effect of "Change in Control." If and to the extent provided
in the Award, in the event of a "Change in Control," as defined in Section 9(b),
the following provisions shall apply:
(i) Any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable and
vested as of the time of the Change in Control, subject only to
applicable restrictions set forth in Section 10(a) hereof;
(ii) Limited SARs (and other SARs if so provided by their
terms) shall become exercisable for amounts, in cash, determined by
reference to the Change in Control Price;
(iii) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan
shall lapse and such Awards shall be deemed fully vested as of the
time of the Change in Control, except to the extent of any waiver by
the Participant and subject to applicable restrictions set forth in
Section 10(a) hereof; and
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(iv) With respect to any such outstanding Award subject to
achievement of performance goals and conditions under the Plan, such
performance goals and other conditions will be deemed to be met if
and to the extent so provided by the Committee in the Award
agreement relating to such Award.
(b) Definition of "Change in Control. A "Change in Control" shall
be deemed to have occurred upon:
(i) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of the Company or the sale of
all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale (any such event being referred to as a
"Corporate Transaction") is subsequently abandoned); or
(ii) Individuals who, as of the date hereof, constitute the
Board (as of the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a member of
the Incumbent Board.
(c) Definition of "Change in Control Price." The "Change in
Control Price" means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.
10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may,
to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or
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quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results or
would result in any postponement of the issuance or delivery of Stock or payment
of benefits under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the
90th day preceding the Change in Control.
(b) Limits on Transferability; Beneficiaries. No Award or other
right or interest of a Participant under the Plan, including any Award or right
which constitutes a derivative security as generally defined in Rule 16a-1(c)
under the Exchange Act, shall be pledged, hypothecated or otherwise encumbered
or subject to any lien, obligation or liability of such Participant to any party
(other than the Company or a Subsidiary), or assigned or transferred by such
Participant otherwise than by will or the laws of descent and distribution or to
a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant
only by the Participant or his or her guardian or legal representative, except
that Awards and other rights (other than ISOs and SARs in tandem therewith) may
be transferred to one or more Beneficiaries or other transferees during the
lifetime of the Participant, and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the extent such
transfers and exercises are permitted by the Committee or the Board pursuant to
the express terms of an Award agreement (subject to any terms and conditions
which the Committee or the Board may impose thereon, and further subject to any
prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee or the Board, and to any additional terms and
conditions deemed necessary or appropriate by the Committee or the Board.
(c) Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
such that a substitution or adjustment is determined by the Committee or the
Board to be appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee or the Board shall, in
such manner as it may deem equitable, substitute or adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee (and
the Board if
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and only to the extent such authority is not required to be exercised by the
Committee to comply with Code Section 162(m)) is authorized to make adjustments
in the terms and conditions of, and the criteria included in, Awards (including
Performance Awards and performance goals, and Annual Incentive Awards and any
Annual Incentive Award pool or performance goals relating thereto) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence, as well as acquisitions and
dispositions of businesses and assets) affecting the Company, any Subsidiary or
any business unit, or the financial statements of the Company or any Subsidiary,
or in response to changes in applicable laws, regulations, accounting
principles, tax rates and regulations or business conditions or in view of the
Committee's assessment of the business strategy of the Company, any Subsidiary
or business unit thereof, performance of comparable organizations, economic and
business conditions, personal performance of a Participant, and any other
circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section 8(c) hereof
to Participants designated by the Committee as Covered Employees and intended to
qualify as "performance-based compensation" under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any Subsidiary is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, 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 or the Board may deem advisable to enable the Company
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,
either on a mandatory or elective basis in the discretion of the Committee.
(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 amendment or alteration to the Plan shall be subject to the
approval of the Company's stockholders not later than the annual meeting next
following such Board action if such stockholder approval is required by any
federal or state law or regulation (including, without limitation, Rule 16b-3 or
Code Section 162(m)) 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 that, without the consent of an affected
Participant, no such Board action may materially and adversely affect the rights
of such Participant under any previously granted and outstanding Award. The
Committee or the Board may waive any conditions or rights under, or amend,
alter, suspend, discontinue or terminate any Award theretofore granted and any
Award agreement relating thereto, except as otherwise provided in the Plan;
provided that, without the consent of an affected Participant, no such Committee
or the Board action may materially and adversely affect the rights of such
Participant
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under such Award. Notwithstanding anything in the Plan to the contrary, if any
right under this Plan would cause a transaction to be ineligible for pooling of
interest accounting that would, but for the right hereunder, be eligible for
such accounting treatment, the Committee or the Board may modify or adjust the
right so that pooling of interest accounting shall be available, including the
substitution of Stock having a Fair Market Value equal to the cash otherwise
payable hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan
nor any action taken hereunder shall be construed as (i) giving any Eligible
Person or Participant the right to continue as an Eligible Person or Participant
or in the employ of the Company or a Subsidiary; (ii) interfering in any way
with the right of the Company or a Subsidiary to terminate any Eligible Person's
or Participant's employment at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.
(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 or
obligation to deliver Stock 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 that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such 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. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan
by the Board nor its submission to the stockholders of the Company for approval
shall be construed as (i) creating any limitations on the power of the Board or
a committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m) or (ii) modifying, amending or in any way being in
substitution of any employment, stock option or other agreement to which the
Company is a party.
(i) Payments in the Event of Forfeitures; Fractional Shares.
Unless otherwise determined by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board 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.
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(j) Governing Law. The validity, construction and effect of the
Plan, any rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of Florida without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) Plan Effective Date and Stockholder Approval; Termination of
Plan. The Plan shall become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) and 422, Rule
16b-3 under the Exchange Act, applicable NASDAQ requirements, and other laws,
regulations, and obligations of the Company applicable to the Plan. Awards may
be granted subject to stockholder approval, but may not be exercised or
otherwise settled in the event stockholder approval is not obtained. The Plan
shall terminate at such time as no shares of Common Stock remain available for
issuance under the Plan and the Company has no further rights or obligations
with respect to outstanding Awards under the Plan.
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Appendix B
LET'S TALK CELLULAR & WIRELESS, INC.
800 BRICKELL AVENUE, SUITE 400
MIAMI, FLORIDA 33131
THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS
The undersigned holder of Common Stock of Let's Talk Cellular &
Wireless, Inc., a Florida corporation (the "Company"), hereby appoints
Brett Beveridge and Daniel M. Cammarata, and each of them, as proxies for the
undersigned, each with full power of substitution, for and in the name of the
undersigned to act for the undersigned and to vote, as designated on the reverse
side of this proxy card, all of the shares of stock of the Company that the
undersigned is entitled to vote at the 1998 Annual Meeting of Shareholders of
the Company, to be held on January 13, 1999 at 10:00 a.m., local time, at the
conference room in the Company's executive offices at 800 Brickell Avenue, Suite
400, Miami, Florida 33131 and at any adjournments or postponements thereof.
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
[X] Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE
DIRECTOR NOMINEES LISTED IN PROPOSAL (1).
1. ELECTION OF DIRECTORS
VOTE FOR all nominees listed
at right except vote withheld
from the following nominee(s) VOTE WITHHELD
(If any) from all nominees
[ ] [ ]
NOMINEES: Allan Sorensen
John P. Bolduc
Douglas F. Berman
(Instruction: To withhold authority for an individual nominee, write that
nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF AN
INCREASE IN THE NUMBER OF SHARES ISSUABLE UNDER THE 1997 EXECUTIVE COMPENSATION
PLAN PURSUANT TO PROPOSAL (2).
2. APPROVAL OF AN AMENDMENT TO THE 1997 EXECUTIVE INCENTIVE COMPENSATION
PLAN TO INCREASE THE NUMBER OF SHARES ISSUABLE UNDER SUCH PLAN.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
VOTE FOR PROPOSAL (2) VOTE AGAINST PROPOSAL (2)
[ ] [ ]
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3. Upon such other business as may properly come before the Annual Meeting of
any adjournment thereof.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting, and any adjournments or
postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED IN
PROPOSAL (1) AT LEFT AND "FOR" THE AMENDMENT TO THE 1997 EXECUTIVE INCENTIVE
COMPENSATION PLAN IN PROPOSAL(2).
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT IN
THE ENVELOPE PROVIDED. NO POSTAGE NECESSARY IF MAILED WITHIN THE UNITED STATES.
The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement, and (iii) the Company's 1998 Annual Report to
Shareholders.
DATE __________________________ SIGNATURE _________________________________
SIGNATURE (if held jointly) ___________________________________________________
NOTE: Please sign exactly as your name appears hereon and mail it promptly even
though you now plan to attend the meeting. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in the partnership name by authorized person.