UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE PERIOD FROM TO
COMMISSION FILE NUMBER : 0-28972
STEINER LEISURE LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMONWEALTH OF THE BAHAMAS NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
SUITE 104A, SAFFREY SQUARE,
NASSAU, THE BAHAMAS NOT APPLICABLE
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (242) 356-0006
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON SHARES, PAR VALUE (U.S.) $.01 PER SHARE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. [X] YES [ ] NO
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K [X].
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AS OF MARCH 26, 1997 WAS APPROXIMATELY $121,059,450.
AS OF MARCH 26, 1997, 7,200,000 OF THE REGISTRANT'S COMMON SHARES, PAR
VALUE (U.S.) $.01 PER SHARE, WERE OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE. PORTIONS OF THE REGISTRANT'S
DEFINITIVE PROXY STATEMENT FOR THE COMPANY'S 1997 ANNUAL MEETING OF
SHAREHOLDERS, WHICH WILL BE FILED ON OR BEFORE APRIL 30, 1997, ARE INCORPORATED
BY REFERENCE IN PART III HEREOF.
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TABLE OF CONTENTS
PAGE
PART I.................................................................... 1
ITEM 1. BUSINESS................................................ 1
General................................................. 1
Cruise Industry Overview................................ 1
Business Strategy....................................... 2
Growth Strategy......................................... 3
Cruise Line Customers................................... 4
Shipboard Services...................................... 5
Facilities Design....................................... 6
Hours of Operation...................................... 6
Recruiting and Training.... ........................... 6
Products................................................ 6
Marketing and Promotion................................. 7
Cruise Line Concession Agreements....................... 7
Competition............................................. 8
Regulation.............................................. 8
Employees............................................... 8
ITEM 2. PROPERTIES.............................................. 9
ITEM 3. LEGAL PROCEEDINGS....................................... 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS..... 9
EXECUTIVE OFFICERS OF THE REGISTRANT................................ 9
PART II................................................................... 11
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.................................. 11
ITEM 6. SELECTED FINANCIAL DATA................................. 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................... 13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............. 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.................. 23
PART III.................................................................. 24
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...... 24
ITEM 11. EXECUTIVE COMPENSATION.................................. 24
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT. .............................. 24
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......... 24
PART IV................................................................... 25
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K.................................. 25
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PART I
ITEM 1. BUSINESS.
GENERAL
Steiner Leisure Limited (including, unless the context otherwise
requires, its subsidiaries and predecessors, "Steiner Leisure" or the "Company")
was organized as an international business company ("IBC") under the laws of The
Bahamas in October 1995 as the successor to Steiner Group Limited, now known as
STGR Limited, a family-owned business founded in 1934 in the United Kingdom
("Steiner Group"). The Company commenced operations in November 1995 with the
contribution to its capital of substantially all of the cruise-related assets of
the maritime division (the"Maritime Division") of Steiner Group and the out-
standing common stock of Coiffeur Transocean (Overseas), Inc. ("CTO"), a
subsidiary of Steiner Group acquired in June 1994. The Company is the leading
provider of spa services and skin and hair care products on board cruise ships
worldwide. The Company strives to create an engaging and therapeutic environment
where customers can receive body and facial treatments and hair styling
comparable in quality to the finest land-based spas and salons. In addition, the
Company develops and markets premium priced, high quality personal care products
which are sold primarily in connection with the services the Company provides
and, to a lesser extent, through third party land-based salon and retail
channels. As of March 1, 1997, the Company served 85 cruise ships representing
25 cruise lines including Carnival, Royal Caribbean, Princess, Norwegian,
Celebrity and Cunard, pursuant to agreements with cruise lines ("Cruise Line
Concession Agreements") typically ranging in duration from one to three years.
See "--Cruise Line Concession Agreements."
The Company provides its services solely on cruise ships in treatment
and fitness facilities. On newer ships the Company's services are provided in
enhanced, large spa facilities, many of which offer hydrotherapy (water based)
treatments and enlarged fitness and treatment areas, generally located in a
single passenger activity area. Twenty-Five of the 85 ships served by the
Company as of March 1, 1997 have such spa facilities. The Company's services
include massage, aromatherapy treatments, seaweed wraps, saunas, steam rooms,
aerobic exercise, hair styling, manicures, pedicures and a variety of other
specialized body treatments designed to capitalize on the growing consumer trend
towards health awareness, personal care and fitness. As of March 1, 1997, ships
with large spas were staffed by the Company with an average of approximately 14
employees, as compared to an average of approximately six Company employees on
other ships.
Effective December 1995 and January 1996, respectively, the Company
acquired its two major product lines, "Elemis" and "La Therapie," and Elemis
Limited, which arranges for the production packaging and supply of the Company's
products. These product lines are sourced primarily from a premier French
manufacturer and packaged and shipped by the Company. The Company also sells a
variety of hair care products under the Steiner name that are manufactured by an
unaffiliated entity. The Company offers over 160 different products, including
beauty products such as aromatherapy oils, cleansers, creams and other skin care
products and accessories and hair care products such as shampoos, moisturizers
and lotions. During 1996, services and products accounted for approximately 62%
and 38% of the Company's revenues, respectively.
CRUISE INDUSTRY OVERVIEW
The passenger cruise industry has experienced substantial growth over the
past 30 years. The industry has evolved from a trans-ocean carrier service into
a vacation alternative to land-based resorts and sightseeing destinations. The
cruise market is comprised of luxury, premium and volume segments which appeal
to a broad range of passenger tastes and budgets. The Company serves ships in
all of these segments. According to Cruise Lines International Association
("CLIA"), an industry trade group, the number of passangers who took cruises
marketed primarily to North American consumers ("North American Cruises")
increased by approximately 4.5% in 1996 over 1995. The number of passangers
taking North American cruises had grown from approximately 2.2 million in
1985 to approximately 4.6 million in 1996, representing a compound annual
growth rate of approximately 7.2%, including a decline from approximately 4.5
million to approximately 4.4 million in 1995, prior to the increase in 1996.
For the reasons discussed below under "Certain Factors That Might
Affect Future Operating Results--Dependence on Cruise Industry," there can be
no assurance, however, that the North American cruise industry will experience
continued growth in the second half of 1996 or at any time in the future, or
that it will not experience
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future decreases in passangers. As of March 1, 1997, the Company served 85 ships
approximately 74 of which the Company believes offer North American Cruises.
According to CLIA, approximately 129 ships offer North American Cruises.
In recent years, cruise lines in general have been building larger
ships with large spas dedicated to the types of health, beauty and fitness
services offered by the Company. Generally, these large spas, many of which
include hydrotherapy treatments, offer enlarged fitness and treatment
facilities, are located on higher profile decks and have enriched decor. With
increasing frequency, the Company has participated in the design of these
facilities. Of the 85 ships served by the Company as of March l, 1997, 25 had
such large spa facilities and the Company believes that five of the six new
ships coming into service during the remainder of 1997 operated by cruise lines
served by the Company will also contain such large spa facilities. There can be
no assurance that the Company will serve any ships not currently subject to an
agreement.
BUSINESS STRATEGY
The Company's business strategy is directed at maintaining and
enhancing its position as the leading provider of spa services and related
products on board cruise ships worldwide. The principal elements of the
Company's business strategy are as follows:
RECRUIT AND TRAIN HIGH QUALITY SHIPBOARD PERSONNEL. The Company provides its
services to customers on a personal basis and employs shipboard staff who are
professional, attentive and able to continue the Company's tradition of catering
to the needs of individual customers. The Company recruits its staff primarily
from European and British Commonwealth countries, and requires prospective
employees to be technically skilled and to possess a willingness to provide
outstanding personal service. The Company trains its candidates in its
philosophy of customer care, emphasizing the objective of assuring that its
customers enjoy an individualized and therapeutic experience. At the same time,
the Company trains and provides incentives to its employees to maximize sales of
the Company's services and products. The Company believes that its success to
date is largely attributable to its ability to staff its operations with highly
qualified personnel.
UTILIZE EXPERIENCED AND EMPOWERED SHIPBOARD MANAGEMENT. The Company's shipboard
operations are supervised by experienced managers who implement the Company's
philosophy of customer care. The Company's managers are selected primarily from
its experienced shipboard staff and are trained at the Company's facilities in
England. These managers are granted substantial authority by senior management
to make the day-to-day decisions regarding shipboard operations including those
actions necessary to maximize revenues. The responsibilities of the Company's
shipboard managers include efficient scheduling of personnel, inventory
management, supervision of sales and marketing, maintenance of the required
shipboard discipline and communication with senior management of the Company.
DEVELOP AND DELIVER HIGH QUALITY SERVICES AND PRODUCTS. The Company strives to
create an engaging and therapeutic environment where customers can receive
body and facial treatments and hair styling comparable in quality to the finest
land-based spas and salons. Many of the techniques and products used by Company
personnel have been developed by the Company based on its own research and in
response to the needs and requests of its customers. The Company continually
updates the range of techniques, services and products it offers to keep pace
with changing health, beauty and fitness trends. Through its attentive and
highly trained staff, and its premium quality hair and beauty products, the
Company provides cruise passengers with what it believes is a richly rewarding
experience that will be a memorable highlight of a cruise vacation.
AGGRESSIVELY MARKET ITS SERVICES AND PRODUCTS. The Company uses a variety of
marketing techniques to bring its services and products to the attention of
cruise passengers. In addition to group promotions, seminars and demonstrations,
Company personnel individually educate their customers as to additional services
and products offered by the Company and cross-market services and products
offered by other Company personnel. Along with shipboard promotions, the Company
promotes and offers the pre-cruise purchase of the Company's shipboard services
by travel groups, including corporate incentive programs, and offers the
pre-cruise purchase of spa packages through travel agents.
MAINTAIN CLOSE RELATIONSHIPS WITH THE CRUISE LINES. The Company believes that
because of its high level of customer satisfaction and the revenues it has
generated for cruise lines, it has developed strong relationships with the
cruise lines served by it that will contribute to the Company's future growth.
The Company believes that its
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performance has enabled it to obtain extensions of almost every Cruise Line
Concession Agreement that has expired since 1990. During 1996, Carnival, Royal
Caribbean and Norwegian, representing an aggregate of 28 ships in service at
March 1, 1997, renewed their Cruise Line Concession Agreements with the Company.
These agreements have an average term of approximately 4.5 years. Since 1990,
agreements with respect to a total of seven ships have not been extended as a
result of cruise lines' decisions to engage another entity or use their own
personnel to provide the services and, with respect to two ships, the cruise
line's discontinuance of the services provided by Company.
GROWTH STRATEGY
The Company's strategy for continued growth includes the following
principal elements:
EXPAND WITH PRESENT CRUISE LINE CUSTOMERS. The Company believes that its success
in providing high quality services and products and generating revenues for the
cruise lines will enable it to grow as the number of ships operated by its
current cruise line customers expands. From 1990 to March 1, 1997, cruise lines
with which the Company had Cruise Line Concession Agreements brought into
service a total of 36 newly constructed ships not covered by then-existing
agreements, all of which were subsequently served by the Company. As of March 1,
1997, cruise lines served by the Company are scheduled to introduce six ships in
service through the end of 1997. The Company expects to perform services on five
of these ships, including three that are subject to agreements with the Company.
In addition, eight of the nine ships scheduled to enter service in 1998 on
behalf of cruise lines that the Company serves are covered by agreements with
the Company. There can be no assurance that the Company will serve any ships not
currently subject to an agreement or that the Company's present cruise line
customers will not retire older, smaller ships.
OBTAIN NEW CRUISE LINE CONCESSION AGREEMENTS. The Company seeks to obtain Cruise
Line Concession Agreements from existing cruise lines with which the Company
currently does not have such agreements, as well as from newly formed cruise
lines. Since 1990, the Company has obtained Cruise Line Concession Agreements
with 10 new cruise line customers.
CAPITALIZE ON GROWTH IN SIZE AND QUALITY OF SHIPBOARD FACILITIES. In response to
passenger demand, an increasing number of cruise ships offer spa facilities many
of which include hydrotherapy treatments, in addition to enlarged fitness and
treatment areas. Newer facilities generally are located on higher profile decks,
have enriched decor and offer all of the Company's services and products in a
single passenger activity area. These enhanced facilities foster the
cross-selling of services and products and enable the Company to serve a larger
number of passengers. With increasing frequency, the Company has participated in
the design of these facilities. The Company believes that its participation has
resulted in the construction of facilities permitting improved quality of
service and increased revenues to the Company and those cruise lines. Of the
ships served by the Company at March 1, 1997, 25 had large spa facilities, as
will, the Company believes, five of the ships coming into service in 1997 for
cruise lines currently served by the Company. There can be no assurance that the
Company's agreements will be extended to cover any ships beyond the three new
ships covered by agreements. As of March 1, 1997, ships with large spas were
staffed by the Company with an average of approximately 14 employees, as
compared to an average of approximately six employees on other Company ships.
CONTINUE TO INCREASE PRODUCT SALES. Sales of the Company's products have
increased at a compound annual growth rate of 37% for the years 1992 through
1996. The Company's products are sold primarily to cruise ship passengers and,
in addition, to land-based customers. The Company believes that there is a
significant opportunity to increase its product sales to third party land-based
salons, retail stores and other retail channels. The Company opened sales
counters at two leading London department stores during 1995 and 1996,
respectively. The Company believes that the acquisitions of the "Elemis" and "La
Therapie" product lines contributed to an improvement in gross profit as a
percentage of sales in 1996.
INCREASING SHIPBOARD PRODUCTIVITY. Improved staff productivity on board ships is
a significant factor contributing to the Company's overall growth. The gross
revenue attributable to each shipboard staff member per day that a ship is in
service is expressed as a "gross per day." The Company's average gross per day
has increased each year, from $208 in 1992 to $256 in 1996. During 1996, ships
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with large spa facilities had an average gross per day of $292 while ships
without large spa facilities had average gross per day during 1996 of $224.
There can be no assurance that the gross per day will continue to increase.
GROWTH BY ACQUISITION. The Company has expanded its operations through its
acquisitions of CTO, which provided services to the cruise industry similar to
those provided by the Company, in 1994, the formulations for the "Elemis" and
"La Therapie" product lines, effective December 1995, and Elemis Limited,
effective January 1996. See "--Products." During the next few years the Company
will consider additional acquisitions of land-based or maritime-based businesses
which it deems compatible with its operations and future plans. There can be no
assurance, however, that the Company will be successful in effecting any
acquisition transaction on terms favorable to the Company.
CRUISE LINE CUSTOMERS
As of March 1, 1997, the Company provided its services and products to
25 cruise lines representing a total of 85 ships, including most of the major
cruise lines offering North American Cruises.
The numbers of ships served as of March 1, 1997 under Cruise Line
Concession Agreements with the respective cruise lines are listed below:
<TABLE>
<CAPTION>
NO. OF SHIPS
NO. OF SHIPS COVERED BY
CRUISE LINE COVERED BY AGREEMENT CRUISE LINE AGREEMENT
<S> <C> <C> <C>
Airtours(1) (2) 2 Norwegian 7
Blasco 1 Orient 1
Carnival(1) 11 P&O European Ferries(5) 1
Celebrity(3) 6 P&O Cruises(5) 3
Costa(1) 1 Premier(6) 2
Crystal 2 Princess(5) 8
CTC 1 Royal Caribbean 10
Cunard 4 Seabourn(1) 3
Diamond Seven Seas 2 Seawind 1
Dolphin 4 Silversea 2
Fred Olsen(4) 2 Mediterranean 1
Holland America(1) 8 Unicom 1
Louis 1 ------ --
Total 85
(1) Carnival Corporation, the parent company of Carnival Cruise Lines, also
owns Holland America and 50% and approximately 30% of the shares of
Seabourn and Airtours, respectively, and has entered into an agreement to
acquire Costa jointly with Airtours.
(2) One of the ships is served pursuant to an oral agreement with Airtours.
(3) Includes one ship which will cease being operated by Celebrity in
October 1997.
(4) One of the ships is served pursuant to an oral agreement with Fred Olsen.
(5) P&O European Ferries, P&O Cruises and Princess are subsidiaries of The
Peninsular & Oriental Steam Navigation Company.
(6) Includes one ship that will cease being operated by Premier as of April 3,
1997.
</TABLE>
In addition to the ships currently served by the Company, the Company's
Cruise Line Concession Agreements covered, as of March 1, 1997, a total of
eleven ships which are expected to come into service through the remainder of
1997 and 1998. The cruise lines for which these ships will enter service and the
expected years of introduction into service are as follows: Carnival (three
ships in 1998); Royal Caribbean (two ships in 1997 and one ship in 1998);
Princess (one ship in 1997 and one ship in 1998); Disney (two ships in 1998);
and Renaissance (one ship in 1998).
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The Company has had no Cruise Line Concession Agreement terminated prior
to its expiration date since 1990, other than as a result of ships being retired
from service or transferred to another cruise line, and the bankruptcy of a
cruise line, and almost all of the Cruise Line Concession Agreements which have
expired have been extended beyond their specified expiration dates. See
"--Cruise Line Concession Agreements."
SHIPBOARD SERVICES
The Company's goal is to provide its customers with a therapeutic and
indulgent experience in an atmosphere of individualized attention. The Company
provides a range of personal services which it believes are comparable to those
offered by the finest land-based resorts. Fees for the Company's services and
products are charged to customers' cabins, with the cruise lines then making
payment to the Company, after deducting a specified percentage of gross revenues
payable to the cruise line pursuant to the applicable Cruise Line Concession
Agreement. The Company believes that the prices it charges for its services and
products are comparable to those charged for similar quality services and
products by land-based establishments.
MASSAGE AND OTHER BODY TREATMENTS
The Company offers massages and a variety of other body treatments to men
and women. Types of body treatments include seaweed and other therapeutic wraps
and aromatherapy treatments. The body treatment techniques include those
developed based on the Company's research of techniques from around the world as
well as those developed in response to the needs and requests of cruise ship
passengers. The number of private treatment rooms for these services ranges,
depending on the size of the ship, from one to twelve and the number of Company
staff available to provide such services also ranges from one to twelve. On
several ships, the Company provides certain specialty treatments including a
body capsule which provides a multi-sensory massage-like treatment in an
individual, self-contained environment. The Company strives to update the
treatments it offers to keep abreast of changing techniques and trends.
BEAUTY AND HAIR
The Company operates a hair styling salon that provides services to
women, men and children as well as facilities for nail and beauty treatments on
each ship it serves. Depending on the size of the ship, the Company's facilities
offer from three to ten hair styling stations as well as stations for manicures,
pedicures and facial treatments, and are staffed by from one to seven Company
employees.
FITNESS FACILITIES
As of March 1, 1997, the Company operated fitness facilities on 44 of
the ships it served. The fitness facilities typically include weightlifting
equipment, cardiovascular equipment (including treadmills, exercise bicycles and
rowing and stair machines) and facilities for fitness classes. In connection
with the fitness facilities, the Company provides from one to three fitness
instructors, depending on ship size, who are available to assist passengers in
using the exercise equipment and conduct aerobic exercise classes. In addition,
the instructors offer special services such as personal nutritional and dietary
advice, body composition analysis and personal training to passengers. Use of
fitness facilities is generally available at no charge to cruise passengers,
except that fees typically are charged for such special services.
SAUNAS AND STEAM ROOMS
The Company operates saunas and steam rooms on most of the ships it
serves. Those facilities generally may be used by passengers at no charge.
SPAS
Since the late 1980's, in response to passenger demand, cruise lines
increasingly have provided enlarged spa facilities which, in general, allow for
all of the Company's services to be offered in a single passenger activity area.
As of March 1, 1997, large spas were found on 25 of the ships served by the
Company. These spas provide enlarged fitness and treatment areas and on most
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ships include hydrotherapy treatments. These facilities are generally
located on higher profile decks and have enriched decor. The Company believes
that the location of its operations in a spa environment enhances the
passengers' enjoyment of the Company's services, encourages increased passenger
interest in those services and facilitates cross-marketing of the Company's
services and products. The Company believes that all of the ships currently
under construction for its largest cruise line customers will include large
spas. The Company employs an average of approximately 14 employees on ships with
large spas, as compared to an average of approximately six employees on other
ships.
FACILITIES DESIGN
In general, the facilities operated by the Company have been designed
by the cruise lines. However, beginning in 1988, several cruise lines began
requesting the Company's assistance in the design of shipboard spas and other
facilities. As of March 1, 1997, the Company had assisted or was assisting in
the design of facilities for a total of 28 ships, including at least 23 of which
have, or upon completion will have, large spas. Of these 28 ships, 16 were in
service at March 1, 1997 and covered by Cruise Line Concession Agreements with
the Company, and the remainder are under construction. The Company believes that
its participation has resulted in the construction of facilities permitting
improved quality of service and increased revenues to the Company and those
cruise lines. The Company believes that its involvement in the design of
shipboard facilities has assisted it in obtaining additional Cruise Line
Concession Agreements, although there can be no assurance that the Company will
be able to obtain agreements for all of the ships with respect to which it has
provided design assistance.
HOURS OF OPERATION
The facilities operated by the Company generally are open each day
during the course of a cruise from 8:00 a.m. to 8:00 p.m.
RECRUITING AND TRAINING
The continued success of the Company is dependent, in part, on its
ability to attract qualified employees. As of March 1, 1997, the Company had 723
employees working on cruise ships. The Company's goal in recruiting and training
new employees is to constantly have available a sufficient number of personnel
trained in the Company's services and philosophy to effectively serve ships in
service and ships anticipated to be in service. Through its wholly-owned
subsidiary, Steiner Training Limited ("Steiner Training"), the Company hires and
trains personnel who perform the Company's shipboard services. Steiner Training
recruits employees, primarily from the United Kingdom and other European and
British Commonwealth countries, through advertisements in trade and other
publications, appearances at beauty, hair and fitness trade shows, meetings with
students at trade schools and recommendations from Company employees. All
shipboard employment candidates are required to have received prior training in
the services they are to perform for the Company and are tested with respect to
such skills prior to being hired. In addition, applicants must possess a
willingness to provide outstanding personal service.
Each candidate must complete a rigorous training program at the
Company's facilities in Stanmore, England. These facilities allow for the
training of up to approximately 60 employees at a time. Typically, the training
course for shipboard personnel is conducted over a period of two to three weeks,
depending on the services to be performed by the employee, and emphasizes the
Company's culture of personalized, attentive passenger care. All employees also
receive supplemental training in their area of specialization, including
instruction in treatments and techniques developed by the Company. Each employee
is educated regarding all of the Company's services and products in order to
cross-market outside of the employee's area of specialty. Steiner Training also
instructs shipboard management candidates. That training covers, among other
things, personnel supervision, customer service and administrative matters,
including interaction with cruise line personnel.
PRODUCTS
The Company sells high quality European manufactured personal care products
for men and women, duty free and tax free in its salons and other shipboard
facilities from on-board inventory. The Company also offers its products through
brochures provided to cruise passengers and to land-based wholesale and retail
customers. The
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beauty products offered include aromatherapy oils as well as cleansers, creams
and other skin care products and cleansing accessories. Hair care products
offered include shampoos, moisturizers and lotions.
Most of the products sold by the Company are from its "Elemis" and "La
Therapie" product lines. As of March l, 1997, the Company sold 127 different
"Elemis" skin and hair care products made primarily from premium quality natural
ingredients. As of that date, the Company also sold a line of 37 premium priced
"La Therapie" skin care products. Almost all of the "Elemis" and "La Therapie"
products are sourced from a premier French manufacturer under an agreement that
expires in 2001.
"Elemis" and "La Therapie" products are used in connection with
services provided by the Company and sold at retail on board ships served by the
Company. In addition, "Elemis" products are sold in a number of countries to
wholesale and retail land-based customers, including third party beauty salons
and retail stores and through other distribution channels directly to consumers.
The Company also sells the products of several entities unaffiliated with the
Company, including private label products manufactured by other companies and
sold by the Company under the Steiner brand name.
Effective December 1995, the Company acquired as a capital contribution
from Nicolas D. Steiner, a senior officer of a predecessor of the Company and
the majority owner of a corporation that was then the sole shareholder of the
Company, certain rights with respect to the formulations for the "Elemis" and
"La Therapie" lines of skin and hair care products. Effective January 1996, the
Company acquired all of the outstanding shares of Elemis Limited, which shares
were owned 95% by Mr. Steiner and 5% by Clive E. Warshaw, the Chairman of the
Board and Chief Executive Officer of the Company. Elemis Limited arranges for
the production, packaging and supplying of the Company's "Elemis" and "La
Therapie" products at facilities in Taunton, England.
MARKETING AND PROMOTION
The Company promotes its services and products to passengers on cruise
ships through on-board demonstrations and seminars, video presentations shown on
in-cabin television, tours of the Company's shipboard facilities and promotional
discounts on lower volume days, such as when the ships are in destination ports.
The Company also distributes illustrated brochures and order forms describing
its services and products to passenger cabins and in the facilities it operates.
In addition, employees cross-market other services and products offered by the
Company to their customers. Along with shipboard promotions, the Company
promotes and offers the pre-cruise purchase of the Company's shipboard services
by travel groups, including corporate incentive programs, and offers the
pre-cruise purchase of spa packages through travel agents. The Company also
benefits from advertising by the cruise lines.
CRUISE LINE CONCESSION AGREEMENTS
Although Cruise Line Concession Agreements vary in certain respects
from cruise line to cruise line, all of the agreements generally give the
Company the right to sell its services and products on board ship, in return for
payment to the cruise lines of specified percentages of the Company's gross
receipts from such sales. Most of the agreements cover all of the then operating
ships of a cruise line. New arrangements must often be negotiated between the
Company and a cruise line as to ships entering service in the future. As of
March 1, 1997, pursuant to Cruise Line Concession Agreements covering a total of
55 ships being served by the Company and seven ships not yet in service, the
Company is obligated to make certain minimum payments to the cruise lines
irrespective of the amount of revenues the Company receives from passengers
under such agreements. Accordingly, the Company could be obligated to pay more
than the amount collected from passengers. As of March 1, 1997, the Company had
guaranteed total minimum payments (excluding payments based on passenger loads
applicable to certain ships served by the Company) of the following approximate
amounts for the indicated years: 1997 - $18.3 million, 1998 - $21.1 million,
1999 - $18.1 million, 2000 - $15.2 million, 2001 - $15.1 million and thereafter
- - $2.5 million
The agreements have specified terms typically ranging from one to
three years, with an average remaining term per ship of approximately two years,
as of March 1, 1997. As of that date, Cruise Line Concession Agreements that
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<PAGE>
expired within one year covered 25 of the 85 ships served by the Company, which
ships accounted for approximately 17% of the Company's revenues for 1996.
In addition to expiration at specified times, most of the Cruise Line
Concession Agreements provide for termination by the cruise line of the entire
agreement (or, in certain cases, as to a particular vessel) with limited or no
advance notice upon the occurrence of certain specified events, including, among
others, failure of a cruise line to meet a specified passenger occupancy rate,
the withdrawal of a vessel from the cruise trade, the sale or lease of a vessel
or the failure of the Company to receive certain specified passenger
satisfaction ratings. As of March 1, 1997, agreements covering a total of three
ships, eleven ships and one ship permit the cruise lines to terminate the
agreements on six months; 90 days' and 60 days' notice, respectively, for any
reason.
COMPETITION
The Company is the leading provider of hair, beauty, massage and
fitness services, and skin and hair care products on board cruise ships
worldwide. However, the Company competes with passenger activity alternatives on
cruise ships and with providers of services and products similar to those of the
Company seeking agreements with cruise lines. Gambling casinos, bars and a
variety of shops are found on almost all of the ships served by the Company. In
addition, the ships call on ports which provide opportunities for additional
shopping as well as other activities that compete with the Company for passenger
dollars. Cruise ships also typically offer swimming pools and other recreational
facilities and activities, and musical and other entertainment without
additional charge. Furthermore, a number of cruise lines currently perform the
shipboard services performed by the Company with their own personnel, and one or
more additional cruise lines could, in the future, elect to perform such
services themselves. In addition, there currently are several other entities
offering services to the cruise industry similar to those provided by the
Company. However, the Company believes that none of its competitors provides
services to a significant number of ships. Additional entities, including those
with significant resources, also could compete with Company in the future.
REGULATION
The cruise industry is subject to significant United States and
international regulation relating to, among other things, financial
responsibility, environmental matters and passenger safety. Enhanced passenger
safety standards adopted as part of the Safety of Life at Sea ("SOLAS")
Convention by the International Maritime Organization are required to be phased
in by 1997 with respect to fire safety and 2010 with respect to vessel
structural requirements. These standards have caused the retirement of certain
cruise ships and otherwise could adversely affect certain of the cruise lines,
including those with which the Company has Cruise Line Concession Agreements.
The Company and its products are subject to regulation by the Federal
Trade Commission (the "FTC") and the Food and Drug Administration ("FDA") in
the United States, as well as various other federal, state and local
regulatory authorities. The Company is also subject to similar regulations under
the laws of the United Kingdom where, in addition to that country's own laws and
regulations, certain European Union laws and regulations also apply. Applicable
regulations relate principally to the ingredients, labeling, packaging and
marketing of the Company's products. The Company believes that it is in
substantial compliance with such regulations, as well as applicable United
States federal, state, local and non-United States rules and regulations
governing the discharge of materials hazardous to the environment.
EMPLOYEES
As of March l, 1997, the Company had a total of 832 employees. Of that
number, 723 worked on cruise ships, 26 were involved in the training of Company
personnel, 32 were involved in the bottling, packaging, warehousing and shipping
of the Company's beauty products and 51 represent management and sales personnel
and support staff. Shipboard employees typically are employed pursuant to
agreements with terms of eight months. Depending on the size of the vessel and
the nature of the facilities on board, the Company has one to three managers on
board each ship it serves. Shipboard employees' compensation consists of salary
plus a commission based on the volume of revenues generated by the employee, or,
in the case of a manager, based on the performance of the team under the
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<PAGE>
manager's supervision. None of the Company's employees is covered by a
collective bargaining agreement. The Company believes that its relations with
its employees are satisfactory.
ITEM 2. PROPERTIES.
The Company's corporate office is located in Nassau, The Bahamas, and
the office of CT Maritime Services, L.C., a Florida subsidiary of the Company
("Maritime Services"), is located in Miami, Florida. The Company also maintains
warehouse and shipping facilities in Fort Lauderdale, Florida. The Company's
training facilities and the administrative office of Elemis Limited are located
in Stanmore, England. The Company also maintains a product bottling, packaging,
warehousing and shipping facility in Taunton, England. All of the
above-described properties are leased, and the Company believes that alternative
sites are readily available on competitive terms in the event that any of the
leases are not renewed.
ITEM 3. LEGAL PROCEEDINGS.
From time to time in the ordinary course of business, the Company is
party to various claims and legal proceedings. Currently, there are no such
claims or proceedings which, in the opinion of management, would have a material
adverse effect on the Company's operations or financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of 1996, prior to the Company's initial
public offering of its common shares, par value (U.S.) $0.01 per share (the
"Common Shares"), the matters described below were submitted to votes of the
Company's shareholders.
On October 8, 1996, the then sole shareholder of the Company, pursuant
to a written action in lieu of a meeting, approved the Company's Non-Employee
Directors' Share Compensation Plan (the "Directors' Plan"), the reservation of
75,000 Common Shares for issuance pursuant to the Plan and certain related
matters. The Directors' Plan, as amended, is described in the definitive Proxy
Statement for the Company's 1997 annual meeting of shareholders, which
registrant intends to file with the Securities and Exchange Commission not later
than 120 days after the end of the fiscal year covered by this report (the
"Proxy Statement").
On November 10, 1996, pursuant to a written action in lieu of a
meeting, the Company's shareholders approved the Company's 1996 Share Option
and Incentive Plan (the "Incentive Plan"), the reservation of 720,000 Common
Shares for issuance pursuant to the Incentive Plan, the granting of certain
options thereunder and certain related matters. The Incentive Plan and the
grants of options to executive officers of the Company thereunder are described
in the Proxy Statement.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the
executive officers of the Company.
NAME AGE POSITION
Clive E. Warshaw 54 Chairman of the Board and Chief
Executive Officer
Leonard I. Fluxman 38 Chief Operating Officer, Chief
Financial Officer and a Director
Michele Steiner Warshaw 51 Executive Vice President and a
Director
Amanda Jane Francis 30 Senior Vice President--Operations
of Steiner Transocean Limited
Sean C. Harrington 30 Managing Director of Elemis Limited
Clive E. Warshaw has served as Chairman of the Board, Chief Executive
Officer and a director of the Company since November 1995. Mr. Warshaw joined
Steiner Group, the Company's predecessor, in 1982 and was involved in both the
land-based operations and Maritime Division of Steiner Group. Mr. Warshaw served
as the senior officer of the Maritime Division of Steiner Group from 1987 until
November 1995. Mr. Warshaw resides in the Bahamas. Mr. Warshaw is the husband of
Michele Steiner Warshaw.
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<PAGE>
Leonard I. Fluxman has served as Chief Operating Officer, Chief
Financial Officer and a director of the Company since November 1995. Mr. Fluxman
joined the Company in June 1994, in connection with the Company's acquisition of
CTO. Mr. Fluxman served as CTO's Vice President--Finance from January 1990 until
June 1994 and as its Chief Operating Officer from June 1994 until November 1995.
Mr. Fluxman, a certified public accountant, was employed by Laventhal and
Horwath from 1986 to 1989, during a portion of which period he served as a
manager.
Michele Steiner Warshaw has served as a director of the Company since
November 1995. In March 1997, Ms. Warshaw was appointed Executive Vice President
of the Company. From January 1996 until such appointment, she served as the
Company's Senior Vice President--Development. Ms. Warshaw held a variety of
positions with the Company and Steiner Group since 1967, including assisting in
the design and development of shipboard facilities and services. From 1990 until
November 1995, Ms. Warshaw was involved exclusively in the Maritime Division of
Steiner Group. Ms. Warshaw resides in The Bahamas.
Amanda Jane Francis has served as Senior Vice President--Operations of
Steiner Transocean Limited ("Steiner Transocean"), the Company's principal
subsidiary, since November 1995, and of Steiner Group from June 1994
until November 1995. From 1989 until June 1994, Ms. Francis was the director of
training for Steiner Group. From 1982 until 1989, Ms. Francis held other
land-based and Maritime Division positions with Steiner Group.
Sean C. Harrington has served as Managing Director of Elemis Limited
since January 1996. From July 1993 through December 1995, he served as Sales
Director, and from May 1991 until July 1993 as United Kingdom Sales Manager of
Elemis Limited. From 1986 until April 1991, Mr. Harrington served as United
Kingdom Sales Director for M120 Ionithermie Limited, which offers a line of
beauty products and treatments.
Executive officers are appointed annually and serve at the discretion
of the Board of Directors, subject to employment agreements between the Company
and the executive officers.
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<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Shares commenced trading on November 13, 1996 on
the Nasdaq National Market ("NNM") under the symbol "STNRF." The high and low
sales prices for the Common Shares as reported by the NNM from November 13,
1996 to December 31, 1996 was $20 1/4 and $13, respectively.
As of March 24, 1997, there were 93 holders of record of the Common
Shares (including nominees holding shares on behalf of beneficial owners).
The Company has not declared or paid any cash dividends on its
Common Shares since its formation and does not presently anticipate paying
any cash dividends on its Common Shares in the foreseeable future. The payment
of future dividends, if any, will be at the discretion of the Company's Board of
Directors after taking into account various factors, including the Company's
financial condition, operating results, current and anticipated cash needs as
well as other factors that the Board of Directors may deem relevant
Dividends and other distributions from Bahamian IBCs, such as the
Company and its Bahamian subsidiaries, are not subject to approval by the
Central Bank of The Bahamas. However, the exemption from such approval
requirements expires in 2015. There can be no assurance that the exemption will
continue beyond such date or that the IBC Act will not be amended prior to the
year 2015 to eliminate such exemption.
ITEM 6. SELECTED FINANCIAL DATA.
Set forth below are the selected financial data for the five years
ended December 31, 1996. The statement of operations data and balance sheet data
as of and for the four years ended December 31, 1996 have been derived from the
financial statements of the Company which have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report included
elsewhere herein. The statement of operations and balance sheet data as of and
for the year ended December 31, 1992 have been derived from the unaudited books
and records of the Company. In the opinion of management, such unaudited
financial statements include all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the information set
forth therein. The information contained in this table should be read in
conjunction with the Consolidated Financial Statements of the Company and the
Notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1992 1993 1994(1) 1995 1996
---- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C>
(in thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
Revenues:
Services................................. $ 9,556 $11,171 $25,310 $35,764 $43,122
Products................................. 7,513 8,779 14,340 18,648 26,458
------- ------- ------- ------- -------
Total Revenues........................ 17,069 19,950 39,650 54,412 69,580
------- ------- ------- ------- -------
Cost of sales:
Cost of services......................... 9,339 9,633 21,324 29,623 33,446
Cost of products......................... 5,762 6,663 11,867 16,309 18,699
------- ------- ------- ------- -------
Total cost of sales................... 15,101 16,296 33,191 45,932 52,145
------- ------- ------- ------- -------
Gross profit.......................... 1,968 3,654 6,459 8,480 17,435
Operating expenses:
Administrative........................... 359 897 1,874 3,100 3,396
Salary and payroll taxes................. 611 1,122 1,785 1,925 3,973
Amortization of intangibles.............. - - 1,264 2,292 2,477
------- ------- ------- ------- -------
Total operating expenses.............. 970 2,019 4,923 7,317 9,846
------- ------- ------- ------- -------
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<PAGE>
Income from operations................ 998 1,635 1,536 1,163 7,589
Other income (expense)..................... - (100) (305) (370) (168)
------- ------- ------- ------- -------
Income before provision for income
taxes................................. 998 1,535 1,231 793 7,421
Provision for income taxes
Current.................................. 304 499 940 1,356 1,750
Deferred................................. - - (30) - -
Nonrecurring............................. - - - - 3,200
------- ------- ------- ------- -------
Total provision for income taxes....... 304 499 910 1,356 4,950
------- ------- ------- ------- -------
Net income (loss).......................... $ 694 $ 1,036 $ 321 $ (563) $ 2,471
------- ------- ------- ------- -------
Net income (loss) per share................ $ 0.11 $ 0.16 $ 0.05 $ (0.09) $ 0.38
------- ------- ------- ------- -------
Weighted average shares outstanding........ 6,372 6,372 6,372 6,372 6,470
------- ------- ------- ------- -------
BALANCE SHEET DATA:
Working capital............................ $ 1,457 $ 2,227 $ 2,009 $ 22 $12,595
Total assets............................... 3,328 5,558 16,230 13,320 26,656
Long-term debt............................. 787 2,012 4,775 3,020 -
Shareholders' equity....................... 1,724 2,404 5,150 3,574 16,080
(1) In June 1994, Steiner Group acquired CTO in a transaction accounted for as a purchase. Accordingly, the Company's 1994
Statement of Operations Data includes approximately seven months of operations of CTO.
</TABLE>
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
Steiner Leisure is the leading provider of spa services and skin and
hair care products on board cruise ships worldwide. The Company, through its
predecessors, commenced operations on board cruise ships approximately 35 years
ago. Pursuant to Cruise Line Concession Agreements, the Company sells its
services and products to cruise passengers in return for payments to cruise
lines, which payments are based on a percentage of revenues or a minimum annual
rental or a combination of both.
The Company commenced operations in November 1995 with the contribution
to its capital of substantially all of the assets and certain of the liabilities
of the Maritime Division of Steiner Group and all of the outstanding common
stock of CTO. The Consolidated Financial Statements of the Company in this
report for periods prior to November 1995 have been prepared from the books of
Steiner Group. Allocations for corporate overhead, payroll, facilities,
administration and other overhead were allocated to the Maritime Division using
a proportional cost method of allocation. The Company believes that such
allocations are representative of stand-alone expenses based on the Maritime
Division's operations. See Note l of Notes to Consolidated Financial Statements.
During the fourth quarter of 1996, CTO was liquidated. The liquidation
resulted in the assignment of CTO's cruise line agreements to the Company and
the assumption of CTO's other functions by the Company. The liquidation of CTO
was a taxable transaction for United States federal and state income tax
purposes, and CTO will be treated as if it had sold all of its assets for fair
market value on the date of distribution of those assets to the Company. Based
on the value of the assets of CTO as determined by an independent appraiser, the
Company has determined that CTO's United States federal and state income tax
liability resulting from the liquidation of approximately $3.2 million was
recognized in full in the fourth quarter of 1996, resulting in the Company
recognizing a loss for the quarter. The tax liability was paid out of the net
proceeds to the Company from its underwritten initial public offering of Common
Shares in November, 1996 (the "IPO"). Other than the tax liability, there was no
effect on the Company's consolidated financial statements from such liquidation.
The Company is a Bahamian IBC. The Bahamas does not tax Bahamian IBCs.
The Company believes that income from its maritime operations will be foreign
source income, which will not be subject to United States taxation. More than
75% of the Company's income for 1996 is not subject to United States income tax.
To the extent that the Company's income from non-maritime operations increases
at a rate in excess of any increase in its maritime-related income, the
percentage of the Company's income subject to tax would increase. A United
States subsidiary of the Company provides administrative services to the
maritime operations, and its earnings from such activities will generally be
subject to U.S. federal income tax at regular corporate rates (generally up to
35%) and may be subject to additional state and local income, franchise and
other taxes. Earnings from Steiner Training and Elemis Limited will be subject
to U.K. tax rates (generally up to 33%).
Effective December 1995, Nicolas D. Steiner acquired certain rights
with respect to the formulations for the "Elemis" and "La Therapie" lines of
skin and hair care products sold by the Company. Immediately thereafter, Mr.
Steiner contributed those rights to the capital of the Company. That
contribution was recorded at the historical cost of those rights of $219,000.
The Company acquired all of the shares of Elemis Limited, effective January
1996, from Nicolas D. Steiner and Clive E. Warshaw. The net book value of the
assets acquired was recorded at their historical cost of $543,000 (based on an
exchange rate of approximately 1.53 U.S. dollars to the British pound). The
transaction was not retroactively accounted for in a manner similar to a pooling
of interests due to the immateriality of Elemis Limited's operations compared to
the Company's combined operations. The Company believes that its acquisitions of
Elemis Limited and the "Elemis" and "La Therapie" product lines permit more
effective control of its manufacturing costs, inventory levels and the
development of beauty products because the operations with respect to those
products are under the direct supervision and control of Company officers. The
Company believes that the acquisitions of the "Elemis" and "La Therapie" product
lines contributed to an improvement in gross profit as a percentage of sales in
1996.
Revenues are generated by the Company from the sale of services and
products, primarily to cruise ship passengers. The Company bills its services at
rates which inherently include an immaterial charge for products used in the
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<PAGE>
rendering of such services. In 1996, sales of the Company's services and
products accounted for approximately 62% and 38% of the Company's revenues,
respectively.
Cost of sales includes (i) cost of service, including wages paid to
shipboard employees, rent payments to cruise lines (which are derived as a
percentage of service revenues or a minimum annual rent or a combination of
both) and other staff-related shipboard expenses and (ii) cost of product,
including wages paid to shipboard employees and rent payments to cruise lines
(which are derived as a percentage of product revenues or a minimum annual rent
or a combination of both). Cost of sales may be affected by, among other things,
sales mix, production levels, changes in prices and discounts, sales volume and
growth rate, purchasing and manufacturing efficiencies, tariffs, duties and
freight and inventory costs. Certain Cruise Line Concession Agreements provide
for increases in the percentage of services and products revenues payable as
rent payments and/or, as the case may be, the amount of minimum annual rental
payments over the terms of such agreements. Rental payments may also be
increased under new agreements with cruise lines that replace expiring
agreements. In general, the Company has experienced increases in rental payments
upon entering into new agreements with cruise lines. Cost of products includes
the cost of products sold through the Company's various retail methods of
distribution, including sales in shipboard facilities, through brochures
provided to cruise passengers and to land-based wholesale and retail customers.
To a lesser extent, cost of products also includes the cost of products consumed
in the rendering of services. Such amount would not be a material component of
the cost of services rendered and would not be practicable to separately
identify. Operating expenses include administrative expenses, salary and payroll
taxes and goodwill amortization related to the acquisition of CTO. Such goodwill
is being amortized over the three-year period that commenced in June 1994.
RECENTLY ISSUED ACCOUNTING STANDARDS. Beginning in 1996, the Company
implemented the provisions of Statement of Financial Accounting Standards No.
123 "Accounting for Stock-Based Compensation" ("SFAS 123") in accounting for
stock-based transactions with nonemployees and, accordingly, records
compensation expense in the consolidated statements of operations for such
transactions. The Company continues to apply the provisions of APB 25 for
transactions with employees, as permitted by SFAS 123.
The Company was required to adopt Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-lived Assets and for
Long-lived Assets to be Disposed of ("SFAS 121") in 1996. SFAS 121 establishes
accounting standards for recording the impairment of long-lived assets, certain
identifiable intangibles and goodwill. The adoption of SFAS 121 did not have a
material impact on the Company's financial position or the results of its
operations.
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<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain
selected income statement data expressed as a percentage of revenues:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
Services...................................................... 63.8% 65.7% 62.0%
Products...................................................... 36.2 34.3 38.0
----- ----- -----
Total revenues............................................ 100.0 100.0 100.0
----- ----- -----
Cost of sales:
Cost of services.............................................. 53.8 54.4 48.1
Cost of products.............................................. 29.9 30.0 26.9
----- ----- -----
Total cost of sales....................................... 83.7 84.4 75.0
----- ----- -----
Gross profit.............................................. 16.3 15.6 25.0
Operating expenses:
Administrative................................................ 4.7 5.7 4.9
Salary and payroll taxes...................................... 4.5 3.5 5.7
Amortization of intangibles................................... 3.2 4.2 3.6
----- ----- -----
Total-operating expenses.................................. 12.4 13.4 14.2
----- ----- -----
Income from operations.................................... 3.9 2.2 10.8
Other income (expense)............................................. (.8) (.7) (.2)
----- ----- -----
Income before provision for income taxes........................... 3.1 1.5 10.6
Provision for income taxes:
Non-recurring................................................. - - 4.6
Current and Deferred.......................................... 2.3 2.5 2.5
----- ----- -----
Total provision for income taxes.......................... 2.3 2.5 7.1
----- ----- -----
Net income (loss).................................................. .8% (1.0)% 3.5%
===== ===== =====
</TABLE>
1996 COMPARED TO 1995
REVENUES. Revenues increased approximately 27.9%, or $15.2 million, to
$69.6 million in 1996 from $54.4 million in 1995. Of this increase, $7.4 million
was attributable to increases in services provided on cruise ships and $7.8
million was attributable to increases in sales of products. The increase in
revenues for 1996 was primarily attributable to an increase of six in the
average number of spa ships in service, which generated greater aggregate
revenues to the Company than the aggregate revenues generated by the twelve
non-spa ships (on average) which the Company ceased to serve in 1996. The
Company had 695 shipboard staff members in service on average in 1996 and 655
shipboard staff members in service on average in 1995. Revenues per staff per
day increased by 15.8% in 1996 compared to 1995.
COST OF SERVICES. Cost of services as a percentage of services revenue
decreased to 77.6% in 1996 from 82.8% in 1995. This decrease was due to the
reduction in onboard expenses and an increase in revenues on ships where the
Company is subject to minimum annual rental payments.
COST OF PRODUCTS. Cost of products as a percentage of products revenue
decreased to 70.7% in 1996 from 87.5% in 1995. This decrease was a result of
lower costs achieved through the Company's ownership of the "Elemis" and "La
Therapie" product lines (previously supplied to the Company by third parties)
and a decrease in wages allocable to product sales, partially offset by an
increase in rent allocable to product sales on certain cruise ships covered by
agreements which became effective in 1996. As a result of the ownership of the
"Elemis" and "La Therapie" product lines, inventories are now recorded at lower
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<PAGE>
values, representing manufacturers' cost rather than the cost of obtaining
inventories from third parties.
OPERATING EXPENSES. Operating expenses as a percentage of revenues
increased to 14.2% in 1996 from 13.4% in 1995 primarily as a result of the
addition of salary and payroll taxes after the acquisition of Elemis Limited,
which was not owned by the Company in 1995 and increases in the compensation of
executive officers of the Company.
NON-RECURRING TAX CHARGE. In 1996 the Company had a non-recurring tax
charge of approximately $3.2 million related to the liquidation of CTO, a United
States subsidiary of the Company. The functions of CTO have been assumed by
other subsidiaries of the Company.
PROVISION FOR INCOME TAXES. The provision for income taxes decreased to
an overall effective rate of 23.6% in 1996 from an overall effective rate of
171.0% in 1995 due to the impact of greater non-tax deductible amortization of
intangibles and interest in the prior period. Without such amortization of
intangibles and interest, the overall effective rate in 1996 would have been
17.2%, compared to 39.9% in 1995.
1995 COMPARED TO 1994
REVENUES. Revenues increased approximately 37.2%, or $14.7 million, to
$54.4 million in 1995 from $39.7 million in 1994. Of such $14.7 million
increase, $12.6 million was attributable to the inclusion in the Company's
financial results of a full year of operations of CTO compared to the inclusion
of seven months of CTO's operations in 1994. Of the $14.7 million increase in
total revenues, $10.4 million was attributable to an increase in services
revenue and $4.3 million was attributable to an increase in products revenue.
Both of these increases resulted from a net increase of 20 cruise ships served
and an increase of 154 staff in service on average in 1995 compared to 1994. In
addition, revenues per staff per day increased 3.8% in 1995.
COST OF SERVICES. Cost of services as a percentage of services revenue
decreased to 82.8% in 1995 from 84.3% in 1994, primarily due to on-board staff
cost controls and reduction of other costs of service which occurred in late
1994 following the consolidation of the CTO operations with those of the
Company. These cost savings were realized during the first full year of combined
operations following the CTO acquisition.
COST OF PRODUCTS. Cost of products as a percentage of products revenue
increased to 87.5% in 1995 from 82.8% in 1994, due primarily to the upgrading of
inventories, including the discontinuance of certain products, on board cruise
ships served by CTO.
OPERATING EXPENSES. Operating expenses as a percentage of revenues
increased to 13.4% in 1995 from 12.4% in 1994, primarily as a result of the
first full year of amortization of intangibles arising from the CTO acquisition
and an increase in administrative expenses as a percentage of sales caused by
higher training costs during the first full year of combined operations
following the CTO acquisition in June 1994.
OTHER INCOME (EXPENSE). Other expense increased by $65,000 primarily as
a result of interest expense being amortized for a full year on the debt assumed
in the acquisition of CTO in June 1994.
PROVISION FOR INCOME TAXES. The provision for income taxes increased to
an overall effective rate of 171% in 1995 from an overall effective rate of
73.9% in 1994 due to the impact of greater non-tax deductible amortization of
intangibles and interest in 1995 compared to 1994. Without such amortization of
intangibles and interest, the overall effective rate in 1995 would have been
39.9% compared to 35.6% in 1994.
QUARTERLY RESULTS AND SEASONALITY
The following table sets forth the statement of operations data for the
four quarters of 1995 and 1996 and the percentage of revenues represented by the
line items presented. Although certain cruise lines have experienced moderate
seasonality, the Company believes that the introduction of cruise ships into
service throughout a year has mitigated the effect of seasonality on the
Company's results of operations. In addition, decreased passenger loads during
slower months for the cruise industry has not had a significant impact on the
Company's revenues.
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<PAGE>
However, due to the Company's dependence on the cruise industry, the Company's
revenues may in the future be affected by seasonality. The quarterly statement
of operations data set forth below were derived from Unaudited Consolidated
Financial Statements of the Company which, in the opinion of management of the
Company, contain all adjustments (consisting only of normal recurring
adjustments) necessary for the fair presentation of those statements.
<TABLE>
<CAPTION>
FISCAL 1995
-----------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................................... $12,980 $13,497 $13,784 $14,151
Gross profit...................................... 2,232 2,176 2,402 1,670
Administrative, salary and payroll taxes.......... 1,229 1,402 1,215 1,179
Amortization of intangibles....................... 573 573 573 573
Operating income (loss)........................... 430 201 614 (82)
Net income (loss)................................. (17) (162) 69 (453)
Net income (loss) per share....................... $ 0.00 $ (0.03) $ 0.01 $ (0.07)
Weighted Average Shares Outstanding............... 6,372 6,372 6,372 6,372
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1996
-----------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ......................................... $16,492 $16,769 $18,130 $18,189
Gross profit ..................................... 3,894 4,113 4,755 4,673
Administrative, salary and payroll taxes ......... 1,542 1,590 1,922 2,315
Amortization of intangibles ...................... 619 619 620 619
Operating income (loss) .......................... 1,733 1,904 2,213 1,739
Net income (loss) ................................ 1,183 1,334 1,719 (1,765)
Net income (loss) per share ...................... $0.19 $ 0.21 $0.27 $ (0.26)
Weighted Average Shares Outstanding .............. 6,372 6,372 6,372 6,782
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The business of the Company historically has been operated with cash
generated from operations, and borrowed funds have been utilized only for
acquisitions and limited capital expenditures.
In November 1996, the Company issued 828,000 of its Common Shares
pursuant to its IPO (which also included shares of a selling shareholder), which
generated net proceeds of approximately $9.7 million to the Company.
Approximately $3.4 million of the net proceeds were used to repay the remaining
outstanding indebtedness assumed by the Company in connection with the
contribution to the capital of the Company of the assets of the Maritime
Division and the common stock of CTO. Approximately $3.2 million were used to
pay the United States federal and state income tax liability incurred in
connection with the liquidation of CTO. The remaining net proceeds, in the
- 17 -
<PAGE>
approximate amount of $3.1 million, will be used for working capital purposes
and have been invested in cash equivalents.
The Company experienced an increase in inventories of approximately
$2.6 million in 1996 from 1995 as a result of the Company's acquisition of the
"Elemis" and "La Therapie" product lines. During 1994, 1995 and 1996, cash flows
from operating activities were $1.7 million, $3.5 million and $9.0 million,
respectively. At December 31, 1995 and 1996, the Company had working capital
of approximately $22,000 and $12.6 million, respectively.
In 1994, in connection with the acquisition of CTO, $1.7 million was
transferred to the Maritime Division from the non-maritime operations of Steiner
Group and Steiner Group incurred debt of approximately $4.0 million from a
financing company. That debt, which bore interest at an imputed rate of 7.5% per
annum, was payable in equal monthly installments and was secured by cruise
business - related assets. The Company assumed the outstanding balance of such
debt, as well as certain other debt of Steiner Group, aggregating approximately
$5.7 million, in connection with the contribution to its capital of the Maritime
Division and the common stock of CTO in November 1995. The remaining unpaid
balance of that debt, aggregating approximately $3.4 million, was repaid from
the net proceeds to the Company from the IPO.
In 1995, cash in the amount of $1.1 million was transferred by the
Maritime Division to the non-maritime operations of Steiner Group to support
these operations. See Consolidated Statements of Cash Flows.
The Company believes that cash generated from operations, together with
the net proceeds received from the IPO, will be sufficient to satisfy its cash
requirements through at least the next twelve months. If the Company were to
engage in any significant acquisition, it may require additional financing from
a third party. The Company currently does not have any agreement with respect to
an acquisition.
INFLATION
The Company does not believe that inflation has had a material adverse
effect on revenues or results of operations. However, public demand for leisure
activities, including cruises, is influenced by general economic conditions,
including inflation. Periods of economic recession or high inflation,
particularly in North America where a number of cruise passengers reside, could
have a material adverse effect on the cruise industry upon which the Company is
dependent.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
From time to time, including herein, the Company may publish
"forward-looking" statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Because such statements include risks and uncertainties, actual
results may differ materially from those expressed or implied by such forward-
looking statements. Factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements include, but
are not limited to, the factors set forth below under "Certain Factors That May
Affect Future Operating Results."
CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
In addition to other information in this report, the following
are important factors that should be considered in evaluating the Company and
its business.
- 18 -
<PAGE>
DEPENDENCE ON CRUISE LINE CONCESSION AGREEMENTS
The Company's revenues are generated primarily on cruise ships pursuant
to Cruise Line Concession Agreements under which the Company provides services
and products paid for by cruise passengers. The Cruise Line Concession
Agreements have specified terms, typically ranging from one to three years, with
an average remaining term per ship as of March 1, 1997 of approximately two
years. As of that date, Cruise Line Concession Agreements that expire within one
year covered 25 of the 85 ships served by the Company, which ships accounted for
approximately 17% of the Company's 1996 revenues. There can be no assurance that
any such agreement will be continued after its expiration date or that any
renewal will be on similar terms. In addition, the Cruise Line Concession
Agreements provide for termination by the cruise lines with limited or no
advance notice under certain circumstances, including, among other things,
failure of a cruise line to meet a specified passenger occupancy rate, the
withdrawal of a vessel from the cruise trade, the sale or lease of a vessel or
the failure of the Company to receive specified passenger service rankings. As
of March 1, 1997, agreements covering a total of three ships, eleven ships and
one ship permit the cruise lines to terminate the agreements on six months', 90
days' and 60 days' notice, respectively, for any reason. There can be no
assurance that any of the Cruise Line Concession Agreements will not be
terminated prior to its specified termination date.
DEPENDENCE ON CRUISE INDUSTRY
The Company's revenues are generated principally from cruise ship
passengers. Therefore, the ability of the cruise industry to attract passengers
is critical to the financial condition of the Company. According to CLIA, North
American Cruises experienced an increase in passenger volume from approximately
2.2 million passengers in 1985 to approximately 4.5 million in 1993. However,
passenger volume declined to approximately 4.4 million in 1995. While, according
to CLIA, passenger volume increased to approximately 4.6 million in 1996, there
can be no assurance as to the future growth of the cruise industry. The cruise
industry is subject to significant risks as described below.
EXTRAORDINARY EVENTS. The cruise lines operate in waters and call on
ports throughout the world, including geographic regions that from time to time
experience political and civil unrest and armed hostilities. Historically, such
events have adversely affected demand for cruise vacations. Furthermore, the
activities of the cruise industry may be adversely affected by severe weather
conditions, both at sea and at ports of embarkation. Publicized operational
difficulties on cruise ships also could adversely affect the cruise industry.
REGULATION. The cruise industry is subject to significant United States
and international regulation relating to, among other things, financial
responsibility, environmental matters and passenger safety. With respect to the
latter, enhanced passenger safety standards adopted as part of the SOLAS
Convention by the International Maritime Organization are required to be phased
in by 1997 with respect to fire safety and 2010 with respect to vessel
structural requirements. These standards have caused the retirement of certain
cruise ships and otherwise could adversely affect certain of the cruise lines,
including those with which the Company has Cruise Line Concession Agreements.
Agreements. From time to time, various other regulatory and legislative changes
have been or may in the future be proposed or enacted that could have an adverse
effect on the cruise industry.
LOSSES AND CONSOLIDATION OF CRUISE LINES. Certain cruise lines with
which the Company has Cruise Line Concession Agreements have experienced
decreases in earnings or losses in recent years. In October 1995, Regency
Cruises, which operated five ships, ceased operations. At the time of such
cessation, the Company had an agreement to provide services on board all of
those ships. In addition, the cruise industry generally has experienced
consolidation during the past few years and, according to cruise industry
analysts, further consolidation is anticipated. Continued consolidation would
result in the Company's dependence on agreements with a smaller number of cruise
lines. Under such circumstances, terminations of even a few Cruise Line
Concession Agreements could have a material adverse effect on the Company.
- 19 -
<PAGE>
COMPETITION AND ECONOMIC CONDITIONS. Cruise lines compete for consumer
disposable leisure time dollars with other vacation alternatives such as
land-based resort hotels and sightseeing vacations. In addition, public demand
for vacation activities is influenced by general economic conditions. Periods of
general economic recession, particularly in North America where a substantial
number of cruise passengers reside, could have a material adverse effect on the
cruise industry.
MINIMUM PAYMENTS UNDER CRUISE LINE CONCESSION AGREEMENTS
As of March 1, 1997, pursuant to Cruise Line Concession Agreements
covering a total of 55 ships being served by the Company and seven additional
ships not yet in service, the Company is obligated to make certain minimum
payments to the cruise lines irrespective of the amount of revenues the Company
receives from passengers. Accordingly, the Company could be obligated to pay
more than the amount collected from passengers. As of March 1, 1997, the Company
had guaranteed total minimum payments (excluding payments based on passenger
loads applicable to certain ships served by the Company) of the following
approximate amounts for the indicated years: 1997 - $18.3 million, 1998 - $21.1
million, 1999 - $18.1 million, 2000 - $15.2 million, 2001 - $15.1 million and
thereafter - $2.5 million.
DEPENDENCE ON CERTAIN CRUISE LINES
The Company's revenues are dependent to a significant extent on a
limited number of cruise lines. Revenues from passengers of each of the
following cruise lines accounted for more than five percent of the Company's
revenues in 1996: Carnival (including its subsidiaries, Holland America,
Seabourn and Airtours)--33%; Royal Caribbean--18%; P&O (including Princess, P&O,
and P&O European Ferries--13%); Norwegian--9% and Celebrity--6%. Those lines
also accounted for 59 of the 85 ships served by the Company as of March 1, 1997.
The loss of any of these cruise line customers could have a material adverse
effect on the Company's revenues.
DEPENDENCE ON QUALIFIED SHIPBOARD EMPLOYEES
The Company's success is dependent on its ability to recruit and retain
personnel qualified to perform the Company's shipboard services. Shipboard
employees typically are employed pursuant to agreements with terms of eight
months. There can be no assurance that the Company will be able to continue to
attract a sufficient number of applicants possessing the requisite skills
necessary to the Company's business.
DEPENDENCE ON SINGLE PRODUCT MANUFACTURER
Almost all of the Company's proprietary beauty products are produced by
a single manufacturer pursuant to an agreement terminating in 2001. In the event
such manufacturer ceased producing the Company's products, the Company believes
that suitable alternative manufacturers could be obtained, although the
transition to other manufacturers could result in significant production delays.
Any significant delay or disruption in the supply of the Company's products
could have a material adverse effect on the Company's product sales.
TAXATION OF THE COMPANY
The Company is a Bahamian IBC that, directly or indirectly, owns all of
the shares of (i) Steiner Transocean, a Bahamian IBC that operates the Company's
shipboard business; (ii) Cosmetics, a Bahamian IBC that owns the rights to the
Company's "Elemis" and "La Therapie" product lines; (iii) Maritime Services,
a Florida limited liability company that performs administrative services in
connection with the Company's maritime operations;(iv) Steiner Beauty Products,
Inc., a Florida corporation that sells skin and hair care products ("Steiner
Beauty"); (v) Steiner Training, a United Kingdom company that provides training
to the Company's shipboard personnel; and (vi) Elemis Limited, a United Kingdom
company that arranges for the production, purchasing and supplying of the
Company's "Elemis" and "La Therapie" products. Maritime Services will not be
subject to United States federal income tax, but the Company, as a result of its
ownership of interests in Maritime Services, will be subject to such tax (at
- 20 -
<PAGE>
regular corporate rates which are generally up to 35%) with respect to the net
income of Maritime Services. In addition, the Company could be subject to the
federal branch profits tax of 30% on certain annual decreases in the United
States net equity of the Company as a result of its ownership of Maritime
Services. The income of Steiner Beauty generally will be subject to United
States federal income tax at regular corporate rates. Maritime Services and
Steiner Beauty may be subject to additional state and local income, franchise
and other taxes. Among other things, Maritime Services, pursuant to an agreement
with Steiner Transocean, receives payments from Steiner Transocean in return for
certain administrative services it provides to Steiner Transocean. The United
States Internal Revenue Service (the "Service") may assert that transactions
between Maritime Services and Steiner Transocean and between other direct and
indirect subsidiaries of the Company do not contain arm's length terms and that
income or deductions should therefore be reallocated among the subsidiaries in a
manner that increases the taxable income of Maritime Services. Any increase in
the taxable income of Maritime Services may result in the imposition of interest
and penalties.
Although Steiner Transocean is a Bahamian IBC and maintains an office
in The Bahamas, Steiner Transocean may be deemed by the Service to have a fixed
place of business in the United States as a result of its relationship with
Maritime Services. A foreign corporation generally is subject to United States
federal corporate income tax at a rate generally up to 35% on its United
States-source income and on its foreign-source income that is effectively
connected to a fixed place of business it maintains in the United States. The
Company believes that Steiner Transocean's income will be foreign-source income,
none of which will be effectively connected to a fixed place of business in the
United States. The Company's belief is based on (i) all of Steiner Transocean's
shipboard spa and salon services being performed outside the United States and
its possessions and their respective territorial waters; (ii) passage of title
and transfer of beneficial ownership of all beauty products sold by Steiner
Transocean taking place outside the United States; and (iii) the activities
performed on behalf of Steiner Transocean in the United States not constituting
a material factor in generating income for Steiner Transocean. However, a
portion of Steiner Transocean's income could be subject to United States federal
income tax to the extent the activities described in (i) or (ii) were deemed to
occur in the United States, its possessions or their respective territorial
waters, or if the activities performed on behalf of Steiner Transocean in the
United States were deemed to constitute such a material factor. In that event,
Steiner Transocean would be subject to tax at a rate of up to 35% on such
income, rather than having no tax liability on such income under Bahamian law.
CTO was liquidated for United States federal and state income tax
purposes during the fourth quarter of 1996 and, accordingly, will be treated as
if it sold all its assets for fair market value on the date those assets are
distributed to the Company. Based on the value of CTO's assets, as determined by
an unrelated party, the Company calculated CTO's tax liability resulting from
its liquidation at approximately $3.2 million. However, if the Service were to
successfully ascribe a higher value to CTO's assets, the tax liability resulting
from CTO's liquidation could be increased correspondingly.
COMPETITION
The Company competes with passenger activity alternatives on cruise
ships and with providers of services and products similar to those of the
Company seeking agreements with cruise lines. Gambling casinos, bars and a
variety of shops are found on almost all of the ships served by the Company. In
addition, the ships call on ports which provide opportunities for additional
shopping as well as other activities that compete with the Company for passenger
dollars. Cruise ships also typically offer swimming pools and other recreational
facilities and activities, and musical and other entertainment without
additional charge. Furthermore, a number of cruise lines currently perform the
shipboard services performed by the Company with their own personnel, and one or
more additional cruise lines could, in the future, elect to perform such
services themselves or discontinue offering such services. In addition, the
Company believes that there currently are several other entities offering
services to the cruise industry similar to those provided by the Company.
However, the Company believes that no single competitor provides services to a
significant number of ships. Additional entities, including those with
significant resources, also could compete with the Company in the future.
- 21 -
<PAGE>
REGULATION
The Company's advertising and product labeling practices in the United
States are subject to regulation by the FTC and FDA, as well as various other
federal, state and local regulatory authorities. The contents of the Company's
products are also subject to regulation in the United States. The Company
(including its packaging activities) is also subject to similar regulation under
the laws of the United Kingdom where, in addition to that country's own
laws and regulations, certain European Union laws and regulations also apply.
Compliance with federal, state and local laws and regulations and non-United
States requirements, including laws and regulations pertaining to the protection
of the environment, has not had a material adverse effect on the Company.
However, federal, state and local regulations in the United States and
non-United States jurisdictions, including increasing European Union regulation,
that are designed to protect consumers or the environment, have had and can be
expected to have, an influence on product claims, manufacturing, contents and
packaging.
POTENTIAL CLAIMS
The nature and use of the Company's products and services could give
rise to claims, including product liability, if one or more of the Company's
customers were to be injured in connection with the Company's services or suffer
adverse reactions following use of its products. Such adverse reactions could be
caused by various factors, many of which are beyond the Company's control,
including hypoallergenic sensitivity and the possibility of malicious tampering
with the Company's products. In the event of any such occurrence, the Company
could incur substantial litigation expense, receive adverse publicity and suffer
a loss of sales. The Company believes that it has insurance sufficient to cover
foreseeable liabilities in connection with its products and services.
- 22 -
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's consolidated Financial Statements and the Notes thereto,
together with the report thereon of Arthur Andersen LLP dated February 21, 1997,
are filed as part of this report, beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
- 23 -
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to directors of the Company and compliance
with respect to Section 16(a) of the Securities Exchange Act of 1934 may be
found under the captions "Proposal 1--Election of Directors" and "Security
Ownership of Management and Certain Beneficial Owners" in the Proxy Statement.
Such information is incorporated herein by reference. Information with respect
to executive officers may be found under the caption "Executive Officers of the
Registrant" herein.
ITEM 11. EXECUTIVE COMPENSATION.
The information in the Proxy Statement set forth under the caption
"Executive Compensation" is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under the caption "Security Ownership of
Management and Certain Beneficial Owners" in the Proxy Statement is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information set forth under the captions "Executive Compensation"
and "Certain Transactions" in the Proxy Statement is incorporated herein by
reference.
- 24 -
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements
The following report and Consolidated Financial Statements are
filed as part of this report beginning on page F-1, pursuant
to Item 8.
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of December 31, 1995
and 1996
Consolidated Statements of Operations for the years
ended December 31, 1994, 1995 and 1996
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1994, 1995 and 1996
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Financial statement schedules have been omitted since they are
either not required, not applicable or the information is
otherwise included.
(3) Exhibit Listing
See list of the Exhibits at 14(c), below.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of
fiscal year 1996.
- 25 -
<PAGE>
(c) The following is a list of all exhibits filed as a part of the
report:
EXHIBIT
NUMBER DESCRIPTION
2.1 Plan of Complete Liquidation and Dissolution of Coiffeur
Transocean (Overseas), Inc.*
3.1 Amended and Restated Memorandum of Association of Steiner
Leisure Limited**
3.2 Amended and Restated Articles of Association of Steiner Leisure
Limited
4.1 Specimen of Common Share certificate**
10.1 Employment Agreement dated as of October 17, 1996 between Steiner
Leisure Limited and Clive E. Warshaw***+
10.1(a) Amendment No. 1 to Employment Agreement between Steiner Leisure
Limited and Clive E. Warshaw dated as of March 25, 1997.+
10.2 Employment Agreement dated as of October 23, 1996 between Steiner
Leisure Limited and Leonard I. Fluxman*+
10.2(a) Amendment No. 1 to Employment Agreement between Steiner Leisure
Limited and Leonard I. Fluxman dated as of March 25, 1997.+
10.3 Employment Agreement dated as of October 21, 1996 between Steiner
Leisure Limited and Michele Steiner Warshaw***+
10.3(a) Amendment No. 1 to Employment Agreement between Steiner Leisure
Limited and Michele Steiner Warshaw dated as of March 25, 1997+
10.4 Employment Agreement dated as of October 17, 1996 between Steiner
Transocean Limited and Amanda Jane Francis***+
10.4(a) Amendment No. 1 to Employment Agreement between Steiner Transocean
Limited and Amanda Jane Frances dated as of March 25, 1997.+
10.5 Service Agreement dated as of September 18, 1996 between Elemis
Limited and Sean C. Harrington**+
10.5(a) Amendment No. 1 to Service Agreement between Elemis Limited and
Sean C. Harrington dated as of March 25, 1997+
10.6 Amended and Restated 1996 Share Option and Incentive Plan+
10.7 Amended and Restated Non-Employee Directors' Share Option Plan
(formerly, "Non-Employee Directors' Share Compensation Plan)+
10.8 Agreement dated May 29, 1996 for the sale and purchase of the
share capital of Elemis Limited among Nicolas D. Steiner,
Clive E. Warshaw, Steiner Leisure Limited and Linda D. Steiner**
10.9 Loan Note dated May 29, 1996 in connection with purchase of the
share capital of Elemis Limited issued by Steiner Leisure
Limited to Nicolas D. Steiner**
10.10 Loan Note dated May 29, 1996 in connection with purchase of the
share capital of Elemis Limited issued by Steiner Leisure Limited
to Clive E. Warshaw**
10.11 Deferred Compensation Agreement dated as of December 31, 1996
between Steiner Leisure Limited and Leonard I. Fluxman+
10.12 Split Dollar Insurance Agreement dated as of March 25, 1997
between Steiner Leisure Limited and Leonard I. Fluxman+
21.1 List of subsidiaries of Steiner Leisure Limited*
27 Financial Data Schedule
- ----------------------------------
*Previously filed with Amendment Number 4 to the Company's Registration
Statement on Form F-1, Registration Number 333-5266, and incorporated herein by
reference.
- 26 -
<PAGE>
**Previously filed with Amendment Number 2 to the Company's Registration
Statement on Form F-1, Registration Number 333-5266, and incorporated herein by
reference.
***Previously filed with Amendment Number 3 to the Company's Registration
Statement on Form F-1, Registration Number 333-5266, and incorporated herein by
reference.
+ Management contract or compensatory plan or arrangement.
- 27 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on March 27, 1997.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
----------------------------
Clive E. Warshaw
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities
indicated on March 27, 1997.
SIGNATURE TITLE(S)
/S/ CLIVE E. WARSHAW Chairman of the Board
- ------------------------------ and Chief Executive Officer
Clive E. Warshaw (Principal Executive Officer)
/S/ LEONARD I. FLUXMAN
- ----------------------------- Director and Chief Operating
Leonard I. Fluxman Officer and Chief Financial
Officer (Principal Financial
and Accounting Officer)
/S/ MICHELE STEINER WARSHAW
- ----------------------------- Director
Michele Steiner Warshaw
/S/ CHARLES D. FINKELSTEIN
- ----------------------------- Director
Charles D. Finkelstein
/S/ JONATHAN M. MARINER
- ----------------------------- Director
Jonathan M. Mariner
/S/ GRAHAM M. WALLACE
- ------------------------------ Director
Graham M. Wallace
- 28 -
<PAGE>
STEINER LEISURE LIMITED AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheets as of December 31, 1995 and 1996 F-2
Consolidated Statements of Operations for the years ended
December 31, 1994, 1995 and 1996 F-3
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1994, 1995 and 1996 F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996 F-5
Notes to Consolidated Financial Statements F-7
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Steiner Leisure Limited and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Steiner Leisure
Limited (a Bahamian international business company) and subsidiaries as of
December 31, 1995 and 1996, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Steiner Leisure Limited and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Miami, Florida,
February 21, 1997.
F-1
<PAGE>
<TABLE>
<CAPTION>
STEINER LEISURE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS DECEMBER 31,
---------------------------------------
<S> <C> <C>
1995 1996
CURRENT ASSETS: ------------- --------------
Cash and cash equivalents
Accounts receivable $ 1,397,000 $ 13,625,000
Inventories 2,362,000 3,413,000
Other current assets 2,603,000 5,232,000
344,000 810,000
Total current assets ----------- ------------
6,706,000 23,080,000
PROPERTY AND EQUIPMENT, net
2,258,000 2,211,000
DUE FROM RELATED PARTIES
402,000 -
INTANGIBLE ASSETS, net
3,571,000 1,111,000
OTHER ASSETS
383,000 254,000
Total assets ----------- ------------
$13,320,000 $ 26,656,000
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued expenses $ 1,211,000 $ 2,041,000
Current portion of capital 2,182,000 3,732,000
lease obligations
Current maturities of long-term debt 59,000 106,000
Due to related parties 2,091,000 217,000
Income taxes payable 891,000 -
250,000 4,389,000
Total current liabilities ----------- ------------
6,684,000 10,485,000
CAPITAL LEASE OBLIGATIONS, net of current ----------- ------------
portion
42,000 91,000
LONG-TERM DEBT, net of current portion ----------- ------------
3,020,000 -
COMMITMENTS (Note 9) ----------- ------------
SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par value;
10,000,000 shares authorized,
none issued and outstanding
Common shares, $.01 par value; - -
20,000,000 shares authorized,
6,372,000 shares in 1995 and
7,200,000 shares in 1996 issued
and outstanding
Subscription receivable 63,720 72,000
Additional paid-in capital (100) -
Foreign currency translation adjustment 723,380 10,532,000
Retained earnings/divisional equity - 218,000
2,787,000 5,258,000
Total shareholders' equity ----------- ------------
3,574,000 16,080,000
Total liabilities and ----------- ------------
shareholders' equity
$13,320,000 $ 26,656,000
=========== ============
The accompanying notes to consolidated financial statements are an integral part of these balance sheets.
</TABLE>
F-2
<PAGE>
STEINER LEISURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994, 1995 AND 1996
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1994 1995 1996
-------------- -------------- -------------
REVENUES:
Services $ 25,310,000 $ 35,764,000 $ 43,122,000
Products 14,340,000 18,648,000 26,458,000
------------ ------------ ------------
Total revenues 39,650,000 54,412,000 69,580,000
------------ ------------ ------------
COST OF SALES:
Cost of services 21,324,000 29,623,000 33,446,000
Cost of products 11,867,000 16,309,000 18,699,000
------------ ------------ ------------
Total cost of sales 33,191,000 45,932,000 52,145,000
------------ ------------ ------------
Gross profit 6,459,000 8,480,000 17,435,000
------------ ------------ ------------
OPERATING EXPENSES:
Administrative 1,874,000 3,100,000 3,396,000
Salary and payroll taxes 1,785,000 1,925,000 3,973,000
Amortization of intangibles 1,264,000 2,292,000 2,477,000
------------ ----------- ------------
Total operating expenses 4,923,000 7,317,000 9,846,000
------------ ----------- ------------
Income from operations 1,536,000 1,163,000 7,589,000
------------ ----------- ------------
OTHER INCOME (EXPENSE):
Interest income 27,000 43,000 137,000
Interest expense (332,000) (413,000) (305,000)
------------- ----------- ------------
Total other income
(expense) (305,000) (370,000) (168,000)
------------- ----------- ------------
Income before provision for
income taxes 1,231,000 793,000 7,421,000
PROVISION FOR INCOME TAXES:
Current 940,000 1,356,000 1,750,000
Deferred (30,000) - -
Nonrecurring - - 3,200,000
------------- ----------- ------------
Total provision for
income taxes 910,000 1,356,000 4,950,000
------------- ----------- ------------
Net income (loss) $ 321,000 $ (563,000) $ 2,471,000
============= =========== ============
NET INCOME (LOSS) PER SHARE $ 0.05 $ (0.09) $ 0.38
============= =========== ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 6,372,000 6,372,000 6,470,000
============= =========== ============
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
STEINER LEISURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
Foreign Retained
Additional Currency Earnings/
Common Common Paid-In Subscription Translation Divisional
Shares Shares Capital Receivable Adjustment Equity Total
---------- ------------ ------------ --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993 6,372,000 $ 63,720 $ (63,620) $ (100) $ (32,000) $ 2,436,000 $ 2,404,000
Net income - - - - - 321,000 321,000
Contribution from Steiner Group
Limited - - 568,000 - - - 568,000
Divisional transfers - - - - - 1,719,000 1,719,000
Foreign currency translation
adjustment - - - - 138,000 - 138,000
--------- -------- ----------- --------- ---------- ----------- -----------
BALANCE, December 31, 1994 6,372,000 63,720 504,380 (100) 106,000 4,476,000 5,150,000
Net loss - - - - - (563,000) (563,000)
Contribution from shareholder - - 219,000 - - - 219,000
Divisional transfers - - - - - (1,126,000) (1,126,000)
Foreign currency translation
adjustment - - - - (106,000) - (106,000)
--------- ------- ----------- -------- --------- --------- -----------
BALANCE, December 31, 1995 6,372,000 63,720 723,380 (100) - 2,787,000 3,574,000
Net income - - - - - 2,471,000 2,471,000
Collection of subscription
receivable - - (100) 100 - - -
Net proceeds from sale of common
shares 828,000 8,280 9,695,720 - - - 9,704,000
Share options issued to
nonemployee - - 113,000 - - - 113,000
Foreign currency translation
adjustment - - - - 218,000 - 218,000
--------- -------- ----------- --------- --------- ---------- -----------
BALANCE, December 31, 1996 7,200,000 $ 72,000 $10,532,000 $ - $ 218,000 $5,258,000 $16,080,000
========= ======== =========== ========= ========= ========== ===========
The accompanying notes to consolidated financial statements are an integral part of these statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STEINER LEISURE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1994 1995 1996
------------- -------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 321,000 $ (563,000) $ 2,471,000
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities-
Depreciation and amortization 1,680,000 2,776,000 3,075,000
Accretion of debt discount 210,000 304,000 177,000
Deferred tax benefit (30,000) - -
Share options issued to nonemployee - - 113,000
(Increase) decrease in-
Accounts receivable (1,187,000) 1,011,000 434,000
Inventories (351,000) 258,000 (1,874,000)
Other current assets (121,000) 221,000 (508,000)
Other assets (89,000) (48,000) 166,000
Increase (decrease) in- 791,000 (694,000) 317,000
Accounts payable
Accrued expenses 428,000 14,000 792,000
Income taxes payable - 250,000 3,835,000
----------- ----------- ------------
Net cash provided by operating
activities 1,652,000 3,529,000 8,998,000
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (223,000) (320,000) (215,000)
Acquisitions, net of cash acquired (5,458,000) - 105,000
Advances to related parties - (402,000) (2,973,000)
Collection of advances to related
parties - - 3,164,000
------------ ----------- ------------
Net cash (used in) provided by
investing activities (5,681,000) (722,000) 81,000
------------ ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations (34,000) (70,000) (115,000)
Borrowings on long-term debt 4,302,000 - -
Payments on long-term debt (832,000) (2,263,000) (5,679,000)
Advances from related parties 156,000 891,000 -
Payments on advances from related
parties - (156,000) (894,000)
Transfers (to) from nonmaritime
operations 1,719,000 (1,126,000) -
Net proceeds from sale of common
shares - - 9,704,000
------------ ----------- ------------
Net cash provided by (used in)
financing activities 5,311,000 (2,724,000) 3,016,000
------------ ----------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 138,000 (106,000) 133,000
F-5
<PAGE>
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,420,000 (23,000) 12,228,000
CASH AND CASH EQUIVALENTS, beginning
of period - 1,420,000 1,397,000
------------ ----------- ------------
CASH AND CASH EQUIVALENTS, end of
period $ 1,420,000 $ 1,397,000 $ 13,625,000
============ =========== ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the year for-
Interest $ 139,000 118,000 $ 178,000
============ =========== ============
Income taxes $ 823,000 $ 1,101,000 $ 1,080,000
============ =========== ============
SUPPLEMENTAL DISCLOSURES OF NONCASH
TRANSACTIONS (See Notes 1 and 10)
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-6
<PAGE>
STEINER LEISURE LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION:
Steiner Leisure Limited ("SLL") and subsidiaries provide spa services and skin
and hair care products to passengers on board cruise ships worldwide. SLL,
incorporated in the Bahamas, commenced operations effective November 1995 with
the contributions of substantially all of the assets and certain of the
liabilities of the Maritime Division (the "Maritime Division") of Steiner Group
Limited, now known as STGR Limited ("Steiner Group"), a division of a U.K.
company and an affiliate of SLL, and all of the outstanding common stock of
Coiffeur Transocean (Overseas), Inc. ("CTO"), a Florida corporation and a wholly
owned subsidiary of Steiner Group. The contributions of net assets of the
Maritime Division and CTO were recorded at historical cost in a manner similar
to a pooling of interests. Accordingly, the consolidated financial statements
include the operations of the Maritime Division for all periods presented and of
CTO for the period since the June 1, 1994 acquisition. See below.
When used herein, unless the context otherwise requires, "Company" refers to
SLL, its subsidiaries and its predecessor businesses conducted through the
Maritime Division and CTO.
Effective June 1, 1994, Steiner Group purchased all outstanding stock of
CTO for total consideration of $8,500,000 in a transaction accounted for as a
purchase as follows:
Purchase price $ 8,400,000
Cost of acquisition 100,000
-------------
8,500,000
Fair value of net assets acquired 1,997,000
-------------
Intangible assets $ 6,503,000
=============
A portion of the purchase price was financed through a $4,050,000 noninterest
bearing note and a noninterest bearing loan from the former shareholder of CTO
in the amount of $1,802,000. The difference between the present value of the
note and its face value of $568,000 was considered a contribution from Steiner
Group to the Company. The difference between the present value of the
seller note and its face value is reflected as a reduction of the purchase
price. Interest was imputed using the Company's weighted average borrowing rate
of 7.5% (see Note 6).
Additionally, if the gross profits of CTO exceeded $4,246,000 for the years
ended December 31, 1994 and 1995, the excess, up to a maximum amount of
$300,000, would be paid to CTO's former shareholder. As of December 31, 1996,
the maximum amount owed relating to 1994 and 1995 was paid. In connection with
the acquisition, the Company entered into a consulting agreement with the former
shareholder (see Note 9(c)). The former shareholder did not exercise control
over the day-to-day operations of CTO and "earn-out" payments were required
regardless of the former shareholder's continued association with CTO.
Accordingly, such payments have been reflected as an increase in the purchase
price.
The intangible assets generated from this acquisition primarily relate to CTO's
concession agreements with the cruise lines and the usefulness of the business
as a going concern as determined by independent appraisal. The concession
agreements did not provide for a right of renewal by CTO. The average remaining
life of these assets was approximately three years. As a result, intangible
assets are being amortized over a period of three years, the life of the
underlying assets.
F-7
<PAGE>
On an unaudited pro forma basis, had the acquisition of CTO occurred as of the
beginning of the period presented, the Company's results of operations would
have been as follows (in thousands):
1994
-------------------------------
REVENUES NET INCOME
---------- ------------
Historical results $ 39,650 $ 321
CTO, prior to the June 1, 1994 acquisition 10,046 354
Pro forma adjustments - 113
--------- ------
Pro forma $ 49,696 $ 788
========= ======
Pro forma adjustments represent the impact of amortization, interest expense,
taxes and the elimination of duplicate administrative fees and intercompany
management fees.
For periods prior to October 31, 1995, the accompanying consolidated financial
statements have been prepared from the books and records of Steiner Group.
Accordingly, the consolidated statements of operations include allocations of
expenses which are material in amount. Such expenses include allocations for
corporate overhead, payroll, facilities, administration and other overhead which
were allocated to the Maritime Division using a proportional cost method of
allocation. This method considers the direct amounts of revenue and costs and
allocates non-direct costs to the division based on the proportion of divisional
direct costs and revenues to total cost and revenues. This method is used when
specific identification of expenses is not practicable. Management believes that
such allocations are representative of stand-alone expenses based on the
Maritime Division's operations. The divisional equity of the Maritime Division
reflects transfers of cash to and from the non-Maritime Division operations of
Steiner Group. These amounts are considered capital contributions or
distributions as they are non-interest bearing and were repaid or collected, as
the case may be, upon transfer of the net assets to SLL.
The tax provision for each period prior to October 31, 1995 reflects taxes which
would have been applicable to the divisional income if the Maritime Division
were a stand alone entity, at an estimated foreign tax rate of 33%. In the
opinion of management, the results of operations and cash flows of the Company
are properly reflected in the accompanying consolidated financial statements.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(A) PRINCIPLES OF CONSOLIDATION-
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
(B) CASH AND CASH EQUIVALENTS-
For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid investments purchased with a maturity of three months or less
at the date of purchase to be cash equivalents. At December 31, 1995 and 1996,
cash and cash equivalents include interest-bearing deposits of $1,397,000 and
$11,862,000, respectively.
F-8
<PAGE>
(C) INVENTORIES-
Inventories, consisting principally of beauty products, are stated at the lower
of cost (first-in, first-out) or market. Inventories consist of the following:
DECEMBER 31,
--------------------------------------
1995 1996
------------- --------------
Finished goods $ 2,603,000 $ 3,997,000
Raw materials - 1,235,000
----------- ------------
$ 2,603,000 $ 5,232,000
=========== ============
(D) PROPERTY AND EQUIPMENT-
Property and equipment are recorded at cost. Depreciation is provided over
estimated useful lives of the respective assets on a straight-line basis.
Leasehold improvements are amortized on a straight-line basis over periods not
exceeding the respective terms of the leases.
(E) REVENUE RECOGNITION-
The Company recognizes revenues earned as services are provided and as retail
products are sold.
(F) AMORTIZATION-
Intangible assets are being amortized on a straight-line basis over 3 years,
representing the approximate remaining life of the acquired intangible assets of
CTO, its concession agreements. Subsequent to an acquisition, the Company
continually evaluates whether later events and circumstances have occurred that
indicate the remaining net book value may warrant revision or may not be
recoverable. When factors indicate that the net book value should be evaluated
for possible impairment, the Company uses an estimate of the related business's
undiscounted operating income over the remaining life of the cost in excess of
net assets of acquired businesses, in measuring whether such cost is
recoverable. At December 31, 1995 and 1996, accumulated amortization was
$3,556,000 and $6,016,000, respectively.
In March 1995, Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" ("SFAS 121") was issued. SFAS 121 establishes accounting standards for
recording the impairment of long-lived assets, certain identifiable intangibles
and goodwill. The Company adopted the provisions of SFAS 121 for the year ended
December 31, 1996, as required, which did not have an impact on its results of
operations and financial position.
(G) INCOME TAXES-
The Company files separate tax returns for its domestic subsidiaries. In
addition, the Company's foreign subsidiaries file income tax returns in their
respective countries of incorporation, where required. The Company follows
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). SFAS No. 109 utilizes the liability method and deferred
taxes are determined based on the estimated future tax effects of differences
between the financial statement and tax bases of assets and liabilities given
the provisions of enacted tax laws. SFAS No. 109 permits the recognition of
deferred tax assets. Deferred income tax provisions and benefits are based on
the changes to the asset or liability from period to period.
F-9
<PAGE>
In November 1996, the Company liquidated CTO. As a result, CTO's functions were
assumed by the Company and its cruise line agreements were assigned to the
Company. The liquidation of CTO was a taxable transaction for income tax
purposes. CTO was treated as if it had sold all of its assets at fair value on
the date of distribution of these assets to the Company. Based on the value of
the assets of CTO as determined by an independent appraiser, the Company has
determined that CTO's income tax liability resulting from the liquidation is
approximately $3.2 million. This amount has been reflected as a nonrecurring
component of the provision for income taxes in the Company's consolidated
financial statements. Prior to the CTO liquidation, the Company filed a
consolidated tax return for its domestic subsidiaries.
(H) TRANSLATION OF FOREIGN CURRENCIES-
Assets and liabilities of foreign subsidiaries are translated at the rate of
exchange in effect at the balance sheet date; income and expenses are translated
at the average rates of exchange prevailing during the year. The related
translation adjustments are reflected in the accumulated translation adjustment
section of the consolidated balance sheets. Foreign currency gains and losses
resulting from transactions, including intercompany transactions are included in
results of operations.
(I) NET INCOME (LOSS) PER SHARE-
Net income (loss) per common share and common share equivalents have been
computed by dividing net income (loss) by the weighted average number of common
shares and dilutive common share equivalents outstanding, after applying the
treasury stock method. During 1994 and 1995, there were no common share
equivalents. Primary and fully diluted net income (loss) per share are the same
for all periods presented.
(J) USE OF ESTIMATES IN THE PREPARATION
OF CONSOLIDATED FINANCIAL STATEMENTS-
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(K) FAIR VALUE OF FINANCIAL INSTRUMENTS-
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments" ("SFAS 107"), requires disclosure of the fair
value of certain financial instruments. Cash and cash equivalents, other current
assets, other assets, accrued expenses and debt are reflected in the
accompanying consolidated financial statements at cost, which approximates fair
value. All long-term debt balances bear interest, or, if noninterest bearing,
have been discounted to approximate fair value.
(L) STOCK-BASED COMPENSATION-
Beginning in 1996, the Company implemented the provisions of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
("SFAS 123") in accounting for stock-based transactions with nonemployees and,
accordingly, records compensation expense in the consolidated statements of
operations for such transactions. The Company continues to apply the provisions
of APB 25 for transactions with employees, as permitted by SFAS 123.
F-10
<PAGE>
(3) PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
DECEMBER 31,
------------------------------------
Useful Life
in Years 1995 1996
------------- -------------- --------------
Furniture and fixtures 5-7 $ 92,000 $ 255,000
Computers and equipment 3-8 764,000 1,169,000
Leasehold improvements 3-5 2,791,000 2,883,000
------------ -------------
3,647,000 4,307,000
Less: Accumulated depreciation
and amortization (1,389,000) (2,096,000)
------------ -------------
$ 2,258,000 $ 2,211,000
============ =============
(4) ACCRUED EXPENSES:
Accrued expenses consist of the following:
DECEMBER 31,
------------------------------------
1995 1996
-------------- --------------
Operative commissions $ 685,000 $ 963,000
Guaranteed minimum rentals 604,000 1,333,000
CTO earnout 300,000 -
Bonuses 212,000 440,000
Staff shipboard accommodations 104,000 163,000
Other 277,000 833,000
------------- -------------
$ 2,182,000 $ 3,732,000
============= =============
(5) CAPITAL LEASE OBLIGATIONS:
Assets under capital leases include office equipment and onboard massage and
exercise equipment. The future minimum lease payments under capital leases and
the present value of the net minimum lease payments as of December 31, 1996 are
as follows:
YEAR AMOUNT
--------------------------------------------- ---------------
1997 $ 115,000
1998 79,000
1999 29,000
2000 3,000
-------------
Total minimum lease payments 226,000
Less: amount representing interest (29,000)
-------------
Present value of minimum lease payments 197,000
Less: Current portion of lease obligations (106,000)
-------------
$ 91,000
=============
F-11
<PAGE>
(6) LONG-TERM DEBT:
Long-term debt consists of the following as of:
DECEMBER 31,
---------------------------
1995 1996
----------- ----------
Loan payable to the former shareholder of
CTO, original principal amount of
$1,802,000 net of unamortized discount
of $56,000 at December 31, 1995,
interest imputed at 7.5%, due in
twelve quarterly installments of $150,000,
beginning on August 31, 1994 $ 845,000 $ -
Note payable to a financing company,
original principal of $4,050,000 net of
unamortized discount of $199,000 at December
31, 1995, interest imputed at 7.5%, due in
thirty-six monthly installments of $113,000
beginning on January 7, 1995, secured by
certain assets of the Company 2,500,000 -
Note payable to a financing company, original
principal of $1,900,000, variable rate
based on the Eurodollar Rate plus 1%,
due in annual installments of $238,000,
due on April 19, 2001, secured by certain
assets of the Company 1,425,000 -
Loans payable to current and former
shareholders, non-interest bearing,
due in ten monthly installments beginning
on August 1, 1996, unsecured - 217,000
Other 341,000 -
----------- ------------
5,111,000 217,000
Less: Current maturities of long-term debt (2,091,000) (217,000)
----------- ------------
$ 3,020,000 $ -
=========== ============
The Company repaid the loan payable to the former shareholder of CTO, the notes
payable to a financing company and other long-term debt, including accrued
interest, with proceeds from the initial public offering discussed in Note 7.
(7) SHAREHOLDERS' EQUITY:
In November 1996, the Company completed an initial public offering of 5,097,240
of its common shares of which 828,000 shares were sold by the Company and
4,269,240 shares were sold by a shareholder of the Company. The offering price
was $13 per share and the proceeds to the Company, net of the underwriters'
discount and other direct costs, were approximately $9,704,000. The Company used
approximately $3,400,000 of the net proceeds to retire long-term debt. In
connection with the offering, the Company authorized an increase in the amount
of common shares to 20,000,000 and changed the par value to $.01 per share.
The Company also authorized 10,000,000 preferred shares with a par value of $.01
per share.
F-12
<PAGE>
In connection with the initial public offering, the Board of Directors of the
Company approved a 63,720-for-1 stock split of its common shares effective
coincident with the date of the initial public offering. Such split has been
retroactively reflected in the accompanying consolidated financial statements
for all periods presented.
(8) INCOME TAXES:
The provision for income taxes consists of the following:
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1995 1996
------------- --------------- -------------
Federal $ 503,000 $ 1,131,000 $ 3,816,000
State 30,000 72,000 332,000
Foreign 377,000 153,000 802,000
----------- ------------- -----------
$ 910,000 $ 1,356,000 $ 4,950,000
=========== ============= ===========
A reconciliation of the difference between the expected provision for income
taxes using the federal tax rate and the Company's actual provision is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1994 1995 1996
----------- ------------- -------------
<S> <C> <C> <C>
Provision using statutory federal tax rate $ 419,000 $ 270,000 $ 2,597,000
(Income) loss earned in jurisdictions
not subject to income taxes - 203,000 (1,600,000)
Amortization of intangibles 430,000 779,000 753,000
Nonrecurring provision related to the
liquidation of CTO (See Note 2(g)) - - 3,200,000
Meals and entertainment 4,000 4,000 3,000
Effect of state income taxes 20,000 48,000 46,000
Effect of foreign taxes 37,000 11,000 (49,000)
Other - 41,000 -
--------- ----------- -----------
$ 910,000 $ 1,356,000 $ 4,950,000
========= =========== ===========
</TABLE>
(9) COMMITMENTS:
(A) CRUISE LINE CONCESSION AGREEMENTS-
The Company has entered into agreements with various cruise line companies of
varying terms. These agreements provide for the Company to pay the cruise lines
rent for use of their shipboard facilities as well as for staff shipboard
accommodations. Rental amounts are based on a percentage of revenue, a minimum
annual rental or a combination of both. Some of the minimum annual rentals are
calculated as a flat dollar amount on an annual basis while others are based
upon minimum passenger per diems for passengers actually embarked on each cruise
of the respective vessel. Staff shipboard accommodations are charged by the
cruise lines on a per staff per day basis. The Company recognizes all expenses
related to cruise line rents, minimum guarantees and staff shipboard
accommodations, generally at the completion of a cruise, as they are incurred.
For cruises in process at period end, accrual is made to record such expenses in
a manner that approximates a pro-rata basis. In addition, staff-related expenses
such as shipboard employee commissions, are recognized in the same manner.
Pursuant to agreements
F-13
<PAGE>
that provide for minimum annual rentals, the Company has guaranteed the
following amounts as of December 31, 1996:
Year Amount
----------- --------------
1997 $ 17,920,000
1998 21,104,000
1999 18,057,000
2000 15,237,000
2001 15,148,000
Thereafter 2,494,000
-------------
$ 89,960,000
=============
(B) OPERATING LEASES-
The Company leases office and warehouse space as well as office equipment and
automobiles under operating leases. The Company incurred approximately $108,000,
$127,000 and $367,000 in rental expense under noncancelable operating leases in
the years ended December 31, 1994, 1995 and 1996, respectively.
Minimum annual commitments under operating leases at December 31, 1996 are as
follows:
Year Amount
-------- --------------
1997 $ 337,000
1998 260,000
1999 244,000
2000 197,000
2001 179,000
-------------
$ 1,217,000
=============
(C) EMPLOYMENT AND CONSULTING AGREEMENTS-
The Company entered into employment agreements, effective as of January 1, 1996,
with its executive officers. The agreements provide for annual base salaries and
annual incentive bonuses based on the Company's attainment of certain earnings
levels or sales levels or at the discretion of the Board of Directors of the
Company, as the case may be.
Future minimum annual commitments under these employment agreements at December
31, 1996 are as follows:
Year Amount
-------- -------------
1997 $ 863,000
1998 863,000
1999 863,000
2000 863,000
2001 740,000
-----------
$ 4,192,000
===========
F-14
<PAGE>
The Company has a consulting agreement with the former shareholder of CTO. Under
the terms of the consulting agreement, the consultant must devote a minimum
number of hours per week to the advancement of the Company. The agreement
provides for annual payments of $150,000 for a period of three years, commencing
June 3, 1994. The obligation with respect to the final annual payment of
$150,000 has been assumed by Steiner Group.
(D) PRODUCT SUPPLY AGREEMENT-
Effective December 1995, the Company entered into a five year agreement with its
principal products supplier, pursuant to which the Company will purchase its
requirements for its products. Such agreement provides for no specific minimum
commitments. See Note 10.
(10) RELATED PARTY TRANSACTIONS:
Effective December 1995, the Company's principal shareholder contributed certain
rights with respect to formulations for lines of products sold by the Company.
The rights were purchased from an unrelated third party by that shareholder. The
formulations were used exclusively in the manufacture of the Company's products.
The contribution of these product formulation rights was recorded at their
historical cost of $219,000, the negotiated purchase price of said product
formulation rights between the unrelated parties. These intangibles are being
amortized over a period of 15 years, the estimated life of the underlying
assets, representing the estimated period over which the related products will
be sold by the Company. Subsequent to the acquisition, the Company continuously
evaluates the realizability of rights acquired to determine if impairment in the
assets' carrying value has occurred due to changes in the Company's plans
regarding sale of the products or decreases in the sales value of the underlying
products. When such impairment has occurred, appropriate write-downs are made to
state the rights at their estimated net realizable value.
Prior to December 31, 1995, the Company incurred obligations to an affiliated
entity for (i) agent processing, which involves the hiring and training of
on-board employees and (ii) certain management services. Included in
Administrative Expenses is $131,000 and $765,000 for agent processing and
management services in the years ended December 31, 1994 and 1995, respectively.
Due to/from related parties consists of the following at December 31, 1995:
AMOUNT
-----------
Elemis Limited $ 459,000
Steiner Group Limited 400,000
Other 32,000
-----------
Total due to related parties $ 891,000
===========
EJ Contracts Limited $ 153,000
Shareholders 249,000
-----------
Total due from related parties $ 402,000
===========
Due to related parties represents amounts owed to affiliates for products
purchased and agent processing. Such amounts are reflected as a current
liability as amounts are owed within a ninety-day period. In the opinion of
management, the terms of purchases from related parties are equivalent to terms
available for the purchase of products from unrelated parties. Related party
purchases were $1,234,136 and $2,300,450 for the years ended December 31, 1994
and 1995, respectively. Effective January 1, 1996, the Company purchased Elemis
Limited ("Elemis") from which products were previously purchased. See below.
F-15
<PAGE>
Due from related parties represents advances to shareholders and affiliates. The
amounts are unsecured, noninterest bearing and have no specified repayment term
and as a result have been reflected as long-term assets. As of December 31,
1996, there were no amounts due from related parties.
Effective January 1, 1996, the Company purchased from Nicolas D. Steiner and
Clive E. Warshaw (the principal beneficial owners of the Company prior to the
initial public offering - see Note 7) 100% of the outstanding shares of Elemis.
The purchase price was funded through a note in the amount of $543,000 and
represented the net book value of the net assets acquired. As such, the
transaction was recorded at historical cost. The transaction was not accounted
for retroactively in a manner similar to a pooling of interests due to the
immateriality of Elemis's operations to the total operations of the Company.
(11) SHARE OPTIONS:
The Company has reserved 720,000 of its common shares for issuance under
its 1996 Share Option and Incentive Plan (the "Plan"). Under the Plan, incentive
share options are available to employees and nonqualified share options may be
granted to consultants, directors or employees of the Company. The terms of each
option agreement are determined by the Compensation Committee of the Board of
Directors. The exercise price of incentive share options may not be less than
fair market value at the date of grant and their terms may not exceed ten years.
The exercise price of nonqualified share options is determined by the
Compensation Committee of the Board of Directors and their terms may not exceed
ten years. A summary of share option activity through December 31, 1996 is as
follows:
NUMBER OF EXERCISE
SHARES PRICE
--------- --------
Options outstanding, December 31, 1995 - $ -
Granted 341,054 13.00
Exercised - -
Canceled - -
------- ------
Options outstanding, December 31, 1996 341,054 $13.00
======= ======
Outstanding options exercisable, December 31, 1996 25,000 $13.00
======= ======
The Company applies APB Opinion 25 and related interpretations in accounting for
options granted to employees. Accordingly, no compensation cost has been
recognized related to such grants. Had compensation cost for the Company's stock
been based on fair value at the grant dates for awards under the Plan consistent
with the methodologies of SFAS 123, the Company's 1996 net income and income per
share would have been reduced to the pro forma amounts indicated below:
Net income As reported $ 2,471,000
Pro forma $ 2,407,000
Income per share As reported $ 0.38
Pro forma $ 0.37
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes model with the following assumptions: expected volatility of
25.0%, risk-free interest rate of 6.0%, expected dividends of $0 and expected
terms of 5 years.
F-16
<PAGE>
In 1996, the Company recorded expense of $113,000 related to 25,000 share
options granted to a nonemployee of the Company. In determining the expense to
be recorded, the Company applied the Black-Scholes model using the same
assumptions described above.
F-17
EXHIBIT 3.2
COMMONWEALTH OF THE BAHAMAS
New Providence
ADOPTED AS OF MARCH 23, 1997
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
STEINER LEISURE LIMITED
Harry B. Sands & Company
Counsel and Attorneys-at-Law
Chambers
Nassau, Bahamas
<PAGE>
The International Business Companies Act
Company Limited by Shares
AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
STEINER LEISURE LIMITED
PRELIMINARY
1. In these Articles, if not inconsistent with the subject or context, the
words and expressions standing in the first column of the following table shall
bear the meanings set opposite them, respectively, in the second column thereof.
WORDS MEANINGS
the Act The International Business Companies Act 1989
(No. 2 of 1990)
these Articles These Amended and Restated Articles of
Association as originally framed or as from time to time
amended.
2
<PAGE>
capital The sum of the aggregate par value of all outstanding
shares with par value of the Company and shares with par
value held by the Company as treasury shares plus
(a) the aggregate of the amounts designated as capital
of all outstanding shares without par value of the
Company and shares without par value held by the
Company as treasury shares, and
(b) the amounts as are from time to time transferred
from surplus to capital by the directors.
Chairman of
the Board The Chairman of the Board of Directors of the Company.
Company Steiner Leisure Limited
company Any company or corporation.
corporate office The office of the Company located at Suite 104A,
Saffrey Square, Nassau, The Bahamas.
directors Members of the Board of Directors of the Company.
majority In excess of 50 percent.
majority (or 66 2/3%)
of the Shareholders With respect to a vote of shareholders means
(i) a majority (or 66 2/3%, as applicable in the
context of the Article in question) of the votes
of the shareholders who were present at the
meeting and who voted and did not abstain, or
3
<PAGE>
(ii) a majority (or 66 2/3%, as applicable in the
context of the Article in question) of the votes
of the shareholders of each class or series of
shares which were present at the meeting and
entitled to vote thereon as a class or series and
who voted and did not abstain and of a majority (or
66 2/3%, as applicable in the context of the
Article in question) of the votes of the
remaining shareholders entitled to vote thereon
present at the meeting and who voted and did not
abstain.
the Memorandum The Amended and Restated Memorandum of
Association of the Company as originally framed or as
from time to time amended.
person An individual, a company, a trust, the estate of a
deceased individual, a partnership, an unincorporated
association or other entity.
resolution
of directors A resolution (i) approved at a duly
constituted meeting of directors of the Company or of a
committee of directors of the Company by the affirmative
vote of a majority of the directors present who voted
and did not abstain or (ii) consented to in writing by
all directors or all members of the committee, as the
case may be.
resolution of
shareholders (a) A resolution approved at a duly constituted meeting
of the shareholders of the Company by the
affirmative vote of
(i) except where the votes of a larger
percentage of shareholders is specifically
provided for in these Articles or in the
Memorandum, a majority of the votes of the
shareholders who were present at the meeting
and who voted and did not abstain, or
(ii) except where the votes of a larger
percentage of shareholders is specifically
provided for in these
4
<PAGE>
Articles or in the Memorandum, a majority of
the votes of the shareholders of each class
or series of shares which were present at
the meeting and entitled to vote thereon as
a class or series and who voted and did not
abstain and of a majority of the votes of
the remaining shareholders entitled to vote
thereon present at the meeting and who voted
and did not abstain.
the Seal The Common Seal of the Company.
Secretary The person holding the office of Secretary of the
Company or, in the absence of a Secretary, such
other officer of the Company who has similar
duties to the Secretary.
securities Shares and debt obligations of every kind, and
options, warrants and rights to acquire shares or
debt obligations.
shareholder A person who is a registered holder of shares in
the Company; a "member" under the Act.
share register The register of shares required to be kept
pursuant to Section 28 of the Act.
special meetings Meetings of the shareholders other than annual
meetings.
surplus The excess, if any, at the time of the
determination, of the total assets of the Company
over the aggregate of its total liabilities, as
shown in its books of account, plus the Company's
capital.
transfer agent Any person appointed by the directors to serve
as transfer agent and registrar of the shares of
the Company.
5
<PAGE>
treasury
shares Shares of the Company that were previously issued
but were repurchased, redeemed or otherwise
acquired by the Company and not cancelled.
"Written" or any term of like import includes words typewritten, printed,
painted, engraved, lithographed, photographed or represented or reproduced by
any mode of representing or reproducing words in a visible form, including
telex, telefax, telegram, cable or other form of writing produced by electronic
communication.
Except as aforesaid any words or expressions defined in the Act shall bear the
same meaning in these Articles.
Whenever the singular or plural number, or the masculine, feminine or neuter
gender is used in these Articles, it shall equally, where the context admits,
include the others.
A reference in these Articles to voting or presence at a meeting in relation to
shares shall be construed as a reference to voting by shareholders holding the
shares except that it is the votes allocated to the shares that shall be counted
and not the number of shareholders who actually voted and a reference to shares
being present at a meeting shall be given a corresponding construction.
A reference to money in these Articles is a reference to the currency of the
United States of America unless otherwise stated.
SHARES
2. Every shareholder shall be entitled to one certificate for the shares
registered in such shareholder's name provided that in respect of shares held
jointly by several persons the Company shall not be bound to issue more than one
certificate, and delivery of a certificate for a share to one of several joint
shareholders shall be sufficient delivery to all.
3. If a certificate for shares is worn out or lost it may be renewed on
production of the worn out certificate or on satisfactory proof of its loss
together with such indemnity as may be required by the Secretary.
6
<PAGE>
4. If several persons are registered as joint holders of any shares, any
one of such persons may give an effectual receipt for any dividend payable in
respect of such shares.
5. Subject to the provisions of these Articles and any resolution of
shareholders, the unissued shares of the Company shall be at the disposal of the
directors who may without prejudice to any rights previously conferred on the
holders of any existing shares or class or series of shares, offer, allot, grant
options over or otherwise dispose of the shares to such persons, at such times
and upon such terms and conditions as the directors may determine.
6. Shares in the Company shall be issued for money, services rendered,
personal property (including other shares, debt obligations or other securities
in the Company), an estate in real property, a promissory note or other binding
obligation to contribute money or property or any combination of the foregoing
as shall be determined by the directors.
7. Shares in the Company may be issued for such amount of consideration as
the directors may from time to time determine, except that in the case of shares
with par value, the amount shall not be less than the par value and, in the
absence of fraud, the decision of the directors as to the value of the
consideration received by the Company in respect of the issue is conclusive
unless a question of law is involved. The consideration in respect of the shares
constitutes capital to the extent of the par value and the excess constitutes
surplus.
8. A share issued by the Company upon conversion of, or in exchange for,
another share or a debt obligation or other security in the Company, shall be
treated for all purposes as having been issued for money equal to the
consideration received or deemed to have been received by the Company in respect
of the other share, debt obligation or other security.
9. Treasury shares may be disposed of by the Company on such terms and
conditions (not otherwise inconsistent with these Articles) as the directors may
determine.
10. The Company may issue fractions of a share and a fractional share
shall have the same corresponding fractional liabilities, limitations,
preferences, privileges, qualifications, restrictions, rights and other
attributes of a whole share of the same class or series of shares.
11. Upon the issue by the Company of a share without par value, the
consideration in respect of the share constitutes capital to the extent
designated by the directors and the excess
7
<PAGE>
constitutes surplus, except that the directors must designate as capital an
amount of the consideration that is at least equal to the amount that the share
is entitled to as a preference, if any, in the assets of the Company upon
liquidation of the Company.
12. The Company may purchase, redeem or otherwise acquire and hold its own
shares but no purchase, redemption or other acquisition which shall constitute a
reduction in capital shall be made otherwise than in compliance with Articles 26
and 27.
13. Shares that the Company purchases, redeems or otherwise acquires
pursuant to Article 12 may be cancelled or held as treasury shares unless the
shares are purchased, redeemed or otherwise acquired out of capital and would
otherwise infringe upon the requirements of Articles 26 and 27. Upon the
cancellation of a share, the amount included as capital of the Company with
respect to that share shall be deducted from the capital of the Company.
14. Where shares in the Company are held by the Company as treasury shares
or are held by another company of which the Company holds, directly or
indirectly, shares having more than 50 percent of the votes in the election of
directors of the other company, such shares of the Company are not entitled to
vote or to have dividends paid thereon and shall not be treated as outstanding
for any purpose except for purposes of determining the capital of the Company.
15. No notice of a trust, whether expressed, implied or constructive, shall
be entered in the share register.
TRANSFER OF SHARES
16. Subject to any limitations in the Memorandum, registered shares in the
Company may be transferred by a written instrument of transfer signed by the
transferor and containing the name and address of the transferee. The instrument
of transfer of any share in the Company shall be executed by the transferor (or
its duly authorized agent), and the transferor shall be deemed to remain the
holder of the shares until the name of the transferee is entered in the share
register in respect thereof. The transfer agent for the Company or the directors
shall determine if a form of transfer is acceptable in the case of any question
or dispute concerning a transfer.
8
<PAGE>
17. The Company shall not be required to treat a transferee of a share in
the Company as a shareholder until the transferee's name has been entered in the
share register.
18. The Company, or any transfer agent on the application of the
transferor or transferee of a share in the Company, shall enter in the share
register the name of the transferee of the share except that (a) the directors
or the transfer agent may decline to register a transfer of shares unless the
instrument of transfer is accompanied by the certificate or certificates for the
shares and such other evidence as the directors or the transfer agent may
reasonably require to show the right of the transferor to make the transfer and
(b) the registration of transfers may be suspended and the share register closed
at such times and for such periods as the directors may from time to time
determine provided always that such registration shall not be suspended and the
share register closed for more than 60 days in any period of 12 months.
TRANSMISSION OF SHARES
19. The personal representative of a deceased shareholder, the guardian of
an incompetent shareholder or the trustee of a bankrupt shareholder shall be the
only persons recognized by the Company as having any title to the shares of such
shareholder but they shall not be entitled to exercise any rights as a
shareholder of the Company until they have proceeded as set forth in Articles 20
and 21. A person becoming entitled to shares by reason of the death,
incompetency or bankruptcy of the holder shall be entitled to the same dividends
and other advantages to which he or she would be entitled if he or she were the
registered holder of the shares, except that he or she shall not, before being
registered as a shareholder in respect of the shares, be entitled in respect of
such shares to exercise any right conferred by share ownership in relation to
meetings of the shareholders of the Company.
20. Any person becoming entitled by operation of law or otherwise to a
share or shares in consequence of the death, incompetence or bankruptcy of any
shareholder may be registered as a shareholder upon such evidence being produced
as may reasonably be required by the directors, the Secretary or any transfer
agent. An application by any such person to be registered as a shareholder shall
for all purposes be deemed to be a transfer of shares of the deceased,
incompetent or bankrupt shareholder and the directors shall treat it as such.
21. Any person who has become entitled to a share or shares in consequence
of the death, incompetence or bankruptcy of any shareholder may, instead of
being registered himself
9
<PAGE>
or herself, request in writing that some person to be named by such person be
registered as the transferee of such share or shares and such request shall
likewise be treated as if it were a transfer.
22. What amounts to incompetence on the part of a person is a matter to be
determined by the Bahamian courts under applicable law, having regard to all the
relevant evidence and the circumstances of the case.
REDUCTION OR INCREASE IN AUTHORIZED CAPITAL
23. Amendment to the Memorandum to increase or reduce the
Company's authorized capital must be approved by a majority of the shareholders.
24. The directors may amend the Memorandum to
(a) divide the shares, including issued shares of a class or
series into a larger number of shares of the same class or
series; or
(b) combine the shares, including issued shares, of a class or
series into a smaller number of shares of the same class or
series, provided, however, that where shares are divided or
combined under (a) or (b) of this Article 24, the aggregate
par value of the new shares must be equal to the aggregate par
value of the original shares.
25. The capital of the Company may by a resolution of directors be
increased by transferring an amount of the surplus of the Company to capital,
and, subject to the provisions of Articles 26 and 27, the capital of the Company
may be reduced by transferring an amount of the capital of the Company to
surplus.
26. No reduction of capital shall be effected that reduces the capital of
the Company to an amount that immediately after the reduction is less than the
aggregate par value of all outstanding shares with par value and all shares with
par value held by the Company as treasury shares and the aggregate of the
amounts designated as capital of all outstanding shares without
10
<PAGE>
par value and all shares without par value held by the Company as treasury
shares that are entitled a preference, if any, in the assets of the Company upon
liquidation of the Company.
27. No reduction of capital shall be effected unless the directors
determine that immediately after the reduction the Company will be able to
satisfy its liabilities as they become due in the ordinary course of its
business and that the realizable assets of the Company will not be less than its
total liabilities, other than deferred taxes, as shown in the books of the
Company and its remaining capital, and, in the absence of fraud, the decision of
the directors as to the realizable value of the assets of the Company is
conclusive, unless a question of law is involved.
28. Where the Company reduces its capital under these Articles the Company
may
(a) return to its shareholders any amount received by the Company
upon the issue of any of its shares;
(b) purchase, redeem or otherwise acquire its shares out of capital;
or
(c) cancel any capital that is lost or not represented by assets
having a realizable value.
MEETINGS OF SHAREHOLDERS
29. Annual meetings of the shareholders shall be held during each fiscal
year of the Company commencing in 1997. The date, time and place of annual
meetings of shareholders shall be as determined by the directors of the Company.
30. The directors of the Company or the Chairman of the Board may convene
special meetings of the shareholders of the Company at such times and in such
manner and places within or outside the Commonwealth of The Bahamas as the
directors consider necessary or desirable.
31. Upon the written request of shareholders holding more than 50 percent
of the outstanding voting shares in the Company the directors shall convene a
special meeting of the shareholders. If a special meeting is requested by such
shareholders, a written request,
11
<PAGE>
specifying the business proposed to be transacted, shall be delivered personally
or sent by first class mail or by express delivery service such as, for example,
Federal Express. Upon receipt of such a request, the Secretary shall cause
notice of such meeting to be given, within 45 days after the date the request
was delivered to the Secretary, to the shareholders entitled to vote on such
proposal, in accordance with the provisions of these Articles. Except as
provided below, if the notice is not given by the Secretary within 45 days after
the date the request was delivered to the Secretary, then the person or persons
requesting the meeting may specify the time and place of the meeting and give
notice thereof; provided, however, that at least 10 days' notice of such meeting
is required to be given to the shareholders.
32. In order that the Company may determine the shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of shares or for the purpose of any other lawful
action, the directors may fix, but shall not be required to so fix, a record
date; provided, however, that such record date shall not precede the date upon
which the action of the directors fixing such record date is taken.
33. Whenever shareholders are required or authorized to take any action at
a meeting, a notice of such meeting, stating the place, day and hour of the
meeting and, in the case of a meeting other than an annual meeting, the purpose
or purposes for which the meeting is called shall be given no fewer than 10 days
before the date set for such meeting, either personally or by first-class mail,
by or at the direction of the Company's Chairman of the Board, Chief Executive
Officer or Secretary, to each shareholder of record entitled to vote at such
meeting. Such notice shall be deemed to be given when deposited in The Bahamas
postal system or the United States mail addressed to the shareholder, at the
shareholder's address as it appears on the share register of the Company, with
first-class postage prepaid thereon. Written waiver by a shareholder of notice
of a shareholders' meeting, signed by the shareholder, whether before or after
the time stated thereon, shall be equivalent to the giving of such notice.
Attendance of a shareholder at a meeting shall constitute a waiver of notice of
such meeting, except when the shareholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully convened.
34. A meeting of shareholders held in contravention of the requirement in
Article 33 is valid if shareholders holding not less than 90 percent of the
total number of shares entitled to vote on all matters to be considered at the
meeting, or not less than 90 percent of the votes of each class or series of
shares where shareholders are entitled to vote thereon as a class or series
12
<PAGE>
together with not less than 90 percent of the remaining votes, have agreed to
shorter notice of the meeting, or if all shareholders holding shares entitled to
vote on all or any matters to be considered at the meeting have waived notice of
the meeting, including by their presence at the meeting.
35. The inadvertent failure of the directors to give notice of a meeting
to a shareholder, or the fact that a shareholder has not received notice, does
not invalidate the meeting.
36. If a quorum pursuant to Article 42 is present at any meeting, (a) in
all matters other than the election of directors, the affirmative vote of the
majority of the shares present in person or represented by proxy at the meeting
and entitled to vote on the subject matter shall be the act of the shareholders,
and (b) directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors, unless a different vote is required by these Articles
or the Memorandum or under applicable law, in which case such express provision
shall govern and control the decision of such question. Shareholders may act
only at meetings duly called and shareholders may not act by written consent or
otherwise outside of such meeting. Only those matters set forth in the notice of
a special meeting may be considered or acted upon at that meeting, unless
otherwise required by law.
37. Subject to Article 51, if shareholder approval is required (a) for the
adoption of any agreement for the merger of the Company with or into any other
entity or for the consolidation of the Company with or into any other entity or
(b) to authorize any sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company to any person, the affirmative
vote of at least 66 2/3% of the shares entitled to vote thereon is required to
approve such transaction; provided, however, that if such transaction is
approved in advance by the directors, such transaction may be approved by the
affirmative vote of a majority of the shares entitled to vote thereon.
38. A shareholder may be represented at a meeting of shareholders by a
proxy who may speak and vote on behalf of the shareholder.
39. An instrument appointing a proxy shall be produced at such time before
the time for holding the meeting at which the person named in such instrument
proposes to vote and at such place as the directors or the Secretary may
designate.
13
<PAGE>
40. Every proxy must be signed by the shareholder or such shareholder's
attorney in fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the shareholder executing it, except as
otherwise provided by law. If a proxy expressly provides, any proxy-holder may
appoint in writing a substitute to act in such proxy-holder's place. An
instrument appointing a proxy shall be in such form as the presiding officer of
the meeting shall deem acceptable.
41. The following shall apply in respect of joint ownership of shares:
(a) if two or more persons hold shares jointly, each of them may
be present in person or by proxy at a meeting of
shareholders and may speak as a shareholder, but each of the
shares so held jointly shall only represent a single share;
(b) if only one of the joint owners is present in person or by
proxy, such joint owner may vote on behalf of all joint
owners; and
(c) if two or more of the joint owners are present in person or
by proxy, they must vote as one.
42. A meeting of shareholders is duly constituted if, at the commencement
of the meeting, there are present in person or by proxy a majority of the
shareholders entitled to vote at the meeting.
43. If within one-half hour from the time appointed for the meeting a
quorum pursuant to Article 42 is not present, the meeting, if convened upon the
request of shareholders, shall be dissolved; in any other case it shall stand
adjourned to the next business day at the same time and place or to such other
day, time and place as the directors may determine and, if at the adjourned
meeting there are present within one-half hour from the time appointed for the
meeting in person or by proxy not less than one third of the votes of the shares
of each class or series of shares entitled to vote on the matters to be
considered by the meeting, those present shall constitute a quorum, but
otherwise the meeting shall be dissolved.
14
<PAGE>
44. At every meeting of shareholders, the Chairman of the Board shall
preside as chairman of the meeting. If there is no Chairman of the Board or if
the Chairman of the Board is not present at the meeting, the directors present
shall choose one of the directors to be the chairman.
45. The chairman may, with the consent of the meeting, adjourn any meeting
from time to time, and from place to place, but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the meeting
from which the adjournment took place.
46. At any meeting of the shareholders the chairman shall be responsible
for deciding in such manner as the chairman shall consider appropriate whether
any resolution has been carried or not and the result of the chairman's decision
shall be announced to the meeting and recorded in the minutes thereof. If the
chairman shall have any doubt as to the outcome of any resolution put to a vote,
the chairman may cause a poll to be taken of all votes cast upon such
resolution, and any business other than upon which a poll has been taken may
proceed pending the taking of the poll.
47. Any person other than an individual shall be regarded as one
shareholder and, subject to Article 48, the right of any individual to speak for
or represent such shareholder shall be determined by the law of the jurisdiction
where, and by the documents by which, the person is constituted or derives its
existence. In case of doubt, the directors may in good faith seek legal advice
from any qualified person and unless and until a court of competent jurisdiction
shall otherwise rule the directors may rely and act upon such advice without
incurring any liability to any shareholder.
48. Any person other than an individual which is a shareholder of the
Company may by resolution of its directors or other governing body authorize
such person as it thinks fit to act as its representative at any meeting of the
Company or of any class of shareholders of the Company, and the person so
authorized shall be entitled to exercise the same powers on behalf of the person
which he or she represents as that person could exercise if it were an
individual shareholder of the Company.
49. Directors of the Company may attend and speak at any meeting of
shareholders of the Company and at any separate meeting of the holders of any
class or series of shares of the Company.
15
<PAGE>
50. At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. In addition to
any other applicable requirements, to be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the directors, (b) brought
before the meeting by or at the direction of the directors, or (c) otherwise
properly brought before the meeting by a shareholder. For business to be
properly brought before an annual meeting by a shareholder, the shareholder must
have given timely notice thereof in writing to the Secretary and be present at
the meeting. To be timely for the first annual meeting of shareholders after the
Company's initial public offering of its shares, a shareholder's notice must be
received at the corporate office of the Company not later than the later of (a)
the 75th day prior to the scheduled date of the annual meeting and (b) the 10th
day following the day on which public announcement of the date of such annual
meeting is first made by the Company. For all subsequent annual meetings, a
shareholder's notice shall be timely if received by the Company at its corporate
office not less than 75 days nor more than 120 days prior to the anniversary
date of the immediately preceding annual meeting (the "Anniversary Date");
provided, however, that in the event the annual meeting is scheduled to be held
on a date more than 30 days before the Anniversary Date or more than 60 days
after the Anniversary Date, a notice shall be timely if received by the Company
at its corporate office not later than the close of business on the later of (a)
the 75th day prior to the scheduled date of such annual meeting or (b) the 10th
day following the day on which public announcement of the date of such annual
meeting is first made by the Company. For purposes of these Articles, "public
announcement" shall mean (a) disclosure in a press release reported by the Dow
Jones News Service, Associated Press or comparable United States national news
service, (b) a report or other document filed publicly with the Securities and
Exchange Commission (including, without limitation, a Form 8-K) or (c) a letter
or report sent to shareholders of record of the Company at the time of the
mailing of such letter or report. A shareholder's notice to the Secretary shall
set forth as to each matter the shareholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting, and the reasons for conducting such business at such annual
meeting, (b) the name and address, as they appear on the Company's books, of the
shareholder proposing such business, (c) the class and number of shares of the
Company which are beneficially owned by the shareholder, (d) the names of any
other beneficial owners of such shares, (e) any material interest of the
shareholder in such business and (f) the names and addresses of other
shareholders known by the shareholder proposing such business to support such
proposal and the class and numbers of shares beneficially owned by such
shareholders. Notwithstanding anything in these Articles to the contrary, no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Article 50. If the directors or a designated
committee thereof determines that any shareholder proposal was not made in a
timely fashion in accordance with the procedures of this Article 50 or that the
information provided in a shareholder's notice does not satisfy the information
requirements
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of this Article 50 in any material respect (a "Non-Compliance Determination"),
such proposal shall not be presented for action at the annual meeting in
question. If neither the directors nor such committee makes a determination as
to the validity of any shareholder proposal in the manner set forth above, the
presiding officer of an annual meeting shall determine whether the shareholder
proposal was made in accordance with the terms of this Article 50. If such
presiding officer makes a Non-Compliance Determination with respect to such
proposal, such proposal shall not be presented for action at the annual meeting
in question. If the directors, a designated committee thereof or the presiding
officer determines that a shareholder proposal was made in accordance with the
requirements of this Article 50, the presiding officer shall so declare at the
annual meeting and ballots shall be provided for use at the meeting with respect
to such proposal.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS
51. Notwithstanding any other provisions of these Articles, the Company
shall not engage in any business combination with any interested shareholder for
a period of 3 years following the time that such shareholder became an
interested shareholder, unless:
(a) prior to such time the directors approved either the business
combination or the transaction which resulted in the shareholder
becoming an interested shareholder, or
(b) upon consummation of the transaction which resulted in the
shareholder becoming an interested shareholder, the interested
shareholder owned at least 85% of the voting shares of the
Company outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned (i) by persons who are directors
and also officers of the Company and (ii) employee share plans in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer, or
(c) at or subsequent to such time the business combination is
approved by the directors and authorized at an annual or special
meeting of shareholders by the affirmative vote of at least 66
2/3% of the shareholders excluding shares owned by the interested
shareholder.
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52. The restrictions contained in Article 51 shall not apply if:
(a) the Company does not have a class of voting shares that is
(i) listed on a United States national securities exchange
or (ii) authorized for quotation on The Nasdaq Stock Market
unless either of the foregoing results from action taken,
directly or indirectly, by an interested shareholder or from
a transaction in which a person becomes an interested
shareholder;
(b) a shareholder becomes an interested shareholder
inadvertently and (i) as soon as practicable divests itself
of ownership of sufficient shares so that the shareholder
ceases to be an interested shareholder and (ii) would not,
at any time within the 3 year period immediately prior to a
business combination between the Company and such
shareholder, have been an interested shareholder but for the
inadvertent acquisition of ownership;
(c) the business combination is proposed prior to the
consummation or abandonment of and subsequent to the earlier
of the public announcement or the notice required hereunder
of a proposed transaction which (i) constitutes one of the
transactions described in the second sentence of this
paragraph; (ii) is with or by a person who either was not an
interested shareholder during the previous 3 years or who
became an interested shareholder with the approval of the
directors or during the period described in paragraph (d) of
this Article 53; and (iii) is approved or not opposed by a
majority of the directors then in office (but not less than
1) who were directors prior to any person becoming an
interested shareholder during the previous 3 years or were
recommended for election or elected to succeed such
directors by a majority of such directors. The proposed
transactions referred to in the preceding sentence are
limited to (x) a merger or consolidation of the Company; (y)
a sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of
transactions), whether as part of a dissolution or
otherwise, of assets of the Company or of any direct or
indirect majority-owned subsidiary of the Company (other
than to any direct or indirect wholly- owned subsidiary or
to the Company) having an aggregate market value equal to
50% or more of either that aggregate market value of all of
the assets of the Company determined on a consolidated basis
or the aggregate market value of all the outstanding shares
of the Company; or (z) a
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proposed tender or exchange offer for 50% or more of the
outstanding voting shares of the Company. The Company shall
give not less then 10 days' notice to all interested
shareholders prior to the consummation of any of the
transactions described in clauses (x) or (y) of the second
sentence of this paragraph; or
(d) the business combination is with an interested shareholder
who became an interested shareholder at a time when the
restrictions contained in Article 51 did not apply by reason
of any paragraph (a) of this Article 52.
53. As used in Articles 51, 52 and/or, as the case may be, 53, the term:
(a) "affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is
controlled by, or is under common control with, another
person.
(b) "associate," when used to indicate a relationship with any
person, means (i) any company, partnership, unincorporated
association or other entity of which such person is a
director, officer or partner or is, directly or indirectly,
the owner of 20% or more of any class of voting shares; (ii)
any trust or other estate in which such person has at least
a 20% beneficial interest or as to which such person serves
as trustee or in a similar fiduciary capacity; and (iii) any
relative or spouse of such person, or any relative of such
spouse, who has the same residence as such person.
(c) "business combination," when used in reference to the
Company and any interested shareholder of the Company,
means:
(i) any merger or consolidation of the Company or any
direct or indirect majority-owned subsidiary of the
Company with (A) the interested shareholder or (B) with
any other company, partnership, unincorporated
association or other entity if the merger or
consolidation is caused by the interested shareholder
and as a result of such merger or consolidation Article
51 is not applicable to the surviving entity;
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(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
transactions), except proportionately as a shareholder
of the Company, to or with the interested shareholder,
whether as part of a dissolution or otherwise, of
assets of the Company or of any direct or indirect
majority-owned subsidiary of the Company which assets
have an aggregate market value equal to 10% or more of
either the aggregate market value of all the assets of
the Company determined on a consolidated basis or the
aggregate market value of all the outstanding shares of
the Company;
(iii)any transaction which results in the issuance or
transfer by the Company or by any direct or indirect
majority-owned subsidiary of the Company of any shares
of the Company or of such subsidiary to the interested
shareholder, except (A) pursuant to the exercise,
exchange or conversion of securities exercisable for,
exchangeable for or convertible into shares of the
Company or any such subsidiary which securities were
outstanding prior to the time that the interested
shareholder became such; (B) pursuant to a dividend or
distribution paid or made, or the exercise, exchange or
conversion of securities exercisable for, exchangeable
for or convertible into shares of the Company or any
such subsidiary which security is distributed, pro rata
to all holders of a class or series of shares of the
Company subsequent to the time the interested
shareholder became such; (C) pursuant to an exchange
offer by the Company to purchase shares made on the
same terms to all holders of said shares; or (D) any
issuance or transfer of shares by the Company, provided
however, that in no case under (B) through (D), above,
shall there be an increase in the interested
shareholder's proportionate share of the shares of any
class or series of the Company or of the voting shares
of the Company;
(iv) any transaction involving the Company or any direct or
indirect majority-owned subsidiary of the Company which
has the effect, directly or indirectly, of increasing
the proportionate share of the shares of any class or
series, or securities convertible into the shares of
any class or series of the Company or of any such
subsidiary which is owned by the interested
shareholder, except as a
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result of immaterial changes due to fractional share
adjustments or as a result of any purchase or
redemption of any shares not caused, directly or
indirectly, by the interested shareholder; or
(v) any receipt by the interested shareholder of the
benefit, directly or indirectly (except proportionately
as a shareholder of the Company) of any loans,
advances, guarantees, pledges, or other financial
benefits (other than those expressly permitted in
subparagraphs (i)-(iv), above) provided by or through
the Company or any direct or indirect majority-owned
subsidiary of the Company.
(d) "control," including the term "controlling," "controlled by"
and "under common control with," means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person,
whether through the ownership of voting shares, by contract,
or otherwise. A person who is the owner of 20% or more of
the outstanding voting shares of any company, partnership,
unincorporated association or other entity shall be presumed
to have control of such entity, in the absence of proof by a
preponderance of the evidence to the contrary.
Notwithstanding the foregoing, a presumption of control
shall not apply where such person holds voting shares, in
good faith and not for the purpose of circumventing Article
51 as an agent, bank, broker, nominee, custodian or trustee
for one or more owners who do not individually or as a group
have control of such entity.
(e) "interested shareholder" means any person (other than the
Company and any direct or indirect majority-owned subsidiary
of the Company) that (i) is the owner of 15% or more of the
outstanding voting shares of the Company, or (ii) is an
affiliate or associate of the Company and was the owner of
15% or more of the outstanding voting shares of the Company
at any time within the 3-year period immediately prior to
the date on which it is sought to be determined whether such
person is an interested shareholder; and the affiliates and
associates of such person; provided, however, that the term
"interested shareholder" shall not include (x) any person
who (A) owned shares in excess of the 15% limitation set
forth herein as of the effective date of the Company's
Registration Statement on
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Form F-1 under the Securities Act of 1933, as amended,
with respect to its initial public offering of shares and
either (I) continued to own shares in excess of such 15%
limitation or would have but for action by the Company or
(II) is an affiliate or associate of the Company and so
continued (or so would have continued but for action by the
Company) to be the owner of 15% or more of the outstanding
voting shares of the Company at any time within the 3-year
period immediately prior to the date on which it is sought
to be determined whether such a person is an interested
shareholder or (B) acquired said shares from a person
described in (A), above, by gift, inheritance or in a
transaction in which no consideration was exchanged; or (y)
any person whose ownership of shares in excess of the 15%
limitation set forth herein is the result of action taken
solely by the Company provided that such person shall be an
interested shareholder if thereafter such person acquires
additional voting shares of the Company, except as a result
of further corporate action not caused, directly or
indirectly, by such person. For the purpose of determining
whether a person is an interested shareholder, the voting
shares of the Company deemed to be outstanding shall include
shares deemed to be owned by the person through application
of paragraph (h) of this Article 53, but shall not include
any other unissued shares of the Company which may be
issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(f) "shares" means, with respect to any company or similar
entity, capital shares and, with respect to any other
entity, any equity interest.
(g) "voting shares" means, with respect to any company or
similar entity, shares of any class or series entitled to
vote generally in the election of directors and, with
respect to any other entity, any equity interest entitled to
vote generally in the election of the governing body of such
entity.
(h) "owner," including the terms "own" and "owned" when used
with respect to any shares, means a person that individually
or with or through any of its affiliates or associates:
(i) beneficially owns such shares, directly or indirectly;
or
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(ii) has (A) the right to acquire such shares (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement
or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, or
otherwise; provided, however, that a person shall not
be deemed the owner of shares tendered pursuant to a
tender or exchange offer made by such person or any of
such person's affiliates or associates until such
tendered shares are accepted for purchase or exchange;
or (B) the right to vote such shares pursuant to any
agreement, arrangement or understanding; provided,
however, that a person shall not be deemed the owner of
any shares because of such person's right to vote such
shares if the agreement, arrangement or understanding
to vote such shares arises solely from a revocable
proxy or consent given in response to a proxy or
consent solicitation made to 10 or more persons; or
(iii)has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent as
described in item (B) of clause (ii), above), or
disposing of such shares with any other person that
beneficially owns, or whose affiliates or associates
beneficially own, directly or indirectly, such shares.
DIRECTORS
54. Subject to Article 60, the directors shall be elected by the
shareholders for such term as the shareholders determine.
55. The minimum number of directors shall be one and the maximum number
shall be seven, as may be determined from time to time by the Board of
Directors.
56. Each director shall hold office until such director's successor takes
office or until his earlier death, resignation or removal.
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57. Commencing at such time as the Board of Directors of the Company shall
consist of seven directors, the Board shall be divided into three classes
designated as Class I, Class II and Class III, respectively, and composed of
two, two and three individuals, respectively. Upon any change in the size of the
Board of Directors, each class shall consist, as nearly as may be possible, of
one-third of the total number of directors constituting the entire Board of
Directors. The initial term of office of directors of Class I shall expire at
the next annual meeting of shareholders of the Company following the initial
filing of these Articles; the initial term of office of directors of Class II
shall expire at the second annual meeting of shareholders of the Company
following the initial filing of these Articles; the initial term of office of
the directors of Class III shall expire at the third annual meeting of
shareholders of the Company following the initial filing of these Articles. At
each annual meeting of shareholders, the successors to the class of directors
whose term shall then expire shall be elected to hold office for a term expiring
at the third succeeding annual meeting of shareholders.
58. Subject to any rights of the holders of Preferred Shares, if and when
issued, to elect directors and to remove any directors whom the holders of any
such shares have the right to elect, any director of the Company may be removed
from office (a) with or without cause by a vote of a majority of the directors
then in office or (b) with cause and by the affirmative vote of a majority of
the total votes which would be eligible to be cast by shareholders in the
election of such director.
59. A director may resign such director's office by giving written notice
of such director's resignation to the Company and the resignation shall have
effect from the date the notice is received by the Company or from such later
date as may be specified in the notice.
60. The directors shall have power at any time, and from time to time, to
appoint any other qualified person or persons as a director, either to fill a
vacancy or as an addition to the board; provided, however, that the total number
of directors shall not at any time exceed the maximum number fixed by these
Articles.
61. A director elected to fill a vacancy resulting from an increase in the
number of directors shall hold office for a term that shall coincide with the
remaining term of the class of directors to which he or she is elected. A
director elected to fill a vacancy not resulting from an increase in the number
of directors shall have the same remaining term as that of his or her
predecessor. Except in the case of newly created directorships where the
directors fail to fill any such vacancy, shareholders may not fill vacancies on
the Board of Directors. In such event, the shareholders may do so at the next
annual or special meeting called for that purpose.
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62. The directors may fix the emoluments of directors with respect to
services to be rendered in any capacity to the Company.
63. A director shall not be required to own shares of the Company.
64. A director of the Company may be or become a director or officer of, or
otherwise interested in, any company or other entity promoted by the Company or
in which the Company may be interested as a shareholder or otherwise, and no
such director shall be accountable to the Company for any remuneration or other
benefits received by such director as a director or officer of, or from such
director's interest in, such other Company unless the Company otherwise directs.
POWERS OF DIRECTORS
65. The business and affairs of the Company shall be managed by the
directors who may pay all expenses incurred preliminary to and in connection
with the formation and registration of the Company and may exercise all such
powers of the Company as are not by the Act or by the Memorandum or these
Articles required to be exercised by the shareholders of the Company, subject to
any delegation of such powers as may be authorized by these Articles or
applicable law.
66. The directors may appoint any person, including an individual who is a
director, to be an officer, agent or liquidator of the Company.
67. Every officer or agent of the Company has such powers and authority of
the directors, including the power and authority to affix the Seal, as are set
forth in these Articles or in a resolution of directors, appointing the officer
or agent.
68. Without limitation on the other powers of the directors under these
Articles or applicable law, the directors may from time to time, at their
discretion, raise or borrow or secure the payment of any sum or sums of money
for the purposes of the Company in such manner and upon such terms and
conditions in all respects as they think fit and in particular by the issue of
bonds, mortgages, debentures or debenture shares perpetual or otherwise, notes
or
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other obligations of the Company charged upon all or any part of the property of
the Company (both present and future).
69. The continuing directors may act notwithstanding any vacancy in their
body.
LIMITATION OF LIABILITY OF DIRECTORS
70. A director shall not be personally liable to the Company or the
shareholders for damages for breach of such director's duties as a director;
provided, however, that such director has acted honestly and in good faith with
a view to the best interests of the Company and has exercised the care,
diligence and skill that a reasonably prudent person would exercise in
comparable circumstances. Neither repeal nor modification of this Article 70,
nor the adoption of any provision in these Articles or in the Memorandum
inconsistent with this Article 70, shall adversely affect any right or
protection afforded to a director by this Article 70 prior to such repeal,
modification or adoption of an inconsistent provision.
PROCEEDINGS OF DIRECTORS
71. The Directors shall hold an annual meeting each year as soon as
practicable after the annual meeting of the shareholders at the place where such
meeting of the shareholders was held or at such other place and time as to which
the directors and any new director nominees shall be notified prior to such
shareholders meeting for the purpose of consideration of business that may be
properly brought before the meeting. Except as aforesaid, no notice of any kind
to either old or new directors for such annual meeting shall be necessary.
72. Regular meetings, other than the annual meeting, of the directors may
be held without notice at such time and at such place as shall from time to time
be determined by the directors. Special meetings of the directors may be called
by any two directors or the Chairman of the Board on not less than 48 hours'
written notice to each director, either personally; by express delivery service
such as, for example, Federal Express; telegram or telefax; provided, however,
that express delivery service may only be used if it is reasonably calculated to
provide delivery of such notice no later than twelve (12) hours prior to such
meeting. Notice of any special meeting of the directors need not be given to any
director who signs a waiver of notice
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either before or after the meeting. Attendance by a director at a special
meeting shall constitute a waiver of notice of such special meeting, except
where a director attends a meeting for the express purpose of objecting to the
transaction of any business because such special meeting is not lawfully
convened.
73. A director shall be deemed to be present at a meeting of directors if
he or she participates by telephone or other electronic means and all directors
participating in the meeting are able to hear each other and recognize each
other's voice. A resolution in writing, in one or more parts, signed by all the
directors, shall be as valid and effectual as if it had been passed at a meeting
of the directors duly called and constituted.
74. A majority of all the directors then in office shall constitute a
quorum for the transaction of business. The affirmative vote of the majority of
directors present at a meeting where a quorum is present shall be the act of the
directors. If a quorum shall not be present at any meeting of the directors, a
majority of the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
75. If the Company shall have only one director the provisions herein
contained for meetings of the directors shall not apply but such sole director
shall have full power to represent and act for the Company in all matters as are
not by the Act or the Memorandum or these Articles required to be exercised by
the shareholders of the Company and, in lieu of minutes of a meeting, shall
record in writing and sign a note or memorandum of all matters requiring a
resolution of directors. Such a note or memorandum shall constitute sufficient
evidence of such resolution for all purposes.
76. At every meeting of the directors the Chairman of the Board shall
preside as chairman of the meeting. If there is no Chairman of the Board or if
the Chairman of the Board is not present at the meeting, the directors present
shall choose one of the directors to be chairman of the meeting.
77. The directors may delegate any of their powers to committees each
consisting of two or more directors as they think fit. Any committee so formed
shall, in the exercise of the powers so delegated, conform to any requirements
that may from time to time be made or imposed upon it by the directors. Meetings
of any committee may be called by any member thereof by the giving of notice as
provided in Article 72. The terms of Article 72 (with respect
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to waiver of notice) and Articles 73 and 74 shall apply to the conduct of
committee meetings.
OFFICERS
78. The directors may appoint officers of the Company at such times as
shall be considered desirable. Such officers may consist of a Chairman of the
Board, a Chief Executive Officer, a Chief Operating Officer and one or more
Vice-Presidents, a Secretary and one more Assistant Secretaries and such other
officers as may from time to time be deemed desirable. Any number of offices may
be held by the same person. A director may serve as an officer of the Company.
79. The officers shall perform such duties as shall be prescribed at the
time of their appointment subject to any modification in such duties as may be
prescribed thereafter by the directors but in the absence of any specific
allocation of duties it shall be the responsibility of the Chairman of the Board
to preside at meetings of directors and shareholders and to manage the day to
day affairs of the Company and the other officers to perform such duties as may
be delegated to them by the directors or by the Chairman of the Board.
80. The officers of the Company shall hold office until their successors
are duly elected and qualified, but any officer elected or appointed by the
directors may, subject to the terms of any applicable employment agreement, be
removed at any time, with or without cause, by the directors. Any vacancy
occurring in any office of the Company may be filled by resolution of directors.
CONFLICT OF INTERESTS
81. Notwithstanding the provisions of Section 55 of the Act, if the
requirements of Article 82 are satisfied, no agreement or transaction between
the Company and one or more of its directors or liquidators, or any person in
which any director or liquidator has a financial interest or to whom any
director or liquidator is related, including as a director or liquidator of that
other person, is void or voidable for this reason only or by reason only that
the director or liquidator is present at the meeting of directors or liquidators
or at the meeting of the committee
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of directors or liquidators that approves the agreement or transaction or that
the vote or consent of the director or liquidator is counted for that purpose.
82. An agreement or transaction referred to in Article 81 is valid if
(a) the material facts of the interest of each director or
liquidator in the agreement or transaction and his or her
interest in or relationship to any other party to the
agreement or transaction are disclosed in good faith or are
known by the other directors or liquidators; and
(b) the agreement or transaction is approved or ratified by a
majority of the disinterested directors or liquidators.
83. A director or liquidator who has an interest in any particular
business to be considered at a meeting of directors, liquidators or shareholders
may be counted for purposes of determining whether the meeting is duly
constituted.
INDEMNIFICATION
84. Subject to Article 85, the Company shall indemnify to the fullest
extent permitted under Bahamian law, as against all expenses including legal
fees, and against all judgements, fines and amounts paid in settlement and
reasonably incurred in connection with legal, administrative or investigative
proceedings any person who
(a) is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil,
criminal, administrative or investigative, by reason of the
fact that the person is or was a director, an officer or
liquidator of the Company; or
(b) is or was, at the request of the Company, serving as a
director, officer or liquidator of, or in any other capacity
is or was acting for, another company or a partnership, joint
venture, trust or other enterprise.
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85. Article 84 only applies to a person referred to in that Article if the
person acted honestly and in good faith with a view to the best interests of the
Company and, in the case of criminal proceedings, the person had no reasonable
cause to believe that such person's conduct was unlawful. In addition,
indemnification shall not be available with respect to any claim against a
person referred to in Article 84 pursuant to the provisions of Section 16(b) of
the United States Securities Exchange Act of 1934, as amended, or any similar
provisions of any other United States federal or state statute or rule.
86. The decision of the directors as to whether the person acted honestly
and in good faith and with a view to the best interests of the Company and as to
whether the person had no reasonable cause to believe that such person's conduct
was unlawful, is in the absence of fraud, sufficient for the purposes of these
Articles, unless a question of law is involved.
87. The termination of any proceedings by any judgement, order,
settlement, convictions or the entering of a nolle prosequi does not, by itself,
create a presumption that the person did not act honestly and in good faith and
with a view to the best interests of the Company or that the person had
reasonable cause to believe that such person's conduct was unlawful.
88. If a person referred to in Article 84 has been successful in defense
of any proceedings referred to in that Article the person is entitled to be
indemnified against all expenses, including legal fees, and against all
judgements, fines and amounts paid in settlement and reasonably incurred by the
person in connection with the proceedings.
89. Expenses incurred in defending any of the proceedings described in
Article 84 shall be paid in advance of the final disposition of such proceeding
upon receipt of an undertaking by or on behalf of the person entitled to
indemnification under Article 84 to repay such amount, if it shall ultimately be
determined that such person is not entitled to be indemnified by the Company
under Article 84.
90. The indemnification under Article 84 with respect to any person shall
not limit or restrict in any way the power of the Company to indemnify or pay
expenses for such person in any other manner permitted by law or be deemed
exclusive of, or invalidate, any other right which such person may have or
acquire under any law, agreement, vote of shareholders or disinterested
directors, or otherwise.
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91. The Company may purchase and maintain insurance in relation to any
person who is or was a director, an officer or a liquidator of the Company, or
who at the request of the Company is or was serving as a director, an officer or
a liquidator of, or in any other capacity is or was acting for, another company
or a partnership, joint venture, trust or other enterprise, against any
liability asserted against the person and incurred by the person in that
capacity, whether or not the Company has or would have had the power to
indemnify the person against the liability under Article 84.
92. The right of indemnification provided for herein (i) shall be deemed
to create contractual rights in favor of persons entitled to indemnification
hereunder; (ii) shall inure to the benefit of the heirs and legal
representatives of persons entitled to indemnification hereunder; and (iii)
shall be applicable to actions, suits and proceedings commenced after the
original adoption date of these Articles of Association on October 31, 1995,
whether arising from acts or omissions occurring before or after the adoption of
this resolution.
93. If applicable Bahamian law is deemed at any time to permit broader
indemnification of the persons described in Article 84 than that provided for in
these Articles, then these Articles shall be deemed to be amended as of the time
that such broader indemnification is permitted to provide for such broader
indemnification.
94. Neither the repeal nor modification of any of Articles 84 through 93,
nor the adoption of any provision in these Articles or in the Memorandum
inconsistent with any of Articles 84 through 93, shall adversely affect any
right or protection afforded to any person described in Article 84 by any of
Articles 84 through 93 prior to such repeal, modification or adoption of an
inconsistent provision.
SEAL
95. The directors shall provide for the safe custody of the Seal. The
Seal, when affixed to any written instrument shall be witnessed by a director or
any other person so authorized from time to time by the directors. The directors
may provide for a facsimile of the Seal and of the signature of any director or
authorized person which may be reproduced by printing or other means on any
instrument and it shall have the same force and validity as if the Seal had been
affixed to such instrument and the same had been signed as hereinbefore
described. The directors may authorize the adoption and use of one or more
corporate seals for use outside the Commonwealth of The Bahamas.
31
<PAGE>
DIVIDENDS
96. The Company may by a resolution of directors declare and pay dividends
in money, shares or other property but dividends shall only be declared and paid
out of surplus. In the event that dividends are paid in specie the directors
shall have responsibility for establishing and recording in the resolution of
directors authorizing the dividends, a fair and proper value for the assets to
be so distributed.
97. No dividend shall be declared and paid unless the directors determine
that immediately after the payment of the dividend the Company will be able to
satisfy its liabilities as they become due in the ordinary course of its
business and the realizable value of the assets of the Company will not be less
than the sum of its total liabilities, other than deferred taxes, as shown in
its books of account, and its capital. In the absence of fraud, the decision of
the directors as to the realizable value of the assets of the Company is
conclusive, unless a question of law is involved.
98. Notice of any dividend that may have been declared shall be given to
each shareholder in manner hereinafter mentioned and all dividends unclaimed for
3 years after having been declared may be forfeited by resolution of directors
for the benefit of the Company.
99. No dividend shall bear interest as against the Company and no dividend
shall be paid on shares described in Article 14.
ACCOUNTS AND BOOKS OF THE COMPANY
100. The directors shall from time to time determine whether and to what
extent and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to inspection by
the shareholders not being directors, and no shareholder (not being a director)
shall have any right of inspecting any account or book or document of the
Company except as conferred by statute or authorized by the directors.
32
<PAGE>
NOTICES
101. Any notice, information or written statement to be given by the
Company (including by the directors or any officer of the Company) to a
shareholder or the shareholders shall be deemed given when delivered personally,
or when deposited into the mail addressed to shareholder at the address shown in
the share register or, when an alternate means of delivery is deemed reasonable
by the directors, when given on behalf of the Company to a party outside of the
Company with instructions to deliver such notice, information or statement to a
shareholder or the shareholders.
VOLUNTARY WINDING UP AND DISSOLUTION
102. The Company may voluntarily commence to wind up and dissolve by
resolution of shareholders or by resolution of directors.
AMENDMENT
103. These Articles may be amended by (a) the directors or (b) 66 2/3% of
the shareholders of each class or series entitled to vote thereon.
HEADINGS
104. The headings in these Articles have been inserted solely for
convenience of reference and neither constitute a part of these Articles nor
affect the meaning, interpretation or effect of any provision of these Articles.
GOVERNING LAW
105. Except as otherwise specifically provided for herein, Bahamian law
shall govern all aspects of these Articles.
ADOPTED MARCH 23, 1997
----------------------------------------------------
Date
33
<PAGE>
EXHIBIT 10.1(A)
AMENDMENT TO EMPLOYMENT AGREEMENT DATED OCTOBER 17, 1996
This Amendment to Employment Agreement (the "Amendment") is made as of
25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Clive E. Warshaw
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment Agreement
dated October 17, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment Agreement
as provided below.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Section 3(a)(i), in its entirety, and the first sentence of Section
3(a)(iii) of the Employment Agreement are hereby amended so that, as amended,
they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof compensation as described in this Section 3(a), all
of which shall be subject to such deductions as may be required
by applicable law or regulation.
<PAGE>
(i) BASE SALARY. A base salary at the rate of (A) Three
Hundred Forty-One Thousand Two Hundred Fifty Dollars [(U.S.) $341,250.00]
for calendar year ("Year") 1997 and (B) no less than Three Hundred
Forty-One Thousand Two Hundred Fifty Dollars [(U.S.) $341,250.00] for each
Year thereafter during the term of this Agreement, subject to review by
the Compensation Committee of the Board of Directors of the Company,
payable in bi-weekly installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each Period (as defined
below) and Year during the term hereof, additional cash compensation as
described in this Section 3(a)(iii) (the "Incentive Bonus") based on a
budget for each Year hereunder, including budgets for each Period (as
defined below) within such Year, which budget includes an estimate of the
Net Earnings (as defined below) for each such Period and for such Year and
which budget shall have been approved for the purpose of the compensation
payable hereunder by the Compensation Committee of the Board of Directors
(the "Budget").
2. EFFECTIVE DATE. The effective date of the amendments to the Employment
Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
STEINER LEISURE LIMITED
/S/ CLIVE E. WARSHAW By: S/S LEONARD I. FLUXMAN
- -------------------------- -------------------------------------
Clive E. Warshaw Leonard I. Fluxman,
Chief Operating Officer and
Chief Financial Officer
2
<PAGE>
EXHIBIT 10.2(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (the "Amendment") is made as
of 25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Leonard I. Fluxman
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 23, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Section 3(a)(i), in its entirety, and the first sentence of
Section 3(a)(iii) of the Employment Agreement are hereby amended so that, as
amended, they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof compensation as described in this Section 3(a),
all of which shall
<PAGE>
be subject to such deductions as may be required by
applicable law or regulation.
(i) BASE SALARY. A base salary at the rate of (A) One
Hundred Eighty-Three Thousand Seven Hundred Fifty Dollars [(U.S.)
$183,750.00] for calendar year ("Year") 1997 and (B) no less than
One Hundred Eighty-Three Thousand Seven Hundred Fifty Dollars
[(U.S.) $183,750.00] for each Year thereafter during the term of
this Agreement, subject to review by the Compensation Committee of
the Board of Directors of the Company, payable in bi-weekly
installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each Period (as
defined below) and Year during the term hereof, additional cash
compensation as described in this Section 3(a)(iii) (the "Incentive
Bonus") based on a budget for each Year hereunder, including budgets
for each Period (as defined below) within such Year, which budget
includes an estimate of the Net Earnings (as defined below) for each
such Period and for such Year and which budget shall have been
approved for the purpose of the compensation payable hereunder by
the Compensation Committee of the Board of Directors (the "Budget").
2. CHANGE IN CONTROL.
The third sentence of Section 5(e) of the Employment Agreement
is hereby amended so that, as amended, it shall read as follows:
(e) CHANGE IN CONTROL. ... Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur as a result of
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities being acquired by (i) one
or more employee benefit plans maintained by the Company or any
entity directly or indirectly Controlled (as defined below) by the
Company, (ii) the Company or any entity directly or indirectly
Controlled by the Company or (iii) Clive E. Warshaw, the current
Chairman, Michele Steiner Warshaw, the wife of Clive E. Warshaw
(collectively, the "Warshaws"), or any entity directly or indirectly
Controlled by either or both of the Warshaws, Employee or members of
the Immediate Family (as defined below) of Employee.
2
<PAGE>
3. EFFECTIVE DATE. The effective date of the amendments to the
Employment Agreement contained in this Amendment shall be January 1, 1997.
4. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
STEINER LEISURE LIMITED
/S/ LEONARD I. FLUXMAN By:/S/ CLIVE E. WARSHAW
- ---------------------------------- -------------------------------------
Leonard I. Fluxman Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 10.3(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is made as
of 25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Michele Steiner Warshaw
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 21, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT. Section 1 of the Employment Agreement is hereby amended by
deleting the words "Senior Vice President-Development," and substituting in
place thereof "Executive Vice President."
2. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the Employment Agreement
are hereby amended so that, as amended, they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof
<PAGE>
compensation as described in this Section 3(a), all of which shall
be subject to such deductions as may be required by applicable law
or regulation.
(i) BASE SALARY. A base salary at the rate of
(A) One Hundred Forty Thousand Dollars [(U.S.) $140,000.00]
for calendar year ("Year") 1997 and (B) no less than One
Hundred Forty Thousand Dollars [(U.S.) $140,000.00] for
each Year thereafter during the term of this Agreement,
subject to review by the Compensation Committee of the
Board of Directors of the Company, payable in bi-weekly
installments (the "Base Salary").
(iii) BONUS. Additional cash compensation in
such amount in such amount as the Compensation Committee
of the Board of Directors may, in its sole discretion,
determine (the "Bonus").
3. EFFECTIVE DATE. The effective date of the amendments to the Employment
Agreement contained in this Amendment shall be January 1, 1997.
4. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
STEINER LEISURE LIMITED
/S/ MICHELE STEINER WARSHAW By: /S/ LEONARD I. FLUXMAN
- ------------------------------ ------------------------------------
Michele Steiner Warshaw Leonard I. Fluxman,
Chief Operating Officer and
Chief Financial Officer
2
<PAGE>
EXHIBIT 10.4(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the Employment Agreement (this "Amendment") is
made as of 25th day of March, 1997 by and between STEINER TRANSOCEAN LIMITED, a
Bahamas international business company (the "Company"), and Amanda Jane Francis
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 17, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the
Employment Agreement are hereby amended so that, as amended, they shall read as
follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during
the term hereof compensation as described in this Section
3(a), all of which shall be subject to such deductions as
may be required by applicable law or regulation.
<PAGE>
(i) BASE SALARY. A base salary at the rate of (A) One
Hundred Twenty Thousand Dollars [(U.S.) $120,000.00] for calendar
year ("Year") 1997 and (B) no less than One Hundred Twenty Thousand
Dollars [(U.S.) $120,000.00] for each Year thereafter during the
term of this Agreement, subject to review by the Compensation
Committee of the Board of Directors of the Company, payable in
bi-weekly installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each calendar
quarter ("Quarter") and Year during the term hereof, additional cash
compensation as described in this Section 3(a)(iii) (the "Bonus")
based on a budget for the Company for each Year hereunder, including
budgets for each Quarter within such Year, which budget includes an
estimate of the total revenues for the Company (the "STO" Revenues)
for each Quarter and for such Year and which budget shall have been
approved for the purpose of the compensation payable hereunder by
the Compensation Committee of the Board of Directors of Steiner
Leisure Limited. At the end of the first Quarter, if the STO
Revenues shall have been met or exceeded for such date, Employee
shall be entitled to receive an amount equal to Twenty Two Thousand
Five Hundred Dollars [(U.S.) $22,500]. At the end of the second
Quarter, if the STO Revenues shall have been met or exceeded for
such date (cumulatively for the Year to date, and not solely for the
second Quarter), Employee shall be entitled to receive an amount
equal to Forty-Five Thousand Dollars [(U.S.) $45,000], less the
amount paid with respect to the first Quarter. At the end of the
third Quarter, if the STO Revenues shall have been met or exceeded
for such date (cumulatively for the Year to date, and not solely for
the third Quarter), Employee shall be entitled to receive an amount
equal to Sixty-Seven Thousand Five Hundred Dollars [(U.S.) $67,500],
less the amounts paid with respect to the first two Quarters. Any
amount which Employee is entitled to receive with respect to the
first three Quarters shall be payable one-half within forty-five
(45) days after the end of each such Quarter and one-half within
forty-five days after the end of the Year in question. At the end of
the fourth Quarter, if the STO Revenues shall have been met or
exceeded for such date (cumulatively for the Year to date, and not
solely for the fourth Quarter), Employee shall be entitled to
receive an amount equal to Ninety Thousand Dollars [(U.S.) $90,000],
less the amounts paid with respect to the first three Quarters,
within forty-five (45) days after the end of the fourth quarter.
Notwithstanding the foregoing, Employee shall only be
2
<PAGE>
entitled to receive payment pursuant to this Section 3(a)(iii) with
respect to a Quarter if she is employed hereunder on the last day of
such Quarter.
2. EFFECTIVE DATE. The effective date of the amendments to the
Employment Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
STEINER LEISURE LIMITED
/S/ AMANDA JANE FRANCIS By:/S/ CLIVE E. WARSHAW
- ------------------------------- -----------------------------
Amanda Jane Francis Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 10.5(A)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to Service Agreement (this "Amendment") is made as of
25th day of March, 1997 by and between ELEMIS LIMITED, a United Kingdom company
(the "Company"), and Sean C. Harrington ("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Service Agreement
dated September 18, 1996 (the "Service Agreement"); and
WHEREAS, the Company and Employee desire to amend the Service
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
(a) BASE SALARY. Clause 5(a) of the Service Agreement is hereby amended to
delete "(pound)50,000.00" on the third line thereof and replacing it with
"(pound)52,500.00."
(b) BONUS. The first sentence of clause 5(b)(ii) of the Service Agreement
is hereby amended by deleting the words "Chairman of the Board" immediately
before the bracketed language at the end of the sentence, and replacing those
words with the words "Compensation Committee of the Board of Directors of
Steiner Leisure Limited."
2. EFFECTIVE DATE. The effective date of the amendments to the Service
Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Service Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
ELEMIS LIMITED
/S/ SEAN C. HARRINGTON By:/S/ CLIVE E. WARSHAW
- ----------------------------- ------------------------------------
Sean C. Harrington Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer of
STEINER LEISURE LIMITED,
Duly authorized to sign
2
<PAGE>
EXHIBIT 10.6
STEINER LEISURE LIMITED
AMENDED AND RESTATED
1996 SHARE OPTION AND INCENTIVE PLAN
ADOPTED MARCH 23, 1997
<PAGE>
STEINER LEISURE LIMITED 1996 SHARE OPTION AND INCENTIVE PLAN
1. PURPOSE.
The purpose of the Steiner Leisure Limited 1996 Share Option and Incentive
Plan (hereinafter referred to as this "Plan") is to (i) assist Steiner Leisure
Limited (the "Company") in attracting and retaining highly qualified, officers,
key employees, directors and consultants for the successful conduct of its
business; (ii) provide incentives and rewards for persons eligible for awards
which are directly linked to the financial performance of the Company in order
to motivate such persons to achieve long-range performance goals; and (iii)
allow persons receiving awards to participate in the growth of the Company.
2. DEFINITIONS.
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" A Change in Control of the Company shall be
deemed to occur if any of the following circumstances have occurred after the
closing of initial public offering of the Shares:
(i) any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
2
<PAGE>
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior approval
of the Board;
(iii) during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors;
(iv) any "person" or "group" within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20% or
more of the then outstanding voting securities
of the Company commences soliciting proxies; and
(v) with respect to a particular Employee, there
occurs a "change in control," as such term is
defined under any employment agreement or
service agreement between the Company or any
direct or indirect subsidiary thereof and such
Employee, entered into before or after the
date of adoption of this Plan (a "Change in
Control Agreement"), which provides for, upon
such change in control, the acceleration of
the vesting of share options or otherwise
affects awards that may be made under this
Plan; provided, however, that this Section
2.2.(v) applies only with respect to the award
or awards accelerated, or otherwise affected
by such Change in Control under such Change in
Control Agreement.
2.3 "CODE" means the United States Internal Revenue Code of 1986, as
currently in effect or hereafter amended.
3
<PAGE>
2.4 "COMMITTEE" means the committee appointed to administer this Plan in
accordance with Section 4 of this Plan.
2.5 "DISABILITY" means "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
2.6 "EMPLOYEE" means any employee of the Company or any direct or indirect
subsidiary of the Company (a "Subsidiary"), fincluding officers of the Company
and any Subsidiary, as well as such officers who are also directors of the
Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
2.8 "EXERCISE PAYMENT" means a payment described in Section 8 upon the
exercise of a Share Option.
2.9 "FAIR MARKET VALUE," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
date, the mean of the high and low prices reported per Share on the applicable
date (i) as quoted on the Nasdaq National Market or the Nasdaq Small Cap Market
(each, a "Nasdaq Market") or (ii) if not traded on a Nasdaq Market, as reported
by any principal national securities exchange in the United States on which it
is then traded (or if the Shares have not been quoted or reported, as the case
may be, on such date, on the first day prior thereto on which the Shares were
quoted or reported, as the case may be), except that in the case of a Share
Appreciation Right that is exercised for cash during the first three (3) days of
the ten (10) day period set forth in Section 7.4 of this Plan, "Fair Market
Value" means the highest daily closing price per Share as reported on such
Nasdaq Market or exchange during such ten (10) day period. Notwithstanding the
foregoing, if a Share Appreciation Right is exercised during the sixty (60) day
period commencing on the date of a Change in Control, the Fair Market Value for
purposes of determining the Share Appreciation shall be the highest of (i) the
Fair Market Value per Share, as determined under the preceding sentence; (ii)
the highest Fair Market Value per Share during the ninety (90) day period ending
on the date of exercise of the SAR; (iii) the highest price per Share shown on
Schedule 13D or an amendment thereto filed pursuant to Section 13(d) of the
Exchange Act 1934 by any person holding 20% of the combined voting power of the
Company's then outstanding voting securities; or (iv) the highest price paid or
to be paid per Share pursuant to a tender or exchange offer as determined by the
Committee. If the Shares are not reported or quoted on a Nasdaq Market or a
national securities exchange, its Fair Market Value shall be as determined in
good faith by the Committee.
4
<PAGE>
2.10 "INCENTIVE STOCK OPTION" or "ISO" means any Share Option granted to
an Employee pursuant to this Plan which is designated as such by the Committee
and which complies with Section 422 of the Code or any successor provision.
2.11 "NON-QUALIFIED SHARE OPTION" means any Share Option granted to a
Participant pursuant to this Plan which is not an ISO.
2.12 "OPTION PRICE" means the purchase price of one Share upon exercise
of a Share Option.
2.13 "PERFORMANCE AWARD" means an award described in Section 10 of this
Plan.
2.14 "RETIREMENT" means retirement from employment by the Company or any
Subsidiary by a Participant who has attained the normal retirement age under any
applicable retirement plan (which is qualified under Section 401(a) of the Code)
of the Company in which such Participant participates.
2.15 "RESTRICTED SHARES" means Shares subject to restrictions on the
transfer of such Shares, conditions of forfeitability of such Shares or any
other limitations or restrictions as determined by the Committee.
2.16 "SETTLEMENT DATE" means, (i) with respect to any Share Appreciation
Rights that have been exercised, the date or dates upon which cash payment is to
be made to the Participant, or in the case of Share Appreciation Rights that are
to be settled in Shares, the date or dates upon which such Shares are to be
delivered to the Participant; (ii) with respect to Performance Awards, the date
or dates upon which Shares are to be delivered to the Participant; (iii) with
respect to Exercise Payments, the date or dates upon which payment thereof is to
be made; and (iv) with respect to grants of Shares, including Restricted Shares,
the date or dates upon which such Shares are to be delivered to the Participant,
in each case determined in accordance with the terms of the grant (including any
award agreement) under which any such award was made.
2.17 "SHARE" or "SHARES" means the common shares of the
Company.
2.18 "SHARE APPRECIATION" means the excess of the Fair Market Value per
Share over the Option Price of the related Share, as determined by the
Committee.
5
<PAGE>
2.19 "SHARE APPRECIATION RIGHT" or "SAR" means an award that entitles a
Participant to receive an amount described in Section 7.2.
2.20 "SHARE OPTION" or "OPTION" means an award that entitles a Partici-
pant to purchase one Share for each Option granted.
3. PARTICIPATION.
The participants in this Plan ("Participants") shall be those persons who
are selected to participate in this Plan by the Committee and who are (i)
Employees serving in managerial, administrative or professional positions, (ii)
directors of the Company or (iii) consultants to the Company or any Subsidiary.
4. ADMINISTRATION.
This Plan shall be administered and interpreted by a committee of two or
more members of the Board appointed by the Board. Members of the Committee shall
be "Non-Employee Directors" as that term is defined for purposes of Rule
16b-3(b)(3)(i) under the Exchange Act. All decisions and acts of the Committee
shall be final and binding upon all Participants. The Committee shall: (i)
determine the number and types of awards to be made under this Plan; (ii) set
the Option Price, the number of Options to be awarded and the number of Shares
to be awarded out of the total number of Shares available for award; (iii)
establish any applicable administrative regulations to further the purpose of
this Plan; (iv) approve forms of award agreements between the participant and
the Company; and (v) take any other action desirable or necessary to interpret,
construe or implement the provisions of this Plan. Prior to the appointment of
the Committee by the Board, or if the Committee shall not be in existence at any
time during the term of this Plan, this Plan shall be administered and
interpreted by the Board and, in such case, all references to the Committee
herein shall be deemed to refer to the Board.
5. AWARDS.
5.1 FORM OF AWARDS. Awards under this Plan may be in any of the following
forms (or a combination thereof): (i) Share Options; (ii) Share Appreciation
Rights; (iii) Exercise Payment rights; (iv) grants of Shares, including
Restricted Shares; or (v) Performance Awards. The Committee may require that any
or all awards under this Plan be made pursuant to an award agreement between the
Participant and the Company. Such award agreements shall be in such form as the
Committee may approve from time to time. The
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Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may deem appropriate.
5.2 MAXIMUM AMOUNT OF SHARES AVAILABLE. The total number of Shares
(including Restricted Shares, if any) granted, or covered by Options granted,
under this Plan during the term of this Plan shall not exceed 720,000. Solely
for the purpose of computing the total number of Shares optioned or granted
under this Plan, there shall not be counted any Shares which have been forfeited
and any Shares covered by Options which, prior to such computation, have
terminated in accordance with their terms or have been canceled by the
Participant or the Company.
5.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION, ETC. In the event of any
change in the outstanding Shares of the Company by reason of any share split,
share dividend, recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of any special
distribution to the shareholders, the Committee shall make such equitable
adjustments in the number of Shares and prices per Share applicable to Options
then outstanding and in the number of Shares which are available thereafter for
Option awards or other awards, both under this Plan as a whole and with respect
to individuals, as the Committee determines are necessary and appropriate. Any
such adjustment shall be conclusive and binding for all purposes of this Plan.
6. SHARE OPTIONS.
6.1 GRANT OF AWARD. The Company may award Options to purchase Shares,
including Restricted Shares (hereinafter referred to as "Share Option Awards")
to such Participants as the Committee authorizes and under such terms as the
Committee establishes. The Committee shall determine with respect to each Share
Option Award, and designate in the grant whether a Participant is to receive an
ISO or a Non-Qualified Share Option.
6.2 OPTION PRICE. The Option Price per Share subject to a Share Option
Award shall be specified in the grant, but, to the extent any Share Option is an
Incentive Stock Option, the Option Price in no event shall be less than the Fair
Market Value per Share on the date of grant. Notwithstanding the foregoing, if
the Participant to whom an ISO is granted owns, at the time of the grant, more
than ten percent (10%) of the combined voting power of the Company, the Option
Price per Share subject to such grant shall be not less than one hundred ten
percent (110%) of the Fair Market Value.
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6.3 TERMS OF OPTION. A Share Option that is an ISO shall not be
transferable by the Participant other than as permitted under Section 422 of the
Code or any successor provision, and, during the Participant's lifetime, shall
be exercisable only by the Participant. Non-Qualified Share Options may be
subject to such restrictions on transferability and exercise as may be provided
for by the Committee in the terms of the grant thereof. A Share Option shall be
of no more than ten (10) years' duration, except that an ISO granted to a
Participant who, at the time of the grant, owns Shares representing more than
ten percent (10%) of the combined voting power of the Company shall by its terms
be of no more than five (5) years' duration. A Share Option by its terms shall
vest in a Participant to whom it is granted and be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but, with respect to Employees, in no event less than one
(1) year following the date of grant of such award; (ii) the Participant's
death; or (iii) a Change in Control.
6.4 EXERCISE OF OPTION. A Non-Qualified Share Option is only exercisable
by a Participant who is an Employee while such Participant is in active
employment with the Company or a Subsidiary or within thirty (30) days after
termination of such employment, except (i) during the three-year period after a
Participant's death, Disability or Retirement; (ii) during a three-year period
commencing on the date of a Participant's termination of employment by the
Company or a Subsidiary other than for cause; (iii) during a three-year period
commencing on the date of termination, by the Participant or the Company or a
Subsidiary, of employment after a Change in Control unless such termination of
employment is by the Company or a Subsidiary for cause; or (iv) if the Committee
decides that it is in the best interest of the Company to permit other
exceptions. A Non-Qualified Stock Option may not be exercised pursuant to this
paragraph after the expiration date of the Share Option.
An Incentive Share Option is only exercisable by a Participant while
the Participant is in active employment with the Company or a Subsidiary or
within thirty (30) days after termination of such employment, except (i) during
a one-year period after a Participant's death, where the Option is exercised by
the estate of the Participant or by any person who acquired such Option by
bequest or inheritance; (ii) during a three-month period commencing on the date
of the Participant's termination of employment other than due to death, a
Disability or by the Company or a Subsidiary other than for cause; or (iii)
during a one-year period commencing on the Participant's termination of
employment on account of Disability. An Incentive Share Option may not be
exercised pursuant to this paragraph after the expiration date of the Share
Option.
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An Option may be exercised with respect to part or all of the Shares
subject to the Option by giving written notice to the Company of the exercise of
the Option. The Option Price for the Shares for which an Option is exercised
shall be paid on or within ten (10) business days after the date of exercise in
cash (by certified or bank cashier's check), in whole Shares owned by the
Participant prior to exercising the Option, in a combination of cash and such
Shares or on such other terms and conditions as the Committee may approve. The
value of any Share delivered in payment of the Option Price shall be its Fair
Market Value on the date the Option is exercised.
6.5 LIMITATION APPLICABLE TO ISOS. The aggregate Fair Market Value,
determined as of the date the related Share Option is granted, of all Shares
with respect to which ISOs are exercisable for the first time by a Participant
in any one calendar year, under this Plan or any other share option plan
maintained by the Company, shall not exceed $100,000.
7. SHARE APPRECIATION RIGHTS.
7.1 GENERAL. The Committee may, in its discretion, grant SARs to
Participants who have received a Share Option Award. The SARs may relate to such
number of Shares, not exceeding the number of Shares that the Participant may
acquire upon exercise of a related Share Option, as the Committee determines in
its discretion. Upon exercise of a Share Option by a Participant, the SAR
relating to the Share covered by such exercise shall terminate. Upon termination
or expiration of a Share Option, any unexercised SAR related to that Option
shall also terminate. Upon exercise of SARs, such rights and the related Share
Options, to the extent of an equal number of Shares shall be surrendered to the
Committee, and such SARs and the related Share Options shall terminate.
7.2 AWARD. Upon a Participant's exercise of some or all of the
Participant's SARs, the Participant shall receive an amount equal to the value
of the Share Appreciation for the number of SARs exercised, payable in cash,
Shares, Restricted Shares, or a combination thereof, at the discretion of the
Committee.
7.3 FORM OF SETTLEMENT. The Committee shall have the discretion to
determine the form in which payment of an SAR will be made, or to permit an
election by the Participant to receive cash in full or partial settlement of the
SAR. Unless otherwise specified in the grant of the SAR, if a Participant
exercises an SAR during the sixty (60) day period commencing on the date of a
Change in Control, the form of payment of such SAR shall be cash, provided that
such SAR was granted at least six (6) months prior to the date of exercise, and
shall be Shares if such SAR was granted
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six (6) months or less prior to the date of the exercise. Settlement for
exercised SARs may be deferred by the Committee in its discretion to such date
and under such terms and conditions as the Committee may determine.
7.4 RESTRICTIONS ON CASH EXERCISE. Except in the case of an SAR that was
granted at least six (6) months prior to exercise and is exercised for cash
during the sixty (60) day period commencing on the date of the Change in
Control, any election by a Participant to receive cash in full or partial
settlement of the SAR, as well as any exercise by a Participant of the
Participant's SAR for such cash, shall be made only during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
7.5 RESTRICTIONS. An SAR is only vested, exercisable and transferable
during the period when the Share Option to which it is related is also vested,
exercisable and transferable, respectively. If the Participant is a person
subject to Section 16 of the Exchange Act, the SAR may not be exercised within
six (6) months after the grant of the related Share Option, unless otherwise
permitted by law.
8. EXERCISE PAYMENTS.
The Committee may grant to Participants holding Share Options the right to
receive payments in connection with the exercise of a Participant's Share
Options ("Exercise Payments") relating to such number of Shares covered by such
Share Options, and subject to such restrictions and pursuant to such other terms
as the Committee may determine. Exercise Payments shall be in an amount
determined by the Committee in its discretion, which amount shall not be greater
than 60% of the excess of the Fair Market Value (as of the date of exercise)
over the Option Price of the Shares acquired upon the exercise of the Option. At
the discretion of the Committee, the Exercise Payment may be made in cash,
Shares, including Restricted Shares, or a combination thereof.
9. GRANTS OF SHARES.
9.1 AWARDS. The Committee may grant, either alone or in addition to other
awards granted under this Plan, Shares (including Restricted Shares) to such
Participants as the Committee authorizes and under such terms (including the
payment of a purchase price) as the Committee establishes. The Committee, in its
discretion, may also make a cash payment to a Participant granted Shares or
Restricted Shares under this Plan to allow such Participant to
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satisfy tax obligations arising out of receipt of such Shares or
Restricted Shares.
9.2 RESTRICTED SHARE AWARD. Awards of Restricted Shares shall be subject
to such terms and conditions as are established by the Committee. Such terms and
conditions may include, but are not limited to, the requirement of continued
service with the Company, achievement of specified business objectives and other
measurements of individual or business unit performance, the manner in which
such Restricted Shares are held, the extent to which the holder of such
Restricted Shares has rights of a shareholder and the circumstances under which
such Restricted Shares shall be forfeited. The Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Shares
received pursuant to this Section 9 prior to the date on which any applicable
restriction established by the Committee lapses. The Participant shall have,
with respect to Restricted Shares, all of the rights of a shareholder of the
Company, including the right to vote the Restricted Shares and the right to
receive any dividends, unless the Committee shall otherwise in the grant of such
Restricted Shares. Restricted Shares may not be sold or transferred by the
Participant until any restrictions that have been established by the Committee
have lapsed. Upon the termination of employment of a Participant who is an
Employee during the period any restrictions are in effect, all Restricted Shares
shall be forfeited without compensation to the Participant unless otherwise
provided in the grant of such Restricted Shares.
10. PERFORMANCE AWARDS.
The Committee may grant, either alone or in addition to other awards
granted under this Plan, awards of Shares based on the attainment, over a
specified period, of individual performance targets or other parameters to such
Participants as the Committee authorizes and under such terms as the Committee
establishes. Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee, are met. The
Committee, shall determine the times at which Performance Awards are to be made
and all conditions of such awards. The Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber Shares received pursuant to
this Section 10 prior to the date on which any applicable restriction or
performance period established by the Committee lapses. Performance Awards may
be paid in Shares, Restricted Shares, or other securities of the Company, cash
or any other form of property that the Committee shall determine. Unless
otherwise provided in the Performance Award, a Participant who is an Employee
must be an Employee at the end of the performance period in order to receive a
Performance Award, unless the Participant dies, has reached Retirement or incurs
a Disability or under such other circumstances as the Committee may determine.
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11. GENERAL PROVISIONS.
11.1 Any assignment or transfer of any awards granted under this Plan may
be effected only if such assignment or transfer does not violate the terms of
the award.
11.2 Nothing contained herein shall require the Company to segregate any
monies from its general funds, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant for
any year.
11.3 Participation in this Plan shall not affect the Company's right to
discharge a Participant or constitute an agreement of employment between a
Participant and the Company.
11.4 This Plan shall be interpreted in accordance with, and the
enforcement of this Plan shall be governed by, the laws of The Bahamas, subject
to any applicable United States federal or state securities laws.
12. AMENDMENT, SUSPENSION, OR TERMINATION.
12.1 GENERAL RULE. Except as otherwise required under applicable rules of
a Nasdaq Market or a securities exchange or other market where the securities of
the Company are traded or applicable law, the Board may suspend, terminate or
amend this Plan, including but not limited to such amendments as may be
necessary or desirable resulting from changes in the United States federal
income tax laws and other applicable laws without the approval of the Company's
shareholders or Participants; provided, however, that no such action shall
adversely affect any awards previously granted to a Participant without the
Participant's consent.
12.2 COMPLIANCE WITH RULE 16B-3. With respect to any person subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as applicable
during the term of this Plan. To the extent that any provision of this Plan or
action of the Committee or its delegates fail to so comply, it shall be deemed
null and void.
13. EFFECTIVE DATE AND DURATION OF PLAN.
This Plan shall be effective on August 15, 1996. No award shall be granted
under this Plan subsequent to August 15, 2006.
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14. TAX WITHHOLDING.
The Company shall have the right to (i) make deductions from any
settlement of an award, including delivery or vesting of Shares, or require that
Shares or cash, or both, be withheld from any award, in each case in an amount
sufficient to satisfy withholding of any federal, state or local taxes required
by law or (ii) take such other action as may be necessary or appropriate to
satisfy any such withholding obligations. The Committee may determine the manner
in which such tax withholding shall be satisfied, and may permit Shares (rounded
up to the next whole number) to be used to satisfy required tax withholding
based on the Fair Market Value of such Shares as of the Settlement Date of the
applicable award.
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EXHIBIT 10.7(A)
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
ADOPTED OCTOBER 8, 1996
AMENDMENT NO. 1 DATED
FEBRUARY 10, 1997
<PAGE>
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited Non- Employee
Directors' Share Option Plan" (this "Plan"). This Plan sets forth the terms of
grants of options (each, an "Option") to purchase the common shares (the
"Shares") of Steiner Leisure Limited (the "Company") to Non-Employee Directors
(as defined below) of the Company. The purpose of this Plan is to advance the
interests of Company and its shareholders by promoting an identity of interest
between the Company's non-employee directors and its shareholders, providing
non-employee directors with a proprietary stake in the Company's success and
strengthening the Company's ability to attract and retain qualified non-employee
directors by affording such persons an opportunity to share in the future
success of the Company.
2. DEFINITIONS.
(a) Act means the Securities Act of 1933, as
amended.
(b) Board means the Board of Directors of the
Company.
(c) Company means Steiner Leisure Limited.
(d) Date of Grant means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(f) Fair Market Value means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the
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closing sales price per share of the Shares underlying an Option on the Nasdaq
Stock Market ("Nasdaq") or, if the Shares are not then traded on Nasdaq, on any
national securities exchange, or (ii) if the Shares are not then traded on
Nasdaq or such exchange, and are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the Shares in such
over-the-counter market or (iii) if the Shares are then not listed on Nasdaq or
such exchange, or traded in an over-the-counter market, such value as the Board
may determine.
(g) Non-Employee Director means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) Options means the options to purchase Shares
granted pursuant to this Plan.
(i) Plan means this Steiner Leisure Limited
Directors' Share Option Plan.
(j) Shares means the common shares of the Company,
par value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes
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thereof. Except as otherwise provided herein, the validity, construction and
effect of this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with the laws of the Commonwealth of the Bahamas
subject to any applicable requirements under United States federal or state
securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 1,250 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan, each individual elected or re-elected as a Non-Employee
Director at such meeting or continuing as a Non-Employee Director shall be
granted, without the need for further action by the Board, an Option to purchase
1,250 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 1,250 multiplied by a fraction, the
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numerator of which is the number of days from the Effective Date until the
scheduled date of the then next Annual meeting (or, if such date has not yet
been scheduled, the anniversary date of the then immediately preceding Annual
Meeting or, in the absence of such date, a date approximating the date of the
next Annual Meeting as determined in good faith by the Board), and the
denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each
Option shall be the Fair Market Value of the Shares on the Date of
Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares
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with respect to which the Option was exercised. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Option holders to have Shares
withheld for this purpose shall be made in writing in form acceptable to the
Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non- Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
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the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non- Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
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i. any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior
approval of the Board;
iii. during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors; or
iv. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
7
<PAGE>
in Rule 13d-3 under the Exchange Act of 20% or more of
the then outstanding voting securities of the Company
commences soliciting proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 82,500. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in
8
<PAGE>
any way the right of the Company to terminate a director at any time. The Board
may at any time discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to
Non-Employee Directors that the Company now has or may hereafter put into
effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.
9
<PAGE>
EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
2
<PAGE>
made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
3
<PAGE>
satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
4
<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
5
<PAGE>
Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
<PAGE>
cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
3
<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
4
<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
5
<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.1(A)
AMENDMENT TO EMPLOYMENT AGREEMENT DATED OCTOBER 17, 1996
This Amendment to Employment Agreement (the "Amendment") is made as of
25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Clive E. Warshaw
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment Agreement
dated October 17, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment Agreement
as provided below.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Section 3(a)(i), in its entirety, and the first sentence of Section
3(a)(iii) of the Employment Agreement are hereby amended so that, as amended,
they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof compensation as described in this Section 3(a), all
of which shall be subject to such deductions as may be required
by applicable law or regulation.
<PAGE>
(i) BASE SALARY. A base salary at the rate of (A) Three
Hundred Forty-One Thousand Two Hundred Fifty Dollars [(U.S.) $341,250.00]
for calendar year ("Year") 1997 and (B) no less than Three Hundred
Forty-One Thousand Two Hundred Fifty Dollars [(U.S.) $341,250.00] for each
Year thereafter during the term of this Agreement, subject to review by
the Compensation Committee of the Board of Directors of the Company,
payable in bi-weekly installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each Period (as defined
below) and Year during the term hereof, additional cash compensation as
described in this Section 3(a)(iii) (the "Incentive Bonus") based on a
budget for each Year hereunder, including budgets for each Period (as
defined below) within such Year, which budget includes an estimate of the
Net Earnings (as defined below) for each such Period and for such Year and
which budget shall have been approved for the purpose of the compensation
payable hereunder by the Compensation Committee of the Board of Directors
(the "Budget").
2. EFFECTIVE DATE. The effective date of the amendments to the Employment
Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
STEINER LEISURE LIMITED
/S/ CLIVE E. WARSHAW By: S/S LEONARD I. FLUXMAN
- -------------------------- -------------------------------------
Clive E. Warshaw Leonard I. Fluxman,
Chief Operating Officer and
Chief Financial Officer
2
<PAGE>
EXHIBIT 10.2(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (the "Amendment") is made as
of 25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Leonard I. Fluxman
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 23, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Section 3(a)(i), in its entirety, and the first sentence of
Section 3(a)(iii) of the Employment Agreement are hereby amended so that, as
amended, they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof compensation as described in this Section 3(a),
all of which shall
<PAGE>
be subject to such deductions as may be required by
applicable law or regulation.
(i) BASE SALARY. A base salary at the rate of (A) One
Hundred Eighty-Three Thousand Seven Hundred Fifty Dollars [(U.S.)
$183,750.00] for calendar year ("Year") 1997 and (B) no less than
One Hundred Eighty-Three Thousand Seven Hundred Fifty Dollars
[(U.S.) $183,750.00] for each Year thereafter during the term of
this Agreement, subject to review by the Compensation Committee of
the Board of Directors of the Company, payable in bi-weekly
installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each Period (as
defined below) and Year during the term hereof, additional cash
compensation as described in this Section 3(a)(iii) (the "Incentive
Bonus") based on a budget for each Year hereunder, including budgets
for each Period (as defined below) within such Year, which budget
includes an estimate of the Net Earnings (as defined below) for each
such Period and for such Year and which budget shall have been
approved for the purpose of the compensation payable hereunder by
the Compensation Committee of the Board of Directors (the "Budget").
2. CHANGE IN CONTROL.
The third sentence of Section 5(e) of the Employment Agreement
is hereby amended so that, as amended, it shall read as follows:
(e) CHANGE IN CONTROL. ... Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur as a result of
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities being acquired by (i) one
or more employee benefit plans maintained by the Company or any
entity directly or indirectly Controlled (as defined below) by the
Company, (ii) the Company or any entity directly or indirectly
Controlled by the Company or (iii) Clive E. Warshaw, the current
Chairman, Michele Steiner Warshaw, the wife of Clive E. Warshaw
(collectively, the "Warshaws"), or any entity directly or indirectly
Controlled by either or both of the Warshaws, Employee or members of
the Immediate Family (as defined below) of Employee.
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<PAGE>
3. EFFECTIVE DATE. The effective date of the amendments to the
Employment Agreement contained in this Amendment shall be January 1, 1997.
4. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
STEINER LEISURE LIMITED
/S/ LEONARD I. FLUXMAN By:/S/ CLIVE E. WARSHAW
- ---------------------------------- -------------------------------------
Leonard I. Fluxman Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 10.3(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is made as
of 25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Michele Steiner Warshaw
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 21, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT. Section 1 of the Employment Agreement is hereby amended by
deleting the words "Senior Vice President-Development," and substituting in
place thereof "Executive Vice President."
2. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the Employment Agreement
are hereby amended so that, as amended, they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof
<PAGE>
compensation as described in this Section 3(a), all of which shall
be subject to such deductions as may be required by applicable law
or regulation.
(i) BASE SALARY. A base salary at the rate of
(A) One Hundred Forty Thousand Dollars [(U.S.) $140,000.00]
for calendar year ("Year") 1997 and (B) no less than One
Hundred Forty Thousand Dollars [(U.S.) $140,000.00] for
each Year thereafter during the term of this Agreement,
subject to review by the Compensation Committee of the
Board of Directors of the Company, payable in bi-weekly
installments (the "Base Salary").
(iii) BONUS. Additional cash compensation in
such amount in such amount as the Compensation Committee
of the Board of Directors may, in its sole discretion,
determine (the "Bonus").
3. EFFECTIVE DATE. The effective date of the amendments to the Employment
Agreement contained in this Amendment shall be January 1, 1997.
4. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
STEINER LEISURE LIMITED
/S/ MICHELE STEINER WARSHAW By: /S/ LEONARD I. FLUXMAN
- ------------------------------ ------------------------------------
Michele Steiner Warshaw Leonard I. Fluxman,
Chief Operating Officer and
Chief Financial Officer
2
<PAGE>
EXHIBIT 10.4(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the Employment Agreement (this "Amendment") is
made as of 25th day of March, 1997 by and between STEINER TRANSOCEAN LIMITED, a
Bahamas international business company (the "Company"), and Amanda Jane Francis
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 17, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the
Employment Agreement are hereby amended so that, as amended, they shall read as
follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during
the term hereof compensation as described in this Section
3(a), all of which shall be subject to such deductions as
may be required by applicable law or regulation.
<PAGE>
(i) BASE SALARY. A base salary at the rate of (A) One
Hundred Twenty Thousand Dollars [(U.S.) $120,000.00] for calendar
year ("Year") 1997 and (B) no less than One Hundred Twenty Thousand
Dollars [(U.S.) $120,000.00] for each Year thereafter during the
term of this Agreement, subject to review by the Compensation
Committee of the Board of Directors of the Company, payable in
bi-weekly installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each calendar
quarter ("Quarter") and Year during the term hereof, additional cash
compensation as described in this Section 3(a)(iii) (the "Bonus")
based on a budget for the Company for each Year hereunder, including
budgets for each Quarter within such Year, which budget includes an
estimate of the total revenues for the Company (the "STO" Revenues)
for each Quarter and for such Year and which budget shall have been
approved for the purpose of the compensation payable hereunder by
the Compensation Committee of the Board of Directors of Steiner
Leisure Limited. At the end of the first Quarter, if the STO
Revenues shall have been met or exceeded for such date, Employee
shall be entitled to receive an amount equal to Twenty Two Thousand
Five Hundred Dollars [(U.S.) $22,500]. At the end of the second
Quarter, if the STO Revenues shall have been met or exceeded for
such date (cumulatively for the Year to date, and not solely for the
second Quarter), Employee shall be entitled to receive an amount
equal to Forty-Five Thousand Dollars [(U.S.) $45,000], less the
amount paid with respect to the first Quarter. At the end of the
third Quarter, if the STO Revenues shall have been met or exceeded
for such date (cumulatively for the Year to date, and not solely for
the third Quarter), Employee shall be entitled to receive an amount
equal to Sixty-Seven Thousand Five Hundred Dollars [(U.S.) $67,500],
less the amounts paid with respect to the first two Quarters. Any
amount which Employee is entitled to receive with respect to the
first three Quarters shall be payable one-half within forty-five
(45) days after the end of each such Quarter and one-half within
forty-five days after the end of the Year in question. At the end of
the fourth Quarter, if the STO Revenues shall have been met or
exceeded for such date (cumulatively for the Year to date, and not
solely for the fourth Quarter), Employee shall be entitled to
receive an amount equal to Ninety Thousand Dollars [(U.S.) $90,000],
less the amounts paid with respect to the first three Quarters,
within forty-five (45) days after the end of the fourth quarter.
Notwithstanding the foregoing, Employee shall only be
2
<PAGE>
entitled to receive payment pursuant to this Section 3(a)(iii) with
respect to a Quarter if she is employed hereunder on the last day of
such Quarter.
2. EFFECTIVE DATE. The effective date of the amendments to the
Employment Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
STEINER LEISURE LIMITED
/S/ AMANDA JANE FRANCIS By:/S/ CLIVE E. WARSHAW
- ------------------------------- -----------------------------
Amanda Jane Francis Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 10.5(A)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to Service Agreement (this "Amendment") is made as of
25th day of March, 1997 by and between ELEMIS LIMITED, a United Kingdom company
(the "Company"), and Sean C. Harrington ("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Service Agreement
dated September 18, 1996 (the "Service Agreement"); and
WHEREAS, the Company and Employee desire to amend the Service
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
(a) BASE SALARY. Clause 5(a) of the Service Agreement is hereby amended to
delete "(pound)50,000.00" on the third line thereof and replacing it with
"(pound)52,500.00."
(b) BONUS. The first sentence of clause 5(b)(ii) of the Service Agreement
is hereby amended by deleting the words "Chairman of the Board" immediately
before the bracketed language at the end of the sentence, and replacing those
words with the words "Compensation Committee of the Board of Directors of
Steiner Leisure Limited."
2. EFFECTIVE DATE. The effective date of the amendments to the Service
Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Service Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
ELEMIS LIMITED
/S/ SEAN C. HARRINGTON By:/S/ CLIVE E. WARSHAW
- ----------------------------- ------------------------------------
Sean C. Harrington Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer of
STEINER LEISURE LIMITED,
Duly authorized to sign
2
<PAGE>
EXHIBIT 10.6
STEINER LEISURE LIMITED
AMENDED AND RESTATED
1996 SHARE OPTION AND INCENTIVE PLAN
ADOPTED MARCH 23, 1997
<PAGE>
STEINER LEISURE LIMITED 1996 SHARE OPTION AND INCENTIVE PLAN
1. PURPOSE.
The purpose of the Steiner Leisure Limited 1996 Share Option and Incentive
Plan (hereinafter referred to as this "Plan") is to (i) assist Steiner Leisure
Limited (the "Company") in attracting and retaining highly qualified, officers,
key employees, directors and consultants for the successful conduct of its
business; (ii) provide incentives and rewards for persons eligible for awards
which are directly linked to the financial performance of the Company in order
to motivate such persons to achieve long-range performance goals; and (iii)
allow persons receiving awards to participate in the growth of the Company.
2. DEFINITIONS.
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" A Change in Control of the Company shall be
deemed to occur if any of the following circumstances have occurred after the
closing of initial public offering of the Shares:
(i) any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
2
<PAGE>
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior approval
of the Board;
(iii) during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors;
(iv) any "person" or "group" within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20% or
more of the then outstanding voting securities
of the Company commences soliciting proxies; and
(v) with respect to a particular Employee, there
occurs a "change in control," as such term is
defined under any employment agreement or
service agreement between the Company or any
direct or indirect subsidiary thereof and such
Employee, entered into before or after the
date of adoption of this Plan (a "Change in
Control Agreement"), which provides for, upon
such change in control, the acceleration of
the vesting of share options or otherwise
affects awards that may be made under this
Plan; provided, however, that this Section
2.2.(v) applies only with respect to the award
or awards accelerated, or otherwise affected
by such Change in Control under such Change in
Control Agreement.
2.3 "CODE" means the United States Internal Revenue Code of 1986, as
currently in effect or hereafter amended.
3
<PAGE>
2.4 "COMMITTEE" means the committee appointed to administer this Plan in
accordance with Section 4 of this Plan.
2.5 "DISABILITY" means "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
2.6 "EMPLOYEE" means any employee of the Company or any direct or indirect
subsidiary of the Company (a "Subsidiary"), fincluding officers of the Company
and any Subsidiary, as well as such officers who are also directors of the
Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
2.8 "EXERCISE PAYMENT" means a payment described in Section 8 upon the
exercise of a Share Option.
2.9 "FAIR MARKET VALUE," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
date, the mean of the high and low prices reported per Share on the applicable
date (i) as quoted on the Nasdaq National Market or the Nasdaq Small Cap Market
(each, a "Nasdaq Market") or (ii) if not traded on a Nasdaq Market, as reported
by any principal national securities exchange in the United States on which it
is then traded (or if the Shares have not been quoted or reported, as the case
may be, on such date, on the first day prior thereto on which the Shares were
quoted or reported, as the case may be), except that in the case of a Share
Appreciation Right that is exercised for cash during the first three (3) days of
the ten (10) day period set forth in Section 7.4 of this Plan, "Fair Market
Value" means the highest daily closing price per Share as reported on such
Nasdaq Market or exchange during such ten (10) day period. Notwithstanding the
foregoing, if a Share Appreciation Right is exercised during the sixty (60) day
period commencing on the date of a Change in Control, the Fair Market Value for
purposes of determining the Share Appreciation shall be the highest of (i) the
Fair Market Value per Share, as determined under the preceding sentence; (ii)
the highest Fair Market Value per Share during the ninety (90) day period ending
on the date of exercise of the SAR; (iii) the highest price per Share shown on
Schedule 13D or an amendment thereto filed pursuant to Section 13(d) of the
Exchange Act 1934 by any person holding 20% of the combined voting power of the
Company's then outstanding voting securities; or (iv) the highest price paid or
to be paid per Share pursuant to a tender or exchange offer as determined by the
Committee. If the Shares are not reported or quoted on a Nasdaq Market or a
national securities exchange, its Fair Market Value shall be as determined in
good faith by the Committee.
4
<PAGE>
2.10 "INCENTIVE STOCK OPTION" or "ISO" means any Share Option granted to
an Employee pursuant to this Plan which is designated as such by the Committee
and which complies with Section 422 of the Code or any successor provision.
2.11 "NON-QUALIFIED SHARE OPTION" means any Share Option granted to a
Participant pursuant to this Plan which is not an ISO.
2.12 "OPTION PRICE" means the purchase price of one Share upon exercise
of a Share Option.
2.13 "PERFORMANCE AWARD" means an award described in Section 10 of this
Plan.
2.14 "RETIREMENT" means retirement from employment by the Company or any
Subsidiary by a Participant who has attained the normal retirement age under any
applicable retirement plan (which is qualified under Section 401(a) of the Code)
of the Company in which such Participant participates.
2.15 "RESTRICTED SHARES" means Shares subject to restrictions on the
transfer of such Shares, conditions of forfeitability of such Shares or any
other limitations or restrictions as determined by the Committee.
2.16 "SETTLEMENT DATE" means, (i) with respect to any Share Appreciation
Rights that have been exercised, the date or dates upon which cash payment is to
be made to the Participant, or in the case of Share Appreciation Rights that are
to be settled in Shares, the date or dates upon which such Shares are to be
delivered to the Participant; (ii) with respect to Performance Awards, the date
or dates upon which Shares are to be delivered to the Participant; (iii) with
respect to Exercise Payments, the date or dates upon which payment thereof is to
be made; and (iv) with respect to grants of Shares, including Restricted Shares,
the date or dates upon which such Shares are to be delivered to the Participant,
in each case determined in accordance with the terms of the grant (including any
award agreement) under which any such award was made.
2.17 "SHARE" or "SHARES" means the common shares of the
Company.
2.18 "SHARE APPRECIATION" means the excess of the Fair Market Value per
Share over the Option Price of the related Share, as determined by the
Committee.
5
<PAGE>
2.19 "SHARE APPRECIATION RIGHT" or "SAR" means an award that entitles a
Participant to receive an amount described in Section 7.2.
2.20 "SHARE OPTION" or "OPTION" means an award that entitles a Partici-
pant to purchase one Share for each Option granted.
3. PARTICIPATION.
The participants in this Plan ("Participants") shall be those persons who
are selected to participate in this Plan by the Committee and who are (i)
Employees serving in managerial, administrative or professional positions, (ii)
directors of the Company or (iii) consultants to the Company or any Subsidiary.
4. ADMINISTRATION.
This Plan shall be administered and interpreted by a committee of two or
more members of the Board appointed by the Board. Members of the Committee shall
be "Non-Employee Directors" as that term is defined for purposes of Rule
16b-3(b)(3)(i) under the Exchange Act. All decisions and acts of the Committee
shall be final and binding upon all Participants. The Committee shall: (i)
determine the number and types of awards to be made under this Plan; (ii) set
the Option Price, the number of Options to be awarded and the number of Shares
to be awarded out of the total number of Shares available for award; (iii)
establish any applicable administrative regulations to further the purpose of
this Plan; (iv) approve forms of award agreements between the participant and
the Company; and (v) take any other action desirable or necessary to interpret,
construe or implement the provisions of this Plan. Prior to the appointment of
the Committee by the Board, or if the Committee shall not be in existence at any
time during the term of this Plan, this Plan shall be administered and
interpreted by the Board and, in such case, all references to the Committee
herein shall be deemed to refer to the Board.
5. AWARDS.
5.1 FORM OF AWARDS. Awards under this Plan may be in any of the following
forms (or a combination thereof): (i) Share Options; (ii) Share Appreciation
Rights; (iii) Exercise Payment rights; (iv) grants of Shares, including
Restricted Shares; or (v) Performance Awards. The Committee may require that any
or all awards under this Plan be made pursuant to an award agreement between the
Participant and the Company. Such award agreements shall be in such form as the
Committee may approve from time to time. The
6
<PAGE>
Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may deem appropriate.
5.2 MAXIMUM AMOUNT OF SHARES AVAILABLE. The total number of Shares
(including Restricted Shares, if any) granted, or covered by Options granted,
under this Plan during the term of this Plan shall not exceed 720,000. Solely
for the purpose of computing the total number of Shares optioned or granted
under this Plan, there shall not be counted any Shares which have been forfeited
and any Shares covered by Options which, prior to such computation, have
terminated in accordance with their terms or have been canceled by the
Participant or the Company.
5.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION, ETC. In the event of any
change in the outstanding Shares of the Company by reason of any share split,
share dividend, recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of any special
distribution to the shareholders, the Committee shall make such equitable
adjustments in the number of Shares and prices per Share applicable to Options
then outstanding and in the number of Shares which are available thereafter for
Option awards or other awards, both under this Plan as a whole and with respect
to individuals, as the Committee determines are necessary and appropriate. Any
such adjustment shall be conclusive and binding for all purposes of this Plan.
6. SHARE OPTIONS.
6.1 GRANT OF AWARD. The Company may award Options to purchase Shares,
including Restricted Shares (hereinafter referred to as "Share Option Awards")
to such Participants as the Committee authorizes and under such terms as the
Committee establishes. The Committee shall determine with respect to each Share
Option Award, and designate in the grant whether a Participant is to receive an
ISO or a Non-Qualified Share Option.
6.2 OPTION PRICE. The Option Price per Share subject to a Share Option
Award shall be specified in the grant, but, to the extent any Share Option is an
Incentive Stock Option, the Option Price in no event shall be less than the Fair
Market Value per Share on the date of grant. Notwithstanding the foregoing, if
the Participant to whom an ISO is granted owns, at the time of the grant, more
than ten percent (10%) of the combined voting power of the Company, the Option
Price per Share subject to such grant shall be not less than one hundred ten
percent (110%) of the Fair Market Value.
7
<PAGE>
6.3 TERMS OF OPTION. A Share Option that is an ISO shall not be
transferable by the Participant other than as permitted under Section 422 of the
Code or any successor provision, and, during the Participant's lifetime, shall
be exercisable only by the Participant. Non-Qualified Share Options may be
subject to such restrictions on transferability and exercise as may be provided
for by the Committee in the terms of the grant thereof. A Share Option shall be
of no more than ten (10) years' duration, except that an ISO granted to a
Participant who, at the time of the grant, owns Shares representing more than
ten percent (10%) of the combined voting power of the Company shall by its terms
be of no more than five (5) years' duration. A Share Option by its terms shall
vest in a Participant to whom it is granted and be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but, with respect to Employees, in no event less than one
(1) year following the date of grant of such award; (ii) the Participant's
death; or (iii) a Change in Control.
6.4 EXERCISE OF OPTION. A Non-Qualified Share Option is only exercisable
by a Participant who is an Employee while such Participant is in active
employment with the Company or a Subsidiary or within thirty (30) days after
termination of such employment, except (i) during the three-year period after a
Participant's death, Disability or Retirement; (ii) during a three-year period
commencing on the date of a Participant's termination of employment by the
Company or a Subsidiary other than for cause; (iii) during a three-year period
commencing on the date of termination, by the Participant or the Company or a
Subsidiary, of employment after a Change in Control unless such termination of
employment is by the Company or a Subsidiary for cause; or (iv) if the Committee
decides that it is in the best interest of the Company to permit other
exceptions. A Non-Qualified Stock Option may not be exercised pursuant to this
paragraph after the expiration date of the Share Option.
An Incentive Share Option is only exercisable by a Participant while
the Participant is in active employment with the Company or a Subsidiary or
within thirty (30) days after termination of such employment, except (i) during
a one-year period after a Participant's death, where the Option is exercised by
the estate of the Participant or by any person who acquired such Option by
bequest or inheritance; (ii) during a three-month period commencing on the date
of the Participant's termination of employment other than due to death, a
Disability or by the Company or a Subsidiary other than for cause; or (iii)
during a one-year period commencing on the Participant's termination of
employment on account of Disability. An Incentive Share Option may not be
exercised pursuant to this paragraph after the expiration date of the Share
Option.
8
<PAGE>
An Option may be exercised with respect to part or all of the Shares
subject to the Option by giving written notice to the Company of the exercise of
the Option. The Option Price for the Shares for which an Option is exercised
shall be paid on or within ten (10) business days after the date of exercise in
cash (by certified or bank cashier's check), in whole Shares owned by the
Participant prior to exercising the Option, in a combination of cash and such
Shares or on such other terms and conditions as the Committee may approve. The
value of any Share delivered in payment of the Option Price shall be its Fair
Market Value on the date the Option is exercised.
6.5 LIMITATION APPLICABLE TO ISOS. The aggregate Fair Market Value,
determined as of the date the related Share Option is granted, of all Shares
with respect to which ISOs are exercisable for the first time by a Participant
in any one calendar year, under this Plan or any other share option plan
maintained by the Company, shall not exceed $100,000.
7. SHARE APPRECIATION RIGHTS.
7.1 GENERAL. The Committee may, in its discretion, grant SARs to
Participants who have received a Share Option Award. The SARs may relate to such
number of Shares, not exceeding the number of Shares that the Participant may
acquire upon exercise of a related Share Option, as the Committee determines in
its discretion. Upon exercise of a Share Option by a Participant, the SAR
relating to the Share covered by such exercise shall terminate. Upon termination
or expiration of a Share Option, any unexercised SAR related to that Option
shall also terminate. Upon exercise of SARs, such rights and the related Share
Options, to the extent of an equal number of Shares shall be surrendered to the
Committee, and such SARs and the related Share Options shall terminate.
7.2 AWARD. Upon a Participant's exercise of some or all of the
Participant's SARs, the Participant shall receive an amount equal to the value
of the Share Appreciation for the number of SARs exercised, payable in cash,
Shares, Restricted Shares, or a combination thereof, at the discretion of the
Committee.
7.3 FORM OF SETTLEMENT. The Committee shall have the discretion to
determine the form in which payment of an SAR will be made, or to permit an
election by the Participant to receive cash in full or partial settlement of the
SAR. Unless otherwise specified in the grant of the SAR, if a Participant
exercises an SAR during the sixty (60) day period commencing on the date of a
Change in Control, the form of payment of such SAR shall be cash, provided that
such SAR was granted at least six (6) months prior to the date of exercise, and
shall be Shares if such SAR was granted
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six (6) months or less prior to the date of the exercise. Settlement for
exercised SARs may be deferred by the Committee in its discretion to such date
and under such terms and conditions as the Committee may determine.
7.4 RESTRICTIONS ON CASH EXERCISE. Except in the case of an SAR that was
granted at least six (6) months prior to exercise and is exercised for cash
during the sixty (60) day period commencing on the date of the Change in
Control, any election by a Participant to receive cash in full or partial
settlement of the SAR, as well as any exercise by a Participant of the
Participant's SAR for such cash, shall be made only during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
7.5 RESTRICTIONS. An SAR is only vested, exercisable and transferable
during the period when the Share Option to which it is related is also vested,
exercisable and transferable, respectively. If the Participant is a person
subject to Section 16 of the Exchange Act, the SAR may not be exercised within
six (6) months after the grant of the related Share Option, unless otherwise
permitted by law.
8. EXERCISE PAYMENTS.
The Committee may grant to Participants holding Share Options the right to
receive payments in connection with the exercise of a Participant's Share
Options ("Exercise Payments") relating to such number of Shares covered by such
Share Options, and subject to such restrictions and pursuant to such other terms
as the Committee may determine. Exercise Payments shall be in an amount
determined by the Committee in its discretion, which amount shall not be greater
than 60% of the excess of the Fair Market Value (as of the date of exercise)
over the Option Price of the Shares acquired upon the exercise of the Option. At
the discretion of the Committee, the Exercise Payment may be made in cash,
Shares, including Restricted Shares, or a combination thereof.
9. GRANTS OF SHARES.
9.1 AWARDS. The Committee may grant, either alone or in addition to other
awards granted under this Plan, Shares (including Restricted Shares) to such
Participants as the Committee authorizes and under such terms (including the
payment of a purchase price) as the Committee establishes. The Committee, in its
discretion, may also make a cash payment to a Participant granted Shares or
Restricted Shares under this Plan to allow such Participant to
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satisfy tax obligations arising out of receipt of such Shares or
Restricted Shares.
9.2 RESTRICTED SHARE AWARD. Awards of Restricted Shares shall be subject
to such terms and conditions as are established by the Committee. Such terms and
conditions may include, but are not limited to, the requirement of continued
service with the Company, achievement of specified business objectives and other
measurements of individual or business unit performance, the manner in which
such Restricted Shares are held, the extent to which the holder of such
Restricted Shares has rights of a shareholder and the circumstances under which
such Restricted Shares shall be forfeited. The Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Shares
received pursuant to this Section 9 prior to the date on which any applicable
restriction established by the Committee lapses. The Participant shall have,
with respect to Restricted Shares, all of the rights of a shareholder of the
Company, including the right to vote the Restricted Shares and the right to
receive any dividends, unless the Committee shall otherwise in the grant of such
Restricted Shares. Restricted Shares may not be sold or transferred by the
Participant until any restrictions that have been established by the Committee
have lapsed. Upon the termination of employment of a Participant who is an
Employee during the period any restrictions are in effect, all Restricted Shares
shall be forfeited without compensation to the Participant unless otherwise
provided in the grant of such Restricted Shares.
10. PERFORMANCE AWARDS.
The Committee may grant, either alone or in addition to other awards
granted under this Plan, awards of Shares based on the attainment, over a
specified period, of individual performance targets or other parameters to such
Participants as the Committee authorizes and under such terms as the Committee
establishes. Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee, are met. The
Committee, shall determine the times at which Performance Awards are to be made
and all conditions of such awards. The Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber Shares received pursuant to
this Section 10 prior to the date on which any applicable restriction or
performance period established by the Committee lapses. Performance Awards may
be paid in Shares, Restricted Shares, or other securities of the Company, cash
or any other form of property that the Committee shall determine. Unless
otherwise provided in the Performance Award, a Participant who is an Employee
must be an Employee at the end of the performance period in order to receive a
Performance Award, unless the Participant dies, has reached Retirement or incurs
a Disability or under such other circumstances as the Committee may determine.
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11. GENERAL PROVISIONS.
11.1 Any assignment or transfer of any awards granted under this Plan may
be effected only if such assignment or transfer does not violate the terms of
the award.
11.2 Nothing contained herein shall require the Company to segregate any
monies from its general funds, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant for
any year.
11.3 Participation in this Plan shall not affect the Company's right to
discharge a Participant or constitute an agreement of employment between a
Participant and the Company.
11.4 This Plan shall be interpreted in accordance with, and the
enforcement of this Plan shall be governed by, the laws of The Bahamas, subject
to any applicable United States federal or state securities laws.
12. AMENDMENT, SUSPENSION, OR TERMINATION.
12.1 GENERAL RULE. Except as otherwise required under applicable rules of
a Nasdaq Market or a securities exchange or other market where the securities of
the Company are traded or applicable law, the Board may suspend, terminate or
amend this Plan, including but not limited to such amendments as may be
necessary or desirable resulting from changes in the United States federal
income tax laws and other applicable laws without the approval of the Company's
shareholders or Participants; provided, however, that no such action shall
adversely affect any awards previously granted to a Participant without the
Participant's consent.
12.2 COMPLIANCE WITH RULE 16B-3. With respect to any person subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as applicable
during the term of this Plan. To the extent that any provision of this Plan or
action of the Committee or its delegates fail to so comply, it shall be deemed
null and void.
13. EFFECTIVE DATE AND DURATION OF PLAN.
This Plan shall be effective on August 15, 1996. No award shall be granted
under this Plan subsequent to August 15, 2006.
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14. TAX WITHHOLDING.
The Company shall have the right to (i) make deductions from any
settlement of an award, including delivery or vesting of Shares, or require that
Shares or cash, or both, be withheld from any award, in each case in an amount
sufficient to satisfy withholding of any federal, state or local taxes required
by law or (ii) take such other action as may be necessary or appropriate to
satisfy any such withholding obligations. The Committee may determine the manner
in which such tax withholding shall be satisfied, and may permit Shares (rounded
up to the next whole number) to be used to satisfy required tax withholding
based on the Fair Market Value of such Shares as of the Settlement Date of the
applicable award.
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EXHIBIT 10.7(A)
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
ADOPTED OCTOBER 8, 1996
AMENDMENT NO. 1 DATED
FEBRUARY 10, 1997
<PAGE>
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited Non- Employee
Directors' Share Option Plan" (this "Plan"). This Plan sets forth the terms of
grants of options (each, an "Option") to purchase the common shares (the
"Shares") of Steiner Leisure Limited (the "Company") to Non-Employee Directors
(as defined below) of the Company. The purpose of this Plan is to advance the
interests of Company and its shareholders by promoting an identity of interest
between the Company's non-employee directors and its shareholders, providing
non-employee directors with a proprietary stake in the Company's success and
strengthening the Company's ability to attract and retain qualified non-employee
directors by affording such persons an opportunity to share in the future
success of the Company.
2. DEFINITIONS.
(a) Act means the Securities Act of 1933, as
amended.
(b) Board means the Board of Directors of the
Company.
(c) Company means Steiner Leisure Limited.
(d) Date of Grant means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(f) Fair Market Value means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the
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closing sales price per share of the Shares underlying an Option on the Nasdaq
Stock Market ("Nasdaq") or, if the Shares are not then traded on Nasdaq, on any
national securities exchange, or (ii) if the Shares are not then traded on
Nasdaq or such exchange, and are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the Shares in such
over-the-counter market or (iii) if the Shares are then not listed on Nasdaq or
such exchange, or traded in an over-the-counter market, such value as the Board
may determine.
(g) Non-Employee Director means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) Options means the options to purchase Shares
granted pursuant to this Plan.
(i) Plan means this Steiner Leisure Limited
Directors' Share Option Plan.
(j) Shares means the common shares of the Company,
par value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes
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thereof. Except as otherwise provided herein, the validity, construction and
effect of this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with the laws of the Commonwealth of the Bahamas
subject to any applicable requirements under United States federal or state
securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 1,250 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan, each individual elected or re-elected as a Non-Employee
Director at such meeting or continuing as a Non-Employee Director shall be
granted, without the need for further action by the Board, an Option to purchase
1,250 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 1,250 multiplied by a fraction, the
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<PAGE>
numerator of which is the number of days from the Effective Date until the
scheduled date of the then next Annual meeting (or, if such date has not yet
been scheduled, the anniversary date of the then immediately preceding Annual
Meeting or, in the absence of such date, a date approximating the date of the
next Annual Meeting as determined in good faith by the Board), and the
denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each
Option shall be the Fair Market Value of the Shares on the Date of
Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares
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<PAGE>
with respect to which the Option was exercised. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Option holders to have Shares
withheld for this purpose shall be made in writing in form acceptable to the
Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non- Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
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<PAGE>
the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non- Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
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<PAGE>
i. any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior
approval of the Board;
iii. during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors; or
iv. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
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<PAGE>
in Rule 13d-3 under the Exchange Act of 20% or more of
the then outstanding voting securities of the Company
commences soliciting proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 82,500. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in
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any way the right of the Company to terminate a director at any time. The Board
may at any time discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to
Non-Employee Directors that the Company now has or may hereafter put into
effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.
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EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
2
<PAGE>
made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
3
<PAGE>
satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
4
<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
5
<PAGE>
Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
<PAGE>
cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
3
<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
4
<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
5
<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.2(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (the "Amendment") is made as
of 25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Leonard I. Fluxman
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 23, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Section 3(a)(i), in its entirety, and the first sentence of
Section 3(a)(iii) of the Employment Agreement are hereby amended so that, as
amended, they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof compensation as described in this Section 3(a),
all of which shall
<PAGE>
be subject to such deductions as may be required by
applicable law or regulation.
(i) BASE SALARY. A base salary at the rate of (A) One
Hundred Eighty-Three Thousand Seven Hundred Fifty Dollars [(U.S.)
$183,750.00] for calendar year ("Year") 1997 and (B) no less than
One Hundred Eighty-Three Thousand Seven Hundred Fifty Dollars
[(U.S.) $183,750.00] for each Year thereafter during the term of
this Agreement, subject to review by the Compensation Committee of
the Board of Directors of the Company, payable in bi-weekly
installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each Period (as
defined below) and Year during the term hereof, additional cash
compensation as described in this Section 3(a)(iii) (the "Incentive
Bonus") based on a budget for each Year hereunder, including budgets
for each Period (as defined below) within such Year, which budget
includes an estimate of the Net Earnings (as defined below) for each
such Period and for such Year and which budget shall have been
approved for the purpose of the compensation payable hereunder by
the Compensation Committee of the Board of Directors (the "Budget").
2. CHANGE IN CONTROL.
The third sentence of Section 5(e) of the Employment Agreement
is hereby amended so that, as amended, it shall read as follows:
(e) CHANGE IN CONTROL. ... Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur as a result of
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities being acquired by (i) one
or more employee benefit plans maintained by the Company or any
entity directly or indirectly Controlled (as defined below) by the
Company, (ii) the Company or any entity directly or indirectly
Controlled by the Company or (iii) Clive E. Warshaw, the current
Chairman, Michele Steiner Warshaw, the wife of Clive E. Warshaw
(collectively, the "Warshaws"), or any entity directly or indirectly
Controlled by either or both of the Warshaws, Employee or members of
the Immediate Family (as defined below) of Employee.
2
<PAGE>
3. EFFECTIVE DATE. The effective date of the amendments to the
Employment Agreement contained in this Amendment shall be January 1, 1997.
4. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
STEINER LEISURE LIMITED
/S/ LEONARD I. FLUXMAN By:/S/ CLIVE E. WARSHAW
- ---------------------------------- -------------------------------------
Leonard I. Fluxman Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 10.3(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is made as
of 25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Michele Steiner Warshaw
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 21, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT. Section 1 of the Employment Agreement is hereby amended by
deleting the words "Senior Vice President-Development," and substituting in
place thereof "Executive Vice President."
2. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the Employment Agreement
are hereby amended so that, as amended, they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof
<PAGE>
compensation as described in this Section 3(a), all of which shall
be subject to such deductions as may be required by applicable law
or regulation.
(i) BASE SALARY. A base salary at the rate of
(A) One Hundred Forty Thousand Dollars [(U.S.) $140,000.00]
for calendar year ("Year") 1997 and (B) no less than One
Hundred Forty Thousand Dollars [(U.S.) $140,000.00] for
each Year thereafter during the term of this Agreement,
subject to review by the Compensation Committee of the
Board of Directors of the Company, payable in bi-weekly
installments (the "Base Salary").
(iii) BONUS. Additional cash compensation in
such amount in such amount as the Compensation Committee
of the Board of Directors may, in its sole discretion,
determine (the "Bonus").
3. EFFECTIVE DATE. The effective date of the amendments to the Employment
Agreement contained in this Amendment shall be January 1, 1997.
4. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
STEINER LEISURE LIMITED
/S/ MICHELE STEINER WARSHAW By: /S/ LEONARD I. FLUXMAN
- ------------------------------ ------------------------------------
Michele Steiner Warshaw Leonard I. Fluxman,
Chief Operating Officer and
Chief Financial Officer
2
<PAGE>
EXHIBIT 10.4(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the Employment Agreement (this "Amendment") is
made as of 25th day of March, 1997 by and between STEINER TRANSOCEAN LIMITED, a
Bahamas international business company (the "Company"), and Amanda Jane Francis
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 17, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the
Employment Agreement are hereby amended so that, as amended, they shall read as
follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during
the term hereof compensation as described in this Section
3(a), all of which shall be subject to such deductions as
may be required by applicable law or regulation.
<PAGE>
(i) BASE SALARY. A base salary at the rate of (A) One
Hundred Twenty Thousand Dollars [(U.S.) $120,000.00] for calendar
year ("Year") 1997 and (B) no less than One Hundred Twenty Thousand
Dollars [(U.S.) $120,000.00] for each Year thereafter during the
term of this Agreement, subject to review by the Compensation
Committee of the Board of Directors of the Company, payable in
bi-weekly installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each calendar
quarter ("Quarter") and Year during the term hereof, additional cash
compensation as described in this Section 3(a)(iii) (the "Bonus")
based on a budget for the Company for each Year hereunder, including
budgets for each Quarter within such Year, which budget includes an
estimate of the total revenues for the Company (the "STO" Revenues)
for each Quarter and for such Year and which budget shall have been
approved for the purpose of the compensation payable hereunder by
the Compensation Committee of the Board of Directors of Steiner
Leisure Limited. At the end of the first Quarter, if the STO
Revenues shall have been met or exceeded for such date, Employee
shall be entitled to receive an amount equal to Twenty Two Thousand
Five Hundred Dollars [(U.S.) $22,500]. At the end of the second
Quarter, if the STO Revenues shall have been met or exceeded for
such date (cumulatively for the Year to date, and not solely for the
second Quarter), Employee shall be entitled to receive an amount
equal to Forty-Five Thousand Dollars [(U.S.) $45,000], less the
amount paid with respect to the first Quarter. At the end of the
third Quarter, if the STO Revenues shall have been met or exceeded
for such date (cumulatively for the Year to date, and not solely for
the third Quarter), Employee shall be entitled to receive an amount
equal to Sixty-Seven Thousand Five Hundred Dollars [(U.S.) $67,500],
less the amounts paid with respect to the first two Quarters. Any
amount which Employee is entitled to receive with respect to the
first three Quarters shall be payable one-half within forty-five
(45) days after the end of each such Quarter and one-half within
forty-five days after the end of the Year in question. At the end of
the fourth Quarter, if the STO Revenues shall have been met or
exceeded for such date (cumulatively for the Year to date, and not
solely for the fourth Quarter), Employee shall be entitled to
receive an amount equal to Ninety Thousand Dollars [(U.S.) $90,000],
less the amounts paid with respect to the first three Quarters,
within forty-five (45) days after the end of the fourth quarter.
Notwithstanding the foregoing, Employee shall only be
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entitled to receive payment pursuant to this Section 3(a)(iii) with
respect to a Quarter if she is employed hereunder on the last day of
such Quarter.
2. EFFECTIVE DATE. The effective date of the amendments to the
Employment Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
STEINER LEISURE LIMITED
/S/ AMANDA JANE FRANCIS By:/S/ CLIVE E. WARSHAW
- ------------------------------- -----------------------------
Amanda Jane Francis Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer
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EXHIBIT 10.5(A)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to Service Agreement (this "Amendment") is made as of
25th day of March, 1997 by and between ELEMIS LIMITED, a United Kingdom company
(the "Company"), and Sean C. Harrington ("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Service Agreement
dated September 18, 1996 (the "Service Agreement"); and
WHEREAS, the Company and Employee desire to amend the Service
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
(a) BASE SALARY. Clause 5(a) of the Service Agreement is hereby amended to
delete "(pound)50,000.00" on the third line thereof and replacing it with
"(pound)52,500.00."
(b) BONUS. The first sentence of clause 5(b)(ii) of the Service Agreement
is hereby amended by deleting the words "Chairman of the Board" immediately
before the bracketed language at the end of the sentence, and replacing those
words with the words "Compensation Committee of the Board of Directors of
Steiner Leisure Limited."
2. EFFECTIVE DATE. The effective date of the amendments to the Service
Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Service Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
ELEMIS LIMITED
/S/ SEAN C. HARRINGTON By:/S/ CLIVE E. WARSHAW
- ----------------------------- ------------------------------------
Sean C. Harrington Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer of
STEINER LEISURE LIMITED,
Duly authorized to sign
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EXHIBIT 10.6
STEINER LEISURE LIMITED
AMENDED AND RESTATED
1996 SHARE OPTION AND INCENTIVE PLAN
ADOPTED MARCH 23, 1997
<PAGE>
STEINER LEISURE LIMITED 1996 SHARE OPTION AND INCENTIVE PLAN
1. PURPOSE.
The purpose of the Steiner Leisure Limited 1996 Share Option and Incentive
Plan (hereinafter referred to as this "Plan") is to (i) assist Steiner Leisure
Limited (the "Company") in attracting and retaining highly qualified, officers,
key employees, directors and consultants for the successful conduct of its
business; (ii) provide incentives and rewards for persons eligible for awards
which are directly linked to the financial performance of the Company in order
to motivate such persons to achieve long-range performance goals; and (iii)
allow persons receiving awards to participate in the growth of the Company.
2. DEFINITIONS.
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" A Change in Control of the Company shall be
deemed to occur if any of the following circumstances have occurred after the
closing of initial public offering of the Shares:
(i) any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
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outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior approval
of the Board;
(iii) during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors;
(iv) any "person" or "group" within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20% or
more of the then outstanding voting securities
of the Company commences soliciting proxies; and
(v) with respect to a particular Employee, there
occurs a "change in control," as such term is
defined under any employment agreement or
service agreement between the Company or any
direct or indirect subsidiary thereof and such
Employee, entered into before or after the
date of adoption of this Plan (a "Change in
Control Agreement"), which provides for, upon
such change in control, the acceleration of
the vesting of share options or otherwise
affects awards that may be made under this
Plan; provided, however, that this Section
2.2.(v) applies only with respect to the award
or awards accelerated, or otherwise affected
by such Change in Control under such Change in
Control Agreement.
2.3 "CODE" means the United States Internal Revenue Code of 1986, as
currently in effect or hereafter amended.
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2.4 "COMMITTEE" means the committee appointed to administer this Plan in
accordance with Section 4 of this Plan.
2.5 "DISABILITY" means "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
2.6 "EMPLOYEE" means any employee of the Company or any direct or indirect
subsidiary of the Company (a "Subsidiary"), fincluding officers of the Company
and any Subsidiary, as well as such officers who are also directors of the
Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
2.8 "EXERCISE PAYMENT" means a payment described in Section 8 upon the
exercise of a Share Option.
2.9 "FAIR MARKET VALUE," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
date, the mean of the high and low prices reported per Share on the applicable
date (i) as quoted on the Nasdaq National Market or the Nasdaq Small Cap Market
(each, a "Nasdaq Market") or (ii) if not traded on a Nasdaq Market, as reported
by any principal national securities exchange in the United States on which it
is then traded (or if the Shares have not been quoted or reported, as the case
may be, on such date, on the first day prior thereto on which the Shares were
quoted or reported, as the case may be), except that in the case of a Share
Appreciation Right that is exercised for cash during the first three (3) days of
the ten (10) day period set forth in Section 7.4 of this Plan, "Fair Market
Value" means the highest daily closing price per Share as reported on such
Nasdaq Market or exchange during such ten (10) day period. Notwithstanding the
foregoing, if a Share Appreciation Right is exercised during the sixty (60) day
period commencing on the date of a Change in Control, the Fair Market Value for
purposes of determining the Share Appreciation shall be the highest of (i) the
Fair Market Value per Share, as determined under the preceding sentence; (ii)
the highest Fair Market Value per Share during the ninety (90) day period ending
on the date of exercise of the SAR; (iii) the highest price per Share shown on
Schedule 13D or an amendment thereto filed pursuant to Section 13(d) of the
Exchange Act 1934 by any person holding 20% of the combined voting power of the
Company's then outstanding voting securities; or (iv) the highest price paid or
to be paid per Share pursuant to a tender or exchange offer as determined by the
Committee. If the Shares are not reported or quoted on a Nasdaq Market or a
national securities exchange, its Fair Market Value shall be as determined in
good faith by the Committee.
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2.10 "INCENTIVE STOCK OPTION" or "ISO" means any Share Option granted to
an Employee pursuant to this Plan which is designated as such by the Committee
and which complies with Section 422 of the Code or any successor provision.
2.11 "NON-QUALIFIED SHARE OPTION" means any Share Option granted to a
Participant pursuant to this Plan which is not an ISO.
2.12 "OPTION PRICE" means the purchase price of one Share upon exercise
of a Share Option.
2.13 "PERFORMANCE AWARD" means an award described in Section 10 of this
Plan.
2.14 "RETIREMENT" means retirement from employment by the Company or any
Subsidiary by a Participant who has attained the normal retirement age under any
applicable retirement plan (which is qualified under Section 401(a) of the Code)
of the Company in which such Participant participates.
2.15 "RESTRICTED SHARES" means Shares subject to restrictions on the
transfer of such Shares, conditions of forfeitability of such Shares or any
other limitations or restrictions as determined by the Committee.
2.16 "SETTLEMENT DATE" means, (i) with respect to any Share Appreciation
Rights that have been exercised, the date or dates upon which cash payment is to
be made to the Participant, or in the case of Share Appreciation Rights that are
to be settled in Shares, the date or dates upon which such Shares are to be
delivered to the Participant; (ii) with respect to Performance Awards, the date
or dates upon which Shares are to be delivered to the Participant; (iii) with
respect to Exercise Payments, the date or dates upon which payment thereof is to
be made; and (iv) with respect to grants of Shares, including Restricted Shares,
the date or dates upon which such Shares are to be delivered to the Participant,
in each case determined in accordance with the terms of the grant (including any
award agreement) under which any such award was made.
2.17 "SHARE" or "SHARES" means the common shares of the
Company.
2.18 "SHARE APPRECIATION" means the excess of the Fair Market Value per
Share over the Option Price of the related Share, as determined by the
Committee.
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2.19 "SHARE APPRECIATION RIGHT" or "SAR" means an award that entitles a
Participant to receive an amount described in Section 7.2.
2.20 "SHARE OPTION" or "OPTION" means an award that entitles a Partici-
pant to purchase one Share for each Option granted.
3. PARTICIPATION.
The participants in this Plan ("Participants") shall be those persons who
are selected to participate in this Plan by the Committee and who are (i)
Employees serving in managerial, administrative or professional positions, (ii)
directors of the Company or (iii) consultants to the Company or any Subsidiary.
4. ADMINISTRATION.
This Plan shall be administered and interpreted by a committee of two or
more members of the Board appointed by the Board. Members of the Committee shall
be "Non-Employee Directors" as that term is defined for purposes of Rule
16b-3(b)(3)(i) under the Exchange Act. All decisions and acts of the Committee
shall be final and binding upon all Participants. The Committee shall: (i)
determine the number and types of awards to be made under this Plan; (ii) set
the Option Price, the number of Options to be awarded and the number of Shares
to be awarded out of the total number of Shares available for award; (iii)
establish any applicable administrative regulations to further the purpose of
this Plan; (iv) approve forms of award agreements between the participant and
the Company; and (v) take any other action desirable or necessary to interpret,
construe or implement the provisions of this Plan. Prior to the appointment of
the Committee by the Board, or if the Committee shall not be in existence at any
time during the term of this Plan, this Plan shall be administered and
interpreted by the Board and, in such case, all references to the Committee
herein shall be deemed to refer to the Board.
5. AWARDS.
5.1 FORM OF AWARDS. Awards under this Plan may be in any of the following
forms (or a combination thereof): (i) Share Options; (ii) Share Appreciation
Rights; (iii) Exercise Payment rights; (iv) grants of Shares, including
Restricted Shares; or (v) Performance Awards. The Committee may require that any
or all awards under this Plan be made pursuant to an award agreement between the
Participant and the Company. Such award agreements shall be in such form as the
Committee may approve from time to time. The
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Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may deem appropriate.
5.2 MAXIMUM AMOUNT OF SHARES AVAILABLE. The total number of Shares
(including Restricted Shares, if any) granted, or covered by Options granted,
under this Plan during the term of this Plan shall not exceed 720,000. Solely
for the purpose of computing the total number of Shares optioned or granted
under this Plan, there shall not be counted any Shares which have been forfeited
and any Shares covered by Options which, prior to such computation, have
terminated in accordance with their terms or have been canceled by the
Participant or the Company.
5.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION, ETC. In the event of any
change in the outstanding Shares of the Company by reason of any share split,
share dividend, recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of any special
distribution to the shareholders, the Committee shall make such equitable
adjustments in the number of Shares and prices per Share applicable to Options
then outstanding and in the number of Shares which are available thereafter for
Option awards or other awards, both under this Plan as a whole and with respect
to individuals, as the Committee determines are necessary and appropriate. Any
such adjustment shall be conclusive and binding for all purposes of this Plan.
6. SHARE OPTIONS.
6.1 GRANT OF AWARD. The Company may award Options to purchase Shares,
including Restricted Shares (hereinafter referred to as "Share Option Awards")
to such Participants as the Committee authorizes and under such terms as the
Committee establishes. The Committee shall determine with respect to each Share
Option Award, and designate in the grant whether a Participant is to receive an
ISO or a Non-Qualified Share Option.
6.2 OPTION PRICE. The Option Price per Share subject to a Share Option
Award shall be specified in the grant, but, to the extent any Share Option is an
Incentive Stock Option, the Option Price in no event shall be less than the Fair
Market Value per Share on the date of grant. Notwithstanding the foregoing, if
the Participant to whom an ISO is granted owns, at the time of the grant, more
than ten percent (10%) of the combined voting power of the Company, the Option
Price per Share subject to such grant shall be not less than one hundred ten
percent (110%) of the Fair Market Value.
7
<PAGE>
6.3 TERMS OF OPTION. A Share Option that is an ISO shall not be
transferable by the Participant other than as permitted under Section 422 of the
Code or any successor provision, and, during the Participant's lifetime, shall
be exercisable only by the Participant. Non-Qualified Share Options may be
subject to such restrictions on transferability and exercise as may be provided
for by the Committee in the terms of the grant thereof. A Share Option shall be
of no more than ten (10) years' duration, except that an ISO granted to a
Participant who, at the time of the grant, owns Shares representing more than
ten percent (10%) of the combined voting power of the Company shall by its terms
be of no more than five (5) years' duration. A Share Option by its terms shall
vest in a Participant to whom it is granted and be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but, with respect to Employees, in no event less than one
(1) year following the date of grant of such award; (ii) the Participant's
death; or (iii) a Change in Control.
6.4 EXERCISE OF OPTION. A Non-Qualified Share Option is only exercisable
by a Participant who is an Employee while such Participant is in active
employment with the Company or a Subsidiary or within thirty (30) days after
termination of such employment, except (i) during the three-year period after a
Participant's death, Disability or Retirement; (ii) during a three-year period
commencing on the date of a Participant's termination of employment by the
Company or a Subsidiary other than for cause; (iii) during a three-year period
commencing on the date of termination, by the Participant or the Company or a
Subsidiary, of employment after a Change in Control unless such termination of
employment is by the Company or a Subsidiary for cause; or (iv) if the Committee
decides that it is in the best interest of the Company to permit other
exceptions. A Non-Qualified Stock Option may not be exercised pursuant to this
paragraph after the expiration date of the Share Option.
An Incentive Share Option is only exercisable by a Participant while
the Participant is in active employment with the Company or a Subsidiary or
within thirty (30) days after termination of such employment, except (i) during
a one-year period after a Participant's death, where the Option is exercised by
the estate of the Participant or by any person who acquired such Option by
bequest or inheritance; (ii) during a three-month period commencing on the date
of the Participant's termination of employment other than due to death, a
Disability or by the Company or a Subsidiary other than for cause; or (iii)
during a one-year period commencing on the Participant's termination of
employment on account of Disability. An Incentive Share Option may not be
exercised pursuant to this paragraph after the expiration date of the Share
Option.
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An Option may be exercised with respect to part or all of the Shares
subject to the Option by giving written notice to the Company of the exercise of
the Option. The Option Price for the Shares for which an Option is exercised
shall be paid on or within ten (10) business days after the date of exercise in
cash (by certified or bank cashier's check), in whole Shares owned by the
Participant prior to exercising the Option, in a combination of cash and such
Shares or on such other terms and conditions as the Committee may approve. The
value of any Share delivered in payment of the Option Price shall be its Fair
Market Value on the date the Option is exercised.
6.5 LIMITATION APPLICABLE TO ISOS. The aggregate Fair Market Value,
determined as of the date the related Share Option is granted, of all Shares
with respect to which ISOs are exercisable for the first time by a Participant
in any one calendar year, under this Plan or any other share option plan
maintained by the Company, shall not exceed $100,000.
7. SHARE APPRECIATION RIGHTS.
7.1 GENERAL. The Committee may, in its discretion, grant SARs to
Participants who have received a Share Option Award. The SARs may relate to such
number of Shares, not exceeding the number of Shares that the Participant may
acquire upon exercise of a related Share Option, as the Committee determines in
its discretion. Upon exercise of a Share Option by a Participant, the SAR
relating to the Share covered by such exercise shall terminate. Upon termination
or expiration of a Share Option, any unexercised SAR related to that Option
shall also terminate. Upon exercise of SARs, such rights and the related Share
Options, to the extent of an equal number of Shares shall be surrendered to the
Committee, and such SARs and the related Share Options shall terminate.
7.2 AWARD. Upon a Participant's exercise of some or all of the
Participant's SARs, the Participant shall receive an amount equal to the value
of the Share Appreciation for the number of SARs exercised, payable in cash,
Shares, Restricted Shares, or a combination thereof, at the discretion of the
Committee.
7.3 FORM OF SETTLEMENT. The Committee shall have the discretion to
determine the form in which payment of an SAR will be made, or to permit an
election by the Participant to receive cash in full or partial settlement of the
SAR. Unless otherwise specified in the grant of the SAR, if a Participant
exercises an SAR during the sixty (60) day period commencing on the date of a
Change in Control, the form of payment of such SAR shall be cash, provided that
such SAR was granted at least six (6) months prior to the date of exercise, and
shall be Shares if such SAR was granted
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six (6) months or less prior to the date of the exercise. Settlement for
exercised SARs may be deferred by the Committee in its discretion to such date
and under such terms and conditions as the Committee may determine.
7.4 RESTRICTIONS ON CASH EXERCISE. Except in the case of an SAR that was
granted at least six (6) months prior to exercise and is exercised for cash
during the sixty (60) day period commencing on the date of the Change in
Control, any election by a Participant to receive cash in full or partial
settlement of the SAR, as well as any exercise by a Participant of the
Participant's SAR for such cash, shall be made only during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
7.5 RESTRICTIONS. An SAR is only vested, exercisable and transferable
during the period when the Share Option to which it is related is also vested,
exercisable and transferable, respectively. If the Participant is a person
subject to Section 16 of the Exchange Act, the SAR may not be exercised within
six (6) months after the grant of the related Share Option, unless otherwise
permitted by law.
8. EXERCISE PAYMENTS.
The Committee may grant to Participants holding Share Options the right to
receive payments in connection with the exercise of a Participant's Share
Options ("Exercise Payments") relating to such number of Shares covered by such
Share Options, and subject to such restrictions and pursuant to such other terms
as the Committee may determine. Exercise Payments shall be in an amount
determined by the Committee in its discretion, which amount shall not be greater
than 60% of the excess of the Fair Market Value (as of the date of exercise)
over the Option Price of the Shares acquired upon the exercise of the Option. At
the discretion of the Committee, the Exercise Payment may be made in cash,
Shares, including Restricted Shares, or a combination thereof.
9. GRANTS OF SHARES.
9.1 AWARDS. The Committee may grant, either alone or in addition to other
awards granted under this Plan, Shares (including Restricted Shares) to such
Participants as the Committee authorizes and under such terms (including the
payment of a purchase price) as the Committee establishes. The Committee, in its
discretion, may also make a cash payment to a Participant granted Shares or
Restricted Shares under this Plan to allow such Participant to
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satisfy tax obligations arising out of receipt of such Shares or
Restricted Shares.
9.2 RESTRICTED SHARE AWARD. Awards of Restricted Shares shall be subject
to such terms and conditions as are established by the Committee. Such terms and
conditions may include, but are not limited to, the requirement of continued
service with the Company, achievement of specified business objectives and other
measurements of individual or business unit performance, the manner in which
such Restricted Shares are held, the extent to which the holder of such
Restricted Shares has rights of a shareholder and the circumstances under which
such Restricted Shares shall be forfeited. The Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Shares
received pursuant to this Section 9 prior to the date on which any applicable
restriction established by the Committee lapses. The Participant shall have,
with respect to Restricted Shares, all of the rights of a shareholder of the
Company, including the right to vote the Restricted Shares and the right to
receive any dividends, unless the Committee shall otherwise in the grant of such
Restricted Shares. Restricted Shares may not be sold or transferred by the
Participant until any restrictions that have been established by the Committee
have lapsed. Upon the termination of employment of a Participant who is an
Employee during the period any restrictions are in effect, all Restricted Shares
shall be forfeited without compensation to the Participant unless otherwise
provided in the grant of such Restricted Shares.
10. PERFORMANCE AWARDS.
The Committee may grant, either alone or in addition to other awards
granted under this Plan, awards of Shares based on the attainment, over a
specified period, of individual performance targets or other parameters to such
Participants as the Committee authorizes and under such terms as the Committee
establishes. Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee, are met. The
Committee, shall determine the times at which Performance Awards are to be made
and all conditions of such awards. The Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber Shares received pursuant to
this Section 10 prior to the date on which any applicable restriction or
performance period established by the Committee lapses. Performance Awards may
be paid in Shares, Restricted Shares, or other securities of the Company, cash
or any other form of property that the Committee shall determine. Unless
otherwise provided in the Performance Award, a Participant who is an Employee
must be an Employee at the end of the performance period in order to receive a
Performance Award, unless the Participant dies, has reached Retirement or incurs
a Disability or under such other circumstances as the Committee may determine.
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11. GENERAL PROVISIONS.
11.1 Any assignment or transfer of any awards granted under this Plan may
be effected only if such assignment or transfer does not violate the terms of
the award.
11.2 Nothing contained herein shall require the Company to segregate any
monies from its general funds, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant for
any year.
11.3 Participation in this Plan shall not affect the Company's right to
discharge a Participant or constitute an agreement of employment between a
Participant and the Company.
11.4 This Plan shall be interpreted in accordance with, and the
enforcement of this Plan shall be governed by, the laws of The Bahamas, subject
to any applicable United States federal or state securities laws.
12. AMENDMENT, SUSPENSION, OR TERMINATION.
12.1 GENERAL RULE. Except as otherwise required under applicable rules of
a Nasdaq Market or a securities exchange or other market where the securities of
the Company are traded or applicable law, the Board may suspend, terminate or
amend this Plan, including but not limited to such amendments as may be
necessary or desirable resulting from changes in the United States federal
income tax laws and other applicable laws without the approval of the Company's
shareholders or Participants; provided, however, that no such action shall
adversely affect any awards previously granted to a Participant without the
Participant's consent.
12.2 COMPLIANCE WITH RULE 16B-3. With respect to any person subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as applicable
during the term of this Plan. To the extent that any provision of this Plan or
action of the Committee or its delegates fail to so comply, it shall be deemed
null and void.
13. EFFECTIVE DATE AND DURATION OF PLAN.
This Plan shall be effective on August 15, 1996. No award shall be granted
under this Plan subsequent to August 15, 2006.
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14. TAX WITHHOLDING.
The Company shall have the right to (i) make deductions from any
settlement of an award, including delivery or vesting of Shares, or require that
Shares or cash, or both, be withheld from any award, in each case in an amount
sufficient to satisfy withholding of any federal, state or local taxes required
by law or (ii) take such other action as may be necessary or appropriate to
satisfy any such withholding obligations. The Committee may determine the manner
in which such tax withholding shall be satisfied, and may permit Shares (rounded
up to the next whole number) to be used to satisfy required tax withholding
based on the Fair Market Value of such Shares as of the Settlement Date of the
applicable award.
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EXHIBIT 10.7(A)
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
ADOPTED OCTOBER 8, 1996
AMENDMENT NO. 1 DATED
FEBRUARY 10, 1997
<PAGE>
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited Non- Employee
Directors' Share Option Plan" (this "Plan"). This Plan sets forth the terms of
grants of options (each, an "Option") to purchase the common shares (the
"Shares") of Steiner Leisure Limited (the "Company") to Non-Employee Directors
(as defined below) of the Company. The purpose of this Plan is to advance the
interests of Company and its shareholders by promoting an identity of interest
between the Company's non-employee directors and its shareholders, providing
non-employee directors with a proprietary stake in the Company's success and
strengthening the Company's ability to attract and retain qualified non-employee
directors by affording such persons an opportunity to share in the future
success of the Company.
2. DEFINITIONS.
(a) Act means the Securities Act of 1933, as
amended.
(b) Board means the Board of Directors of the
Company.
(c) Company means Steiner Leisure Limited.
(d) Date of Grant means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(f) Fair Market Value means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the
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closing sales price per share of the Shares underlying an Option on the Nasdaq
Stock Market ("Nasdaq") or, if the Shares are not then traded on Nasdaq, on any
national securities exchange, or (ii) if the Shares are not then traded on
Nasdaq or such exchange, and are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the Shares in such
over-the-counter market or (iii) if the Shares are then not listed on Nasdaq or
such exchange, or traded in an over-the-counter market, such value as the Board
may determine.
(g) Non-Employee Director means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) Options means the options to purchase Shares
granted pursuant to this Plan.
(i) Plan means this Steiner Leisure Limited
Directors' Share Option Plan.
(j) Shares means the common shares of the Company,
par value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes
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thereof. Except as otherwise provided herein, the validity, construction and
effect of this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with the laws of the Commonwealth of the Bahamas
subject to any applicable requirements under United States federal or state
securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 1,250 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan, each individual elected or re-elected as a Non-Employee
Director at such meeting or continuing as a Non-Employee Director shall be
granted, without the need for further action by the Board, an Option to purchase
1,250 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 1,250 multiplied by a fraction, the
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numerator of which is the number of days from the Effective Date until the
scheduled date of the then next Annual meeting (or, if such date has not yet
been scheduled, the anniversary date of the then immediately preceding Annual
Meeting or, in the absence of such date, a date approximating the date of the
next Annual Meeting as determined in good faith by the Board), and the
denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each
Option shall be the Fair Market Value of the Shares on the Date of
Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares
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<PAGE>
with respect to which the Option was exercised. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Option holders to have Shares
withheld for this purpose shall be made in writing in form acceptable to the
Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non- Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
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the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non- Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
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i. any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior
approval of the Board;
iii. during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors; or
iv. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
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in Rule 13d-3 under the Exchange Act of 20% or more of
the then outstanding voting securities of the Company
commences soliciting proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 82,500. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in
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any way the right of the Company to terminate a director at any time. The Board
may at any time discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to
Non-Employee Directors that the Company now has or may hereafter put into
effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.
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EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
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made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
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satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
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<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
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<PAGE>
Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
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IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
<PAGE>
cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
3
<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
4
<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
5
<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.3(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is made as
of 25th day of March, 1997 by and between STEINER LEISURE LIMITED, a Bahamas
international business company (the "Company"), and Michele Steiner Warshaw
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 21, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT. Section 1 of the Employment Agreement is hereby amended by
deleting the words "Senior Vice President-Development," and substituting in
place thereof "Executive Vice President."
2. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the Employment Agreement
are hereby amended so that, as amended, they shall read as follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during the
term hereof
<PAGE>
compensation as described in this Section 3(a), all of which shall
be subject to such deductions as may be required by applicable law
or regulation.
(i) BASE SALARY. A base salary at the rate of
(A) One Hundred Forty Thousand Dollars [(U.S.) $140,000.00]
for calendar year ("Year") 1997 and (B) no less than One
Hundred Forty Thousand Dollars [(U.S.) $140,000.00] for
each Year thereafter during the term of this Agreement,
subject to review by the Compensation Committee of the
Board of Directors of the Company, payable in bi-weekly
installments (the "Base Salary").
(iii) BONUS. Additional cash compensation in
such amount in such amount as the Compensation Committee
of the Board of Directors may, in its sole discretion,
determine (the "Bonus").
3. EFFECTIVE DATE. The effective date of the amendments to the Employment
Agreement contained in this Amendment shall be January 1, 1997.
4. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
STEINER LEISURE LIMITED
/S/ MICHELE STEINER WARSHAW By: /S/ LEONARD I. FLUXMAN
- ------------------------------ ------------------------------------
Michele Steiner Warshaw Leonard I. Fluxman,
Chief Operating Officer and
Chief Financial Officer
2
<PAGE>
EXHIBIT 10.4(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the Employment Agreement (this "Amendment") is
made as of 25th day of March, 1997 by and between STEINER TRANSOCEAN LIMITED, a
Bahamas international business company (the "Company"), and Amanda Jane Francis
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 17, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the
Employment Agreement are hereby amended so that, as amended, they shall read as
follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during
the term hereof compensation as described in this Section
3(a), all of which shall be subject to such deductions as
may be required by applicable law or regulation.
<PAGE>
(i) BASE SALARY. A base salary at the rate of (A) One
Hundred Twenty Thousand Dollars [(U.S.) $120,000.00] for calendar
year ("Year") 1997 and (B) no less than One Hundred Twenty Thousand
Dollars [(U.S.) $120,000.00] for each Year thereafter during the
term of this Agreement, subject to review by the Compensation
Committee of the Board of Directors of the Company, payable in
bi-weekly installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each calendar
quarter ("Quarter") and Year during the term hereof, additional cash
compensation as described in this Section 3(a)(iii) (the "Bonus")
based on a budget for the Company for each Year hereunder, including
budgets for each Quarter within such Year, which budget includes an
estimate of the total revenues for the Company (the "STO" Revenues)
for each Quarter and for such Year and which budget shall have been
approved for the purpose of the compensation payable hereunder by
the Compensation Committee of the Board of Directors of Steiner
Leisure Limited. At the end of the first Quarter, if the STO
Revenues shall have been met or exceeded for such date, Employee
shall be entitled to receive an amount equal to Twenty Two Thousand
Five Hundred Dollars [(U.S.) $22,500]. At the end of the second
Quarter, if the STO Revenues shall have been met or exceeded for
such date (cumulatively for the Year to date, and not solely for the
second Quarter), Employee shall be entitled to receive an amount
equal to Forty-Five Thousand Dollars [(U.S.) $45,000], less the
amount paid with respect to the first Quarter. At the end of the
third Quarter, if the STO Revenues shall have been met or exceeded
for such date (cumulatively for the Year to date, and not solely for
the third Quarter), Employee shall be entitled to receive an amount
equal to Sixty-Seven Thousand Five Hundred Dollars [(U.S.) $67,500],
less the amounts paid with respect to the first two Quarters. Any
amount which Employee is entitled to receive with respect to the
first three Quarters shall be payable one-half within forty-five
(45) days after the end of each such Quarter and one-half within
forty-five days after the end of the Year in question. At the end of
the fourth Quarter, if the STO Revenues shall have been met or
exceeded for such date (cumulatively for the Year to date, and not
solely for the fourth Quarter), Employee shall be entitled to
receive an amount equal to Ninety Thousand Dollars [(U.S.) $90,000],
less the amounts paid with respect to the first three Quarters,
within forty-five (45) days after the end of the fourth quarter.
Notwithstanding the foregoing, Employee shall only be
2
<PAGE>
entitled to receive payment pursuant to this Section 3(a)(iii) with
respect to a Quarter if she is employed hereunder on the last day of
such Quarter.
2. EFFECTIVE DATE. The effective date of the amendments to the
Employment Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
STEINER LEISURE LIMITED
/S/ AMANDA JANE FRANCIS By:/S/ CLIVE E. WARSHAW
- ------------------------------- -----------------------------
Amanda Jane Francis Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 10.5(A)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to Service Agreement (this "Amendment") is made as of
25th day of March, 1997 by and between ELEMIS LIMITED, a United Kingdom company
(the "Company"), and Sean C. Harrington ("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Service Agreement
dated September 18, 1996 (the "Service Agreement"); and
WHEREAS, the Company and Employee desire to amend the Service
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
(a) BASE SALARY. Clause 5(a) of the Service Agreement is hereby amended to
delete "(pound)50,000.00" on the third line thereof and replacing it with
"(pound)52,500.00."
(b) BONUS. The first sentence of clause 5(b)(ii) of the Service Agreement
is hereby amended by deleting the words "Chairman of the Board" immediately
before the bracketed language at the end of the sentence, and replacing those
words with the words "Compensation Committee of the Board of Directors of
Steiner Leisure Limited."
2. EFFECTIVE DATE. The effective date of the amendments to the Service
Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Service Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
ELEMIS LIMITED
/S/ SEAN C. HARRINGTON By:/S/ CLIVE E. WARSHAW
- ----------------------------- ------------------------------------
Sean C. Harrington Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer of
STEINER LEISURE LIMITED,
Duly authorized to sign
2
<PAGE>
EXHIBIT 10.6
STEINER LEISURE LIMITED
AMENDED AND RESTATED
1996 SHARE OPTION AND INCENTIVE PLAN
ADOPTED MARCH 23, 1997
<PAGE>
STEINER LEISURE LIMITED 1996 SHARE OPTION AND INCENTIVE PLAN
1. PURPOSE.
The purpose of the Steiner Leisure Limited 1996 Share Option and Incentive
Plan (hereinafter referred to as this "Plan") is to (i) assist Steiner Leisure
Limited (the "Company") in attracting and retaining highly qualified, officers,
key employees, directors and consultants for the successful conduct of its
business; (ii) provide incentives and rewards for persons eligible for awards
which are directly linked to the financial performance of the Company in order
to motivate such persons to achieve long-range performance goals; and (iii)
allow persons receiving awards to participate in the growth of the Company.
2. DEFINITIONS.
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" A Change in Control of the Company shall be
deemed to occur if any of the following circumstances have occurred after the
closing of initial public offering of the Shares:
(i) any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
2
<PAGE>
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior approval
of the Board;
(iii) during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors;
(iv) any "person" or "group" within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20% or
more of the then outstanding voting securities
of the Company commences soliciting proxies; and
(v) with respect to a particular Employee, there
occurs a "change in control," as such term is
defined under any employment agreement or
service agreement between the Company or any
direct or indirect subsidiary thereof and such
Employee, entered into before or after the
date of adoption of this Plan (a "Change in
Control Agreement"), which provides for, upon
such change in control, the acceleration of
the vesting of share options or otherwise
affects awards that may be made under this
Plan; provided, however, that this Section
2.2.(v) applies only with respect to the award
or awards accelerated, or otherwise affected
by such Change in Control under such Change in
Control Agreement.
2.3 "CODE" means the United States Internal Revenue Code of 1986, as
currently in effect or hereafter amended.
3
<PAGE>
2.4 "COMMITTEE" means the committee appointed to administer this Plan in
accordance with Section 4 of this Plan.
2.5 "DISABILITY" means "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
2.6 "EMPLOYEE" means any employee of the Company or any direct or indirect
subsidiary of the Company (a "Subsidiary"), fincluding officers of the Company
and any Subsidiary, as well as such officers who are also directors of the
Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
2.8 "EXERCISE PAYMENT" means a payment described in Section 8 upon the
exercise of a Share Option.
2.9 "FAIR MARKET VALUE," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
date, the mean of the high and low prices reported per Share on the applicable
date (i) as quoted on the Nasdaq National Market or the Nasdaq Small Cap Market
(each, a "Nasdaq Market") or (ii) if not traded on a Nasdaq Market, as reported
by any principal national securities exchange in the United States on which it
is then traded (or if the Shares have not been quoted or reported, as the case
may be, on such date, on the first day prior thereto on which the Shares were
quoted or reported, as the case may be), except that in the case of a Share
Appreciation Right that is exercised for cash during the first three (3) days of
the ten (10) day period set forth in Section 7.4 of this Plan, "Fair Market
Value" means the highest daily closing price per Share as reported on such
Nasdaq Market or exchange during such ten (10) day period. Notwithstanding the
foregoing, if a Share Appreciation Right is exercised during the sixty (60) day
period commencing on the date of a Change in Control, the Fair Market Value for
purposes of determining the Share Appreciation shall be the highest of (i) the
Fair Market Value per Share, as determined under the preceding sentence; (ii)
the highest Fair Market Value per Share during the ninety (90) day period ending
on the date of exercise of the SAR; (iii) the highest price per Share shown on
Schedule 13D or an amendment thereto filed pursuant to Section 13(d) of the
Exchange Act 1934 by any person holding 20% of the combined voting power of the
Company's then outstanding voting securities; or (iv) the highest price paid or
to be paid per Share pursuant to a tender or exchange offer as determined by the
Committee. If the Shares are not reported or quoted on a Nasdaq Market or a
national securities exchange, its Fair Market Value shall be as determined in
good faith by the Committee.
4
<PAGE>
2.10 "INCENTIVE STOCK OPTION" or "ISO" means any Share Option granted to
an Employee pursuant to this Plan which is designated as such by the Committee
and which complies with Section 422 of the Code or any successor provision.
2.11 "NON-QUALIFIED SHARE OPTION" means any Share Option granted to a
Participant pursuant to this Plan which is not an ISO.
2.12 "OPTION PRICE" means the purchase price of one Share upon exercise
of a Share Option.
2.13 "PERFORMANCE AWARD" means an award described in Section 10 of this
Plan.
2.14 "RETIREMENT" means retirement from employment by the Company or any
Subsidiary by a Participant who has attained the normal retirement age under any
applicable retirement plan (which is qualified under Section 401(a) of the Code)
of the Company in which such Participant participates.
2.15 "RESTRICTED SHARES" means Shares subject to restrictions on the
transfer of such Shares, conditions of forfeitability of such Shares or any
other limitations or restrictions as determined by the Committee.
2.16 "SETTLEMENT DATE" means, (i) with respect to any Share Appreciation
Rights that have been exercised, the date or dates upon which cash payment is to
be made to the Participant, or in the case of Share Appreciation Rights that are
to be settled in Shares, the date or dates upon which such Shares are to be
delivered to the Participant; (ii) with respect to Performance Awards, the date
or dates upon which Shares are to be delivered to the Participant; (iii) with
respect to Exercise Payments, the date or dates upon which payment thereof is to
be made; and (iv) with respect to grants of Shares, including Restricted Shares,
the date or dates upon which such Shares are to be delivered to the Participant,
in each case determined in accordance with the terms of the grant (including any
award agreement) under which any such award was made.
2.17 "SHARE" or "SHARES" means the common shares of the
Company.
2.18 "SHARE APPRECIATION" means the excess of the Fair Market Value per
Share over the Option Price of the related Share, as determined by the
Committee.
5
<PAGE>
2.19 "SHARE APPRECIATION RIGHT" or "SAR" means an award that entitles a
Participant to receive an amount described in Section 7.2.
2.20 "SHARE OPTION" or "OPTION" means an award that entitles a Partici-
pant to purchase one Share for each Option granted.
3. PARTICIPATION.
The participants in this Plan ("Participants") shall be those persons who
are selected to participate in this Plan by the Committee and who are (i)
Employees serving in managerial, administrative or professional positions, (ii)
directors of the Company or (iii) consultants to the Company or any Subsidiary.
4. ADMINISTRATION.
This Plan shall be administered and interpreted by a committee of two or
more members of the Board appointed by the Board. Members of the Committee shall
be "Non-Employee Directors" as that term is defined for purposes of Rule
16b-3(b)(3)(i) under the Exchange Act. All decisions and acts of the Committee
shall be final and binding upon all Participants. The Committee shall: (i)
determine the number and types of awards to be made under this Plan; (ii) set
the Option Price, the number of Options to be awarded and the number of Shares
to be awarded out of the total number of Shares available for award; (iii)
establish any applicable administrative regulations to further the purpose of
this Plan; (iv) approve forms of award agreements between the participant and
the Company; and (v) take any other action desirable or necessary to interpret,
construe or implement the provisions of this Plan. Prior to the appointment of
the Committee by the Board, or if the Committee shall not be in existence at any
time during the term of this Plan, this Plan shall be administered and
interpreted by the Board and, in such case, all references to the Committee
herein shall be deemed to refer to the Board.
5. AWARDS.
5.1 FORM OF AWARDS. Awards under this Plan may be in any of the following
forms (or a combination thereof): (i) Share Options; (ii) Share Appreciation
Rights; (iii) Exercise Payment rights; (iv) grants of Shares, including
Restricted Shares; or (v) Performance Awards. The Committee may require that any
or all awards under this Plan be made pursuant to an award agreement between the
Participant and the Company. Such award agreements shall be in such form as the
Committee may approve from time to time. The
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Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may deem appropriate.
5.2 MAXIMUM AMOUNT OF SHARES AVAILABLE. The total number of Shares
(including Restricted Shares, if any) granted, or covered by Options granted,
under this Plan during the term of this Plan shall not exceed 720,000. Solely
for the purpose of computing the total number of Shares optioned or granted
under this Plan, there shall not be counted any Shares which have been forfeited
and any Shares covered by Options which, prior to such computation, have
terminated in accordance with their terms or have been canceled by the
Participant or the Company.
5.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION, ETC. In the event of any
change in the outstanding Shares of the Company by reason of any share split,
share dividend, recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of any special
distribution to the shareholders, the Committee shall make such equitable
adjustments in the number of Shares and prices per Share applicable to Options
then outstanding and in the number of Shares which are available thereafter for
Option awards or other awards, both under this Plan as a whole and with respect
to individuals, as the Committee determines are necessary and appropriate. Any
such adjustment shall be conclusive and binding for all purposes of this Plan.
6. SHARE OPTIONS.
6.1 GRANT OF AWARD. The Company may award Options to purchase Shares,
including Restricted Shares (hereinafter referred to as "Share Option Awards")
to such Participants as the Committee authorizes and under such terms as the
Committee establishes. The Committee shall determine with respect to each Share
Option Award, and designate in the grant whether a Participant is to receive an
ISO or a Non-Qualified Share Option.
6.2 OPTION PRICE. The Option Price per Share subject to a Share Option
Award shall be specified in the grant, but, to the extent any Share Option is an
Incentive Stock Option, the Option Price in no event shall be less than the Fair
Market Value per Share on the date of grant. Notwithstanding the foregoing, if
the Participant to whom an ISO is granted owns, at the time of the grant, more
than ten percent (10%) of the combined voting power of the Company, the Option
Price per Share subject to such grant shall be not less than one hundred ten
percent (110%) of the Fair Market Value.
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6.3 TERMS OF OPTION. A Share Option that is an ISO shall not be
transferable by the Participant other than as permitted under Section 422 of the
Code or any successor provision, and, during the Participant's lifetime, shall
be exercisable only by the Participant. Non-Qualified Share Options may be
subject to such restrictions on transferability and exercise as may be provided
for by the Committee in the terms of the grant thereof. A Share Option shall be
of no more than ten (10) years' duration, except that an ISO granted to a
Participant who, at the time of the grant, owns Shares representing more than
ten percent (10%) of the combined voting power of the Company shall by its terms
be of no more than five (5) years' duration. A Share Option by its terms shall
vest in a Participant to whom it is granted and be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but, with respect to Employees, in no event less than one
(1) year following the date of grant of such award; (ii) the Participant's
death; or (iii) a Change in Control.
6.4 EXERCISE OF OPTION. A Non-Qualified Share Option is only exercisable
by a Participant who is an Employee while such Participant is in active
employment with the Company or a Subsidiary or within thirty (30) days after
termination of such employment, except (i) during the three-year period after a
Participant's death, Disability or Retirement; (ii) during a three-year period
commencing on the date of a Participant's termination of employment by the
Company or a Subsidiary other than for cause; (iii) during a three-year period
commencing on the date of termination, by the Participant or the Company or a
Subsidiary, of employment after a Change in Control unless such termination of
employment is by the Company or a Subsidiary for cause; or (iv) if the Committee
decides that it is in the best interest of the Company to permit other
exceptions. A Non-Qualified Stock Option may not be exercised pursuant to this
paragraph after the expiration date of the Share Option.
An Incentive Share Option is only exercisable by a Participant while
the Participant is in active employment with the Company or a Subsidiary or
within thirty (30) days after termination of such employment, except (i) during
a one-year period after a Participant's death, where the Option is exercised by
the estate of the Participant or by any person who acquired such Option by
bequest or inheritance; (ii) during a three-month period commencing on the date
of the Participant's termination of employment other than due to death, a
Disability or by the Company or a Subsidiary other than for cause; or (iii)
during a one-year period commencing on the Participant's termination of
employment on account of Disability. An Incentive Share Option may not be
exercised pursuant to this paragraph after the expiration date of the Share
Option.
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An Option may be exercised with respect to part or all of the Shares
subject to the Option by giving written notice to the Company of the exercise of
the Option. The Option Price for the Shares for which an Option is exercised
shall be paid on or within ten (10) business days after the date of exercise in
cash (by certified or bank cashier's check), in whole Shares owned by the
Participant prior to exercising the Option, in a combination of cash and such
Shares or on such other terms and conditions as the Committee may approve. The
value of any Share delivered in payment of the Option Price shall be its Fair
Market Value on the date the Option is exercised.
6.5 LIMITATION APPLICABLE TO ISOS. The aggregate Fair Market Value,
determined as of the date the related Share Option is granted, of all Shares
with respect to which ISOs are exercisable for the first time by a Participant
in any one calendar year, under this Plan or any other share option plan
maintained by the Company, shall not exceed $100,000.
7. SHARE APPRECIATION RIGHTS.
7.1 GENERAL. The Committee may, in its discretion, grant SARs to
Participants who have received a Share Option Award. The SARs may relate to such
number of Shares, not exceeding the number of Shares that the Participant may
acquire upon exercise of a related Share Option, as the Committee determines in
its discretion. Upon exercise of a Share Option by a Participant, the SAR
relating to the Share covered by such exercise shall terminate. Upon termination
or expiration of a Share Option, any unexercised SAR related to that Option
shall also terminate. Upon exercise of SARs, such rights and the related Share
Options, to the extent of an equal number of Shares shall be surrendered to the
Committee, and such SARs and the related Share Options shall terminate.
7.2 AWARD. Upon a Participant's exercise of some or all of the
Participant's SARs, the Participant shall receive an amount equal to the value
of the Share Appreciation for the number of SARs exercised, payable in cash,
Shares, Restricted Shares, or a combination thereof, at the discretion of the
Committee.
7.3 FORM OF SETTLEMENT. The Committee shall have the discretion to
determine the form in which payment of an SAR will be made, or to permit an
election by the Participant to receive cash in full or partial settlement of the
SAR. Unless otherwise specified in the grant of the SAR, if a Participant
exercises an SAR during the sixty (60) day period commencing on the date of a
Change in Control, the form of payment of such SAR shall be cash, provided that
such SAR was granted at least six (6) months prior to the date of exercise, and
shall be Shares if such SAR was granted
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six (6) months or less prior to the date of the exercise. Settlement for
exercised SARs may be deferred by the Committee in its discretion to such date
and under such terms and conditions as the Committee may determine.
7.4 RESTRICTIONS ON CASH EXERCISE. Except in the case of an SAR that was
granted at least six (6) months prior to exercise and is exercised for cash
during the sixty (60) day period commencing on the date of the Change in
Control, any election by a Participant to receive cash in full or partial
settlement of the SAR, as well as any exercise by a Participant of the
Participant's SAR for such cash, shall be made only during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
7.5 RESTRICTIONS. An SAR is only vested, exercisable and transferable
during the period when the Share Option to which it is related is also vested,
exercisable and transferable, respectively. If the Participant is a person
subject to Section 16 of the Exchange Act, the SAR may not be exercised within
six (6) months after the grant of the related Share Option, unless otherwise
permitted by law.
8. EXERCISE PAYMENTS.
The Committee may grant to Participants holding Share Options the right to
receive payments in connection with the exercise of a Participant's Share
Options ("Exercise Payments") relating to such number of Shares covered by such
Share Options, and subject to such restrictions and pursuant to such other terms
as the Committee may determine. Exercise Payments shall be in an amount
determined by the Committee in its discretion, which amount shall not be greater
than 60% of the excess of the Fair Market Value (as of the date of exercise)
over the Option Price of the Shares acquired upon the exercise of the Option. At
the discretion of the Committee, the Exercise Payment may be made in cash,
Shares, including Restricted Shares, or a combination thereof.
9. GRANTS OF SHARES.
9.1 AWARDS. The Committee may grant, either alone or in addition to other
awards granted under this Plan, Shares (including Restricted Shares) to such
Participants as the Committee authorizes and under such terms (including the
payment of a purchase price) as the Committee establishes. The Committee, in its
discretion, may also make a cash payment to a Participant granted Shares or
Restricted Shares under this Plan to allow such Participant to
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satisfy tax obligations arising out of receipt of such Shares or
Restricted Shares.
9.2 RESTRICTED SHARE AWARD. Awards of Restricted Shares shall be subject
to such terms and conditions as are established by the Committee. Such terms and
conditions may include, but are not limited to, the requirement of continued
service with the Company, achievement of specified business objectives and other
measurements of individual or business unit performance, the manner in which
such Restricted Shares are held, the extent to which the holder of such
Restricted Shares has rights of a shareholder and the circumstances under which
such Restricted Shares shall be forfeited. The Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Shares
received pursuant to this Section 9 prior to the date on which any applicable
restriction established by the Committee lapses. The Participant shall have,
with respect to Restricted Shares, all of the rights of a shareholder of the
Company, including the right to vote the Restricted Shares and the right to
receive any dividends, unless the Committee shall otherwise in the grant of such
Restricted Shares. Restricted Shares may not be sold or transferred by the
Participant until any restrictions that have been established by the Committee
have lapsed. Upon the termination of employment of a Participant who is an
Employee during the period any restrictions are in effect, all Restricted Shares
shall be forfeited without compensation to the Participant unless otherwise
provided in the grant of such Restricted Shares.
10. PERFORMANCE AWARDS.
The Committee may grant, either alone or in addition to other awards
granted under this Plan, awards of Shares based on the attainment, over a
specified period, of individual performance targets or other parameters to such
Participants as the Committee authorizes and under such terms as the Committee
establishes. Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee, are met. The
Committee, shall determine the times at which Performance Awards are to be made
and all conditions of such awards. The Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber Shares received pursuant to
this Section 10 prior to the date on which any applicable restriction or
performance period established by the Committee lapses. Performance Awards may
be paid in Shares, Restricted Shares, or other securities of the Company, cash
or any other form of property that the Committee shall determine. Unless
otherwise provided in the Performance Award, a Participant who is an Employee
must be an Employee at the end of the performance period in order to receive a
Performance Award, unless the Participant dies, has reached Retirement or incurs
a Disability or under such other circumstances as the Committee may determine.
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11. GENERAL PROVISIONS.
11.1 Any assignment or transfer of any awards granted under this Plan may
be effected only if such assignment or transfer does not violate the terms of
the award.
11.2 Nothing contained herein shall require the Company to segregate any
monies from its general funds, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant for
any year.
11.3 Participation in this Plan shall not affect the Company's right to
discharge a Participant or constitute an agreement of employment between a
Participant and the Company.
11.4 This Plan shall be interpreted in accordance with, and the
enforcement of this Plan shall be governed by, the laws of The Bahamas, subject
to any applicable United States federal or state securities laws.
12. AMENDMENT, SUSPENSION, OR TERMINATION.
12.1 GENERAL RULE. Except as otherwise required under applicable rules of
a Nasdaq Market or a securities exchange or other market where the securities of
the Company are traded or applicable law, the Board may suspend, terminate or
amend this Plan, including but not limited to such amendments as may be
necessary or desirable resulting from changes in the United States federal
income tax laws and other applicable laws without the approval of the Company's
shareholders or Participants; provided, however, that no such action shall
adversely affect any awards previously granted to a Participant without the
Participant's consent.
12.2 COMPLIANCE WITH RULE 16B-3. With respect to any person subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as applicable
during the term of this Plan. To the extent that any provision of this Plan or
action of the Committee or its delegates fail to so comply, it shall be deemed
null and void.
13. EFFECTIVE DATE AND DURATION OF PLAN.
This Plan shall be effective on August 15, 1996. No award shall be granted
under this Plan subsequent to August 15, 2006.
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14. TAX WITHHOLDING.
The Company shall have the right to (i) make deductions from any
settlement of an award, including delivery or vesting of Shares, or require that
Shares or cash, or both, be withheld from any award, in each case in an amount
sufficient to satisfy withholding of any federal, state or local taxes required
by law or (ii) take such other action as may be necessary or appropriate to
satisfy any such withholding obligations. The Committee may determine the manner
in which such tax withholding shall be satisfied, and may permit Shares (rounded
up to the next whole number) to be used to satisfy required tax withholding
based on the Fair Market Value of such Shares as of the Settlement Date of the
applicable award.
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EXHIBIT 10.7(A)
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
ADOPTED OCTOBER 8, 1996
AMENDMENT NO. 1 DATED
FEBRUARY 10, 1997
<PAGE>
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited Non- Employee
Directors' Share Option Plan" (this "Plan"). This Plan sets forth the terms of
grants of options (each, an "Option") to purchase the common shares (the
"Shares") of Steiner Leisure Limited (the "Company") to Non-Employee Directors
(as defined below) of the Company. The purpose of this Plan is to advance the
interests of Company and its shareholders by promoting an identity of interest
between the Company's non-employee directors and its shareholders, providing
non-employee directors with a proprietary stake in the Company's success and
strengthening the Company's ability to attract and retain qualified non-employee
directors by affording such persons an opportunity to share in the future
success of the Company.
2. DEFINITIONS.
(a) Act means the Securities Act of 1933, as
amended.
(b) Board means the Board of Directors of the
Company.
(c) Company means Steiner Leisure Limited.
(d) Date of Grant means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(f) Fair Market Value means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the
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closing sales price per share of the Shares underlying an Option on the Nasdaq
Stock Market ("Nasdaq") or, if the Shares are not then traded on Nasdaq, on any
national securities exchange, or (ii) if the Shares are not then traded on
Nasdaq or such exchange, and are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the Shares in such
over-the-counter market or (iii) if the Shares are then not listed on Nasdaq or
such exchange, or traded in an over-the-counter market, such value as the Board
may determine.
(g) Non-Employee Director means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) Options means the options to purchase Shares
granted pursuant to this Plan.
(i) Plan means this Steiner Leisure Limited
Directors' Share Option Plan.
(j) Shares means the common shares of the Company,
par value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes
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thereof. Except as otherwise provided herein, the validity, construction and
effect of this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with the laws of the Commonwealth of the Bahamas
subject to any applicable requirements under United States federal or state
securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 1,250 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan, each individual elected or re-elected as a Non-Employee
Director at such meeting or continuing as a Non-Employee Director shall be
granted, without the need for further action by the Board, an Option to purchase
1,250 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 1,250 multiplied by a fraction, the
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numerator of which is the number of days from the Effective Date until the
scheduled date of the then next Annual meeting (or, if such date has not yet
been scheduled, the anniversary date of the then immediately preceding Annual
Meeting or, in the absence of such date, a date approximating the date of the
next Annual Meeting as determined in good faith by the Board), and the
denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each
Option shall be the Fair Market Value of the Shares on the Date of
Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares
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<PAGE>
with respect to which the Option was exercised. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Option holders to have Shares
withheld for this purpose shall be made in writing in form acceptable to the
Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non- Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
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the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non- Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
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i. any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior
approval of the Board;
iii. during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors; or
iv. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
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in Rule 13d-3 under the Exchange Act of 20% or more of
the then outstanding voting securities of the Company
commences soliciting proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 82,500. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in
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<PAGE>
any way the right of the Company to terminate a director at any time. The Board
may at any time discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to
Non-Employee Directors that the Company now has or may hereafter put into
effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.
9
<PAGE>
EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
2
<PAGE>
made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
3
<PAGE>
satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
4
<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
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<PAGE>
Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
<PAGE>
cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
3
<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
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<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
5
<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.4(A)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the Employment Agreement (this "Amendment") is
made as of 25th day of March, 1997 by and between STEINER TRANSOCEAN LIMITED, a
Bahamas international business company (the "Company"), and Amanda Jane Francis
("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Employment
Agreement dated October 17, 1996 (the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend the Employment
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
Sections 3(a)(i) and 3(a)(iii), respectively, of the
Employment Agreement are hereby amended so that, as amended, they shall read as
follows:
(a) SALARY, ETC. Commencing as of January 1, 1997,
except as otherwise expressly provided herein, the Company
(or any Affiliate thereof) shall pay to Employee during
the term hereof compensation as described in this Section
3(a), all of which shall be subject to such deductions as
may be required by applicable law or regulation.
<PAGE>
(i) BASE SALARY. A base salary at the rate of (A) One
Hundred Twenty Thousand Dollars [(U.S.) $120,000.00] for calendar
year ("Year") 1997 and (B) no less than One Hundred Twenty Thousand
Dollars [(U.S.) $120,000.00] for each Year thereafter during the
term of this Agreement, subject to review by the Compensation
Committee of the Board of Directors of the Company, payable in
bi-weekly installments (the "Base Salary").
(iii) INCENTIVE BONUS. With respect to each calendar
quarter ("Quarter") and Year during the term hereof, additional cash
compensation as described in this Section 3(a)(iii) (the "Bonus")
based on a budget for the Company for each Year hereunder, including
budgets for each Quarter within such Year, which budget includes an
estimate of the total revenues for the Company (the "STO" Revenues)
for each Quarter and for such Year and which budget shall have been
approved for the purpose of the compensation payable hereunder by
the Compensation Committee of the Board of Directors of Steiner
Leisure Limited. At the end of the first Quarter, if the STO
Revenues shall have been met or exceeded for such date, Employee
shall be entitled to receive an amount equal to Twenty Two Thousand
Five Hundred Dollars [(U.S.) $22,500]. At the end of the second
Quarter, if the STO Revenues shall have been met or exceeded for
such date (cumulatively for the Year to date, and not solely for the
second Quarter), Employee shall be entitled to receive an amount
equal to Forty-Five Thousand Dollars [(U.S.) $45,000], less the
amount paid with respect to the first Quarter. At the end of the
third Quarter, if the STO Revenues shall have been met or exceeded
for such date (cumulatively for the Year to date, and not solely for
the third Quarter), Employee shall be entitled to receive an amount
equal to Sixty-Seven Thousand Five Hundred Dollars [(U.S.) $67,500],
less the amounts paid with respect to the first two Quarters. Any
amount which Employee is entitled to receive with respect to the
first three Quarters shall be payable one-half within forty-five
(45) days after the end of each such Quarter and one-half within
forty-five days after the end of the Year in question. At the end of
the fourth Quarter, if the STO Revenues shall have been met or
exceeded for such date (cumulatively for the Year to date, and not
solely for the fourth Quarter), Employee shall be entitled to
receive an amount equal to Ninety Thousand Dollars [(U.S.) $90,000],
less the amounts paid with respect to the first three Quarters,
within forty-five (45) days after the end of the fourth quarter.
Notwithstanding the foregoing, Employee shall only be
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entitled to receive payment pursuant to this Section 3(a)(iii) with
respect to a Quarter if she is employed hereunder on the last day of
such Quarter.
2. EFFECTIVE DATE. The effective date of the amendments to the
Employment Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
STEINER LEISURE LIMITED
/S/ AMANDA JANE FRANCIS By:/S/ CLIVE E. WARSHAW
- ------------------------------- -----------------------------
Amanda Jane Francis Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer
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EXHIBIT 10.5(A)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to Service Agreement (this "Amendment") is made as of
25th day of March, 1997 by and between ELEMIS LIMITED, a United Kingdom company
(the "Company"), and Sean C. Harrington ("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Service Agreement
dated September 18, 1996 (the "Service Agreement"); and
WHEREAS, the Company and Employee desire to amend the Service
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
(a) BASE SALARY. Clause 5(a) of the Service Agreement is hereby amended to
delete "(pound)50,000.00" on the third line thereof and replacing it with
"(pound)52,500.00."
(b) BONUS. The first sentence of clause 5(b)(ii) of the Service Agreement
is hereby amended by deleting the words "Chairman of the Board" immediately
before the bracketed language at the end of the sentence, and replacing those
words with the words "Compensation Committee of the Board of Directors of
Steiner Leisure Limited."
2. EFFECTIVE DATE. The effective date of the amendments to the Service
Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Service Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
ELEMIS LIMITED
/S/ SEAN C. HARRINGTON By:/S/ CLIVE E. WARSHAW
- ----------------------------- ------------------------------------
Sean C. Harrington Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer of
STEINER LEISURE LIMITED,
Duly authorized to sign
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EXHIBIT 10.6
STEINER LEISURE LIMITED
AMENDED AND RESTATED
1996 SHARE OPTION AND INCENTIVE PLAN
ADOPTED MARCH 23, 1997
<PAGE>
STEINER LEISURE LIMITED 1996 SHARE OPTION AND INCENTIVE PLAN
1. PURPOSE.
The purpose of the Steiner Leisure Limited 1996 Share Option and Incentive
Plan (hereinafter referred to as this "Plan") is to (i) assist Steiner Leisure
Limited (the "Company") in attracting and retaining highly qualified, officers,
key employees, directors and consultants for the successful conduct of its
business; (ii) provide incentives and rewards for persons eligible for awards
which are directly linked to the financial performance of the Company in order
to motivate such persons to achieve long-range performance goals; and (iii)
allow persons receiving awards to participate in the growth of the Company.
2. DEFINITIONS.
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" A Change in Control of the Company shall be
deemed to occur if any of the following circumstances have occurred after the
closing of initial public offering of the Shares:
(i) any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
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outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior approval
of the Board;
(iii) during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors;
(iv) any "person" or "group" within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20% or
more of the then outstanding voting securities
of the Company commences soliciting proxies; and
(v) with respect to a particular Employee, there
occurs a "change in control," as such term is
defined under any employment agreement or
service agreement between the Company or any
direct or indirect subsidiary thereof and such
Employee, entered into before or after the
date of adoption of this Plan (a "Change in
Control Agreement"), which provides for, upon
such change in control, the acceleration of
the vesting of share options or otherwise
affects awards that may be made under this
Plan; provided, however, that this Section
2.2.(v) applies only with respect to the award
or awards accelerated, or otherwise affected
by such Change in Control under such Change in
Control Agreement.
2.3 "CODE" means the United States Internal Revenue Code of 1986, as
currently in effect or hereafter amended.
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2.4 "COMMITTEE" means the committee appointed to administer this Plan in
accordance with Section 4 of this Plan.
2.5 "DISABILITY" means "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
2.6 "EMPLOYEE" means any employee of the Company or any direct or indirect
subsidiary of the Company (a "Subsidiary"), fincluding officers of the Company
and any Subsidiary, as well as such officers who are also directors of the
Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
2.8 "EXERCISE PAYMENT" means a payment described in Section 8 upon the
exercise of a Share Option.
2.9 "FAIR MARKET VALUE," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
date, the mean of the high and low prices reported per Share on the applicable
date (i) as quoted on the Nasdaq National Market or the Nasdaq Small Cap Market
(each, a "Nasdaq Market") or (ii) if not traded on a Nasdaq Market, as reported
by any principal national securities exchange in the United States on which it
is then traded (or if the Shares have not been quoted or reported, as the case
may be, on such date, on the first day prior thereto on which the Shares were
quoted or reported, as the case may be), except that in the case of a Share
Appreciation Right that is exercised for cash during the first three (3) days of
the ten (10) day period set forth in Section 7.4 of this Plan, "Fair Market
Value" means the highest daily closing price per Share as reported on such
Nasdaq Market or exchange during such ten (10) day period. Notwithstanding the
foregoing, if a Share Appreciation Right is exercised during the sixty (60) day
period commencing on the date of a Change in Control, the Fair Market Value for
purposes of determining the Share Appreciation shall be the highest of (i) the
Fair Market Value per Share, as determined under the preceding sentence; (ii)
the highest Fair Market Value per Share during the ninety (90) day period ending
on the date of exercise of the SAR; (iii) the highest price per Share shown on
Schedule 13D or an amendment thereto filed pursuant to Section 13(d) of the
Exchange Act 1934 by any person holding 20% of the combined voting power of the
Company's then outstanding voting securities; or (iv) the highest price paid or
to be paid per Share pursuant to a tender or exchange offer as determined by the
Committee. If the Shares are not reported or quoted on a Nasdaq Market or a
national securities exchange, its Fair Market Value shall be as determined in
good faith by the Committee.
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2.10 "INCENTIVE STOCK OPTION" or "ISO" means any Share Option granted to
an Employee pursuant to this Plan which is designated as such by the Committee
and which complies with Section 422 of the Code or any successor provision.
2.11 "NON-QUALIFIED SHARE OPTION" means any Share Option granted to a
Participant pursuant to this Plan which is not an ISO.
2.12 "OPTION PRICE" means the purchase price of one Share upon exercise
of a Share Option.
2.13 "PERFORMANCE AWARD" means an award described in Section 10 of this
Plan.
2.14 "RETIREMENT" means retirement from employment by the Company or any
Subsidiary by a Participant who has attained the normal retirement age under any
applicable retirement plan (which is qualified under Section 401(a) of the Code)
of the Company in which such Participant participates.
2.15 "RESTRICTED SHARES" means Shares subject to restrictions on the
transfer of such Shares, conditions of forfeitability of such Shares or any
other limitations or restrictions as determined by the Committee.
2.16 "SETTLEMENT DATE" means, (i) with respect to any Share Appreciation
Rights that have been exercised, the date or dates upon which cash payment is to
be made to the Participant, or in the case of Share Appreciation Rights that are
to be settled in Shares, the date or dates upon which such Shares are to be
delivered to the Participant; (ii) with respect to Performance Awards, the date
or dates upon which Shares are to be delivered to the Participant; (iii) with
respect to Exercise Payments, the date or dates upon which payment thereof is to
be made; and (iv) with respect to grants of Shares, including Restricted Shares,
the date or dates upon which such Shares are to be delivered to the Participant,
in each case determined in accordance with the terms of the grant (including any
award agreement) under which any such award was made.
2.17 "SHARE" or "SHARES" means the common shares of the
Company.
2.18 "SHARE APPRECIATION" means the excess of the Fair Market Value per
Share over the Option Price of the related Share, as determined by the
Committee.
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2.19 "SHARE APPRECIATION RIGHT" or "SAR" means an award that entitles a
Participant to receive an amount described in Section 7.2.
2.20 "SHARE OPTION" or "OPTION" means an award that entitles a Partici-
pant to purchase one Share for each Option granted.
3. PARTICIPATION.
The participants in this Plan ("Participants") shall be those persons who
are selected to participate in this Plan by the Committee and who are (i)
Employees serving in managerial, administrative or professional positions, (ii)
directors of the Company or (iii) consultants to the Company or any Subsidiary.
4. ADMINISTRATION.
This Plan shall be administered and interpreted by a committee of two or
more members of the Board appointed by the Board. Members of the Committee shall
be "Non-Employee Directors" as that term is defined for purposes of Rule
16b-3(b)(3)(i) under the Exchange Act. All decisions and acts of the Committee
shall be final and binding upon all Participants. The Committee shall: (i)
determine the number and types of awards to be made under this Plan; (ii) set
the Option Price, the number of Options to be awarded and the number of Shares
to be awarded out of the total number of Shares available for award; (iii)
establish any applicable administrative regulations to further the purpose of
this Plan; (iv) approve forms of award agreements between the participant and
the Company; and (v) take any other action desirable or necessary to interpret,
construe or implement the provisions of this Plan. Prior to the appointment of
the Committee by the Board, or if the Committee shall not be in existence at any
time during the term of this Plan, this Plan shall be administered and
interpreted by the Board and, in such case, all references to the Committee
herein shall be deemed to refer to the Board.
5. AWARDS.
5.1 FORM OF AWARDS. Awards under this Plan may be in any of the following
forms (or a combination thereof): (i) Share Options; (ii) Share Appreciation
Rights; (iii) Exercise Payment rights; (iv) grants of Shares, including
Restricted Shares; or (v) Performance Awards. The Committee may require that any
or all awards under this Plan be made pursuant to an award agreement between the
Participant and the Company. Such award agreements shall be in such form as the
Committee may approve from time to time. The
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Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may deem appropriate.
5.2 MAXIMUM AMOUNT OF SHARES AVAILABLE. The total number of Shares
(including Restricted Shares, if any) granted, or covered by Options granted,
under this Plan during the term of this Plan shall not exceed 720,000. Solely
for the purpose of computing the total number of Shares optioned or granted
under this Plan, there shall not be counted any Shares which have been forfeited
and any Shares covered by Options which, prior to such computation, have
terminated in accordance with their terms or have been canceled by the
Participant or the Company.
5.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION, ETC. In the event of any
change in the outstanding Shares of the Company by reason of any share split,
share dividend, recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of any special
distribution to the shareholders, the Committee shall make such equitable
adjustments in the number of Shares and prices per Share applicable to Options
then outstanding and in the number of Shares which are available thereafter for
Option awards or other awards, both under this Plan as a whole and with respect
to individuals, as the Committee determines are necessary and appropriate. Any
such adjustment shall be conclusive and binding for all purposes of this Plan.
6. SHARE OPTIONS.
6.1 GRANT OF AWARD. The Company may award Options to purchase Shares,
including Restricted Shares (hereinafter referred to as "Share Option Awards")
to such Participants as the Committee authorizes and under such terms as the
Committee establishes. The Committee shall determine with respect to each Share
Option Award, and designate in the grant whether a Participant is to receive an
ISO or a Non-Qualified Share Option.
6.2 OPTION PRICE. The Option Price per Share subject to a Share Option
Award shall be specified in the grant, but, to the extent any Share Option is an
Incentive Stock Option, the Option Price in no event shall be less than the Fair
Market Value per Share on the date of grant. Notwithstanding the foregoing, if
the Participant to whom an ISO is granted owns, at the time of the grant, more
than ten percent (10%) of the combined voting power of the Company, the Option
Price per Share subject to such grant shall be not less than one hundred ten
percent (110%) of the Fair Market Value.
7
<PAGE>
6.3 TERMS OF OPTION. A Share Option that is an ISO shall not be
transferable by the Participant other than as permitted under Section 422 of the
Code or any successor provision, and, during the Participant's lifetime, shall
be exercisable only by the Participant. Non-Qualified Share Options may be
subject to such restrictions on transferability and exercise as may be provided
for by the Committee in the terms of the grant thereof. A Share Option shall be
of no more than ten (10) years' duration, except that an ISO granted to a
Participant who, at the time of the grant, owns Shares representing more than
ten percent (10%) of the combined voting power of the Company shall by its terms
be of no more than five (5) years' duration. A Share Option by its terms shall
vest in a Participant to whom it is granted and be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but, with respect to Employees, in no event less than one
(1) year following the date of grant of such award; (ii) the Participant's
death; or (iii) a Change in Control.
6.4 EXERCISE OF OPTION. A Non-Qualified Share Option is only exercisable
by a Participant who is an Employee while such Participant is in active
employment with the Company or a Subsidiary or within thirty (30) days after
termination of such employment, except (i) during the three-year period after a
Participant's death, Disability or Retirement; (ii) during a three-year period
commencing on the date of a Participant's termination of employment by the
Company or a Subsidiary other than for cause; (iii) during a three-year period
commencing on the date of termination, by the Participant or the Company or a
Subsidiary, of employment after a Change in Control unless such termination of
employment is by the Company or a Subsidiary for cause; or (iv) if the Committee
decides that it is in the best interest of the Company to permit other
exceptions. A Non-Qualified Stock Option may not be exercised pursuant to this
paragraph after the expiration date of the Share Option.
An Incentive Share Option is only exercisable by a Participant while
the Participant is in active employment with the Company or a Subsidiary or
within thirty (30) days after termination of such employment, except (i) during
a one-year period after a Participant's death, where the Option is exercised by
the estate of the Participant or by any person who acquired such Option by
bequest or inheritance; (ii) during a three-month period commencing on the date
of the Participant's termination of employment other than due to death, a
Disability or by the Company or a Subsidiary other than for cause; or (iii)
during a one-year period commencing on the Participant's termination of
employment on account of Disability. An Incentive Share Option may not be
exercised pursuant to this paragraph after the expiration date of the Share
Option.
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An Option may be exercised with respect to part or all of the Shares
subject to the Option by giving written notice to the Company of the exercise of
the Option. The Option Price for the Shares for which an Option is exercised
shall be paid on or within ten (10) business days after the date of exercise in
cash (by certified or bank cashier's check), in whole Shares owned by the
Participant prior to exercising the Option, in a combination of cash and such
Shares or on such other terms and conditions as the Committee may approve. The
value of any Share delivered in payment of the Option Price shall be its Fair
Market Value on the date the Option is exercised.
6.5 LIMITATION APPLICABLE TO ISOS. The aggregate Fair Market Value,
determined as of the date the related Share Option is granted, of all Shares
with respect to which ISOs are exercisable for the first time by a Participant
in any one calendar year, under this Plan or any other share option plan
maintained by the Company, shall not exceed $100,000.
7. SHARE APPRECIATION RIGHTS.
7.1 GENERAL. The Committee may, in its discretion, grant SARs to
Participants who have received a Share Option Award. The SARs may relate to such
number of Shares, not exceeding the number of Shares that the Participant may
acquire upon exercise of a related Share Option, as the Committee determines in
its discretion. Upon exercise of a Share Option by a Participant, the SAR
relating to the Share covered by such exercise shall terminate. Upon termination
or expiration of a Share Option, any unexercised SAR related to that Option
shall also terminate. Upon exercise of SARs, such rights and the related Share
Options, to the extent of an equal number of Shares shall be surrendered to the
Committee, and such SARs and the related Share Options shall terminate.
7.2 AWARD. Upon a Participant's exercise of some or all of the
Participant's SARs, the Participant shall receive an amount equal to the value
of the Share Appreciation for the number of SARs exercised, payable in cash,
Shares, Restricted Shares, or a combination thereof, at the discretion of the
Committee.
7.3 FORM OF SETTLEMENT. The Committee shall have the discretion to
determine the form in which payment of an SAR will be made, or to permit an
election by the Participant to receive cash in full or partial settlement of the
SAR. Unless otherwise specified in the grant of the SAR, if a Participant
exercises an SAR during the sixty (60) day period commencing on the date of a
Change in Control, the form of payment of such SAR shall be cash, provided that
such SAR was granted at least six (6) months prior to the date of exercise, and
shall be Shares if such SAR was granted
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six (6) months or less prior to the date of the exercise. Settlement for
exercised SARs may be deferred by the Committee in its discretion to such date
and under such terms and conditions as the Committee may determine.
7.4 RESTRICTIONS ON CASH EXERCISE. Except in the case of an SAR that was
granted at least six (6) months prior to exercise and is exercised for cash
during the sixty (60) day period commencing on the date of the Change in
Control, any election by a Participant to receive cash in full or partial
settlement of the SAR, as well as any exercise by a Participant of the
Participant's SAR for such cash, shall be made only during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
7.5 RESTRICTIONS. An SAR is only vested, exercisable and transferable
during the period when the Share Option to which it is related is also vested,
exercisable and transferable, respectively. If the Participant is a person
subject to Section 16 of the Exchange Act, the SAR may not be exercised within
six (6) months after the grant of the related Share Option, unless otherwise
permitted by law.
8. EXERCISE PAYMENTS.
The Committee may grant to Participants holding Share Options the right to
receive payments in connection with the exercise of a Participant's Share
Options ("Exercise Payments") relating to such number of Shares covered by such
Share Options, and subject to such restrictions and pursuant to such other terms
as the Committee may determine. Exercise Payments shall be in an amount
determined by the Committee in its discretion, which amount shall not be greater
than 60% of the excess of the Fair Market Value (as of the date of exercise)
over the Option Price of the Shares acquired upon the exercise of the Option. At
the discretion of the Committee, the Exercise Payment may be made in cash,
Shares, including Restricted Shares, or a combination thereof.
9. GRANTS OF SHARES.
9.1 AWARDS. The Committee may grant, either alone or in addition to other
awards granted under this Plan, Shares (including Restricted Shares) to such
Participants as the Committee authorizes and under such terms (including the
payment of a purchase price) as the Committee establishes. The Committee, in its
discretion, may also make a cash payment to a Participant granted Shares or
Restricted Shares under this Plan to allow such Participant to
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satisfy tax obligations arising out of receipt of such Shares or
Restricted Shares.
9.2 RESTRICTED SHARE AWARD. Awards of Restricted Shares shall be subject
to such terms and conditions as are established by the Committee. Such terms and
conditions may include, but are not limited to, the requirement of continued
service with the Company, achievement of specified business objectives and other
measurements of individual or business unit performance, the manner in which
such Restricted Shares are held, the extent to which the holder of such
Restricted Shares has rights of a shareholder and the circumstances under which
such Restricted Shares shall be forfeited. The Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Shares
received pursuant to this Section 9 prior to the date on which any applicable
restriction established by the Committee lapses. The Participant shall have,
with respect to Restricted Shares, all of the rights of a shareholder of the
Company, including the right to vote the Restricted Shares and the right to
receive any dividends, unless the Committee shall otherwise in the grant of such
Restricted Shares. Restricted Shares may not be sold or transferred by the
Participant until any restrictions that have been established by the Committee
have lapsed. Upon the termination of employment of a Participant who is an
Employee during the period any restrictions are in effect, all Restricted Shares
shall be forfeited without compensation to the Participant unless otherwise
provided in the grant of such Restricted Shares.
10. PERFORMANCE AWARDS.
The Committee may grant, either alone or in addition to other awards
granted under this Plan, awards of Shares based on the attainment, over a
specified period, of individual performance targets or other parameters to such
Participants as the Committee authorizes and under such terms as the Committee
establishes. Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee, are met. The
Committee, shall determine the times at which Performance Awards are to be made
and all conditions of such awards. The Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber Shares received pursuant to
this Section 10 prior to the date on which any applicable restriction or
performance period established by the Committee lapses. Performance Awards may
be paid in Shares, Restricted Shares, or other securities of the Company, cash
or any other form of property that the Committee shall determine. Unless
otherwise provided in the Performance Award, a Participant who is an Employee
must be an Employee at the end of the performance period in order to receive a
Performance Award, unless the Participant dies, has reached Retirement or incurs
a Disability or under such other circumstances as the Committee may determine.
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11. GENERAL PROVISIONS.
11.1 Any assignment or transfer of any awards granted under this Plan may
be effected only if such assignment or transfer does not violate the terms of
the award.
11.2 Nothing contained herein shall require the Company to segregate any
monies from its general funds, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant for
any year.
11.3 Participation in this Plan shall not affect the Company's right to
discharge a Participant or constitute an agreement of employment between a
Participant and the Company.
11.4 This Plan shall be interpreted in accordance with, and the
enforcement of this Plan shall be governed by, the laws of The Bahamas, subject
to any applicable United States federal or state securities laws.
12. AMENDMENT, SUSPENSION, OR TERMINATION.
12.1 GENERAL RULE. Except as otherwise required under applicable rules of
a Nasdaq Market or a securities exchange or other market where the securities of
the Company are traded or applicable law, the Board may suspend, terminate or
amend this Plan, including but not limited to such amendments as may be
necessary or desirable resulting from changes in the United States federal
income tax laws and other applicable laws without the approval of the Company's
shareholders or Participants; provided, however, that no such action shall
adversely affect any awards previously granted to a Participant without the
Participant's consent.
12.2 COMPLIANCE WITH RULE 16B-3. With respect to any person subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as applicable
during the term of this Plan. To the extent that any provision of this Plan or
action of the Committee or its delegates fail to so comply, it shall be deemed
null and void.
13. EFFECTIVE DATE AND DURATION OF PLAN.
This Plan shall be effective on August 15, 1996. No award shall be granted
under this Plan subsequent to August 15, 2006.
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14. TAX WITHHOLDING.
The Company shall have the right to (i) make deductions from any
settlement of an award, including delivery or vesting of Shares, or require that
Shares or cash, or both, be withheld from any award, in each case in an amount
sufficient to satisfy withholding of any federal, state or local taxes required
by law or (ii) take such other action as may be necessary or appropriate to
satisfy any such withholding obligations. The Committee may determine the manner
in which such tax withholding shall be satisfied, and may permit Shares (rounded
up to the next whole number) to be used to satisfy required tax withholding
based on the Fair Market Value of such Shares as of the Settlement Date of the
applicable award.
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EXHIBIT 10.7(A)
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
ADOPTED OCTOBER 8, 1996
AMENDMENT NO. 1 DATED
FEBRUARY 10, 1997
<PAGE>
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited Non- Employee
Directors' Share Option Plan" (this "Plan"). This Plan sets forth the terms of
grants of options (each, an "Option") to purchase the common shares (the
"Shares") of Steiner Leisure Limited (the "Company") to Non-Employee Directors
(as defined below) of the Company. The purpose of this Plan is to advance the
interests of Company and its shareholders by promoting an identity of interest
between the Company's non-employee directors and its shareholders, providing
non-employee directors with a proprietary stake in the Company's success and
strengthening the Company's ability to attract and retain qualified non-employee
directors by affording such persons an opportunity to share in the future
success of the Company.
2. DEFINITIONS.
(a) Act means the Securities Act of 1933, as
amended.
(b) Board means the Board of Directors of the
Company.
(c) Company means Steiner Leisure Limited.
(d) Date of Grant means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(f) Fair Market Value means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the
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closing sales price per share of the Shares underlying an Option on the Nasdaq
Stock Market ("Nasdaq") or, if the Shares are not then traded on Nasdaq, on any
national securities exchange, or (ii) if the Shares are not then traded on
Nasdaq or such exchange, and are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the Shares in such
over-the-counter market or (iii) if the Shares are then not listed on Nasdaq or
such exchange, or traded in an over-the-counter market, such value as the Board
may determine.
(g) Non-Employee Director means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) Options means the options to purchase Shares
granted pursuant to this Plan.
(i) Plan means this Steiner Leisure Limited
Directors' Share Option Plan.
(j) Shares means the common shares of the Company,
par value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes
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thereof. Except as otherwise provided herein, the validity, construction and
effect of this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with the laws of the Commonwealth of the Bahamas
subject to any applicable requirements under United States federal or state
securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 1,250 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan, each individual elected or re-elected as a Non-Employee
Director at such meeting or continuing as a Non-Employee Director shall be
granted, without the need for further action by the Board, an Option to purchase
1,250 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 1,250 multiplied by a fraction, the
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numerator of which is the number of days from the Effective Date until the
scheduled date of the then next Annual meeting (or, if such date has not yet
been scheduled, the anniversary date of the then immediately preceding Annual
Meeting or, in the absence of such date, a date approximating the date of the
next Annual Meeting as determined in good faith by the Board), and the
denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each
Option shall be the Fair Market Value of the Shares on the Date of
Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares
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<PAGE>
with respect to which the Option was exercised. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Option holders to have Shares
withheld for this purpose shall be made in writing in form acceptable to the
Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non- Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
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the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non- Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
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i. any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior
approval of the Board;
iii. during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors; or
iv. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
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in Rule 13d-3 under the Exchange Act of 20% or more of
the then outstanding voting securities of the Company
commences soliciting proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 82,500. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in
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any way the right of the Company to terminate a director at any time. The Board
may at any time discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to
Non-Employee Directors that the Company now has or may hereafter put into
effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.
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EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
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made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
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satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
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<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
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<PAGE>
Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
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IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
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cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
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<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
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<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
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<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.5(A)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to Service Agreement (this "Amendment") is made as of
25th day of March, 1997 by and between ELEMIS LIMITED, a United Kingdom company
(the "Company"), and Sean C. Harrington ("Employee").
WITNESSETH:
WHEREAS, the Company and Employee entered into an Service Agreement
dated September 18, 1996 (the "Service Agreement"); and
WHEREAS, the Company and Employee desire to amend the Service
Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. COMPENSATION.
(a) BASE SALARY. Clause 5(a) of the Service Agreement is hereby amended to
delete "(pound)50,000.00" on the third line thereof and replacing it with
"(pound)52,500.00."
(b) BONUS. The first sentence of clause 5(b)(ii) of the Service Agreement
is hereby amended by deleting the words "Chairman of the Board" immediately
before the bracketed language at the end of the sentence, and replacing those
words with the words "Compensation Committee of the Board of Directors of
Steiner Leisure Limited."
2. EFFECTIVE DATE. The effective date of the amendments to the Service
Agreement contained in this Amendment shall be January 1, 1997.
3. NO OTHER AMENDMENT. Except as set forth in this Amendment, all
provisions of the Service Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
ELEMIS LIMITED
/S/ SEAN C. HARRINGTON By:/S/ CLIVE E. WARSHAW
- ----------------------------- ------------------------------------
Sean C. Harrington Clive E. Warshaw,
Chairman of the Board and
Chief Executive Officer of
STEINER LEISURE LIMITED,
Duly authorized to sign
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<PAGE>
EXHIBIT 10.6
STEINER LEISURE LIMITED
AMENDED AND RESTATED
1996 SHARE OPTION AND INCENTIVE PLAN
ADOPTED MARCH 23, 1997
<PAGE>
STEINER LEISURE LIMITED 1996 SHARE OPTION AND INCENTIVE PLAN
1. PURPOSE.
The purpose of the Steiner Leisure Limited 1996 Share Option and Incentive
Plan (hereinafter referred to as this "Plan") is to (i) assist Steiner Leisure
Limited (the "Company") in attracting and retaining highly qualified, officers,
key employees, directors and consultants for the successful conduct of its
business; (ii) provide incentives and rewards for persons eligible for awards
which are directly linked to the financial performance of the Company in order
to motivate such persons to achieve long-range performance goals; and (iii)
allow persons receiving awards to participate in the growth of the Company.
2. DEFINITIONS.
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" A Change in Control of the Company shall be
deemed to occur if any of the following circumstances have occurred after the
closing of initial public offering of the Shares:
(i) any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
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<PAGE>
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior approval
of the Board;
(iii) during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors;
(iv) any "person" or "group" within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20% or
more of the then outstanding voting securities
of the Company commences soliciting proxies; and
(v) with respect to a particular Employee, there
occurs a "change in control," as such term is
defined under any employment agreement or
service agreement between the Company or any
direct or indirect subsidiary thereof and such
Employee, entered into before or after the
date of adoption of this Plan (a "Change in
Control Agreement"), which provides for, upon
such change in control, the acceleration of
the vesting of share options or otherwise
affects awards that may be made under this
Plan; provided, however, that this Section
2.2.(v) applies only with respect to the award
or awards accelerated, or otherwise affected
by such Change in Control under such Change in
Control Agreement.
2.3 "CODE" means the United States Internal Revenue Code of 1986, as
currently in effect or hereafter amended.
3
<PAGE>
2.4 "COMMITTEE" means the committee appointed to administer this Plan in
accordance with Section 4 of this Plan.
2.5 "DISABILITY" means "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
2.6 "EMPLOYEE" means any employee of the Company or any direct or indirect
subsidiary of the Company (a "Subsidiary"), fincluding officers of the Company
and any Subsidiary, as well as such officers who are also directors of the
Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
2.8 "EXERCISE PAYMENT" means a payment described in Section 8 upon the
exercise of a Share Option.
2.9 "FAIR MARKET VALUE," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
date, the mean of the high and low prices reported per Share on the applicable
date (i) as quoted on the Nasdaq National Market or the Nasdaq Small Cap Market
(each, a "Nasdaq Market") or (ii) if not traded on a Nasdaq Market, as reported
by any principal national securities exchange in the United States on which it
is then traded (or if the Shares have not been quoted or reported, as the case
may be, on such date, on the first day prior thereto on which the Shares were
quoted or reported, as the case may be), except that in the case of a Share
Appreciation Right that is exercised for cash during the first three (3) days of
the ten (10) day period set forth in Section 7.4 of this Plan, "Fair Market
Value" means the highest daily closing price per Share as reported on such
Nasdaq Market or exchange during such ten (10) day period. Notwithstanding the
foregoing, if a Share Appreciation Right is exercised during the sixty (60) day
period commencing on the date of a Change in Control, the Fair Market Value for
purposes of determining the Share Appreciation shall be the highest of (i) the
Fair Market Value per Share, as determined under the preceding sentence; (ii)
the highest Fair Market Value per Share during the ninety (90) day period ending
on the date of exercise of the SAR; (iii) the highest price per Share shown on
Schedule 13D or an amendment thereto filed pursuant to Section 13(d) of the
Exchange Act 1934 by any person holding 20% of the combined voting power of the
Company's then outstanding voting securities; or (iv) the highest price paid or
to be paid per Share pursuant to a tender or exchange offer as determined by the
Committee. If the Shares are not reported or quoted on a Nasdaq Market or a
national securities exchange, its Fair Market Value shall be as determined in
good faith by the Committee.
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<PAGE>
2.10 "INCENTIVE STOCK OPTION" or "ISO" means any Share Option granted to
an Employee pursuant to this Plan which is designated as such by the Committee
and which complies with Section 422 of the Code or any successor provision.
2.11 "NON-QUALIFIED SHARE OPTION" means any Share Option granted to a
Participant pursuant to this Plan which is not an ISO.
2.12 "OPTION PRICE" means the purchase price of one Share upon exercise
of a Share Option.
2.13 "PERFORMANCE AWARD" means an award described in Section 10 of this
Plan.
2.14 "RETIREMENT" means retirement from employment by the Company or any
Subsidiary by a Participant who has attained the normal retirement age under any
applicable retirement plan (which is qualified under Section 401(a) of the Code)
of the Company in which such Participant participates.
2.15 "RESTRICTED SHARES" means Shares subject to restrictions on the
transfer of such Shares, conditions of forfeitability of such Shares or any
other limitations or restrictions as determined by the Committee.
2.16 "SETTLEMENT DATE" means, (i) with respect to any Share Appreciation
Rights that have been exercised, the date or dates upon which cash payment is to
be made to the Participant, or in the case of Share Appreciation Rights that are
to be settled in Shares, the date or dates upon which such Shares are to be
delivered to the Participant; (ii) with respect to Performance Awards, the date
or dates upon which Shares are to be delivered to the Participant; (iii) with
respect to Exercise Payments, the date or dates upon which payment thereof is to
be made; and (iv) with respect to grants of Shares, including Restricted Shares,
the date or dates upon which such Shares are to be delivered to the Participant,
in each case determined in accordance with the terms of the grant (including any
award agreement) under which any such award was made.
2.17 "SHARE" or "SHARES" means the common shares of the
Company.
2.18 "SHARE APPRECIATION" means the excess of the Fair Market Value per
Share over the Option Price of the related Share, as determined by the
Committee.
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<PAGE>
2.19 "SHARE APPRECIATION RIGHT" or "SAR" means an award that entitles a
Participant to receive an amount described in Section 7.2.
2.20 "SHARE OPTION" or "OPTION" means an award that entitles a Partici-
pant to purchase one Share for each Option granted.
3. PARTICIPATION.
The participants in this Plan ("Participants") shall be those persons who
are selected to participate in this Plan by the Committee and who are (i)
Employees serving in managerial, administrative or professional positions, (ii)
directors of the Company or (iii) consultants to the Company or any Subsidiary.
4. ADMINISTRATION.
This Plan shall be administered and interpreted by a committee of two or
more members of the Board appointed by the Board. Members of the Committee shall
be "Non-Employee Directors" as that term is defined for purposes of Rule
16b-3(b)(3)(i) under the Exchange Act. All decisions and acts of the Committee
shall be final and binding upon all Participants. The Committee shall: (i)
determine the number and types of awards to be made under this Plan; (ii) set
the Option Price, the number of Options to be awarded and the number of Shares
to be awarded out of the total number of Shares available for award; (iii)
establish any applicable administrative regulations to further the purpose of
this Plan; (iv) approve forms of award agreements between the participant and
the Company; and (v) take any other action desirable or necessary to interpret,
construe or implement the provisions of this Plan. Prior to the appointment of
the Committee by the Board, or if the Committee shall not be in existence at any
time during the term of this Plan, this Plan shall be administered and
interpreted by the Board and, in such case, all references to the Committee
herein shall be deemed to refer to the Board.
5. AWARDS.
5.1 FORM OF AWARDS. Awards under this Plan may be in any of the following
forms (or a combination thereof): (i) Share Options; (ii) Share Appreciation
Rights; (iii) Exercise Payment rights; (iv) grants of Shares, including
Restricted Shares; or (v) Performance Awards. The Committee may require that any
or all awards under this Plan be made pursuant to an award agreement between the
Participant and the Company. Such award agreements shall be in such form as the
Committee may approve from time to time. The
6
<PAGE>
Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may deem appropriate.
5.2 MAXIMUM AMOUNT OF SHARES AVAILABLE. The total number of Shares
(including Restricted Shares, if any) granted, or covered by Options granted,
under this Plan during the term of this Plan shall not exceed 720,000. Solely
for the purpose of computing the total number of Shares optioned or granted
under this Plan, there shall not be counted any Shares which have been forfeited
and any Shares covered by Options which, prior to such computation, have
terminated in accordance with their terms or have been canceled by the
Participant or the Company.
5.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION, ETC. In the event of any
change in the outstanding Shares of the Company by reason of any share split,
share dividend, recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of any special
distribution to the shareholders, the Committee shall make such equitable
adjustments in the number of Shares and prices per Share applicable to Options
then outstanding and in the number of Shares which are available thereafter for
Option awards or other awards, both under this Plan as a whole and with respect
to individuals, as the Committee determines are necessary and appropriate. Any
such adjustment shall be conclusive and binding for all purposes of this Plan.
6. SHARE OPTIONS.
6.1 GRANT OF AWARD. The Company may award Options to purchase Shares,
including Restricted Shares (hereinafter referred to as "Share Option Awards")
to such Participants as the Committee authorizes and under such terms as the
Committee establishes. The Committee shall determine with respect to each Share
Option Award, and designate in the grant whether a Participant is to receive an
ISO or a Non-Qualified Share Option.
6.2 OPTION PRICE. The Option Price per Share subject to a Share Option
Award shall be specified in the grant, but, to the extent any Share Option is an
Incentive Stock Option, the Option Price in no event shall be less than the Fair
Market Value per Share on the date of grant. Notwithstanding the foregoing, if
the Participant to whom an ISO is granted owns, at the time of the grant, more
than ten percent (10%) of the combined voting power of the Company, the Option
Price per Share subject to such grant shall be not less than one hundred ten
percent (110%) of the Fair Market Value.
7
<PAGE>
6.3 TERMS OF OPTION. A Share Option that is an ISO shall not be
transferable by the Participant other than as permitted under Section 422 of the
Code or any successor provision, and, during the Participant's lifetime, shall
be exercisable only by the Participant. Non-Qualified Share Options may be
subject to such restrictions on transferability and exercise as may be provided
for by the Committee in the terms of the grant thereof. A Share Option shall be
of no more than ten (10) years' duration, except that an ISO granted to a
Participant who, at the time of the grant, owns Shares representing more than
ten percent (10%) of the combined voting power of the Company shall by its terms
be of no more than five (5) years' duration. A Share Option by its terms shall
vest in a Participant to whom it is granted and be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but, with respect to Employees, in no event less than one
(1) year following the date of grant of such award; (ii) the Participant's
death; or (iii) a Change in Control.
6.4 EXERCISE OF OPTION. A Non-Qualified Share Option is only exercisable
by a Participant who is an Employee while such Participant is in active
employment with the Company or a Subsidiary or within thirty (30) days after
termination of such employment, except (i) during the three-year period after a
Participant's death, Disability or Retirement; (ii) during a three-year period
commencing on the date of a Participant's termination of employment by the
Company or a Subsidiary other than for cause; (iii) during a three-year period
commencing on the date of termination, by the Participant or the Company or a
Subsidiary, of employment after a Change in Control unless such termination of
employment is by the Company or a Subsidiary for cause; or (iv) if the Committee
decides that it is in the best interest of the Company to permit other
exceptions. A Non-Qualified Stock Option may not be exercised pursuant to this
paragraph after the expiration date of the Share Option.
An Incentive Share Option is only exercisable by a Participant while
the Participant is in active employment with the Company or a Subsidiary or
within thirty (30) days after termination of such employment, except (i) during
a one-year period after a Participant's death, where the Option is exercised by
the estate of the Participant or by any person who acquired such Option by
bequest or inheritance; (ii) during a three-month period commencing on the date
of the Participant's termination of employment other than due to death, a
Disability or by the Company or a Subsidiary other than for cause; or (iii)
during a one-year period commencing on the Participant's termination of
employment on account of Disability. An Incentive Share Option may not be
exercised pursuant to this paragraph after the expiration date of the Share
Option.
8
<PAGE>
An Option may be exercised with respect to part or all of the Shares
subject to the Option by giving written notice to the Company of the exercise of
the Option. The Option Price for the Shares for which an Option is exercised
shall be paid on or within ten (10) business days after the date of exercise in
cash (by certified or bank cashier's check), in whole Shares owned by the
Participant prior to exercising the Option, in a combination of cash and such
Shares or on such other terms and conditions as the Committee may approve. The
value of any Share delivered in payment of the Option Price shall be its Fair
Market Value on the date the Option is exercised.
6.5 LIMITATION APPLICABLE TO ISOS. The aggregate Fair Market Value,
determined as of the date the related Share Option is granted, of all Shares
with respect to which ISOs are exercisable for the first time by a Participant
in any one calendar year, under this Plan or any other share option plan
maintained by the Company, shall not exceed $100,000.
7. SHARE APPRECIATION RIGHTS.
7.1 GENERAL. The Committee may, in its discretion, grant SARs to
Participants who have received a Share Option Award. The SARs may relate to such
number of Shares, not exceeding the number of Shares that the Participant may
acquire upon exercise of a related Share Option, as the Committee determines in
its discretion. Upon exercise of a Share Option by a Participant, the SAR
relating to the Share covered by such exercise shall terminate. Upon termination
or expiration of a Share Option, any unexercised SAR related to that Option
shall also terminate. Upon exercise of SARs, such rights and the related Share
Options, to the extent of an equal number of Shares shall be surrendered to the
Committee, and such SARs and the related Share Options shall terminate.
7.2 AWARD. Upon a Participant's exercise of some or all of the
Participant's SARs, the Participant shall receive an amount equal to the value
of the Share Appreciation for the number of SARs exercised, payable in cash,
Shares, Restricted Shares, or a combination thereof, at the discretion of the
Committee.
7.3 FORM OF SETTLEMENT. The Committee shall have the discretion to
determine the form in which payment of an SAR will be made, or to permit an
election by the Participant to receive cash in full or partial settlement of the
SAR. Unless otherwise specified in the grant of the SAR, if a Participant
exercises an SAR during the sixty (60) day period commencing on the date of a
Change in Control, the form of payment of such SAR shall be cash, provided that
such SAR was granted at least six (6) months prior to the date of exercise, and
shall be Shares if such SAR was granted
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six (6) months or less prior to the date of the exercise. Settlement for
exercised SARs may be deferred by the Committee in its discretion to such date
and under such terms and conditions as the Committee may determine.
7.4 RESTRICTIONS ON CASH EXERCISE. Except in the case of an SAR that was
granted at least six (6) months prior to exercise and is exercised for cash
during the sixty (60) day period commencing on the date of the Change in
Control, any election by a Participant to receive cash in full or partial
settlement of the SAR, as well as any exercise by a Participant of the
Participant's SAR for such cash, shall be made only during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
7.5 RESTRICTIONS. An SAR is only vested, exercisable and transferable
during the period when the Share Option to which it is related is also vested,
exercisable and transferable, respectively. If the Participant is a person
subject to Section 16 of the Exchange Act, the SAR may not be exercised within
six (6) months after the grant of the related Share Option, unless otherwise
permitted by law.
8. EXERCISE PAYMENTS.
The Committee may grant to Participants holding Share Options the right to
receive payments in connection with the exercise of a Participant's Share
Options ("Exercise Payments") relating to such number of Shares covered by such
Share Options, and subject to such restrictions and pursuant to such other terms
as the Committee may determine. Exercise Payments shall be in an amount
determined by the Committee in its discretion, which amount shall not be greater
than 60% of the excess of the Fair Market Value (as of the date of exercise)
over the Option Price of the Shares acquired upon the exercise of the Option. At
the discretion of the Committee, the Exercise Payment may be made in cash,
Shares, including Restricted Shares, or a combination thereof.
9. GRANTS OF SHARES.
9.1 AWARDS. The Committee may grant, either alone or in addition to other
awards granted under this Plan, Shares (including Restricted Shares) to such
Participants as the Committee authorizes and under such terms (including the
payment of a purchase price) as the Committee establishes. The Committee, in its
discretion, may also make a cash payment to a Participant granted Shares or
Restricted Shares under this Plan to allow such Participant to
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satisfy tax obligations arising out of receipt of such Shares or
Restricted Shares.
9.2 RESTRICTED SHARE AWARD. Awards of Restricted Shares shall be subject
to such terms and conditions as are established by the Committee. Such terms and
conditions may include, but are not limited to, the requirement of continued
service with the Company, achievement of specified business objectives and other
measurements of individual or business unit performance, the manner in which
such Restricted Shares are held, the extent to which the holder of such
Restricted Shares has rights of a shareholder and the circumstances under which
such Restricted Shares shall be forfeited. The Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Shares
received pursuant to this Section 9 prior to the date on which any applicable
restriction established by the Committee lapses. The Participant shall have,
with respect to Restricted Shares, all of the rights of a shareholder of the
Company, including the right to vote the Restricted Shares and the right to
receive any dividends, unless the Committee shall otherwise in the grant of such
Restricted Shares. Restricted Shares may not be sold or transferred by the
Participant until any restrictions that have been established by the Committee
have lapsed. Upon the termination of employment of a Participant who is an
Employee during the period any restrictions are in effect, all Restricted Shares
shall be forfeited without compensation to the Participant unless otherwise
provided in the grant of such Restricted Shares.
10. PERFORMANCE AWARDS.
The Committee may grant, either alone or in addition to other awards
granted under this Plan, awards of Shares based on the attainment, over a
specified period, of individual performance targets or other parameters to such
Participants as the Committee authorizes and under such terms as the Committee
establishes. Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee, are met. The
Committee, shall determine the times at which Performance Awards are to be made
and all conditions of such awards. The Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber Shares received pursuant to
this Section 10 prior to the date on which any applicable restriction or
performance period established by the Committee lapses. Performance Awards may
be paid in Shares, Restricted Shares, or other securities of the Company, cash
or any other form of property that the Committee shall determine. Unless
otherwise provided in the Performance Award, a Participant who is an Employee
must be an Employee at the end of the performance period in order to receive a
Performance Award, unless the Participant dies, has reached Retirement or incurs
a Disability or under such other circumstances as the Committee may determine.
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11. GENERAL PROVISIONS.
11.1 Any assignment or transfer of any awards granted under this Plan may
be effected only if such assignment or transfer does not violate the terms of
the award.
11.2 Nothing contained herein shall require the Company to segregate any
monies from its general funds, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant for
any year.
11.3 Participation in this Plan shall not affect the Company's right to
discharge a Participant or constitute an agreement of employment between a
Participant and the Company.
11.4 This Plan shall be interpreted in accordance with, and the
enforcement of this Plan shall be governed by, the laws of The Bahamas, subject
to any applicable United States federal or state securities laws.
12. AMENDMENT, SUSPENSION, OR TERMINATION.
12.1 GENERAL RULE. Except as otherwise required under applicable rules of
a Nasdaq Market or a securities exchange or other market where the securities of
the Company are traded or applicable law, the Board may suspend, terminate or
amend this Plan, including but not limited to such amendments as may be
necessary or desirable resulting from changes in the United States federal
income tax laws and other applicable laws without the approval of the Company's
shareholders or Participants; provided, however, that no such action shall
adversely affect any awards previously granted to a Participant without the
Participant's consent.
12.2 COMPLIANCE WITH RULE 16B-3. With respect to any person subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as applicable
during the term of this Plan. To the extent that any provision of this Plan or
action of the Committee or its delegates fail to so comply, it shall be deemed
null and void.
13. EFFECTIVE DATE AND DURATION OF PLAN.
This Plan shall be effective on August 15, 1996. No award shall be granted
under this Plan subsequent to August 15, 2006.
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14. TAX WITHHOLDING.
The Company shall have the right to (i) make deductions from any
settlement of an award, including delivery or vesting of Shares, or require that
Shares or cash, or both, be withheld from any award, in each case in an amount
sufficient to satisfy withholding of any federal, state or local taxes required
by law or (ii) take such other action as may be necessary or appropriate to
satisfy any such withholding obligations. The Committee may determine the manner
in which such tax withholding shall be satisfied, and may permit Shares (rounded
up to the next whole number) to be used to satisfy required tax withholding
based on the Fair Market Value of such Shares as of the Settlement Date of the
applicable award.
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EXHIBIT 10.7(A)
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
ADOPTED OCTOBER 8, 1996
AMENDMENT NO. 1 DATED
FEBRUARY 10, 1997
<PAGE>
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited Non- Employee
Directors' Share Option Plan" (this "Plan"). This Plan sets forth the terms of
grants of options (each, an "Option") to purchase the common shares (the
"Shares") of Steiner Leisure Limited (the "Company") to Non-Employee Directors
(as defined below) of the Company. The purpose of this Plan is to advance the
interests of Company and its shareholders by promoting an identity of interest
between the Company's non-employee directors and its shareholders, providing
non-employee directors with a proprietary stake in the Company's success and
strengthening the Company's ability to attract and retain qualified non-employee
directors by affording such persons an opportunity to share in the future
success of the Company.
2. DEFINITIONS.
(a) Act means the Securities Act of 1933, as
amended.
(b) Board means the Board of Directors of the
Company.
(c) Company means Steiner Leisure Limited.
(d) Date of Grant means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(f) Fair Market Value means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the
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closing sales price per share of the Shares underlying an Option on the Nasdaq
Stock Market ("Nasdaq") or, if the Shares are not then traded on Nasdaq, on any
national securities exchange, or (ii) if the Shares are not then traded on
Nasdaq or such exchange, and are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the Shares in such
over-the-counter market or (iii) if the Shares are then not listed on Nasdaq or
such exchange, or traded in an over-the-counter market, such value as the Board
may determine.
(g) Non-Employee Director means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) Options means the options to purchase Shares
granted pursuant to this Plan.
(i) Plan means this Steiner Leisure Limited
Directors' Share Option Plan.
(j) Shares means the common shares of the Company,
par value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes
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thereof. Except as otherwise provided herein, the validity, construction and
effect of this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with the laws of the Commonwealth of the Bahamas
subject to any applicable requirements under United States federal or state
securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 1,250 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan, each individual elected or re-elected as a Non-Employee
Director at such meeting or continuing as a Non-Employee Director shall be
granted, without the need for further action by the Board, an Option to purchase
1,250 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 1,250 multiplied by a fraction, the
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numerator of which is the number of days from the Effective Date until the
scheduled date of the then next Annual meeting (or, if such date has not yet
been scheduled, the anniversary date of the then immediately preceding Annual
Meeting or, in the absence of such date, a date approximating the date of the
next Annual Meeting as determined in good faith by the Board), and the
denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each
Option shall be the Fair Market Value of the Shares on the Date of
Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares
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<PAGE>
with respect to which the Option was exercised. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Option holders to have Shares
withheld for this purpose shall be made in writing in form acceptable to the
Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non- Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
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the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non- Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
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i. any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior
approval of the Board;
iii. during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors; or
iv. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
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in Rule 13d-3 under the Exchange Act of 20% or more of
the then outstanding voting securities of the Company
commences soliciting proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 82,500. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in
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any way the right of the Company to terminate a director at any time. The Board
may at any time discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to
Non-Employee Directors that the Company now has or may hereafter put into
effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.
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EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
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made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
3
<PAGE>
satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
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<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
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<PAGE>
Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
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IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
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<PAGE>
cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
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<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
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<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
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<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.6
STEINER LEISURE LIMITED
AMENDED AND RESTATED
1996 SHARE OPTION AND INCENTIVE PLAN
ADOPTED MARCH 23, 1997
<PAGE>
STEINER LEISURE LIMITED 1996 SHARE OPTION AND INCENTIVE PLAN
1. PURPOSE.
The purpose of the Steiner Leisure Limited 1996 Share Option and Incentive
Plan (hereinafter referred to as this "Plan") is to (i) assist Steiner Leisure
Limited (the "Company") in attracting and retaining highly qualified, officers,
key employees, directors and consultants for the successful conduct of its
business; (ii) provide incentives and rewards for persons eligible for awards
which are directly linked to the financial performance of the Company in order
to motivate such persons to achieve long-range performance goals; and (iii)
allow persons receiving awards to participate in the growth of the Company.
2. DEFINITIONS.
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" A Change in Control of the Company shall be
deemed to occur if any of the following circumstances have occurred after the
closing of initial public offering of the Shares:
(i) any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
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<PAGE>
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior approval
of the Board;
(iii) during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors;
(iv) any "person" or "group" within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20% or
more of the then outstanding voting securities
of the Company commences soliciting proxies; and
(v) with respect to a particular Employee, there
occurs a "change in control," as such term is
defined under any employment agreement or
service agreement between the Company or any
direct or indirect subsidiary thereof and such
Employee, entered into before or after the
date of adoption of this Plan (a "Change in
Control Agreement"), which provides for, upon
such change in control, the acceleration of
the vesting of share options or otherwise
affects awards that may be made under this
Plan; provided, however, that this Section
2.2.(v) applies only with respect to the award
or awards accelerated, or otherwise affected
by such Change in Control under such Change in
Control Agreement.
2.3 "CODE" means the United States Internal Revenue Code of 1986, as
currently in effect or hereafter amended.
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<PAGE>
2.4 "COMMITTEE" means the committee appointed to administer this Plan in
accordance with Section 4 of this Plan.
2.5 "DISABILITY" means "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
2.6 "EMPLOYEE" means any employee of the Company or any direct or indirect
subsidiary of the Company (a "Subsidiary"), fincluding officers of the Company
and any Subsidiary, as well as such officers who are also directors of the
Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
2.8 "EXERCISE PAYMENT" means a payment described in Section 8 upon the
exercise of a Share Option.
2.9 "FAIR MARKET VALUE," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
date, the mean of the high and low prices reported per Share on the applicable
date (i) as quoted on the Nasdaq National Market or the Nasdaq Small Cap Market
(each, a "Nasdaq Market") or (ii) if not traded on a Nasdaq Market, as reported
by any principal national securities exchange in the United States on which it
is then traded (or if the Shares have not been quoted or reported, as the case
may be, on such date, on the first day prior thereto on which the Shares were
quoted or reported, as the case may be), except that in the case of a Share
Appreciation Right that is exercised for cash during the first three (3) days of
the ten (10) day period set forth in Section 7.4 of this Plan, "Fair Market
Value" means the highest daily closing price per Share as reported on such
Nasdaq Market or exchange during such ten (10) day period. Notwithstanding the
foregoing, if a Share Appreciation Right is exercised during the sixty (60) day
period commencing on the date of a Change in Control, the Fair Market Value for
purposes of determining the Share Appreciation shall be the highest of (i) the
Fair Market Value per Share, as determined under the preceding sentence; (ii)
the highest Fair Market Value per Share during the ninety (90) day period ending
on the date of exercise of the SAR; (iii) the highest price per Share shown on
Schedule 13D or an amendment thereto filed pursuant to Section 13(d) of the
Exchange Act 1934 by any person holding 20% of the combined voting power of the
Company's then outstanding voting securities; or (iv) the highest price paid or
to be paid per Share pursuant to a tender or exchange offer as determined by the
Committee. If the Shares are not reported or quoted on a Nasdaq Market or a
national securities exchange, its Fair Market Value shall be as determined in
good faith by the Committee.
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<PAGE>
2.10 "INCENTIVE STOCK OPTION" or "ISO" means any Share Option granted to
an Employee pursuant to this Plan which is designated as such by the Committee
and which complies with Section 422 of the Code or any successor provision.
2.11 "NON-QUALIFIED SHARE OPTION" means any Share Option granted to a
Participant pursuant to this Plan which is not an ISO.
2.12 "OPTION PRICE" means the purchase price of one Share upon exercise
of a Share Option.
2.13 "PERFORMANCE AWARD" means an award described in Section 10 of this
Plan.
2.14 "RETIREMENT" means retirement from employment by the Company or any
Subsidiary by a Participant who has attained the normal retirement age under any
applicable retirement plan (which is qualified under Section 401(a) of the Code)
of the Company in which such Participant participates.
2.15 "RESTRICTED SHARES" means Shares subject to restrictions on the
transfer of such Shares, conditions of forfeitability of such Shares or any
other limitations or restrictions as determined by the Committee.
2.16 "SETTLEMENT DATE" means, (i) with respect to any Share Appreciation
Rights that have been exercised, the date or dates upon which cash payment is to
be made to the Participant, or in the case of Share Appreciation Rights that are
to be settled in Shares, the date or dates upon which such Shares are to be
delivered to the Participant; (ii) with respect to Performance Awards, the date
or dates upon which Shares are to be delivered to the Participant; (iii) with
respect to Exercise Payments, the date or dates upon which payment thereof is to
be made; and (iv) with respect to grants of Shares, including Restricted Shares,
the date or dates upon which such Shares are to be delivered to the Participant,
in each case determined in accordance with the terms of the grant (including any
award agreement) under which any such award was made.
2.17 "SHARE" or "SHARES" means the common shares of the
Company.
2.18 "SHARE APPRECIATION" means the excess of the Fair Market Value per
Share over the Option Price of the related Share, as determined by the
Committee.
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<PAGE>
2.19 "SHARE APPRECIATION RIGHT" or "SAR" means an award that entitles a
Participant to receive an amount described in Section 7.2.
2.20 "SHARE OPTION" or "OPTION" means an award that entitles a Partici-
pant to purchase one Share for each Option granted.
3. PARTICIPATION.
The participants in this Plan ("Participants") shall be those persons who
are selected to participate in this Plan by the Committee and who are (i)
Employees serving in managerial, administrative or professional positions, (ii)
directors of the Company or (iii) consultants to the Company or any Subsidiary.
4. ADMINISTRATION.
This Plan shall be administered and interpreted by a committee of two or
more members of the Board appointed by the Board. Members of the Committee shall
be "Non-Employee Directors" as that term is defined for purposes of Rule
16b-3(b)(3)(i) under the Exchange Act. All decisions and acts of the Committee
shall be final and binding upon all Participants. The Committee shall: (i)
determine the number and types of awards to be made under this Plan; (ii) set
the Option Price, the number of Options to be awarded and the number of Shares
to be awarded out of the total number of Shares available for award; (iii)
establish any applicable administrative regulations to further the purpose of
this Plan; (iv) approve forms of award agreements between the participant and
the Company; and (v) take any other action desirable or necessary to interpret,
construe or implement the provisions of this Plan. Prior to the appointment of
the Committee by the Board, or if the Committee shall not be in existence at any
time during the term of this Plan, this Plan shall be administered and
interpreted by the Board and, in such case, all references to the Committee
herein shall be deemed to refer to the Board.
5. AWARDS.
5.1 FORM OF AWARDS. Awards under this Plan may be in any of the following
forms (or a combination thereof): (i) Share Options; (ii) Share Appreciation
Rights; (iii) Exercise Payment rights; (iv) grants of Shares, including
Restricted Shares; or (v) Performance Awards. The Committee may require that any
or all awards under this Plan be made pursuant to an award agreement between the
Participant and the Company. Such award agreements shall be in such form as the
Committee may approve from time to time. The
6
<PAGE>
Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may deem appropriate.
5.2 MAXIMUM AMOUNT OF SHARES AVAILABLE. The total number of Shares
(including Restricted Shares, if any) granted, or covered by Options granted,
under this Plan during the term of this Plan shall not exceed 720,000. Solely
for the purpose of computing the total number of Shares optioned or granted
under this Plan, there shall not be counted any Shares which have been forfeited
and any Shares covered by Options which, prior to such computation, have
terminated in accordance with their terms or have been canceled by the
Participant or the Company.
5.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION, ETC. In the event of any
change in the outstanding Shares of the Company by reason of any share split,
share dividend, recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of any special
distribution to the shareholders, the Committee shall make such equitable
adjustments in the number of Shares and prices per Share applicable to Options
then outstanding and in the number of Shares which are available thereafter for
Option awards or other awards, both under this Plan as a whole and with respect
to individuals, as the Committee determines are necessary and appropriate. Any
such adjustment shall be conclusive and binding for all purposes of this Plan.
6. SHARE OPTIONS.
6.1 GRANT OF AWARD. The Company may award Options to purchase Shares,
including Restricted Shares (hereinafter referred to as "Share Option Awards")
to such Participants as the Committee authorizes and under such terms as the
Committee establishes. The Committee shall determine with respect to each Share
Option Award, and designate in the grant whether a Participant is to receive an
ISO or a Non-Qualified Share Option.
6.2 OPTION PRICE. The Option Price per Share subject to a Share Option
Award shall be specified in the grant, but, to the extent any Share Option is an
Incentive Stock Option, the Option Price in no event shall be less than the Fair
Market Value per Share on the date of grant. Notwithstanding the foregoing, if
the Participant to whom an ISO is granted owns, at the time of the grant, more
than ten percent (10%) of the combined voting power of the Company, the Option
Price per Share subject to such grant shall be not less than one hundred ten
percent (110%) of the Fair Market Value.
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6.3 TERMS OF OPTION. A Share Option that is an ISO shall not be
transferable by the Participant other than as permitted under Section 422 of the
Code or any successor provision, and, during the Participant's lifetime, shall
be exercisable only by the Participant. Non-Qualified Share Options may be
subject to such restrictions on transferability and exercise as may be provided
for by the Committee in the terms of the grant thereof. A Share Option shall be
of no more than ten (10) years' duration, except that an ISO granted to a
Participant who, at the time of the grant, owns Shares representing more than
ten percent (10%) of the combined voting power of the Company shall by its terms
be of no more than five (5) years' duration. A Share Option by its terms shall
vest in a Participant to whom it is granted and be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but, with respect to Employees, in no event less than one
(1) year following the date of grant of such award; (ii) the Participant's
death; or (iii) a Change in Control.
6.4 EXERCISE OF OPTION. A Non-Qualified Share Option is only exercisable
by a Participant who is an Employee while such Participant is in active
employment with the Company or a Subsidiary or within thirty (30) days after
termination of such employment, except (i) during the three-year period after a
Participant's death, Disability or Retirement; (ii) during a three-year period
commencing on the date of a Participant's termination of employment by the
Company or a Subsidiary other than for cause; (iii) during a three-year period
commencing on the date of termination, by the Participant or the Company or a
Subsidiary, of employment after a Change in Control unless such termination of
employment is by the Company or a Subsidiary for cause; or (iv) if the Committee
decides that it is in the best interest of the Company to permit other
exceptions. A Non-Qualified Stock Option may not be exercised pursuant to this
paragraph after the expiration date of the Share Option.
An Incentive Share Option is only exercisable by a Participant while
the Participant is in active employment with the Company or a Subsidiary or
within thirty (30) days after termination of such employment, except (i) during
a one-year period after a Participant's death, where the Option is exercised by
the estate of the Participant or by any person who acquired such Option by
bequest or inheritance; (ii) during a three-month period commencing on the date
of the Participant's termination of employment other than due to death, a
Disability or by the Company or a Subsidiary other than for cause; or (iii)
during a one-year period commencing on the Participant's termination of
employment on account of Disability. An Incentive Share Option may not be
exercised pursuant to this paragraph after the expiration date of the Share
Option.
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An Option may be exercised with respect to part or all of the Shares
subject to the Option by giving written notice to the Company of the exercise of
the Option. The Option Price for the Shares for which an Option is exercised
shall be paid on or within ten (10) business days after the date of exercise in
cash (by certified or bank cashier's check), in whole Shares owned by the
Participant prior to exercising the Option, in a combination of cash and such
Shares or on such other terms and conditions as the Committee may approve. The
value of any Share delivered in payment of the Option Price shall be its Fair
Market Value on the date the Option is exercised.
6.5 LIMITATION APPLICABLE TO ISOS. The aggregate Fair Market Value,
determined as of the date the related Share Option is granted, of all Shares
with respect to which ISOs are exercisable for the first time by a Participant
in any one calendar year, under this Plan or any other share option plan
maintained by the Company, shall not exceed $100,000.
7. SHARE APPRECIATION RIGHTS.
7.1 GENERAL. The Committee may, in its discretion, grant SARs to
Participants who have received a Share Option Award. The SARs may relate to such
number of Shares, not exceeding the number of Shares that the Participant may
acquire upon exercise of a related Share Option, as the Committee determines in
its discretion. Upon exercise of a Share Option by a Participant, the SAR
relating to the Share covered by such exercise shall terminate. Upon termination
or expiration of a Share Option, any unexercised SAR related to that Option
shall also terminate. Upon exercise of SARs, such rights and the related Share
Options, to the extent of an equal number of Shares shall be surrendered to the
Committee, and such SARs and the related Share Options shall terminate.
7.2 AWARD. Upon a Participant's exercise of some or all of the
Participant's SARs, the Participant shall receive an amount equal to the value
of the Share Appreciation for the number of SARs exercised, payable in cash,
Shares, Restricted Shares, or a combination thereof, at the discretion of the
Committee.
7.3 FORM OF SETTLEMENT. The Committee shall have the discretion to
determine the form in which payment of an SAR will be made, or to permit an
election by the Participant to receive cash in full or partial settlement of the
SAR. Unless otherwise specified in the grant of the SAR, if a Participant
exercises an SAR during the sixty (60) day period commencing on the date of a
Change in Control, the form of payment of such SAR shall be cash, provided that
such SAR was granted at least six (6) months prior to the date of exercise, and
shall be Shares if such SAR was granted
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six (6) months or less prior to the date of the exercise. Settlement for
exercised SARs may be deferred by the Committee in its discretion to such date
and under such terms and conditions as the Committee may determine.
7.4 RESTRICTIONS ON CASH EXERCISE. Except in the case of an SAR that was
granted at least six (6) months prior to exercise and is exercised for cash
during the sixty (60) day period commencing on the date of the Change in
Control, any election by a Participant to receive cash in full or partial
settlement of the SAR, as well as any exercise by a Participant of the
Participant's SAR for such cash, shall be made only during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
7.5 RESTRICTIONS. An SAR is only vested, exercisable and transferable
during the period when the Share Option to which it is related is also vested,
exercisable and transferable, respectively. If the Participant is a person
subject to Section 16 of the Exchange Act, the SAR may not be exercised within
six (6) months after the grant of the related Share Option, unless otherwise
permitted by law.
8. EXERCISE PAYMENTS.
The Committee may grant to Participants holding Share Options the right to
receive payments in connection with the exercise of a Participant's Share
Options ("Exercise Payments") relating to such number of Shares covered by such
Share Options, and subject to such restrictions and pursuant to such other terms
as the Committee may determine. Exercise Payments shall be in an amount
determined by the Committee in its discretion, which amount shall not be greater
than 60% of the excess of the Fair Market Value (as of the date of exercise)
over the Option Price of the Shares acquired upon the exercise of the Option. At
the discretion of the Committee, the Exercise Payment may be made in cash,
Shares, including Restricted Shares, or a combination thereof.
9. GRANTS OF SHARES.
9.1 AWARDS. The Committee may grant, either alone or in addition to other
awards granted under this Plan, Shares (including Restricted Shares) to such
Participants as the Committee authorizes and under such terms (including the
payment of a purchase price) as the Committee establishes. The Committee, in its
discretion, may also make a cash payment to a Participant granted Shares or
Restricted Shares under this Plan to allow such Participant to
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satisfy tax obligations arising out of receipt of such Shares or
Restricted Shares.
9.2 RESTRICTED SHARE AWARD. Awards of Restricted Shares shall be subject
to such terms and conditions as are established by the Committee. Such terms and
conditions may include, but are not limited to, the requirement of continued
service with the Company, achievement of specified business objectives and other
measurements of individual or business unit performance, the manner in which
such Restricted Shares are held, the extent to which the holder of such
Restricted Shares has rights of a shareholder and the circumstances under which
such Restricted Shares shall be forfeited. The Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Shares
received pursuant to this Section 9 prior to the date on which any applicable
restriction established by the Committee lapses. The Participant shall have,
with respect to Restricted Shares, all of the rights of a shareholder of the
Company, including the right to vote the Restricted Shares and the right to
receive any dividends, unless the Committee shall otherwise in the grant of such
Restricted Shares. Restricted Shares may not be sold or transferred by the
Participant until any restrictions that have been established by the Committee
have lapsed. Upon the termination of employment of a Participant who is an
Employee during the period any restrictions are in effect, all Restricted Shares
shall be forfeited without compensation to the Participant unless otherwise
provided in the grant of such Restricted Shares.
10. PERFORMANCE AWARDS.
The Committee may grant, either alone or in addition to other awards
granted under this Plan, awards of Shares based on the attainment, over a
specified period, of individual performance targets or other parameters to such
Participants as the Committee authorizes and under such terms as the Committee
establishes. Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee, are met. The
Committee, shall determine the times at which Performance Awards are to be made
and all conditions of such awards. The Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber Shares received pursuant to
this Section 10 prior to the date on which any applicable restriction or
performance period established by the Committee lapses. Performance Awards may
be paid in Shares, Restricted Shares, or other securities of the Company, cash
or any other form of property that the Committee shall determine. Unless
otherwise provided in the Performance Award, a Participant who is an Employee
must be an Employee at the end of the performance period in order to receive a
Performance Award, unless the Participant dies, has reached Retirement or incurs
a Disability or under such other circumstances as the Committee may determine.
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11. GENERAL PROVISIONS.
11.1 Any assignment or transfer of any awards granted under this Plan may
be effected only if such assignment or transfer does not violate the terms of
the award.
11.2 Nothing contained herein shall require the Company to segregate any
monies from its general funds, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant for
any year.
11.3 Participation in this Plan shall not affect the Company's right to
discharge a Participant or constitute an agreement of employment between a
Participant and the Company.
11.4 This Plan shall be interpreted in accordance with, and the
enforcement of this Plan shall be governed by, the laws of The Bahamas, subject
to any applicable United States federal or state securities laws.
12. AMENDMENT, SUSPENSION, OR TERMINATION.
12.1 GENERAL RULE. Except as otherwise required under applicable rules of
a Nasdaq Market or a securities exchange or other market where the securities of
the Company are traded or applicable law, the Board may suspend, terminate or
amend this Plan, including but not limited to such amendments as may be
necessary or desirable resulting from changes in the United States federal
income tax laws and other applicable laws without the approval of the Company's
shareholders or Participants; provided, however, that no such action shall
adversely affect any awards previously granted to a Participant without the
Participant's consent.
12.2 COMPLIANCE WITH RULE 16B-3. With respect to any person subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as applicable
during the term of this Plan. To the extent that any provision of this Plan or
action of the Committee or its delegates fail to so comply, it shall be deemed
null and void.
13. EFFECTIVE DATE AND DURATION OF PLAN.
This Plan shall be effective on August 15, 1996. No award shall be granted
under this Plan subsequent to August 15, 2006.
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14. TAX WITHHOLDING.
The Company shall have the right to (i) make deductions from any
settlement of an award, including delivery or vesting of Shares, or require that
Shares or cash, or both, be withheld from any award, in each case in an amount
sufficient to satisfy withholding of any federal, state or local taxes required
by law or (ii) take such other action as may be necessary or appropriate to
satisfy any such withholding obligations. The Committee may determine the manner
in which such tax withholding shall be satisfied, and may permit Shares (rounded
up to the next whole number) to be used to satisfy required tax withholding
based on the Fair Market Value of such Shares as of the Settlement Date of the
applicable award.
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EXHIBIT 10.7(A)
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
ADOPTED OCTOBER 8, 1996
AMENDMENT NO. 1 DATED
FEBRUARY 10, 1997
<PAGE>
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited Non- Employee
Directors' Share Option Plan" (this "Plan"). This Plan sets forth the terms of
grants of options (each, an "Option") to purchase the common shares (the
"Shares") of Steiner Leisure Limited (the "Company") to Non-Employee Directors
(as defined below) of the Company. The purpose of this Plan is to advance the
interests of Company and its shareholders by promoting an identity of interest
between the Company's non-employee directors and its shareholders, providing
non-employee directors with a proprietary stake in the Company's success and
strengthening the Company's ability to attract and retain qualified non-employee
directors by affording such persons an opportunity to share in the future
success of the Company.
2. DEFINITIONS.
(a) Act means the Securities Act of 1933, as
amended.
(b) Board means the Board of Directors of the
Company.
(c) Company means Steiner Leisure Limited.
(d) Date of Grant means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(f) Fair Market Value means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the
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closing sales price per share of the Shares underlying an Option on the Nasdaq
Stock Market ("Nasdaq") or, if the Shares are not then traded on Nasdaq, on any
national securities exchange, or (ii) if the Shares are not then traded on
Nasdaq or such exchange, and are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the Shares in such
over-the-counter market or (iii) if the Shares are then not listed on Nasdaq or
such exchange, or traded in an over-the-counter market, such value as the Board
may determine.
(g) Non-Employee Director means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) Options means the options to purchase Shares
granted pursuant to this Plan.
(i) Plan means this Steiner Leisure Limited
Directors' Share Option Plan.
(j) Shares means the common shares of the Company,
par value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes
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thereof. Except as otherwise provided herein, the validity, construction and
effect of this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with the laws of the Commonwealth of the Bahamas
subject to any applicable requirements under United States federal or state
securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 1,250 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan, each individual elected or re-elected as a Non-Employee
Director at such meeting or continuing as a Non-Employee Director shall be
granted, without the need for further action by the Board, an Option to purchase
1,250 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 1,250 multiplied by a fraction, the
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numerator of which is the number of days from the Effective Date until the
scheduled date of the then next Annual meeting (or, if such date has not yet
been scheduled, the anniversary date of the then immediately preceding Annual
Meeting or, in the absence of such date, a date approximating the date of the
next Annual Meeting as determined in good faith by the Board), and the
denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each
Option shall be the Fair Market Value of the Shares on the Date of
Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares
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with respect to which the Option was exercised. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Option holders to have Shares
withheld for this purpose shall be made in writing in form acceptable to the
Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non- Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
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the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non- Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
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i. any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior
approval of the Board;
iii. during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors; or
iv. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
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in Rule 13d-3 under the Exchange Act of 20% or more of
the then outstanding voting securities of the Company
commences soliciting proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 82,500. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in
8
<PAGE>
any way the right of the Company to terminate a director at any time. The Board
may at any time discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to
Non-Employee Directors that the Company now has or may hereafter put into
effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.
9
<PAGE>
EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
2
<PAGE>
made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
3
<PAGE>
satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
4
<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
5
<PAGE>
Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
<PAGE>
cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
3
<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
4
<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
5
<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.7(A)
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
ADOPTED OCTOBER 8, 1996
AMENDMENT NO. 1 DATED
FEBRUARY 10, 1997
<PAGE>
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited Non- Employee
Directors' Share Option Plan" (this "Plan"). This Plan sets forth the terms of
grants of options (each, an "Option") to purchase the common shares (the
"Shares") of Steiner Leisure Limited (the "Company") to Non-Employee Directors
(as defined below) of the Company. The purpose of this Plan is to advance the
interests of Company and its shareholders by promoting an identity of interest
between the Company's non-employee directors and its shareholders, providing
non-employee directors with a proprietary stake in the Company's success and
strengthening the Company's ability to attract and retain qualified non-employee
directors by affording such persons an opportunity to share in the future
success of the Company.
2. DEFINITIONS.
(a) Act means the Securities Act of 1933, as
amended.
(b) Board means the Board of Directors of the
Company.
(c) Company means Steiner Leisure Limited.
(d) Date of Grant means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) Exchange Act means the Securities Exchange Act
of 1934, as amended.
(f) Fair Market Value means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the
1
<PAGE>
closing sales price per share of the Shares underlying an Option on the Nasdaq
Stock Market ("Nasdaq") or, if the Shares are not then traded on Nasdaq, on any
national securities exchange, or (ii) if the Shares are not then traded on
Nasdaq or such exchange, and are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the Shares in such
over-the-counter market or (iii) if the Shares are then not listed on Nasdaq or
such exchange, or traded in an over-the-counter market, such value as the Board
may determine.
(g) Non-Employee Director means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) Options means the options to purchase Shares
granted pursuant to this Plan.
(i) Plan means this Steiner Leisure Limited
Directors' Share Option Plan.
(j) Shares means the common shares of the Company,
par value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes
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thereof. Except as otherwise provided herein, the validity, construction and
effect of this Plan and any rules and regulations relating to this Plan shall be
determined in accordance with the laws of the Commonwealth of the Bahamas
subject to any applicable requirements under United States federal or state
securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 1,250 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan, each individual elected or re-elected as a Non-Employee
Director at such meeting or continuing as a Non-Employee Director shall be
granted, without the need for further action by the Board, an Option to purchase
1,250 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 1,250 multiplied by a fraction, the
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<PAGE>
numerator of which is the number of days from the Effective Date until the
scheduled date of the then next Annual meeting (or, if such date has not yet
been scheduled, the anniversary date of the then immediately preceding Annual
Meeting or, in the absence of such date, a date approximating the date of the
next Annual Meeting as determined in good faith by the Board), and the
denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each
Option shall be the Fair Market Value of the Shares on the Date of
Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares
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<PAGE>
with respect to which the Option was exercised. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Option holders to have Shares
withheld for this purpose shall be made in writing in form acceptable to the
Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non- Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
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the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non- Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
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<PAGE>
i. any transaction as a result of which a change
in control of the Company would be required to
be reported in response to Item 1(a) of the
Current Report on Form 8-K as in effect on the
date hereof, pursuant to Sections 13 or 15(d)
of the Exchange Act, whether or not the
Company is then subject to such reporting
requirement, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Company, otherwise
than through a transaction or transactions
arranged by, or consummated with the prior
approval of, the Board or (b) acquires by
proxy or otherwise the right to vote for the
election of directors, for any merger or
consolidation of the Company or for any other
matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or
arrangements consummated with the prior
approval of the Board;
iii. during any period of 24 consecutive months
(not including any period prior to the
adoption of this Plan), Present Directors
and/or New Directors cease for any reason to
constitute a majority of the Board. For
purposes of the preceding sentence, "Present
Directors" shall mean individuals who, at the
beginning of such consecutive 24 month period,
were members of the Board and "New Directors"
shall mean any director whose election by the
Board or whose nomination for election by the
Company's shareholders was approved by a vote
of at least two-thirds of the Directors then
still in office who were Present Directors or
New Directors; or
iv. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
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in Rule 13d-3 under the Exchange Act of 20% or more of
the then outstanding voting securities of the Company
commences soliciting proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 82,500. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in
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any way the right of the Company to terminate a director at any time. The Board
may at any time discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to
Non-Employee Directors that the Company now has or may hereafter put into
effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.
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EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
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made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
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satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
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<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
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Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
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cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
3
<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
4
<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
5
<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT made effective the 31ST day of
DECEMBER , 1996, by and between STEINER LEISURE LIMITED., a Bahamian corporation
(hereinafter referred to as "Company"), and LEONARD FLUXMAN, a resident of Dade
County, Florida (hereinafter referred to as "Employee").
W I T N E S S E T H :
WHEREAS, Company has heretofore employed Employee as an executive of
the Company;
WHEREAS, Employee's past services to the Company have contributed to
the success of the Company;
WHEREAS, The Company desires to recognize the valuable and
meritorious services performed on behalf of the Company by Employee and to offer
him an incentive to remain as an employee of the Company;
WHEREAS, The parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW, THEREFORE, the parties hereto, for and in consideration of the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
hereby agree as follows:
1. RECITALS. The foregoing statements and recitals are true and
correct and are incorporated herein by this reference.
<PAGE>
2. DEFERRED COMPENSATION. Employee may elect, in accordance with
Section 3 of this Agreement, to defer annually the receipt of a portion of the
Incentive Bonus ("Bonus") that Employee may be entitled to receive annually
under the provisions of that certain Employment Agreement ("Employment
Agreement") entered into between Employee and the Company or such greater amount
as the Board of Directors of the Company may from time to time approve in
writing. Any amount of said Bonus deferred pursuant to this Section shall be
recorded by the Company in a deferred compensation account ("Account")
maintained in the name of Employee. Upon Employee's election to defer receipt of
said portion of or all of the Bonus, Company shall credit such amount to the
Account at such time as the amount would otherwise be payable to Employee and
shall also credit to the Account whatever earnings, if any, the investment of
the Account may have produced. All right, title and interest in and to all
amounts credited to the Account shall at all times be the sole and absolute
property of Company and shall in no event be deemed to constitute a fund or
collateral security for the payment under this Agreement. All amounts credited
to the Account shall for all purposes be a part of the general funds of Company.
To the extent that Employee or his designee acquires a right to receive payments
under this Agreement such right shall be not greater than the right of any
unsecured general creditor of Company. Neither Employee nor his designee shall
have any interest whatsoever in any amount credited to the account. Amounts
credited to Employee's Account may hereinafter be sometimes referred to as
"Deferred Compensation".
3. ELECTION BY EMPLOYEE. An election to defer receipt of all or a
portion of Employee's Bonus shall be made in writing and shall become effective
upon filing with the Company. An election shall remain in effect unless Employee
amends or terminates the election by a notice in writing filed with Company. An
amendment or termination of election shall be applicable only prospectively to
Employee's Bonus and shall apply for the fiscal year immediately following the
fiscal year of filing such notice with the Company, and shall not affect amounts
previously credited to the Account. Employee may not amend or terminate the
election with respect to the method or time of payment of the amounts credited
to the Account.
4. DISTRIBUTION. If Employee terminates employment other than on
account of death then all amounts credited to Employee's Account shall be paid
to Employee, at the time and in the manner specified in Employee's election
filed with Company. Employee may elect to receive all amounts credited to his
Account in one lump sum or in a specified number of equal annual installment
payments. The date on which such lump sum payment shall be
2
<PAGE>
made, or the date on which the initial installment shall be paid, shall be
specified in the form of election filed with Company and shall be determined by
reference to the date on which Employee ceases to serve Company as an Employee.
In the event that Employee dies prior to the termination of his employment no
amounts credited to Employee's Account will be paid him.
5. BENEFICIARY DESIGNATION. Subject to the provisions of Section 4,
in the event that Employee shall die after terminating his employment but before
all amounts credited to his Account shall have been paid to him, Company shall
make payment of the balance of the amount in his Account to such person or
persons as Employee shall designate by notice in writing filed with Company.
Such payment shall be made in one lump sum or in equal annual installments, at
the election of Employee. In the event that Employee shall fail to designate any
beneficiary, then the balance of the amount in Employee's Account shall be paid
to Employee's estate in one lump sum.
6. LIFE INSURANCE. It is understood and agreed that Company shall be
under no obligation whatsoever to purchase any life insurance policy, annuity
policy, or to otherwise fund the Employee's Deferred Compensation hereunder. In
the event that Company shall voluntarily elect to purchase any such medium of
funding, Company shall be the absolute owner thereof and Employee shall have no
rights therein. It is specifically understood and agreed that payment of
Employee's Deferred Compensation hereunder shall at all times remain the general
unsecured obligation of Company and any medium of funding so purchased by
Company shall be the sole, exclusive and unrestricted property of Company. In
any and all events, whether or not any such medium of funding is in fact
purchased by Company, Company's liability to pay Deferred Compensation hereunder
shall be limited to the aggregate sums and the manner of payment hereinabove set
forth in the previous paragraphs of this Agreement.
7. SPENDTHRIFT PROVISION. The Deferred Compensation payable hereunder
shall not be subject to assignment and shall not be transferable by Employee or
by any other party, nor shall same be subject to attachment, garnishment,
execution or any other legal process by any creditor of Employee or Employee's
estate; and Employee shall have no right to alienate, hypothecate, encumber or
dispose of his right to receive all or any portion of the Deferred Compensation
herein set forth; provided, however, that if, at the time of the death of
Employee during his employment with Company, Employee is obligated to Company in
any manner whatsoever, it is specifically recognized and agreed that the first
amounts due to be paid hereunder as Deferred Compensation shall instead be used
to
3
<PAGE>
satisfy Employee's obligations to Company in the order in which such payments
are due hereunder. In the event that there is more than one named beneficiary of
the Deferred Compensation due hereunder, such reduction and offset in such
payments for reimbursements to Company shall be taken pro rata from the payments
due to the respective beneficiaries hereunder in accordance with the respective
amounts due to all such beneficiaries.
8. RIGHT OF EMPLOYMENT. Nothing herein contained shall be construed
or interpreted as giving Employee the right to be retained in the service and
employment of Company, and Company and Employee each severally reserve the
rights to terminate such employment for any reason whatsoever in accordance with
such respective rights of termination as existed prior to the date of this
Agreement or may exist in the future.
9. COOPERATION FOR EXAMINATION. In the event that Company voluntarily
elects to purchase one or more life insurance policies or other media of funding
with respect to any Deferred Compensation hereunder which purchase requires any
one or more medical examinations of Employee, the giving of financial or other
information by Employee to any party (including but not limited to an insurance
company) or any similar act requiring the cooperation of Employee, Employee
shall fully cooperate with Company in the giving of such financial and other
information and the submission to any such medical or other examination. Upon
the failure of Employee to so cooperate in accordance with the provisions of
this paragraph, or if Employee makes any misrepresentation or false statement,
or omits any material statement of fact, or effects any other act of omission or
commission which results in the failure of any insurance company to effect
payments of death benefits under any such insurance policy, annuity or other
medium of funding which Company voluntarily elects to purchase, then, upon the
occurrence of any one or more of the foregoing events, this Agreement shall
terminate and be of no further force or effect, and in such event, Company shall
have no obligation for the payment of any Deferred Compensation.
10. INCOME TAX WITHHOLDING. If Company shall be required under
applicable law to withhold federal income or any other taxes of any kind or
description with regard to any Deferred Compensation to be paid under this
Agreement, including but not limited to federal withholding of income tax,
federal social security taxes or any state or local governmental taxes of any
kind, then any and all of such taxes shall be withheld prior to the payment of
Deferred Compensation hereunder.
4
<PAGE>
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the respective parties hereto and the heirs, personal
representatives, successors and assigns of each of them.
(b) This Agreement contains the entire understanding and agreement
of the parties hereto and no future understanding or amendment shall be binding
unless reduced to writing and signed by both parties.
(c) This Agreement shall be construed and enforced in accordance
with the substantive and remedial laws of the State of Florida. In the event of
any dispute hereunder, the parties hereby agree that such dispute shall be
resolved by and in any court of competent jurisdiction geographically situate in
Dade County, Florida, and both parties hereby agree to submit to the personal
jurisdiction of such court.
(d) This Agreement may not be altered, amended, or modified except
in a writing executed by all parties hereto.
(e) Any party's failure to insist on compliance or enforcement of
any provision of this Agreement shall neither affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
any other provision of this Agreement.
(f) No part of this Agreement will be affected if any other part of
it is held invalid or unenforceable.
(g) This Agreement shall terminate upon the first
occurrence of any of the following events:
(i) A termination of the employment of Employee for any
reason whatsoever under the provisions of the Employment Agreement or any
renewal or extension thereof.
(ii) A voluntary termination hereof by Company and Employee
which voluntary termination shall be binding and conclusive upon the parties
hereto and all heirs, personal representatives, successors and assigns of any or
all of them.
5
<PAGE>
Notwithstanding any termination of this Agreement, each party shall
continue to have any right to enforce any right that such party had under this
Agreement at the time of termination of this Agreement.
(h) If any term, provision, or condition of this Agreement shall be
found by any court competent jurisdiction to be against public policy, illegal
or void in any manner whatsoever, and such determination shall be upheld upon
exhaustion of all appeals, such determination shall have the effect of
terminating this Agreement AB INITIO and in such event this entire Agreement
shall be rendered null, void and of no further force or effect and Company shall
have no financial or other obligations hereunder to Employee, or any other
person hereunder.
(i) Any headings preceding the text of the several paragraphs hereof
are inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
12. NOTICES. Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given upon the date it
is personally delivered to Employee or to an officer of the corporation other
than LEONARD FLUXMAN or three business days after it is sent by registered or
certified mail, return receipt requested addressed to such addressee at the
address set forth in the Employment Agreement or any other address notified by a
party to the other party in writing.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Deferred Compensation
Agreement to be duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
<PAGE>
cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
3
<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
4
<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
5
<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
EXHIBIT 10.12
SPLIT-DOLLAR INSURANCE AGREEMENT
AGREEMENT MADE effective the __th day of _____, 1997, by and between
STEINER LEISURE LIMITED, a Bahamian corporation, (hereinafter referred to as the
"Company") and LEONARD FLUXMAN, a resident of Dade County, Florida (hereinafter
referred to as the "Insured").
W I T N E S S E T H :
WHEREAS, the Insured desires to insure his life, for the benefit and
protection of his family; and
WHEREAS, Company desire to assist Insured providing insurance for
the benefit and protection of his family by paying the full amount of premiums
due on the policy on the Insured's life; and
WHEREAS, the Insured will be the owner of the policy of insurance on
his life acquired pursuant to the terms of this Agreement, the policy will be
assigned to the Company as security for the repayment of the amount which the
Company will contribute toward payment of the premiums due on said policy;
NOW, THEREFORE, the parties hereto, for and in consideration of the
mutual covenants herein contained, the sum of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
1. APPLICATION FOR INSURANCE. Insured agrees to apply for one or
more policies (each a "Policy" and collectively the "Policies") of life
insurance covering the life of Insured from such companies, in such types and
face amounts, and on such terms and conditions as shall be referred to in
Exhibit "A" attached hereto and made a part of this Agreement listing the
insurer (the
<PAGE>
"Insurer"), the face amount, the type and premium of each such
policy.
2. INCIDENTS OF OWNERSHIP. The Insured shall be the sole and
absolute owner of any and all Policies and may exercise all ownership rights and
incidents of ownership granted to the owner of each such Policy by Insurer,
except as may expressly provided to the contrary in this Agreement. It is the
intention of the parties that the Insured retain all rights that each such
Policy grants to the owner thereof, except Company's right to be repaid the
amounts that it pays toward the premiums on each such Policy. Specifically (but
not limited thereto), Company may neither have nor exercise any rights as
collateral assignee of each such Policy that could in any way defeat or impair
the Insured's right to receive the cash surrender value or the death proceeds of
each such Policy in excess of the amount due to Company under this Agreement.
All provisions of the collateral assignment to the Company described in Section
5 below shall be construed so as to carry out such intention.
3. DIVIDENDS. All dividends declared on each Policy may be applied
to buy one-year term insurance on the life of the Insured, in an amount equal to
such Policy's cash value as of such Policy's next anniversary date. If the
premium for such term insurance is less than the amount of such dividend, then
the balance of such dividend shall be used to reduce the premiums payable on
such Policy. If such dividend is not adequate to buy the required amount of
one-year term insurance on the life of the Insured, then the entire dividend may
be applied to buy such term insurance on his life. The parties hereto agree that
the dividend election provisions of each Policy shall conform to the provisions
of this section.
4. PREMIUM PAYMENTS. Except as otherwise provided in this Agreement,
on or before the due date of each Policy premium, or within the grace period
provided in each Policy, Company shall pay the full amount of such premium to
the Insurer, and shall, upon request, promptly furnish to the Insured evidence
of timely payment of each such premium. Company shall annually furnish to
Insured a statement of the amount of income reportable by him for federal income
tax purposes as a result of such premium payments.
5. RIGHT OF REPAYMENT. To secure the repayment to the Company of the
amount of premiums on each Policy paid by it hereunder, the Insured has,
contemporaneously herewith, assigned the Policy to the Company as
collateral, under the form used by the Insurer to such assignments, which
collateral assignment specifi-
2
<PAGE>
cally limits the Company's right thereunder to the repayment of the amounts it
paid towards premiums on such Policy. Such repayment shall be made from such
Policy's cash surrender value if this Agreement is terminated or if the Insured
surrenders or cancels such Policy, or from such Policy's death proceeds, if the
Insured should die while such Policy and this Agreement remain in force. In no
event shall the Company have any right to borrow against such Policy. Each
Policy's collateral assignment shall not be terminated, altered, or amended by
the Insured without the express written consent of the Company. The parties
hereto agree to take all actions necessary to cause such collateral assignment
to conform to the provisions of the Agreement.
6. RIGHTS OF THE INSURED IN THE POLICY.
6.1 RIGHTS OF THE COMPANY PROTECTED. The Insured shall take no
action with respect to each Policy that would in any way compromise or
jeopardize the Company's right to be repaid the amount it paid towards such
Policy's premiums, without the Company's express written consent.
6.2 RIGHT TO BORROW. The Insured may pledge or assign such
Policy, subject to the terms and conditions of this Agreement, in order to
secure a loan from the Insurer or from a third party, in an amount that shall
not exceed such Policy's cash surrender value as of the most recent date on
which the premiums have been paid, less the amount of the premiums on such
Policy paid by the Company. Interest charges on such loan shall be the
responsibility of and shall be paid by the Insured. For each Policy year in
which the Insured borrows against such Policy, the Company shall be
correspondingly relieved of its obligation to pay any amounts towards premiums
for that particular Policy year.
6.3 RIGHT TO CANCEL. The Insured shall have the sole right to
surrender or cancel such Policy and to receive such Policy's full cash surrender
value directly from the Insurer. Notwithstanding the foregoing, upon any
surrender or cancellation of such Policy, the Company shall have the unqualified
right to receive a portion of the cash surrender value equal to the total amount
of the premiums paid by it under this Agreement. Immediately upon receipt of the
cash value, the Insured shall pay to the Company the portion of such cash value
to which it is entitled under this Agreement, and shall retain the balance, if
any.
7. UPON THE INSURED'S DEATH. Upon the death of the
Insured, the Company and the Insured shall promptly take all action
3
<PAGE>
necessary to obtain the death benefit provided under each Policy. The Company
shall have the unqualified right to receive a portion of such death benefits
equal to the total amount of the premiums paid by it under this Agreement. The
balance of the death benefits provided under each Policy, if any, shall be paid
directly to the beneficiary designated by the Insured in the manner and in the
amount provided in such Policy's beneficiary designation provisions. In no event
shall the amount payable to the Company under this Agreement exceed each Policy
proceeds payable at the death of the Insured. No amount shall be paid from such
death benefits to the beneficiary designated by the Insured until the full
amount due to the Company has been paid. The parties agree that the beneficiary
designation provision of each Policy shall conform to the provisions of this
Agreement.
8. RELEASE OF COLLATERAL ASSIGNMENT. For sixty (60) days after the
date this Agreement is terminated, the Insured shall have the option of
obtaining the release of the collateral assignment of each Policy to the
Company. The Insured may exercise this option by repaying Company the total
amount of the premium payments Company has made under this Agreement, and upon
receipt of such amount, Company shall release the Employee's collateral
assignment of each Policy by its execution and delivery of an appropriate
instrument of release. If the Insured fails to exercise such option within the
said sixty (60) day period, then, at the Company's written request, he shall
execute any document required by the Insurer to transfer his interest in such
Policy to the Company. Alternatively, the Company may enforce its right to be
repaid the amount of each Policy premiums paid by it from the Policy's cash
surrender value under such Policy's collateral assignment, and if the cash
surrender value exceeds the amount of such premium payments, the excess will be
paid to the Insured.
9. TERMINATION. This Agreement shall automatically terminate upon
cessation of Insured's employment with Company. In addition, this Agreement may
be terminated by either party giving written notice to the other party of such
intention to terminate. Such notice, if given, shall be given at least thirty
(30) days prior to the date on which the next premium on each Policy purchased
in accordance herewith is due and payable; and within thirty (30) days after
the receipt of any such notice of intention to terminate, the Insured shall have
the right and option to assume Company's interest in and to the Policy from
Company by paying to the Company an amount equal to the aggregate amount of
premiums that the Company paid for such Policy. Notwithstanding such
termination, each party shall continue to have the right to enforce any right
that such party had at the
4
<PAGE>
time of termination under this Agreement. In the event of such purchase by
Insured, Company shall execute all documents which may be necessary or advisable
to release or otherwise transfer its interest in the Policy to the Insured.
10. INSURER PROTECTED. The Insurer shall be fully discharged
from its obligations under each Policy by payment of such Policy's death
benefit to the beneficiary named in each such Policy, subject to such Policy's
terms and conditions. In no event shall the Insurer be considered a party to
this Agreement. No provision of this Agreement shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the Insurer's
obligations as expressly provided in such Policy, except insofar as the
provisions of this Agreement are made a part of such Policy by the collateral
assignment document executed by the Insured and filed with the Insurer in
connection with this Agreement.
11. THE COMPANY AS FIDUCIARY. The Company is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement. The Company will make all determinations
relating to the rights and benefits conferred by this Agreement, and its
decision regarding any claim by the Insured or his beneficiary for benefits
under this Agreement must be stated in writing and delivered or mailed to the
Insured or such beneficiary. Such decision shall set forth the specific reasons
for any such denial.
12. GOVERNING LAW. This Agreement shall be executed and delivered in
the State of Florida and shall be construed and enforced in accordance with the
laws of such State. In the event of any dispute hereunder, the parties hereby
agree that such dispute shall be resolved by and in any court of competent
jurisdiction geographically situate in Dade County, Florida, and both parties
hereby agree to submit to the personal jurisdiction of such court.
13. MODIFICATION. This Agreement may not be altered,
amended, or modified except in a writing executed by all parties
hereto.
14. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives, and assigns.
5
<PAGE>
15. NOTICES. Any notice or election required or permitted to be
given hereunder shall be in writing and shall be deemed to be given upon the
date it is personally delivered to Employee or to an officer of the corporation
other than LEONARD FLUXMAN or three business days after it is sent by registered
or certified mail, return receipt requested addressed to such addressee at the
address set forth in any employment agreement entered into between the parties
hereto and in effect or any other address notified by a party to the other party
in writing.
16. WAIVER. Any party's failure to insist on compliance
or enforcement of any provision of this Agreement shall neither
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or any other provision of this
Agreement.
17. COPIES. More than one (1) copy of this Agreement
may be executed and all parties agree and acknowledge that each
executed copy shall be a duplicate original.
18. SEVERABILITY. No part of this Agreement will be
affected if any other part of it is held invalid or unenforceable.
19. HEADINGS. Any headings preceding the text of the
several paragraphs hereof are inserted solely for the convenience
of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.
20. ENTIRE AGREEMENT. This Agreement contains the
entire understanding and agreement of the parties hereto and no
future understanding or amendment shall be binding unless reduced
to writing and signed by both parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
STEINER LEISURE LIMITED
By:/S/ CLIVE E. WARSHAW
-----------------------------------
Clive E. Warshaw, Chairman
of the Board and Chief
Executive Officer
/S/ LEONARD I. FLUXMAN
-----------------------------------
Leonard I. Fluxman
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AT AND FOR THE YEAR ENDED DECEMBER 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 13,625,000
<SECURITIES> 0
<RECEIVABLES> 3,413,000
<ALLOWANCES> 51,000
<INVENTORY> 5,232,000
<CURRENT-ASSETS> 23,080,000
<PP&E> 4,307,000
<DEPRECIATION> 2,096,000
<TOTAL-ASSETS> 26,656,000
<CURRENT-LIABILITIES> 10,485,000
<BONDS> 217,000
0
0
<COMMON> 72,000
<OTHER-SE> 16,008,000
<TOTAL-LIABILITY-AND-EQUITY> 26,656,000
<SALES> 26,458,000
<TOTAL-REVENUES> 69,580,000
<CGS> 18,699,000
<TOTAL-COSTS> 61,991,000
<OTHER-EXPENSES> 168,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 177,000
<INCOME-PRETAX> 7,421,000
<INCOME-TAX> 4,950,000
<INCOME-CONTINUING> 2,471,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,471,000
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
