SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant X
---
Filed by a Party other than the Registrant
---
Check the appropriate box:
___ Preliminary Proxy Statement ___Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
X Definitive Proxy Statement
- ---
Definitive Additional Materials
- ---
Soliciting Material Pursuant to 240.14-11(c) or 240.14a-12
- ---
dELiA*s Inc.
(Name of Registrant as Specified In Its Charter)
dELiA*s Inc.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
- ---
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0.11.
- ---
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0.11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
Fee paid previously with preliminary materials.
- ---
Check box if any part of the fee is offset as provided by Exchange Rule
- --- 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
dELiA*s Inc.
435 Hudson Street
New York, New York 10014
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of dELiA*s Inc. ("dELiA*s" or the
"Company") will be held at the offices of The Chase Manhattan Bank, 270 Park
Avenue, New York, New York, on Tuesday, July 14, 1998, at 1:30 p.m., local time,
for the following purposes:
1. To elect two Class II directors to hold office for a term of three
years;
2. To approve the dELiA*s Inc. 1996 Stock Incentive Plan, as amended and
restated as of June 11, 1998;
3. To ratify the appointment of Deloitte & Touche LLP as the independent
public accountants of the Company; and
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
The Board of Directors has fixed the close of business on Friday, May 29,
1998 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting and at any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE ENCLOSED
PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Alex S. Navarro
Secretary
June 12, 1998
<PAGE>
dELiA*s Inc.
435 Hudson Street
New York, New York 10014
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 14, 1998
The accompanying proxy is solicited by and on behalf of the Board of
Directors of dELiA*s Inc., a Delaware corporation ("dELiA*s" or the "Company"),
to be used at the Annual Meeting of Stockholders (the "Annual Meeting") to be
held at the offices of The Chase Manhattan Bank, 270 Park Avenue, New York, New
York, on Tuesday, July 14, 1998 at 1:30 p.m., local time, and at any
adjournments thereof.
When the accompanying proxy is properly executed and returned, the shares
of common stock, par value $ .01 per share (the "Common Stock"), of the Company
it represents will be voted at the meeting in accordance with the directions
noted thereon and, if no direction is indicated, the shares it represents will
be voted: (i) FOR the election of the two nominees for Class I Directors of the
Company listed herein; (ii) FOR the approval of the dELiA*s Inc. 1996 Stock
Incentive Plan (the "Incentive Plan"), as amended and restated as of June 11,
1998; (iii) FOR the ratification of the appointment of Deloitte & Touche LLP as
independent public accountants of the Company for the current fiscal year; and
(iv) in the discretion of the holders of the proxy with respect to any other
business that may properly come before the meeting and at any adjournments
thereof. Any stockholder signing and delivering a proxy may revoke it at any
time before it is voted by delivering to the Secretary of the Company a written
revocation or a duly executed proxy bearing a date later than the date of the
proxy being revoked. Any stockholder attending the Annual Meeting in person may
withdraw his proxy and vote his shares.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made primarily by mail; however, officers and regular
employees of the Company may solicit proxies personally or by telephone or by
telegram. Those persons will not be compensated specially for such services. The
Company may reimburse brokers, banks, custodians, nominees and fiduciaries
holding shares of Common Stock in their names or in the names of their nominees
for their reasonable charges and expenses in forwarding proxies and proxy
material to the beneficial owners of such shares.
A copy of the Notice of Annual Meeting of Stockholders accompanies this
Proxy Statement. This Proxy Statement will first be mailed to stockholders of
the Company on or about June 15, 1998.
VOTING RIGHTS
Only holders of record of shares of Common Stock at the close of business
on May 29, 1998 will be entitled to notice of and to vote at the Annual Meeting.
On that date, the Company had outstanding 13,321,164 shares of Common Stock, the
holders of which are entitled to one vote per share on each matter to come
before the Annual Meeting. Voting rights are non-cumulative.
The presence, in person or by proxy, of stockholders holding a majority of
the outstanding shares of Common Stock will constitute a quorum at the Annual
Meeting. Directors will be elected at the Annual Meeting by a plurality of the
votes cast (i.e., the three nominees receiving the greatest number of votes will
be elected as directors). The affirmative vote of the holders of a majority of
the shares of Common Stock
<PAGE>
present or represented at the Annual Meeting will be required to approve the
Incentive Plan and ratify the reappointment of Deloitte & Touche LLP.
Abstentions and broker non-votes (which occur when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner) are counted for purposes of
determining the presence or absence of a quorum at the meeting. Abstentions are
counted in tabulations of the votes cast on proposals presented to stockholders,
but broker non-votes are not counted for purposes of determining whether a
proposal has been approved.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
The following table sets forth information as of May 28, 1998 with respect
to the Common Stock beneficially owned by (i) each person known by the Company
to be the beneficial owner of more than five percent of the outstanding shares
of Common Stock, (ii) each director individually, (iii) each executive officer
individually and (iv) all executive officers and directors as a group.
<TABLE>
<CAPTION>
Shares
Beneficially Owned
------------------
Name and Address Number Percent
- ---------------- ------ -------
5% Stockholders
- ---------------
<S> <C> <C>
Stephen I. Kahn (1).............................. 6,860,360 51.2%
435 Hudson Street
New York, New York 10014
Geraldine Karetsky (2)........................... 1,078,098 8.1
1660 Silverking Drive
Aspen, Colorado 81611
Sidney S. Kahn (2)............................... 905,440 6.8
14 East 60th Street
New York, New York 10014
Wellington Management Company, LLP (4)........... 863,800 6.5
75 State Street
Boston, Massachusetts 02109
Other Executive Officers and Directors
- --------------------------------------
Christopher C. Edgar (4)......................... 616,363 4.6
Evan Guillemin (4)............................... 128,942 *
S. Roger Horchow (4)............................. 18,000 *
Joseph J. Pinto (4).............................. 18,000 *
Directors and executive officers as a group
(7 individuals).................................. 7,641,665 56.3
</TABLE>
- ---------------------
* Less than 1%.
(1) Includes (a) 2,999,825 shares of Common Stock directly owned by Mr. Kahn,
(b) 80,000 shares of Common Stock issuable upon exercise of an option and
(c) 3,780,535 shares of Common Stock as
2
<PAGE>
to which Mr. Kahn has the sole power to vote pursuant to a stockholders
agreement and agreements with certain employees who are holders of
restricted stock, including 3,256,345 shares of which Mr. Kahn has shared
power to restrict the disposition.
(2) Includes 57,356 shares of Common Stock owned by Mr. Kahn and Ms. Karetsky,
as trustees, of which shares Mr. Kahn and Ms. Karetsky have the shared
power of disposition.
(3) Based solely on a Schedule 13G dated January 13, 1998 filed by Wellington
Management Company, LLP ("Wellington") with the Securities and Exchange
Commission. According to such Schedule 13G, Wellington, in its capacity as
an investment adviser, has the shared power to dispose of 863,800 shares of
Common Stock, of which it has the shared power to vote 354,000 shares.
(4) Includes shares of Common Stock issuable upon exercise of options as
follows: Mr. Edgar--60,000 shares; Mr. Guillemin--100,000 shares; Mr.
Horchow--8,000 shares; and Mr. Pinto 8,000 shares.
Family Stockholders Agreement
Certain members of Stephen I. Kahn's family and trusts for the benefit of
such persons (the "Family Holders") and Stephen I. Kahn have entered into a
stockholders agreement with the Company (the "Family Stockholders Agreement")
which, subject to certain exceptions, prohibits the Family Holders from
transferring the shares of Common Stock they own until December 18, 1998.
Thereafter, the Family Holders will be able to transfer such shares in
accordance with the limitations imposed on "affiliates" under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). In addition, the
Family Stockholders Agreement gives Stephen I. Kahn the right to vote all the
shares of Common Stock owned by the Family Holders on all matters that come
before the stockholders of the Company. The Company believes the Family Holders,
collectively, owned 24.4% of the outstanding Common Stock as of May 28, 1998.
The Family Stockholders Agreement will expire on December 18, 2006.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors of the Company consists of three classes of
directors, with terms expiring in successive years. Two current Class II
directors, Sidney S. Kahn and Geraldine Karetsky, have been nominated for
reelection with terms to expire in 2001. The terms of the current Class I
directors (S. Roger Horchow and Joseph J. Pinto) expire in 2000 and the terms of
the current Class III directors (Stephen I. Kahn and Christopher C. Edgar)
expire in 1999.
In the absence of instructions to the contrary, the shares of Common Stock
represented by a proxy delivered to the Board of Directors will be voted FOR Mr.
Kahn and Ms. Karetsky. Each nominee has consented to being named as a nominee in
this Proxy Statement and to serve if elected. However, if either Mr. Kahn or Ms.
Karetsky should become unable to serve as a director for any reason, votes will
be cast instead for a substitute nominee designated by the Board of Directors
or, if none is so designated, will be cast according to the judgment of the
person or persons voting the proxy.
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the Annual Meeting will be required to elected
each director nominee.
3
<PAGE>
MANAGEMENT
Executive Officers and Directors
Executive officers and directors of the Company (including the current
directors who are nominees and the continuing directors) are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Stephen I. Kahn (1)(2)....... 33 Chairman of the Board, Chief Executive
Officer, President and Director
Christopher C. Edgar......... 32 Executive Vice President, Chief Operating
Officer and Director
Evan Guillemin............... 33 Chief Financial Officer
S. Roger Horchow (1)(3)...... 69 Director
Sidney S. Kahn (2)........... 61 Director
Geraldine Karetsky........... 57 Director
Joseph J. Pinto (1)(2)(3).... 65 Director
</TABLE>
- ---------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of 1996 Stock Incentive Plan Committee.
Stephen I. Kahn has served as President and Chief Executive Officer of
dELiA*s since co-founding the Company in 1993 and has served as Chairman of the
Board of Directors since October 1996. Prior to the Reorganization described
under "Certain Transactions," he served as a member of the board of managers of
dELiA*s LLC (a predecessor of the Company). Prior to that, he worked at
PaineWebber Group, Inc., an investment banking and brokerage firm, primarily in
the merchant banking group. He is a director of Happy Kids Inc., a
publicly-traded designer and marketer of custom-designed, licensed and branded
children's apparel, and Danier Leather Inc., a publicly-traded integrated
designer, manufacturer and retailer of high quality, high fashion leather and
suede clothing. Mr. Kahn holds a B.A. from Yale College, an M.A. from Oxford
University and an M.B.A. from Columbia Business School.
Christopher C. Edgar has served as Executive Vice President of dELiA*s and
as dELiA*s Chief Operating Officer since co-founding the Company in 1993 and
joined the Board of Directors of the Company in October 1996. Prior to the
Reorganization, he served as a member of the board of managers of dELiA*s LLC.
Mr. Edgar oversees catalog publishing, marketing, merchandising and inventory
management. From 1992 to 1993, Mr. Edgar was a Nicholson Fellow and student in
the doctoral program in comparative literature at Columbia University. Mr. Edgar
received a B.A. from Yale College and an M.A. from Columbia University.
4
<PAGE>
Evan Guillemin has served as Chief Financial Officer of dELiA*s since July
1996. Prior to joining the Company, he served briefly, first as an associate
with and later a director of acquisitions for, K-III Communications Corporation,
a media investment company. From 1992 to 1994, he was executive vice president
of The New York Observer Co., with responsibility for the sales, marketing and
finance for that company's regional newspaper group. Mr. Guillemin received a
B.A. from Yale College and an M.B.A. from Harvard Business School.
S. Roger Horchow joined the Board of Directors of the Company in October
1996. He was the founder and chairman of the Horchow Collection, a direct
marketer of specialty home and fashion products, from 1971 until 1990. Mr.
Horchow was vice president of mail order for Neiman Marcus Group, Inc. from 1969
to 1971. Mr. Horchow has been a director of Fieldcrest Cannon, Inc., a
manufacturer of home-furnishing textile products, since 1994. He is also a
director of Public Radio International, Smithsonian Institution and serves on
the Board of Governors of the Yale University Art Gallery. He has been chairman
of R. Horchow Productions, Inc., a theatrical production company, since 1990 and
served as a merchandise consultant to Sotheby's, an auctioneer of art and
collectibles, from September 1996 to March 1997. Mr. Horchow received a B.A.
from Yale College.
Sidney S. Kahn served as a member of the board of managers of dELiA*s LLC
since its founding and joined the Company's Board of Directors in October 1996.
He has been a private investor specializing in venture capital investments since
1987. He received a B.A. from Yale College and is a member of the Board of
Governors of the Yale University Art Gallery.
Geraldine Karetsky served as a member of the board of managers of dELiA*s
LLC since 1994 and joined the Company's Board of Directors in October 1996. She
is a private investor and venture capitalist. She received a B.A. from Smith
College.
Joseph J. Pinto joined the Board of Directors of the Company in November
1996. He is a private investor. Since 1981, Mr. Pinto has been a director and
officer of Sefinco Ltd. (and a predecessor), the U.S.-based private investment
affiliate of Entrecanales Y Tavora SA, a Spanish conglomerate with interests in
construction and merchant banking. Sefinco's investments have included
Loehmann's, Inc., a specialty retailer of women's fashion apparel, on whose
board Mr. Pinto served from 1988 to 1992. Mr. Pinto received a B.A. from Yale
College.
Sidney S. Kahn is Stephen I. Kahn's father. Ms. Karetsky is Stephen I.
Kahn's aunt and Sidney S. Kahn's sister. There are no other family relationships
among the directors and executive officers of the Company.
Key Employees
Charlene Benson has been Creative Director of dELiA*s since the fall of
1994. Prior to joining the Company, she was art director of Mademoiselle from
1991 to 1994. She has received awards from the Society of Publications for her
work in US magazine, GQ and The New York Times.
Karen Christensen has been a Senior Vice President and Controller of the
Company since January 1995. Prior to joining the Company, Ms. Christensen
practiced law with the firm of Certilman Balin Adler
5
<PAGE>
& Hyman in 1994. From 1993 to 1994, she was a director of international sales at
Masten Wright Incorporated, an international marketing firm.
Ilka Eberly has been Buying Manager of dELiA*s since July 1996. Prior to
joining the Company, Ms. Eberly was a divisional merchandise manager of Urban
Outfitters, where she worked from 1990 to 1996.
Lisa Higgins joined dELiA*s in 1994 as one of the original buyers and is
currently Senior Vice President of Merchandising of the Company. Prior to
joining the Company, Ms. Higgins worked in the retailing division of Esprit from
1990 until 1992. From 1992 to 1994, Ms. Higgins was an officer and director of a
non-profit institution in Colorado.
David Lerner has been Vice President of Marketing of dELiA*s since December
1996. Prior to joining the Company, Mr. Lerner was the director of marketing for
Brownstone Studio, a women's catalog company, and held marketing positions with
Hanover Direct, another catalog company, from 1993 to 1994.
Kate Mortell has been Director of Print Manufacturing of dELiA*s since
March 1997. Prior to joining the Company, Ms. Mortell worked for Lord & Taylor
from 1992 to 1997 as a production/quality control manager for its direct mail
and advertising programs.
Alex S. Navarro has been Senior Vice President-Development and Legal
Affairs, General Counsel and Secretary of dELiA*s since April 1997. Prior to
joining the Company, Mr. Navarro was associated with the law firm of Proskauer
Rose LLP from 1994 until 1997. From 1993 to 1994, Mr. Navarro was a law clerk to
the Hon. Robert J. Wilentz, Chief Justice of the Supreme Court of New Jersey.
Mary Obert has been Apparel Production Manager of dELiA*s since August
1996. Prior to joining the Company, she was a production designer at Planet
Claire from 1995 to 1996 and a production manager and assistant designer at
Living Doll from 1992 to 1995.
Martin Paulin has been Vice President of Distribution of dELiA*s since May
1997. From 1994 to 1996 he held a variety of warehousing and distribution
managerial positions with Hanover Direct.
Julie Scott has been Vice President of International Marketing of dELiA*s
since September 1996. Between 1990 and 1996, she worked in client acquisitions
at Abacus Direct Corp., a database marketing company, as well as in licensing
and sales in Japan at a variety of companies including Marvel Comics, Calvin
Klein, Hermes and Dentsu.
Kent Trowbridge has been Senior Vice President and Director of Operations
of dELiA*s since February 1995. From 1994 to 1995, Mr. Trowbridge was a market
strategist at Josephthal, Lyon and Ross. From 1993 to 1994, he was a research
analyst and money manager at Sherwood Securities.
Seth Walter has been Senior Vice President of Inventory Management of
dELiA*s since November 1995. Prior to joining the Company, Mr. Walter was an
inventory manager at Williams-Sonoma, where he worked from 1990 to 1995.
Meetings of the Board of Directors of the Company
During the fiscal year ended January 31, 1998 ("fiscal 1997"), the Board of
Directors held five
6
<PAGE>
meetings. Each member of the Board was present, and each member of the
Board who sits on a committee of the Board was present at each meeting of that
committee during such period.
Committees of the Board of Directors
Audit Committee. The Audit Committee, a majority of whose members are
directors who are neither members of the Company's management nor members of the
Kahn family, makes recommendations concerning the engagement of independent
public accountants, reviews with the independent public accountants the plans
and results of the audit engagement, approves professional services provided by
the independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls.
Compensation Committee. The Compensation Committee approves the salaries
and other benefits of the executive officers of the Company and administers
certain compensation plans of the Company. In addition, the Compensation
Committee is authorized to consult with the Company's management regarding
pension and other benefit plans and compensation policies and practices of the
Company.
1996 Stock Incentive Plan Committee. The 1996 Stock Incentive Plan
Committee (the "Stock Incentive Committee"), consisting solely of directors who,
to the extent legally required, qualify as "outside directors" under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and as
"non-employee directors" under Rule 16b-3(c) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), administers the Company's Incentive Plan.
Compensation of Directors
The Company pays its directors who are neither employees of the Company nor
members of the Kahn family $1,500 for each directors' meeting and each committee
meeting attended (plus reimbursement for out-of-pocket expenses). Under the
Incentive Plan, each non-employee director who is not a member of the Kahn
family was granted an option to purchase 40,000 shares of Common Stock at an
exercise price per share equal to the initial public offering price of the
Common Stock. All options granted to non-employee directors will become
exercisable at the rate of 20% on each of the first five anniversaries of the
date of grant, assuming the non-employee director is a director on those dates,
and all such options generally will cease to be exercisable 10 years from the
date of grant. Upon a Change of Control (as defined in the Incentive Plan) and,
in the case of directors elected prior to November 15, 1996 who are neither
members of the Company's management nor members of the Kahn family, upon a
termination of directorship other than for cause or as a result of a refusal to
stand for re-election, all options (which have not yet expired) will
automatically become exercisable. Directors who are employees of the Company or
members of the Kahn family are not compensated for services as directors.
Executive Compensation
The following table sets forth certain information concerning compensation
awarded to, earned by or paid during the past three years to those persons who
were, at January 31, 1998, the Company's Chief Executive Officer, and the
Company's two other executive officers of the Company whose total annual salary
and bonus for fiscal 1997 exceeded $100,000 (collectively, the "named executive
officers"). Except as disclosed below, the aggregate value of all perquisites
and other personal benefits, securities or property
7
<PAGE>
did not exceed 10% of the total of annual salary and bonus for each named
executive officer.
8
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------- ----------------------
Securities
Fiscal Restricted Underlying
Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Options (#)
- --------------------------- ---- ---------- --------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Stephen I. Kahn............................. 1997 $100,000 -- -- 80,000
Chairman of the Board, President and
Chief Executive Officer 1996 37,773 $35,000 -- --
1995 20,000 -- -- --
Christopher C. Edgar........................ 1997 103,846 -- -- 60,000
Executive Vice President, Chief Operating 1996 43,654 26,500 (1) --
Officer and Director 1995 20,000 -- -- --
Evan Guillemin (2).......................... 1997 103,846 -- -- --
Chief Financial Officer and Treasurer 1996 29,808 -- -- 250,000
- ---------------------------------------------
</TABLE>
(1) Mr. Edgar received a grant of a restricted interest in Delia's LLC, a
predecessor of the Company, on February 1, 1996. Prior to the Company's
initial public offering, this interest was converted into 60,705 shares of
the Common Stock.
(2) Mr. Guillemin's employment with the Company's predecessor, Delia's LLC,
commenced in July 1996.
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to
individual grants of stock options made during fiscal 1997 to each of the named
executive officers who received stock options grants in such year. The Company
did not make any SAR grants in fiscal 1997.
<TABLE>
<CAPTION>
Percent of
Total Potential Realizable Value
Number of Options at Assumed Annual Rates of
Securities Granted to Stock Price Appreciation
Underlying Employees Exercise of for Option Term(1)
Option in Fiscal Base Price Expiration ------------------
Name Granted (#) Year ($/Sh) Date 5% ($) 10% ($)
- ---- ----------- ---- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Stephen I. Kahn............. 80,000 (2) 22.1% $18.25 3/10/08 $918,186 $2,326,864
Christopher C. Edgar........ 60,000 (2) 16.6 18.25 3/10/08 688,640 1,745,148
- -----------------------------
</TABLE>
(1) Potential unrealized value is based on an assumption that the price per
share of the Common Stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the ten-year option term.
The numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company`s
estimate of future stock price growth.
(2) Represents options to purchase shares of Common Stock.
9
<PAGE>
Fiscal Year-End Option Values
The following table sets forth certain information concerning unexercised
options held by the named executive officers as of January 31, 1998. There were
no stock options exercised by any of the named executive officers during fiscal
1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at Fiscal
Name Options at Fiscal Year-End (#) Year-End ($)
- ---- ------------------------------ ------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen I. Kahn............. -- 80,000 -- $750,000
Christopher C. Edgar........ -- 60,000 -- 562,500
Evan Guillemin.............. 50,000 200,000 $831,250 3,325,000
</TABLE>
Employment Agreements
Messrs. Kahn and Edgar (the "Executives") have entered into three-year
agreements with the Company providing for their employment as Chairman of the
Board and President and as Chief Operating Officer and Executive Vice President,
respectively, at minimum salaries of $100,000 a year for each Executive, subject
to annual upward adjustment in proportion to the increase in the consumer price
index plus such increases in salary and such bonuses as the Board of Directors
may from time to time approve. If an Executive dies, or, as a result of
disability, is unable to perform substantially all his duties for a period of
nine consecutive months, the Company may terminate his employment (not earlier
than 30 days and not later than 90 days after the expiration of the nine-month
period), in which event the Executive (or his heirs or estate) will be entitled
to his salary for the remainder of the term of the agreement. Evan Guillemin has
entered into an employment agreement with the Company providing for the
continuation of his employment as Chief Financial Officer, at a salary of
$100,000 a year, on substantially the same terms and conditions as the
Executives, except that the term of Mr. Guillemin's agreement will expire on
July 31, 2001.
In addition, the Company has agreed to recommend to the Board of Directors
(or an appropriate committee thereof), that Messrs. Kahn and Edgar be granted in
March of 1999, 2000 and 2001 options to purchase 80,000 and 60,000 shares of
Common Stock, respectively, in each case at an exercise price equal to the fair
market value of the Common Stock on the date of grant.
Compensation Committee Report
The following Report of the Compensation Committee of the Board of
Directors of the Company, describing the compensation policies and rationale
applicable to the Company's executive officers. The information contained in
this report shall not be deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under the Securities Act or the
Exchange Act, except to the extent that the Company specifically incorporates it
by reference into such filing.
Executive Compensation Policy. The Company's executive compensation policy
is designed to attract, motivate and retain the executive talent required to
develop and achieve the Company's strategic and operating goals and to create a
mutuality of interest between executive officers and stockholders through
compensation structures that share the rewards and risks of strategic business
planning and implementation. This policy is manifested in an entrepreneurial
compensation model, heavily weighted
10
<PAGE>
towards incentive compensation. The Committee believes this approach is
appropriate and beneficial to the long-term interests of the Company's
stockholders, in light of the Company's operating needs, and the existing equity
participation of certain executive officers in the vitality of the Company.
Base Salaries. The Company has entered into substantially similar
employment agreements with Stephen I. Kahn, its Chief Executive Officer,
Christopher C. Edgar, its Chief Operating Officer, and Evan Guillemin, its Chief
Financial Officer that provide for an annual base salary of $100,000 (as
adjusted annually for cost of living increases). The Company believes these base
salaries are substantially below the base salaries offered to executive officers
of comparable public companies. The executives' employment agreements
contemplate periodic review by the Board of Directors. The Committee expects
that adjustments will be made in a manner consistent with the attainment of
individual goals and the Company's overall operating and financial performance.
At the request of the Company's executive officers, no adjustments were made to
the base salaries of such officers during fiscal 1997.
Bonuses. The employment agreements each provide for a discretionary bonus.
The Compensation Committee recommends the amount of the bonus to be awarded,
taking into account the operating results of the Company as well as such
subjective factors as the Committee deems appropriate and in the best interests
of the Company and its stockholders. At the request of the Company's executive
officers, no cash bonuses were awarded to any executive officer during fiscal
1997.
Incentive Compensation. The Company's policy is to provide its executive
officers with long-term incentive compensation primarily through grants of stock
options. Grants are recommended either by the entire Board of Directors or the
Compensation Committee and approved by the 1996 Stock Incentive Plan Committee
of the Board of Directors.
The Committee believes that stock options provide the Company's executive
officers with the opportunity to purchase and maintain an equity interest in the
Company and to share in the appreciation of the value of the stock. The
Committee believes that stock options directly motivate an executive to maximize
long-term stockholder value. The options also utilize vesting periods to
encourage key employees to continue in the employ of the Company. All options to
executive officers were granted at the fair market value of the Common Stock on
the date of grant.
In fiscal 1997, the Committee recommended that the Stock Incentive Plan
Committee of the Board of Directors grant to each of Messrs. Kahn and Edgar
options to purchase 80,000 and 60,000 shares of Common Stock, respectively, with
an exercise price equal to the fair market value of the Common Stock on the date
of grant. In addition, the Committee recommended that in each of March 1998,
March 1999, March 2000 and March 2001, Messrs. Kahn and Edgar be granted options
to purchase 80,000 and 60,000 shares of Common Stock, respectively.
Compensation of the Chief Executive Officer. As discussed under
"Management--Employment Agreements" and above, the Company entered into an
employment agreement with Stephen I. Kahn during fiscal 1996, prior to the
Company's initial public offering of Common Stock (the "IPO") and the formation
of the Compensation Committee. Pursuant to such agreement, Mr. Kahn's base
salary is $100,000, subject to adjustment by the Board of Directors and the
award of cash bonus recommended by the Board of Directors. As described above,
at Mr. Kahn's request, his salary was not adjusted and he was not awarded any
cash bonus during fiscal 1997. The relatively low compensation paid to Stephen
I. Kahn, the Chief Executive Officer of the Company during fiscal 1997, in
comparison to compensation paid to chief executive officers of comparable public
companies, results from such officer's request that he not receive
11
<PAGE>
higher compensation. Mr. Kahn and the Committee believe that, since Mr. Kahn is
the largest single stockholder of the Company, his interests and those of other
stockholders are aligned, and therefore, it is more advantageous to the
Company's stockholders for the Company to conserve cash to enhance the Company's
operating performance rather than to use cash to provide additional compensation
to its chief executive officer.
Notwithstanding the foregoing, the Committee intends to periodically review
and, if appropriate, adjust, Mr. Kahn's base salary and bonus awards in a manner
consistent with the attainment of individual goals and the Company's overall
operating and financial performance.
At Mr. Kahn's request, the only additional cash compensation awarded to him
in fiscal 1997 was in the form of the stock option grant described above. The
Committee reviewed data relating to the total compensation awarded to chief
executive officers of comparable public companies. Based upon its review of such
data. its comparison of Mr. Kahn's compensation to such data and its evaluation
of Mr. Kahn successful stewardship of the Company through a period of
substantial sales and earnings growth, as well as the IPO, the Committee
approved the stock option grant to Mr. Kahn described above and recommended the
grant of additional stock options in 1998, 1999, 2000 and 2001.
Notwithstanding Mr. Kahn's membership on the Committee, it is the intention
of the Committee that he did not, and will not, participate in the determination
of his own compensation.
The Compensation Committee
Sidney S. Kahn
Stephen I. Kahn
Joseph J. Pinto
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Sidney S. Kahn, Stephen I.
Kahn and Joseph J. Pinto. Stephen I. Kahn is the Chief Executive Officer and
President of the Company. Sidney S. Kahn is Stephen I. Kahn's father. The Stock
Incentive Committee currently consists of S. Roger Horchow and Joseph J. Pinto.
Other than the foregoing, there were no compensation committee interlocks or
insider participation during fiscal 1997.
PROPOSAL 2: APPROVAL OF THE COMPANY'S 1996 STOCK INCENTIVE PLAN, AS
AMENDED AND RESTATED AS OF JUNE 11, 1998
On December 18, 1996, immediately prior to the IPO, the Company's Board of
Directors and stockholders approved the Company's Incentive Plan, which provides
for the following types of awards to employees of the Company and its
subsidiaries: (i) stock options, including incentive stock options and
non-qualified stock options; (ii) stock appreciation rights, in tandem with
stock options or freestanding; and (iii) restricted stock. Awards may be granted
singly, in combination or in tandem, as determined by a committee of the
Company's Board of Directors that administers the plan. In addition, the
Incentive Plan provides for the nondiscretionary grant of stock options to
certain non-employee directors of the Company. See "Management--Compensation of
Directors."
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<PAGE>
The Company's Board of Directors recently determined that it was in the
best interests of the Company to amend the Incentive Plan. Effective June 11,
1998 the Board of Directors ratified and approved an Amended and Restated
version of the Incentive Plan (the Incentive Plan as so amended is hereafter
referred to as the "Amended and Restated Incentive Plan") to be effective upon
shareholder approval thereof, and now submits such Amended and Restated
Incentive Plan to the stockholders for their approval.
The amendments to the Incentive Plan provide (i) that the aggregate number
of shares of Common Stock which may be issued or used for reference purposes
under the Incentive Plan or with respect to which other awards may be granted
thereunder be increased from 1,250,000 to 2,500,000; (ii) that the maximum
number of shares of Common Stock subject to any stock option or stock
appreciation right which may be granted under the Incentive Plan to each
participant during each fiscal year of the Company be increased from 100,000 to
200,000; and (iii) that consultants and advisers to the Company be eligible for
the grant of non-qualified stock options and restricted stock under the
Incentive Plan.
The Board of Directors recommends the approval by the stockholders of the
Amended and Restated Incentive Plan. In the absence of instructions to the
contrary, the shares of Common Stock represented by a proxy delivered to the
Board of Directors will be voted FOR the approval of the Amended and Restated
Incentive Plan.
Summary of the Amended and Restated Incentive Plan
The following description of the Amended and Restated Incentive Plan,
which, except as expressly stated, gives effect to the proposed amendments, is a
summary and is qualified in its entirely by reference to the text of the Amended
and Restated Incentive Plan, which is attached hereto as Exhibit A. The proposed
amendments are shown in italics in Exhibit A.
Purpose. The purpose of the Amended and Restated Incentive Plan is to
enhance the profitability and value of the Company for the benefit of its
stockholders by enabling the Company (i) to offer employees and consultants of
the Company and its Subsidiaries stock based incentives and other equity
interests in the Company, thereby creating a means to raise the level of stock
ownership by employees and consultants in order to attract, retain and reward
such individuals and strengthen the mutuality of interests between such
individuals and the Company's stockholders and (ii) to make equity based awards
to non-employee directors thereby attracting, retaining and rewarding such
non-employee directors and strengthening the mutuality of interests between
non-employee directors and the Company's stockholders.
Administration. The Amended and Restated Incentive Plan is administered by
the Stock Incentive Committee of the Board of Directors of the Company which is
intended to be comprised solely of two or more directors qualifying as "outside
directors" under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code") and "non-employee directors" as defined in Rule 16b-3 of the
Exchange Act. The Stock Incentive Committee has full authority and discretion,
subject to the terms of the Amended and Restated Incentive Plan, to determine
those employees and consultants of the Company or its Subsidiaries eligible to
receive awards and the amount and type of awards. Terms and conditions of awards
will be set forth in written grant agreements, the terms of which will be
consistent with the terms of the Amended and Restated Incentive Plan. Awards
under the Amended and Restated Incentive Plan may not be made on or after the
tenth anniversary of the date of its adoption, but awards granted prior to such
date may extend beyond that date.
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<PAGE>
Available Shares and Other Units. A maximum of 2,500,000 shares of Common
Stock may be issued or used for reference purposes pursuant to the Amended and
Restated Incentive Plan. The maximum number of shares of Common Stock subject to
each of stock options or stock appreciation rights that may be granted to any
individual under the Amended and Restated Incentive Plan is 200,000 for each
fiscal year of the Company during the term of the Amended and Restated Incentive
Plan. If a stock appreciation right is granted in tandem with a stock option, it
shall apply against the individual limits for both stock options and stock
appreciation rights, but only once against the maximum number of shares
available under the Amended and Restated Incentive Plan.
In general, upon the termination, cancellation or expiration of an award,
the unissued shares of Common Stock subject to such awards will again be
available for awards under the Amended and Restated Incentive Plan, but will
still count against the individual specified limits for the applicable fiscal
year.
The Stock Incentive Committee may make appropriate adjustments to the
number and kind of shares available for awards and the terms of outstanding
awards under the Amended and Restated Incentive Plan to reflect any change in
the Company's capital stock, split-up, stock dividend, special distribution to
stockholders, combination or reclassification with respect to any outstanding
series or class of stock or consolidation, merger or sale of all or
substantially all of the assets of the Company, or any similar change affecting
the Company's capital structure or business.
Types of Awards. The Amended and Restated Incentive Plan provides for the
grant of any or all of the following types of awards to eligible employees, and
in certain cases, consultants, of the Company and its subsidiaries: (i) stock
options, including incentive stock options and non-qualified stock options; (ii)
stock appreciation rights, in tandem with stock options or freestanding), and
(iii) restricted stock. In addition, the Amended and Restated Incentive Plan
provides for the one-time non-discretionary award of stock options to
non-employee directors of the Company. Each of these types of awards is
discussed in more detail below. Awards may be granted singly, in combination, or
in tandem, as determined by the Stock Incentive Committee.
Stock Options. Under the Amended and Restated Incentive Plan, the Stock
Incentive Committee may grant awards in the form of options to purchase shares
of the Company's Common Stock. Options may be in the form of incentive stock
options or non-qualified stock options; provided that consultants are not
eligible to receive incentive stock options. The Stock Incentive Committee will,
with regard to each stock option, determine the number of shares subject to the
option, the term of the option (which shall not exceed 10 years, provided,
however, that the term of an incentive stock option granted to a ten percent
stockholder of the Company shall not exceed five years), the exercise price per
share of stock subject to the option, the vesting schedule (if any), and the
other material terms of the option. No option may have an exercise price less
than the fair market value of the Common Stock at the time of grant (or, in the
case of an incentive stock option granted to a ten percent stockholder of the
Company, 110% of Fair Market Value), except that, in the case of certain
modifications of the stock options that are deemed to be new issuances under the
Code, the exercise price may continue to be the original exercise price.
The option price may, to the extent determined by the Stock Incentive
Committee at or after the time of grant, be paid by a participant in cash, in
shares of Common Stock owned by the participant (free and clear of any liens and
encumbrances), in shares of restricted stock valued at the fair market value on
the payment date as determined by the Stock Incentive Committee (without regard
to any forfeiture restrictions applicable to restricted stock), by a reduction
in the number of shares of Common Stock
14
<PAGE>
issuable upon exercise of the option or by such other method as is approved by
the Stock Incentive Committee. No options may be granted after December 18,
2006.
As of June 10, 1998, options to purchase 1,178,437 shares of Common Stock
have been granted under the Incentive Plan to a total of 128 employees at
exercise prices ranging from $11.00 to $27.75. Of the options granted, 4,500
have been canceled. These option grants leave a total of 67,063 available for
future grants under the Incentive Plan without giving effect to the amendments
proposed herein. Information regarding grants made under the Amended and
Restated Incentive Plan to each of the Company's named executive officers for
the fiscal year ended on January 31, 1998 is provided in the table of this Proxy
Statement entitled "Option Grants in Last Fiscal Year." As of June 10, 1998, the
market value per share of the Common Stock was $21.00.
Restricted Stock. The Amended and Restated Incentive Plan authorizes the
Stock Incentive Committee to award shares of restricted stock to employees and
consultants of the Company and its subsidiaries. Upon the award of restricted
stock, the recipient has all rights of a stockholder with respect to the shares,
including the right to receive dividends currently, unless so specified by the
Stock Incentive Committee at the time of grant, subject to the conditions and
restrictions generally applicable to restricted stock or specifically set forth
in the recipient's restricted stock award agreement. Unless otherwise determined
by the Stock Incentive Committee at grant, payment of dividends, if any, shall
be deferred until the date that the relevant share of restricted stock vests.
Recipients of restricted stock are required to enter into a restricted
stock award agreement with the Company which states the restrictions to which
the shares are subject and the date or dates or criteria on which such
restrictions will lapse. Within the limits of the Amended and Restated Incentive
Plan, the Stock Incentive Committee may, based on service or other criteria
determined by the Stock Incentive Committee, provide for the lapse of such
restrictions in installments in whole or in part or may accelerate or waive such
restrictions.
As of June 10, 1998, no shares of restricted stock had been granted under
the Amended and Restated Incentive Plan.
Stock Appreciation Rights ("SARs"). The Amended and Restated Incentive Plan
authorizes the Stock Incentive Committee to grant SARs either with a stock
option ("Tandem SARs") or independent of a stock option ("Non-Tandem SARs") to
employees and consultants of the Company. A SAR is a right to receive a payment
either in cash or Common Stock as the Stock Incentive Committee may determine,
equal in value to the excess of the Fair Market Value of a share of Common Stock
on the date of exercise over the reference price per share of Common Stock
established in connection with the grant of the SAR. The reference price per
share covered by an SAR will be the per share exercise price of the related
option in the case of a Tandem SAR and will be the per share Fair Market Value
of the Common Stock on the date of grant in the case of a Non-Tandem SAR subject
to the same exception that applies to stock options.
A Tandem SAR may be granted at the time of the grant of the related stock
option or, if the related stock option is a non-qualified stock option, at any
time thereafter during the term of the stock option. A Tandem SAR generally may
be exercised at and only at the times and to the extent the related stock option
is exercisable. A Tandem SAR is exercised by surrendering the same portion of
the related option. A Tandem SAR expires upon the termination of the related
stock option. Consultants shall not be eligible for a grant of Tandem SARs
granted in connection with all or part of an incentive stock option.
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<PAGE>
A Non-Tandem SAR will be exercisable as provided by the Stock Incentive
Committee and will have such other terms and conditions as the Stock Incentive
Committee may determine. A Non-Tandem SAR may have a term no longer than ten
years from its date of grant. A Non-Tandem SAR is subject to acceleration of
vesting or immediate termination upon termination of employment in certain
circumstances.
The Stock Incentive Committee is also authorized to grant "limited SARs,"
either as Tandem SARs or Non-Tandem SARs. Limited SARs would become exercisable
only upon the occurrence of a Change in Control (as defined in the Amended and
Restated Incentive Plan) or such other event as the Stock Incentive Committee
may designate at the time of grant or thereafter.
As of April 30, 1998, no SARs had been granted under the Amended and
Restated Incentive Plan.
Awards to Non-Employee Directors. Under the Incentive Plan, each
non-employee director who is not a member of the Kahn family is granted an
option to purchase 40,000 shares of Common Stock at an exercise price per share
equal to, in the case of directors elected prior to the IPO, the initial public
offering price per share of Common Stock, and in the case of directors elected
subsequent to the IPO, at the fair market value of the Common Stock at the time
of grant. All options granted to non-employee directors will become exercisable
at the rate of 20% on each of the first five anniversaries of the date of grant,
assuming the non-employee director is a director on those dates, and all such
options generally will cease to be exercisable ten years from the date of grant.
Change in Control. Subject to the next sentence, unless determined
otherwise by the Stock Incentive Committee at the time of grant, upon a Change
in Control (as defined in the Amended and Restated Incentive Plan), all vesting
and forfeiture conditions, restrictions and limitations in effect with respect
to any outstanding award made under the Amended and Restated Incentive Plan will
immediately lapse and any unvested awards will automatically become 100% vested.
However, unless otherwise determined by the Stock Incentive Committee at the
time of grant, no acceleration of exercisability shall occur with regard to
stock options that the Stock Incentive Committee reasonably determines in good
faith prior to a Change in Control will be honored or assumed or new rights
substituted therefor by a participant's employer immediately following the
Change in Control. The Stock Incentive Committee may also, at its sole
discretion. provide for accelerated vesting of an award (other than a grant to
non-employee directors) upon a termination of employment during the 180-day
period prior to a Change in Control.
Certain Federal Income Tax Consequences. The rules concerning the Federal
income tax consequences with respect to stock options granted pursuant to the
Amended and Restated Incentive Plan are highly technical. In addition, the
applicable statutory provisions are subject to change and their application may
vary in individual circumstances. Therefore, the following is designed to
provide a general understanding of the Federal income tax consequences; it does
not set forth any state or local income tax or estate tax consequences that may
be applicable. The following summary is included herein for general information
only and does not purport to address all of the tax considerations that may be
relevant. Each recipient of a grant is urged to consult his or her own tax
advisor as to the specific tax consequences to such grantee of the grant.
Incentive Stock Options. Options granted under the Amended and Restated
Incentive Plan may be incentive stock options as defined in the Code, provided
that such options satisfy the requirements under the Code therefor. In general,
neither the grant nor the exercise of an incentive stock option will result in
taxable income to the optionee or a deduction to the Company. The sale of Common
Stock received pursuant to the exercise of an option which satisfied all the
requirements of an incentive stock option, as
16
<PAGE>
well as the holding period requirement described below, will result in a
long-term capital gain or loss to the optionee equal to the difference between
the amount realized on the sale and the option price and will not result in a
tax deduction to the Company. To receive incentive stock option treatment, the
optionee must not dispose of the Common Stock purchased pursuant to the exercise
of an option either (i) within two years after the option is granted or (ii)
within one year after the date of exercise.
If all requirements for incentive stock option treatment other than the
holding period rules are satisfied, the recognition of income by the optionee is
deferred until disposition of the Common Stock, but, in general, any gain (in an
amount equal to the lesser of (i) the fair market value of the Common Stock on
the date of exercise (or, with respect to officers and directors, the date that
sale of such stock would not create liability ("Section 16(b) liability") under
the Exchange Act) minus the option price or (ii) the amount realized on the
disposition minus the option price) is treated as ordinary income. Any remaining
gain is treated as long-term or short-term capital gain depending on the
optionee's holding period for the stock disposed of. Subject to the limitations
under Sections 162(m) and 280G of the Code (as described below), the Company
generally will be entitled to a deduction for federal income tax purposes at
that time equal to the amount of ordinary income realized by the optionee.
The Amended and Restated Incentive Plan provides that, with the consent of
the Stock Incentive Committee, an optionee may pay for Common Stock received
upon the exercise of an option (including an incentive stock option) with other
shares of Common Stock. In general, an optionee's transfer of stock acquired
pursuant to the exercise of an incentive stock option, to acquire other stock in
connection with the exercise of an incentive stock option may result in ordinary
income if the transferred stock has not met the minimum statutory holding period
necessary for favorable tax treatment as an incentive stock option. For example,
if an optionee exercises an incentive stock option and uses the stock so
acquired to exercise another incentive stock option within the two-year or
one-year holding periods discussed above, the optionee may realize ordinary
income under the rules summarized above.
Non-Qualified Stock Options. An optionee will realize no taxable income at
the time he or she is granted a non-qualified stock option. Such conclusion is
predicated on the assumption that, under existing Treasury Department
regulations, a non-qualified stock option, at the time of its grant, has no
readily ascertainable fair market value. Ordinary income will be realized when a
non-qualified stock option is exercised. The amount of such income will be equal
to the excess of the fair market value on the exercise date of the shares of
Common Stock issued to an optionee over the option price. The optionee's holding
period with respect to the shares acquired will begin on the date of exercise.
The tax basis of the stock acquired upon the exercise of any option will be
equal to the sum of (i) the exercise price of such option and (ii) the amount
included in income with respect to such option. Any gain or loss on a subsequent
sale of the stock will be either a long-term or short-term capital gain or loss,
depending on the optionee's holding period for the stock disposed of. Subject to
the limitation under Sections 162(m) and 280G of the Code (as described below),
the Company generally will be entitled to a deduction for Federal income tax
purposes at the same time and in the same amount as the optionee is considered
to have realized ordinary income in connection with the exercise of the option.
Certain Other Tax Issues. In addition, (i) officers and directors of the
Company subject to Section 16(b) liability may be subject to special rules
regarding the income tax consequences concerning their options, (ii) any
entitlement to a tax deduction on the part of the Company is subject to the
applicable Federal tax rules (including, without limitation, Code Section 162(m)
regarding the $1,000,000 limitation on deductible compensation), (iii) in the
event that the exercisability or vesting of any option or award is
17
<PAGE>
accelerated because of a change in control, payments relating to the options or
awards (or a portion thereof), either alone or together with certain other
payments, may constitute parachute payments under Section 280G of the Code,
which excess amounts may be subject to excise taxes and may be nondeductible by
the Company, and (iv) the exercise of an incentive stock option may have
implications in the computation of alternative minimum taxable income.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for Federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and the four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Options will generally qualify under one of these exceptions
if they are granted under a plan that states the maximum number of shares with
respect to which options may be granted to any employee during a specified
period and the plan under which the options are granted is approved by
stockholders and is administered by a compensation committee comprised of
outside directors. The Amended and Restated Incentive Plan is intended to
satisfy these requirements with respect to stock options granted thereunder.
PERFORMANCE GRAPH
The following graph and related disclosure information shall not be deemed
to be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or the Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
The following performance graph compares the cumulative total return of the
Common Stock, the Nasdaq Stock Market Index and The Nasdaq Stock Market Retail
Trade Index. Each case assumes a $100 investment on December 19, 1996 (the first
day of public trading of the Company's Common Stock) and reinvestment of any
dividends.
18
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<TABLE>
<CAPTION>
[STOCK PRICE PERFORMANCE GRAPH]
Cumulative Total Return
December 19, 1996 January 31, 1997 January 31, 1998
----------------- ---------------- ----------------
<S> <C> <C> <C>
dELiA*s Inc. Common Stock............................. $100 $168.18 $251.14
The Nasdaq Stock Market Index--U.S.................... 100 106.54 125.88
The Nasdaq Stock Market Retail Trade Index............ 100 100.82 117.61
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely on a review of the reports and representations furnished to
the Company during the last fiscal year, the Company believes that each of the
persons required to file reports under Section 16(a) of the Exchange Act filed
all such required reports on a timely basis during such period.
PROPOSAL 3: RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has reappointed Deloitte & Touche LLP as the
Company's independent accountants for the fiscal year ending January 31, 1999
and recommends the ratification by the stockholders of that reappointment. In
the absence of instructions to the contrary, the shares of Common Stock
represented by a proxy delivered to the Board of Directors will be voted FOR the
ratification of the appointment of Deloitte & Touche LLP.
19
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A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting and will be available to respond to appropriate questions and
make such statements as he or she may desire.
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the meeting will be required to ratify the
reappointment of Deloitte & Touche LLP as independent accountants of the
Company.
Changes in Accountants.
On August 30, 1996, dELiA*s LLC, a predecessor of the Company, engaged
Deloitte & Touche LLP as its independent public accountant to audit its
financial statements. The decision to change accountants was approved by the
managers of dELiA*s LLC. Richard A. Eisner & Company, LLP's report on the
financial statements for fiscal 1995 of the Company did not contain an adverse
opinion or a disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope or accounting principles. During the two most recent
fiscal years preceding the engagement of Deloitte & Touche LLP, there were no
disagreements with Richard A. Eisner & Company, LLP on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure which, if not resolved to the satisfaction of Richard A. Eisner &
Company, LLP, would have caused it to make a reference to the subject matter of
the disagreement in connection with its report. During the two most recent
fiscal years prior to engaging Deloitte & Touche LLP, neither the Company nor
its predecessors consulted with Deloitte & Touche LLP regarding the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on such entities'
financial statements.
STOCKHOLDERS PROPOSALS
Stockholders of the Company wishing to include proposals in the proxy
material in relation to the annual meeting of the Company to be held in 1999
must submit the same in writing so as to be received at the executive office of
the Company on or before February 15, 1999. Such proposals must also meet the
other requirements of the rules of the Securities and Exchange Commission
relating to stockholders' proposals.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended January 31, 1998 is
being mailed together with this Proxy Statement to the Company's stockholders of
record at the close of business on May 18, 1998.
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OTHER BUSINESS
The Company's Board of Directors does not know of any other matters to come
before the meeting. However, if any other matters properly come before the
meeting or any adjournments thereof, it is intended that the persons named in
the accompanying proxy will vote thereon according to their judgment on such
matters.
By Order of the Board of Directors,
/s/ Alex S. Navarro
Secretary
June 12, 1998
STOCKHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION WILL
BE APPRECIATED.
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EXHIBIT A
dELiA*s Inc.
AMENDED AND RESTATED
1996 STOCK INCENTIVE PLAN
(PROPOSED AMENDMENTS ARE SHOWN IN ITALICS)
A-1
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURPOSE..........................................................1
ARTICLE II DEFINITIONS......................................................1
ARTICLE III ADMINISTRATION...................................................3
ARTICLE IV SHARE AND OTHER LIMITATIONS......................................5
ARTICLE V ELIGIBILITY......................................................7
ARTICLE VI EMPLOYEE STOCK OPTION GRANTS.....................................7
ARTICLE VII RESTRICTED STOCK AWARDS.........................................10
ARTICLE VIII STOCK APPRECIATION RIGHTS.......................................11
ARTICLE IX NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS.......................14
ARTICLE X NON-TRANSFERABILITY.............................................16
ARTICLE XI CHANGE IN CONTROL PROVISIONS....................................16
ARTICLE XII TERMINATION OR AMENDMENT OF THE PLAN............................18
ARTICLE XIII UNFUNDED PLAN...................................................18
ARTICLE XIV GENERAL PROVISIONS..............................................18
ARTICLE XV TERM OF PLAN....................................................20
ARTICLE XVI NAME OF PLAN....................................................20
A-2
<PAGE>
dELiA*s Inc.
AMENDED AND RESTATED
1996 STOCK INCENTIVE PLAN
ARTICLE I.
PURPOSE
The purpose of this dELiA*s Inc. 1996 Stock Incentive Plan, (the "Plan"),
is to enhance the profitability and value of dELiA*s Inc. (the "Company") for
the benefit of its stockholders by enabling the Company (i) to offer employees
AND CONSULTANTS of the Company and its Subsidiaries stock based incentives and
other equity interests in the Company, thereby creating a means to raise the
level of stock ownership by employees AND CONSULTANTS in order to attract,
retain and reward such individuals and strengthen the mutuality of interests
between SUCH INDIVIDUALS and the Company's stockholders and (ii) to make equity
based awards to non-employee directors thereby attracting, retaining and
rewarding such non-employee directors and strengthening the mutuality of
interests between non-employee directors and the Company's stockholders.
ARTICLE II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1. "Award" shall mean any award under this Plan of any Stock Option,
Stock Appreciation Right or Restricted Stock. All Awards shall be confirmed by,
and subject to the terms of, a written agreement executed by the Company and the
Participant.
2.2. "Board" shall mean the Board of Directors of the Company.
2.3. "Cause" shall mean, with respect to a Participant's Termination of
Employment OR TERMINATION OF CONSULTANCY, unless otherwise determined by the
Committee at grant, or, if no rights of the Participant are reduced, thereafter,
termination due to a Participant's dishonesty, fraud, insubordination, willful
misconduct, refusal to perform services (for any reason other than illness or
incapacity) or materially unsatisfactory performance of his or her duties for
the Company as determined by the Committee in its sole discretion. With respect
to a Participant's Termination of Directorship, Cause shall mean an act or
failure to act that constitutes "cause" for removal of a director under
applicable Delaware law.
2.4. "Change in Control" shall have the meaning set forth in Article XI.
2.5. "Code" shall mean the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision.
2.6. "Committee" shall mean a committee of the Board appointed from time to
time by the Board. Solely to the extent required under Rule 16b-3 and Section
162(m) of the Code, such committee shall consist of two or more non-employee
directors, each of whom shall be a non-employee director as defined in Rule
16b-3 and an outside director as defined under Section 162(m) of the Code. To
the extent that no Committee exists which has the authority to administer the
Plan, the functions of the Committee shall be exercised by the Board. If for any
reason the appointed Committee does not meet the requirements of Rule 16b-3 or
Section 162(m) of the Code, such noncompliance with the requirements of Rule
16b-3 or Section 162(m) of the Code shall not affect the validity of the awards,
grants, interpretations or other actions of the Committee.
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2.7. "Common Stock" means the Common Stock, $.01 par value per share, of
the Company.
2.8. "Disability" shall mean total and permanent disability, as defined in
Section 22(e)(3) of the Code.
2.9. "Effective Date" shall mean December 18, 1996.
2.10. "Eligible Employees" shall mean the employees of the Company and its
Subsidiaries who are eligible pursuant to Section 5.1 to be granted Awards under
this Plan.
2.11. "Exchange Act" shall mean the Securities Exchange Act of 1934.
2.12. "Fair Market Value" for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, shall mean, as of any date, the last sales price reported for the
Common Stock on the applicable date (i) as reported by the principal national
securities exchange in the United States on which it is then traded, or (ii) if
not traded on any such national securities exchange, as quoted on an automated
quotation system sponsored by the National Association of Securities Dealers. If
the Common Stock is not readily tradable on a national securities exchange or
any system sponsored by the National Association of Securities Dealers, its Fair
Market Value shall be set in good faith by the Committee on the advice of a
registered investment adviser (as defined under the Investment Advisers Act of
1940). For purposes of the grant of any Award, the applicable date shall be the
date for which the last sales price is available at the time of grant. For
purposes of the exercise of any Stock Appreciation Right, the applicable date
shall be the date a notice of exercise is received by the Committee or if not a
day on which the applicable market is open, the next day that it is open.
2.13. "Good Reason" shall mean, with respect to a Participant's Termination
of Employment OR TERMINATION OF CONSULTANCY unless otherwise determined by the
Committee at grant, or, if no rights of the Participant are reduced, thereafter,
a voluntary termination due to "good reason," as the Committee, in its sole
discretion, decides to treat as a Good Reason termination.
2.14. "Incentive Stock Option" shall mean any Stock Option awarded under
this Plan intended to be and designated as an "Incentive Stock Option" within
the meaning of Section 422 of the Code.
2.15. "Non-Qualified Stock Option" shall mean any Stock Option awarded
under this Plan that is not an Incentive Stock Option.
2.16. "Participant" shall mean the following persons to whom an Award has
been made pursuant to this Plan: Eligible Employees AND CONSULTANTS of the
Company and its Subsidiaries and non-employee directors of the Company;
provided, however, that non-employee directors shall be Participants for
purposes of the Plan solely with respect to awards of Stock Options pursuant to
Article IX.
2.17. "Restricted Stock" shall mean an award of shares of Common Stock
under the Plan that is subject to restrictions under Article VII.
2.18. "Restriction Period" shall have the meaning set forth in Subsection
7.3(a) with respect to Restricted Stock for Eligible Employees.
2.19. "Retirement" with respect to a Participant's Termination of
Employment shall mean a Termination of Employment OR TERMINATION OF CONSULTANCY
without Cause from the Company by a Participant who has attained (i) at least
age sixty-five (65); or (ii) such earlier date after age fifty-five (55) as
approved by the Committee with regard to such Participant. With respect to a
Participant's Termination of Directorship, Retirement shall mean the failure to
stand for reelection or the failure to be reelected after a Participant has
attained age sixty-five (65).
2.20. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provisions.
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2.21. "Section 162(m) of the Code" shall mean the exception for
performance-based compensation under Section 162(m) of the Code and any Treasury
regulations thereunder.
2.22. "Stock Appreciation Right" shall mean the right pursuant to an Award
granted under Article IX. A Tandem Stock Appreciation Right shall mean the right
to surrender to the Company all (or a portion) of a Stock Option in exchange for
an amount in cash or stock equal to the excess of (i) the Fair Market Value, on
the date such Stock Option (or such portion thereof) is surrendered, of the
Common Stock covered by such Stock Option (or such portion thereof), over (ii)
the aggregate exercise price of such Stock Option (or such portion thereof). A
Non-Tandem Stock Appreciation Right shall mean the right to receive an amount in
cash or stock equal to the excess of (x) the Fair Market Value of a share of
Common Stock on of the date such right is exercised, over (y) the aggregate
exercise price of such right, otherwise than on surrender of a Stock Option.
2.23. "Stock Option" or "Option" shall mean any Option to purchase shares
of Common Stock granted to Eligible Employees or Consultants pursuant to Article
VI.
2.24. "Subsidiary" shall mean any corporation that is defined as a
subsidiary corporation in Section 424(f) of the Code.
2.25. "Ten Percent Stockholder" shall mean a person owning Common Stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company as defined in Section 422 of the
Code.
2.26. "Termination of Directorship" shall mean, with respect to a
non-employee director, that the non-employee director has ceased to be a
director of the Company.
2.27. "Termination of Employment" shall mean (i) a termination of service
(for reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and its Subsidiaries; or (ii) when an
entity which is employing a Participant ceases to be a Subsidiary, unless the
Participant thereupon becomes employed by the Company or another Subsidiary.
2.28. "Transfer" or "Transferred" shall mean anticipate, alienate, attach,
sell, assign, pledge, encumber, charge or otherwise transfer.
2.29. "Withholding Election" shall have the meaning set forth in Section
14.4.
2.30. "CONSULTANT" SHALL MEAN ANY ADVISER OR CONSULTANT TO THE COMPANY AND
ITS SUBSIDIARIES WHO IS ELIGIBLE PURSUANT TO SECTION 5.1 TO BE GRANTED AWARDS
UNDER THIS PLAN.
2.31. "TERMINATION OF CONSULTANCY" SHALL MEAN, WITH RESPECT TO A
CONSULTANT, THAT THE CONSULTANT IS NO LONGER ACTING AS A CONSULTANT TO THE
COMPANY AND ITS SUBSIDIARIES. IN THE EVENT AN ENTITY SHALL CEASE TO BE A
SUBSIDIARY, THERE SHALL BE DEEMED A TERMINATION OF CONSULTANCY OF ANY INDIVIDUAL
WHO IS NOT OTHERWISE A CONSULTANT OF THE COMPANY OR ANOTHER SUBSIDIARY AT THE
TIME THE ENTITY CEASES TO BE A SUBSIDIARY.
ARTICLE III.
ADMINISTRATION
3.1. The Committee. The Plan shall be administered and interpreted by the
Committee.
3.2. Awards. The Committee shall have full authority to grant, pursuant to
the terms of this Plan, (i) Stock Options, (ii) Stock Appreciation Rights, both
Tandem and Non-Tandem and (iii) Restricted Stock to Eligible Employees or
Consultants. Stock Options shall be granted to non-employee directors of the
Company pursuant to Article IX. In particular, the Committee shall have the
authority:
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(a) to select the Eligible Employees AND CONSULTANTS to whom Stock
Options, Stock Appreciation Rights and Restricted Stock may from time to time be
granted hereunder;
(b) to determine whether and to what extent Stock Options, Stock
Appreciation Rights and Restricted Stock or any combination thereof, are to be
granted hereunder to one or more Eligible Employees OR CONSULTANTS;
(c) to determine, in accordance with the terms of this Plan, the
number of shares of Common Stock to be covered by each Award to an Eligible
Employee OR CONSULTANT granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Award granted hereunder to an Eligible Employee or
Consultant (including, but not limited to, the share price, any restriction or
limitation, any vesting schedule or acceleration thereof, or any forfeiture
restrictions or waiver thereof, regarding any Stock Option or other Award, and
the shares of Common Stock relating thereto, based on such factors, if any, as
the Committee shall determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock Option
may be settled in cash, Common Stock and/or Restricted Stock under Subsection
6.3(d);
(f) to determine whether, to what extent and under what circumstances
to provide loans (which shall be on a recourse basis and shall bear a reasonable
rate of interest) to Eligible Employees OR CONSULTANTS in order to exercise
Options under the Plan;
(g) to determine whether a Stock Appreciation Right is Tandem or Non-
Tandem; and
(h) to determine whether to require an Eligible Employee OR
CONSULTANT, as a condition of the granting of any Award, to not sell or
otherwise dispose of shares acquired pursuant to the exercise of an Option or as
an Award for a period of time as determined by the Committee, in its sole
discretion, following the date of the acquisition of such Option or Award.
3.3. Guidelines. Subject to Article XII hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing this Plan and perform all acts, including the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in this Plan or
in any agreement relating thereto in the manner and to the extent it shall deem
necessary to carry this Plan into effect, but only to the extent any such action
would be permitted under the applicable provisions of Rule 16b-3 (if any) and
the applicable provisions of Section 162(m) of the Code (if any). The Committee
may adopt special guidelines and provisions for persons who are residing in, or
subject to, the taxes of, countries other than the United States to comply with
applicable tax and securities laws. If and to the extent applicable, this Plan
is intended to comply with Section 162(m) of the Code and the applicable
requirements of Rule 16b-3 and shall be limited, construed and interpreted in a
manner so as to comply therewith.
3.4. Decisions Final. Any decision, interpretation or other action made or
taken in good faith by or at the direction of the Company, the Board, or the
Committee (or any of its members) arising out of or in connection with the Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the Company and all employees
and Participants and their respective heirs, executors, administrators,
successors and assigns.
3.5. Reliance on Counsel. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligations or duties
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hereunder, or with respect to any action or proceeding or any question of law,
and shall not be liable with respect to any action taken or omitted by it in
good faith pursuant to the advice of such counsel.
3.6. Procedures. If the Committee is appointed, the Board shall designate
one of the members of the Committee as chairman and the Committee shall hold
meetings, subject to the By-Laws of the Company, at such times and places as it
shall deem advisable. A majority of the Committee members shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by all
Committee members in accordance with the By-Laws of the Company shall be fully
effective as if it had been made by a vote at a meeting duly called and held.
The Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
3.7. Designation of Consultants Liability.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of the Plan
and may grant authority to employees to execute agreements or other documents on
behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by the
Committee or Board in the engagement of any such counsel, consultant or agent
shall be paid by the Company. The Committee, its members and any person
designated pursuant to paragraph (a) above shall not be liable for any action or
determination made in good faith with respect to the Plan. To the maximum extent
permitted by applicable law, no officer of the Company or member or former
member of the Committee or of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any Award granted
under it. To the maximum extent permitted by applicable law and the Certificate
of Incorporation and By-Laws of the Company and to the extent not covered by
insurance, each officer and member or former member of the Committee or of the
Board shall be indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to the
Company) or liability (including any sum paid in settlement of a claim with the
approval of the Company), and advanced amounts necessary to pay the foregoing at
the earliest time and to the fullest extent permitted, arising out of any act or
omission to act in connection with the Plan, except to the extent arising out of
such officer's, member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
officers, directors or members or former officers, directors or members may have
under applicable law or under the Certificate of Incorporation or By-Laws of the
Company or Subsidiary. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under this Plan.
ARTICLE IV.
SHARE AND OTHER LIMITATIONS
4.1. Shares.
(a) General Limitation. The aggregate number of shares of Common Stock
which may be issued or used for reference purposes under this Plan or with
respect to which other Awards may be granted shall not exceed 2,500,000 shares
(subject to any increase or decrease pursuant to Section 4.2) which may be
either authorized and unissued Common Stock or Common Stock held in or acquired
for the treasury of the Company. If any Option or Stock Appreciation Right
granted under this Plan expires, terminates or is cancelled for any reason
without having been exercised in full or, with respect to Options, the Company
repurchases any Option pursuant to Section 6.3(f), the number of shares of
Common Stock underlying the repurchased Option, and/or the number of shares of
Common Stock underlying any unexercised Stock Appreciation Right or Option shall
again be available for the purposes of Awards under the Plan. If a Tandem Stock
Appreciation Right or a limited Stock Appreciation Right is granted in tandem
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with an Option, such grant shall only apply once against the maximum number of
shares of Common Stock which may be issued under this Plan.
(b) Individual Participant Limitations. (i) The maximum number of
shares of Common Stock subject to any Option which may be granted under this
Plan to each Participant shall not exceed 200,000 shares (subject to any
increase or decrease pursuant to Section 4.2) during each fiscal year of the
Company.
(i) There are no annual individual Participant limitations on
Restricted Stock.
(ii) The maximum number of shares of Common Stock subject to any
Stock Appreciation Right which may be granted under this Plan to each
Participant shall not exceed 200,000 shares (subject to any increase or decrease
pursuant to Section 4.2) during each fiscal year of the Company. If a Tandem
Stock Appreciation Right or limited Stock Appreciation Right is granted in
tandem with an Option it shall apply against the Eligible Employee's OR
CONSULTANT'S individual share limitations for both Stock Appreciation Rights and
Options.
4.2. Changes.
(a) The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company or Subsidiary, any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting Common Stock, the
dissolution or liquidation of the Company or Subsidiary, any sale or transfer of
all or part of its assets or business or any other corporate act or proceeding.
(b) In the event of any such change in the capital structure or business of
the Company by reason of any stock dividend or distribution, stock split or
reverse stock split, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, distribution with respect to its
outstanding Common Stock or capital stock other than Common Stock, sale or
transfer of all or part of its assets or business, reclassification of its
capital stock, or any similar change affecting the Company's capital structure
or business and the Committee determines an adjustment is appropriate under the
Plan, then the aggregate number and kind of shares which thereafter may be
issued under this Plan, the number and kind of shares or other property
(including cash) to be issued upon exercise of an outstanding Option or other
Awards granted under this Plan and the purchase price thereof shall be
appropriately adjusted consistent with such change in such manner as the
Committee may deem equitable to prevent substantial dilution or enlargement of
the rights granted to, or available for, Participants under this Plan or as
otherwise necessary to reflect the change, and any such adjustment determined by
the Committee shall be binding and conclusive on the Company and all
Participants and employees and their respective heirs, executors,
administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any adjustment in
Options or Awards pursuant to Section 4.2(a) or (b) shall be aggregated until,
and eliminated at, the time of exercise by rounding-down for fractions less than
one-half (1/2) and rounding-up for fractions equal to or greater than one-half
(1/2). No cash settlements shall be made with respect to fractional shares
eliminated by rounding. Notice of any adjustment shall be given by the Committee
to each Participant whose Option or Award has been adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
(d) In the event of a merger or consolidation in which the Company is not
the surviving entity or in the event of any transaction that results in the
acquisition of substantially all of the Company's outstanding Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all of the Company's assets
(all of the foregoing being referred to as "Acquisition Events"), then the
Committee may, in its sole discretion, terminate all outstanding Options and
Stock Appreciation Rights of Eligible Employees AND CONSULTANTS, effective as of
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the date of the Acquisition Event, by delivering notice of termination to each
such Participant at least twenty (20) days prior to the date of consummation of
the Acquisition Event; provided, that during the period from the date on which
such notice of termination is delivered to the consummation of the Acquisition
Event, each such Participant shall have the right to exercise in full all of his
or her Options and Stock Appreciation Rights that are then outstanding (without
regard to any limitations on exercisability otherwise contained in the Option or
Award Agreements) but contingent on occurrence of the Acquisition Event, and,
provided that, if the Acquisition Event does not take place within a specified
period after giving such notice for any reason whatsoever, the notice and
exercise shall be null and void.
Notwithstanding the foregoing and solely to the extent required by Section
16 of the Exchange Act, at the discretion of the Committee, the provisions
contained in this subsection shall be adjusted as they apply to Options and
Stock Appreciation Rights granted to Eligible Employees AND CONSULTANTS within
six (6) months before the occurrence of an Acquisition Event if the holder of
such Award is subject to the reporting requirements of Section 16(a) of the
Exchange Act in such manner as determined by the Committee, including without
limitation, terminating Options and Stock Appreciation Rights at specific dates
after the Acquisition Event, in order to give the holder the benefit of the
Option.
If an Acquisition Event occurs, to the extent the Committee does not
terminate the outstanding Options and Stock Appreciation Rights pursuant to this
Section 4.2(d), then the provisions of Section 4.2(b) shall apply.
4.3. Purchase Price. Notwithstanding any provision of this Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under this Plan, such shares shall not be issued for a consideration
which is less than as permitted under applicable law.
ARTICLE V.
ELIGIBILITY
5.1. All employees AND CONSULTANTS of the Company and its Subsidiaries are
eligible to be granted Options, Stock Appreciation Rights and Restricted Stock
under this Plan. Eligibility under this Plan shall be determined by the
Committee in its sole discretion.
5.2. Non-employee directors of the Company are only eligible to receive an
Award of Stock Options in accordance with Article IX of the Plan.
ARTICLE VI.
EMPLOYEE STOCK OPTION GRANTS
6.1. Options. Each Stock Option granted hereunder shall be one of two
types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code or (ii) a Non-Qualified Stock Option.
6.2. Grants. The Committee shall have the authority to grant to any
Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options (in each case with or without Stock
Appreciation Rights). To the extent that any Stock Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Stock Option or the portion thereof which
does not qualify, shall constitute a separate Non-Qualified Stock Option. The
Committee shall have the authority to grant to any Consultant one or more
Non-Qualified Stock Options (with or without Stock Appreciation Rights).
NOTWITHSTANDING ANY OTHER PROVISION OF THE PLAN TO THE CONTRARY OR ANY PROVISION
IN AN AGREEMENT EVIDENCING THE GRANT OF AN OPTION TO THE CONTRARY, ANY OPTION
GRANTED TO A CONSULTANT SHALL BE A NON-QUALIFIED STOCK OPTION.
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6.3. Terms of Options. Options granted under this Plan shall be subject to
the following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock
purchasable under an Incentive Stock Option shall be determined by the Committee
at the time of grant but shall not be less than 100% of the Fair Market Value of
the share of Common Stock at the time of grant; provided, however, if an
Incentive Stock Option is granted to a Ten Percent Stockholder, the purchase
price shall be no less than 110% of the Fair Market Value of the Common Stock.
The purchase price of shares of Common Stock subject to a Non-Qualified Stock
Option shall be determined by the Committee but shall not be less than the 100%
of the Fair Market Value of the Common Stock at the time of grant.
Notwithstanding the foregoing, if an Option is modified, extended or renewed
and, thereby, deemed to be the issuance of a new Option under the Code, the
exercise price of an Option may continue to be the original exercise price even
if less than the Fair Market Value of the Common Stock at the time of such
modification, extension or renewal.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten (10) years
after the date the Option is granted, provided, however, the term of an
Incentive Stock Option granted to a Ten Percent Stockholder may not exceed five
(5) years.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at grant. If the Committee provides, in its discretion, that any Stock
Option is exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within certain time
periods), the Committee may waive such limitations on the exercisability at any
time at or after grant in whole or in part (including, without limitation, that
the Committee may waive the installment exercise provisions or accelerate the
time at which Options may be exercised), based on such factors, if any, as the
Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Stock Options may be
exercised in whole or in part at any time during the Option term, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price in such form, or such other arrangement for the satisfaction of the
purchase price, as the Committee may accept. If and to the extent determined by
the Committee in its sole discretion at or after grant, payment in full or in
part may also be made in the form of Common Stock withheld from the shares to be
received on the exercise of a Stock Option hereunder, Common Stock owned by the
Participant (and for which the Participant has good title free and clear of any
liens and encumbrances) or Restricted Stock based, in each case, on the Fair
Market Value of the Common Stock on the payment date as determined by the
Committee (without regard to any forfeiture restrictions applicable to such
Restricted Stock). No shares of Common Stock shall be issued until payment, as
provided herein, therefor has been made or provided for. If payment in full or
in part has been made in the form of Restricted Stock, an equivalent number of
shares of Common Stock issued on exercise of the Option shall be subject to the
same restrictions and conditions, during the remainder of the Restriction
Period, applicable to the Restricted Stock surrendered therefor.
(e) Incentive Stock Option Limitations. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by an Eligible Employee during any calendar year under the Plan
and/or any other stock option plan of the Company or any Subsidiary or parent
corporation (within the meaning of Section 424(e) of the Code) exceeds $100,000,
such Options shall be treated as Options which are not Incentive Stock Options.
Should the foregoing provision not be necessary in order for the Stock
Options to qualify as Incentive Stock Options, or should any additional
provisions be required, the Committee may amend the Plan accordingly, without
the necessity of obtaining the approval of the stockholders of the Company.
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(f) Buy Out and Settlement Provisions. The Committee may at any time
on behalf of the Company offer to buy out an Option previously granted, based on
such terms and conditions as the Committee shall establish and communicate to
the Participant at the time that such offer is made.
(g) Form, Modification, Extension and Renewal of Options. Subject to
the terms and conditions and within the limitations of the Plan, an Option shall
be evidenced by such form of agreement or grant as is approved by the Committee,
and the Committee may modify, extend or renew outstanding Options granted under
the Plan (provided that the rights of a Participant are not reduced without his
consent), or accept the surrender of outstanding Options (up to the extent not
theretofore exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised).
(h) Other Terms and Conditions. Options may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms of
the Plan, as the Committee shall deem appropriate including, without limitation,
permitting "reloads" such that the same number of Options are granted as the
number of Options exercised, shares used to pay for the exercise price of
Options or shares used to pay withholding taxes ("Reloads"). With respect to
Reloads, the exercise price of the new Stock Option shall be the Fair Market
Value on the date of the "reload" and the term of the Stock Option shall be the
same as the remaining term of the Options that are exercised, if applicable, or
such other exercise price and term as determined by the Committee.
6.4. Termination of Employment OR TERMINATION OF CONSULTANCY. The following
rules apply with regard to Options upon the Termination of Employment of a
Participant:
(a) Termination by Reason of Death. If a Participant's Termination of
Employment OR TERMINATION OF CONSULTANCY is by reason of death, any Stock Option
held by such Participant, unless otherwise determined by the Committee at grant
or, if no rights of the Participant's estate are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's death, by the legal
representative of the estate, at any time within a period of one (1) year from
the date of such death, but in no event beyond the expiration of the stated term
of such Stock Option.
(b) Termination by Reason of Disability. If a Participant's
Termination of Employment OR TERMINATION OF CONSULTANCY is by reason of
Disability, any Stock Option held by such Participant, unless otherwise
determined by the Committee at grant or, if no rights of the Participant are
reduced, thereafter, may be exercised, to the extent exercisable at the
Participant's termination, by the Participant (or the legal representative of
the Participant's estate if the Participant dies after termination) at any time
within a period of one (1) year from the date of such termination, but in no
event beyond the expiration of the stated term of such Stock Option.
(c) Termination by Reason of Retirement. If a Participant's
Termination of Employment OR TERMINATION OF CONSULTANCY is by reason of
Retirement, any Stock Option held by such Participant, unless otherwise
determined by the Committee at grant, or, if no rights of the Participant are
reduced, thereafter, shall be fully vested and may thereafter be exercised by
the Participant at any time within a period of one (1) year from the date of
such termination, but in no event beyond the expiration of the stated term of
such Stock Option; provided, however, that, if the Participant dies within such
exercise period, any unexercised Stock Option held by such Participant shall
thereafter be exercisable, to the extent to which it was exercisable at the time
of death, for a period of one (1) year (or such other period as the Committee
may specify at grant or, if no rights of the Participant's estate are reduced,
thereafter) from the date of such death, but in no event beyond the expiration
of the stated term of such Stock Option.
(d) Involuntary Termination Without Cause or Termination for Good
Reason. If a Participant's Termination of Employment OR TERMINATION OF
CONSULTANCY is by involuntary termination without Cause or for Good Reason, any
Stock Option held by such Participant, unless otherwise determined by the
Committee at grant or, if no rights of the Participant are reduced, thereafter,
may be exercised, to the extent exercisable at termination, by the Participant
at any time within a period of ninety (90) days from the date of such
termination, but in no event beyond the expiration of the stated term of such
Stock Option.
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(e) Termination Without Good Reason. If a Participant's Termination of
Employment OR TERMINATION OF CONSULTANCY is voluntary but without Good Reason
and occurs prior to, or more than ninety (90) days after, the occurrence of an
event which would be grounds for Termination of Employment by the Company for
Cause (without regard to any notice or cure period requirements), any Stock
Option held by such Participant, unless otherwise determined by the Committee at
grant or, if no rights of the Participant are reduced, thereafter, may be
exercised, to the extent exercisable at termination, by the Participant at any
time within a period of thirty (30) days from the date of such termination, but
in no event beyond the expiration of the stated term of such Stock Option.
(f) Other Termination. Unless otherwise determined by the Committee at
grant or, if no rights of the Participant are reduced, thereafter, if a
Participant's Termination of Employment OR TERMINATION OF CONSULTANCY IS for any
reason other than death, Disability, Retirement, Good Reason, involuntary
termination without Cause or voluntary termination as provided in subsection (e)
above, any Stock Option held by such Participant shall thereupon terminate and
expire as of the date of termination, provided that (unless the Committee
determines a different period upon grant or, if, no rights of the Participant
are reduced, thereafter) in the event the termination is for Cause or is a
voluntary termination without Good Reason within ninety (90) days after
occurrence of an event which would be grounds for Termination of Employment OR
TERMINATION OF CONSULTANCY by the Company for Cause (without regard to any
notice or cure period requirement), any Stock Option held by the Participant at
the time of occurrence of the event which would be grounds for Termination of
Employment OR TERMINATION OF CONSULTANCY by the Company for Cause shall be
deemed to have terminated and expired upon occurrence of the event which would
be grounds for Termination of Employment OR TERMINATION OF CONSULTANCY by the
Company for Cause.
ARTICLE VII.
RESTRICTED STOCK AWARDS
7.1. Awards of Restricted Stock. Shares of Restricted Stock may be issued
to Eligible Employees OR CONSULTANTS either alone or in addition to other Awards
granted under the Plan. The Committee shall determine the eligible persons to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the price (if any) to be paid by the
recipient (subject to Section 7.2), the time or times within which such Awards
may be subject to forfeiture, the vesting schedule and rights to acceleration
thereof, and all other terms and conditions of the Awards.
7.2. Awards and Certificates. The prospective Participant selected to
receive a Restricted Stock Award shall not have any rights with respect to such
Award, unless and until such Participant has delivered a fully executed copy of
the Restricted Stock Award agreement evidencing the Award to the Company and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
(a) Purchase Price. The purchase price of Restricted Stock shall be
fixed by the Committee. Subject to Section 4.3, the purchase price for shares of
Restricted Stock may be zero to the extent permitted by applicable law, and, to
the extent not so permitted, such purchase price may not be less than par value.
(b) Acceptance. Awards of Restricted Stock must be accepted within a
period of sixty (60) days (or such shorter period as the Committee may specify
at grant) after the Award date, by executing a Restricted Stock Award agreement
and by paying whatever price (if any) the Committee has designated thereunder.
(c) Legend. Each Participant receiving a Restricted Stock Award shall
be issued a stock certificate in respect of such shares of Restricted Stock,
unless the Committee elects to use another system, such as book entries by the
transfer agent, as evidencing ownership of a Restricted Stock Award. Such
certificate
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shall be registered in the name of such Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
"The anticipation, alienation, attachment, sale, transfer, assignment,
pledge, encumbrance or charge of the shares of stock represented hereby are
subject to the terms and conditions (including forfeiture) of the dELiA*s
Inc. (the "Company") 1996 Stock Incentive Plan and an Agreement entered
into between the registered owner and the Company, dated ________. Copies
of such Plan and Agreement are on file at the principal office of the
Company."
(d) Custody. The Committee may require that any stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
Award, the Participant shall have delivered a duly signed stock power, endorsed
in blank, relating to the Common Stock covered by such Award.
7.3. Restrictions and Conditions on Restricted Stock Awards. The shares of
Restricted Stock awarded pursuant to this Plan shall be subject to Article X and
the following restrictions and conditions:
(a) Restriction Period; Vesting and Acceleration of Vesting. The
Participant shall not be permitted to Transfer shares of Restricted Stock
awarded under this Plan during a period set by the Committee (the "Restriction
Period") commencing with the date of such Award, as set forth in the Restricted
Stock Award agreement and such agreement shall set forth a vesting schedule and
any events which would accelerate vesting of the shares of Restricted Stock.
Within these limits, based on service, or other criteria determined by the
Committee, the Committee may provide for the lapse of such restrictions in
installments in whole or in part, or may accelerate the vesting of all or any
part of any Restricted Stock Award.
(b) Rights as Stockholder. Except as provided in this subsection (b)
and subsection (a) above and as otherwise determined by the Committee, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a holder of shares of Common Stock of the Company including,
without limitation, the right to receive any dividends, the right to vote such
shares and, subject to and conditioned upon the full vesting of shares of
Restricted Stock, the right to tender such shares. Notwithstanding the
foregoing, the payment of dividends shall be deferred until, and conditioned
upon, the expiration of the applicable Restriction Period, unless the Committee,
in its sole discretion, specifies otherwise at the time of the Award.
(c) Lapse of Restrictions. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to such Restriction
Period, the certificates for such shares shall be delivered to the Participant.
All legends shall be removed from said certificates at the time of delivery to
the Participant except as otherwise required by applicable law.
7.4. Termination of Employment for Restricted Stock. Subject to the
applicable provisions of the Restricted Stock Award agreement and this Plan,
upon a Participant's Termination of Employment for any reason during the
relevant Restriction Period, all Restricted Stock still subject to restriction
will vest or be forfeited in accordance with the terms and conditions
established by the Committee at grant or thereafter.
ARTICLE VIII.
STOCK APPRECIATION RIGHTS
8.1. Tandem Stock Appreciation Rights. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option (a "Reference Stock
Option") granted under this Plan ("Tandem Stock Appreciation Rights"). In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Reference Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the grant
of such Reference Stock Option.
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CONSULTANTS SHALL NOT BE ELIGIBLE FOR A GRANT OF TANDEM STOCK APPRECIATION
RIGHTS GRANTED IN CONJUNCTION WITH ALL OR PART OF AN INCENTIVE STOCK OPTION.
8.2. Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock
Appreciation Rights shall be subject to such terms and conditions, not
inconsistent with the provisions of this Plan, as shall be determined from time
to time by the Committee, including Article X and the following:
(a) Term. A Tandem Stock Appreciation Right or applicable portion
thereof granted with respect to a Reference Stock Option shall terminate and no
longer be exercisable upon the termination or exercise of the Reference Stock
Option, except that, unless otherwise determined by the Committee, in its sole
discretion, at the time of grant, a Tandem Stock Appreciation Right granted with
respect to less than the full number of shares covered by the Reference Stock
Option shall not be reduced until and then only to the extent the exercise or
termination of the Reference Stock Option causes the number of shares covered by
the Tandem Stock Appreciation Right to exceed the number of shares remaining
available and unexercised under the Reference Stock Option.
(b) Exercisability. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Reference
Stock Options to which they relate shall be exercisable in accordance with the
provisions of Article VI and this Article VIII.
(c) Method of Exercise. A Tandem Stock Appreciation Right may be
exercised by an optionee by surrendering the applicable portion of the Reference
Stock Option. Upon such exercise and surrender, the Participant shall be
entitled to receive an amount determined in the manner prescribed in this
Section 8.2. Stock Options which have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the related Tandem Stock
Appreciation Rights have been exercised.
(d) Payment. Upon the exercise of a Tandem Stock Appreciation Right a
Participant shall be entitled to receive up to, but no more than, an amount in
cash and/or Common Stock (as chosen by the Committee in its sole discretion)
equal in value to the excess of the Fair Market Value of one share of Common
Stock over the option price per share specified in the Reference Stock Option
multiplied by the number of shares in respect of which the Tandem Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment.
(e) Deemed Exercise of Reference Stock Option. Upon the exercise of a
Tandem Stock Appreciation Right, the Reference Stock Option or part thereof to
which such Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Article IV of the Plan
on the number of shares of Common Stock to be issued under the Plan.
8.3. Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation
Rights may also be granted without reference to any Stock Options granted under
this Plan.
8.4. Terms and Conditions of Non-Tandem Stock Appreciation Rights.
Non-Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of this Plan, as shall be
determined from time to time by the Committee, including Article X and the
following:
(a) Term. The term of each Non-Tandem Stock Appreciation Right shall
be fixed by the Committee, but shall not be greater than ten (10) years after
the date the right is granted.
(b) Exercisability. Non-Tandem Stock Appreciation Rights shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at grant. If the Committee provides, in its
discretion, that any such right is exercisable subject to certain limitations
(including, without limitation, that it is exercisable only in installments or
within certain time periods), the Committee may waive such limitation on the
exercisability at any time at or after grant in whole or in part (including,
without limitation, that the Committee may waive the installment exercise
provisions or
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accelerate the time at which rights may be exercised), based on such factors, if
any, as the Committee shall determine, in its sole discretion.
(c) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (b) above, Non-Tandem Stock
Appreciation Rights may be exercised in whole or in part at any time during the
option term, by giving written notice of exercise to the Company specifying the
number of Non-Tandem Stock Appreciation Rights to be exercised.
(d) Payment. Upon the exercise of a Non-Tandem Stock Appreciation
Right a Participant shall be entitled to receive, for each right exercised, up
to, but no more than, an amount in cash and/or Common Stock (as chosen by the
Committee in its sole discretion) equal in value to the excess of the Fair
Market Value of one share of Common Stock on the date the right is exercised
over the Fair Market Value of one (1) share of Common Stock on the date the
right was awarded to the Participant.
8.5. Limited Stock Appreciation Rights. The Committee may, in its sole
discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either as a
general Stock Appreciation Right or as a limited Stock Appreciation Right.
Limited Stock Appreciation Rights may be exercised only upon the occurrence of a
Change in Control or such other event as the Committee may, in its sole
discretion, designate at the time of grant or thereafter. Upon the exercise of
limited Stock Appreciation Rights, except as otherwise provided in an Award
agreement, the Participant shall receive in cash or Common Stock, as determined
by the Committee, an amount equal to the amount (1) set forth in Section 8.2(d)
with respect to Tandem Stock Appreciation Rights or (2) set forth in Section
8.4(d) with respect to Non-Tandem Stock Appreciation Rights.
8.6. Termination of Employment. The following rules apply with regard to
Stock Appreciation Rights upon the Termination of Employment of a Participant.
(a) Termination by Death. If a Participant's Termination of Employment
is by reason of death, any Stock Appreciation Right held by such Participant,
unless otherwise determined by the Committee at grant or if no rights of the
Participant's estate are reduced, thereafter, may be exercised, to the extent
exercisable at the Participant's death, by the legal representative of the
estate, at any time within a period of one (1) year from the date of such death
or until the expiration of the stated term of such Stock Appreciation Right,
whichever period is the shorter.
(b) Termination by Reason of Disability. If a Participant's
Termination of Employment is by reason of Disability, any Stock Appreciation
Right held by such participant, unless otherwise determined by the Committee at
grant or, if no rights of the Participant are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's termination, by the
Participant (or the legal representative of the Participant's estate if the
Participant dies after termination) at any time within a period of one (1) year
from the date of such termination or until the expiration of the stated term of
such Stock Appreciation Right, whichever period is the shorter.
(c) Termination by Reason of Retirement. If a Participant's
Termination of Employment is by reason of Retirement, any Stock Appreciation
Right held by such Participant, unless otherwise determined by the Committee at
grant or, if no rights of the Participant are reduced, thereafter, shall be
fully vested and may thereafter be exercised by the Participant at any time
within a period of one (1) year from the date of such termination or until the
expiration of the stated term of such right, whichever period is the shorter;
provided, however, that, if the Participant dies within such one (1) year
period, any unexercised Non- Tandem Stock Appreciation Right held by such
Participant shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one (1) year (or such other
period as the Committee may specify at grant or if no rights of the Participant
are reduced, thereafter) from the date of such death or until the expiration of
the stated term of such right, whichever period is the shorter.
(d) Involuntary Termination Without Cause or Termination for Good
Reason. If a Participant's Termination of Employment is by involuntary
termination without Cause or for Good Reason,
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any Stock Appreciation Right held by such participant, unless otherwise
determined by the Committee at grant or if no rights of the participant are
reduced, thereafter, may be exercised, to the extent exercisable at termination,
by the Participant at any time within a period of ninety (90) days from the date
of such termination or until the expiration of the stated term of such right,
whichever period is shorter.
(e) Termination Without Good Reason. If a Participant's Termination of
Employment is voluntary but without Good Reason and occurs prior to, or more
than ninety (90) days after, the occurrence of an event which would be grounds
for Termination of Employment by the Company for Cause (without regard to any
notice or cure period requirements), any Stock Appreciation Right held by such
Participant, unless greater or lesser exercise rights are provided by the
Committee at the time of grant or, if no rights of the participant are reduced,
thereafter, may be exercised, to the extent exercisable at termination, by the
Participant at any time within a period of thirty (30) days from the date of
such termination, but in no event beyond the expiration of the stated term of
such Stock Appreciation Right.
(f) Other Termination. Unless otherwise determined by the Committee at
grant, or, if no rights of the Participant are reduced thereafter, if a
Participant's Termination of Employment is for any reason other than death,
Disability, Retirement, Good Reason, involuntary termination without Cause or
voluntary termination as provided in subsection (e) above, any Stock
Appreciation Right held by such Participant shall thereupon terminate or expire
as of the date of termination, provided, that (unless the Committee determines a
different period upon grant, or, if no rights of the Participant are reduced,
thereafter) in the event the termination is for Cause or is a voluntary
termination as provided in subsection (e) above, within ninety (90) days after
occurrence of an event which would be grounds for Termination of Employment by
the Company for Cause (without regard to any notice or cure period requirement),
any Stock Appreciation Right held by the Participant at the time of the
occurrence of the event which would be grounds for Termination of Employment by
the Company for Cause shall be deemed to have terminated and expired upon
occurrence of the event which would be grounds for Termination of Employment by
the Company for Cause.
ARTICLE IX.
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS
9.1. Options. The terms of this Article IX shall apply only to Options
granted to non-employee directors.
9.2. Grants. Without further action by the Board or the stockholders of the
Company, each non-employee director other than Geraldine Karetsky and Sidney S.
Kahn shall:
(a) subject to the terms of the Plan, be granted Options to purchase
40,000 shares of Common Stock upon (1) the date on which the offering price in
connection with the initial public offering of the Common Stock (the "Offering")
is agreed upon between the Company and the underwriters (the "Price to the
Public); or (2) if later, as of the date the non-employee director begins
service as a director on the Board;
(b) notwithstanding the foregoing, if the Offering is not consummated
by February 28, 1997, no Options shall thereafter be granted and any Options
previously granted under Section 9.1(a) above shall become null and void.
9.3. Non-Qualified Stock Options. Stock Options granted under this Article
IX shall be Non-Qualified Stock Options.
9.4. Terms of Options. Options granted under this Article shall be subject
to the following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with terms of this Plan, as
the Committee shall deem desirable:
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(a) Option Price. The purchase price per share deliverable upon the
exercise of an Option granted pursuant to Section 9.2(a)(1) shall be the Price
to the Public and the purchase price per share deliverable upon the exercise of
an Option granted pursuant to Section 9.2(a)(2) shall be 100% of the Fair Market
Value of such Common Stock at the time of the grant of the Option, or the par
value of the Common Stock, whichever is greater.
(b) Exercisability. Except as otherwise provided herein, twenty
percent (20%) of any Option granted under this Article IX shall be exercisable
on or after each of the five anniversaries following the date of grant, provided
that, notwithstanding anything in Section 9.5 to the contrary, any Option
granted to a non-employee director elected prior to November 15, 1996 shall
fully vest upon a Termination of Directorship other than (i) for Cause, or (ii)
due to a director's refusal to stand for reelection. All Options shall fully
vest upon a Change in Control.
(c) Method for Exercise. A non-employee director electing to exercise
one or more Options shall give written notice of exercise to the Company
specifying the number of shares to be purchased. Common Stock purchased pursuant
to the exercise of Options shall be paid for at the time of exercise in cash or
by delivery of unencumbered Common Stock owned by the non-employee director or a
combination thereof or by such other method as approved by the Board.
(d) Option Term. Except as otherwise provided herein, if not
previously exercised each Option shall expire upon the tenth anniversary of the
date of the grant thereof.
9.5. Termination of Directorship. The following rules apply with regard to
Options upon the Termination of Directorship:
(a) Death, Disability or Otherwise Ceasing to be a Director Other than
for Cause. Except as otherwise provided herein, upon the Termination of
Directorship, on account of Disability, death, Retirement, resignation, failure
to stand for reelection or failure to be reelected or otherwise other than as
set forth in (b) below, all outstanding Options then exercisable and not
exercised by the Participant prior to such Termination of Directorship shall
remain exercisable, to the extent exercisable at the Termination of
Directorship, by the Participant or, in the case of death, by the Participant's
estate or by the person given authority to exercise such Options by his or her
will or by operation of law, for the remainder of the stated term of such
Options.
(b) Cause. Upon removal, failure to stand for reelection or failure to
be renominated for Cause, or if the Company obtains or discovers information
after Termination of Directorship that such Participant had engaged in conduct
that would have justified a removal for Cause during such directorship, all
outstanding Options of such Participant shall immediately terminate and shall be
null and void.
(c) Cancellation of Options. No Options that were not exercisable
during the period such person serves as a director shall thereafter become
exercisable upon a Termination of Directorship for any reason or no reason
whatsoever, and such Options shall terminate and become null and void upon a
Termination of Directorship.
9.6. Changes. (a) The Awards to a non-employee director shall be subject to
Sections 4.2(a), (b) and (c) of the Plan and this Section 9.6, but shall not be
subject to Section 4.2(d).
(b) If the Company shall not be the surviving corporation in any
merger or consolidation, or if the Company is to be dissolved or liquidated,
then, unless the surviving corporation assumes the Options or substitutes new
Options which are determined by the Board in its sole discretion to be
substantially similar in nature and equivalent in terms and value for Options
then outstanding, upon the effective date of such merger, consolidation,
liquidation or dissolution, any unexercised Options shall expire without
additional compensation to the holder thereof; provided, that, the Committee
shall deliver notice to each non-employee director at least twenty (20) days
prior to the date of consummation of such merger, consolidation, dissolution or
liquidation which would result in the expiration of the Options and during the
period from the date on which such notice of termination is delivered to the
consummation of
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the merger, consolidation, dissolution or liquidation, such Participant shall
have the right to exercise in full effective as of such consummation all Options
that are then outstanding (without regard to limitations on exercise otherwise
contained in the Options) but contingent on occurrence of the merger,
consolidation, dissolution or liquidation, and, provided that, if the
contemplated transaction does not take place within a ninety (90) day period
after giving such notice for any reason whatsoever, the notice, accelerated
vesting and exercise shall be null and void and, if and when appropriate, new
notice shall be given as aforesaid.
ARTICLE X.
NON-TRANSFERABILITY
No Stock Option or Stock Appreciation Right shall be Transferable by the
Participant otherwise than by will or by the laws of descent and distribution.
All Stock Options and all Stock Appreciation Rights shall be exercisable, during
the Participant's lifetime, only by the Participant. Tandem Stock Appreciation
Rights shall be Transferable, to the extent permitted above, only with the
underlying Stock Option. Shares of Restricted Stock under Article VII may not be
Transferred prior to the date on which shares are issued, or, if later, the date
on which any applicable restriction lapses. No Award shall, except as otherwise
specifically provided by law or herein, be Transferable in any manner, and any
attempt to Transfer any such Award shall be void, and no such Award shall in any
manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person who shall be entitled to such Award, nor
shall it be subject to attachment or legal process for or against such person.
ARTICLE XI.
CHANGE IN CONTROL PROVISIONS
11.1. Benefits. In the event of a Change in Control of the Company (as
defined below), except as otherwise provided by the Committee upon the grant of
an Award, the Participant shall be entitled to the following benefits:
(a) Subject to paragraph (c) below with regard to Options granted to
Eligible Employees AND CONSULTANTS, all outstanding Options and the related
Tandem Stock Appreciation Rights and Non-Tandem Stock Appreciation Rights of
such Participant granted prior to the Change in Control shall be fully vested
and immediately exercisable in their entirety. The Committee, in its sole
discretion, may provide for the purchase of any such Stock Options by the
Company for an amount of cash equal to the excess of the Change in Control price
(as defined below) of the shares of Common Stock covered by such Stock Options,
over the aggregate exercise price of such Stock Options. For purposes of this
Section 11.1, Change in Control price shall mean the higher of (i) the highest
price per share of Common Stock paid in any transaction related to a Change in
Control of the Company, or (ii) the highest Fair Market Value per share of
Common Stock at any time during the sixty (60) day period preceding a Change in
Control.
(b) The restrictions to which any shares of Restricted Stock of such
Participant granted prior to the Change in Control are subject shall lapse as if
the applicable Restriction Period had ended upon such Change in Control.
(c) Notwithstanding anything to the contrary herein, unless the
Committee provides otherwise at the time an Option is granted to an Eligible
Employee OR CONSULTANT hereunder or thereafter, no acceleration of
exercisability shall occur with respect to such Option if the Committee
reasonably determines in good faith, prior to the occurrence of the Change in
Control, that the Options shall be honored or assumed, or new rights substituted
therefor (each such honored, assumed or substituted option hereinafter called an
"Alternative Option"), by a Participant's employer (or the parent or a
subsidiary of such employer) immediately following the Change in Control,
provided that any such Alternative Option must meet the following criteria:
(i) the Alternative Option must be based on stock which is traded
on an established securities market, or which will be so traded within thirty
(30) days of the Change in Control;
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(ii) the Alternative Option must provide such Participant with
rights and entitlements substantially equivalent to or better than the rights,
terms and conditions applicable under such Option, including, but not limited
to, an identical or better exercise schedule; and
(iii) the Alternative Option must have economic value
substantially equivalent to the value of such Option (determined at the time of
the Change in Control).
For purposes of Incentive Stock Options, any assumed or substituted Option
shall comply with the requirements of Treasury regulation ss. 1.425- 1 (and any
amendments thereto).
(d) Notwithstanding anything else herein, the Committee may, in its
sole discretion, provide for accelerated vesting of an Award (other than a grant
to a non-employee director pursuant to Article IX hereof), upon a Termination of
Employment during the Pre-Change in Control Period. Unless otherwise determined
by the Committee, the Pre-Change in Control Period shall be the one hundred
eighty (180) day period prior to a Change in Control.
11.2. Change in Control. A "Change in Control" shall be deemed to have
occurred:
(a) upon any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, any company
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common Stock of the
Company, or as a group or individually Stephen I. Kahn, his spouse and their
issue and any trusts for the benefit of any of them), becoming the owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities (including,
without limitation, securities owned at the time of any increase in ownership);
(b) a change in the composition of the Board of Directors of the
Company such that the individuals who, as of the date hereof, comprise the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, for purposes of this subsection that any
individual who becomes a member of an Incumbent Board subsequent to the date
hereof whose election, or nomination for election by the Company's stockholders,
was approved in advance or contemporaneously with such election by a vote of at
least a majority of those individuals who are members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; but, provided further, that any
such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors of the Company or actual or threatened tender offer
for shares of the Company or similar transaction or other contest for corporate
control (other than a tender offer by the Company) shall not be so considered as
a member of the Incumbent Board; or
(c) upon the merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than fifty percent (50%) of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
(other than those covered by the exceptions in (a) above) acquires more than
fifty percent (50%) of the combined voting power of the Company's then
outstanding securities shall not constitute a Change in Control of the Company;
or
(d) upon the stockholder's of the Company approval of a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the
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Company's assets other than the sale of all or substantially all of the assets
of the Company to a person or persons who beneficially own, directly or
indirectly, at least fifty percent (50%) or more of the combined voting power of
the outstanding voting securities of the Company at the time of the sale.
ARTICLE XII.
TERMINATION OR AMENDMENT OF THE PLAN
12.1. Termination or Amendment. Notwithstanding any other provision of this
Plan, the Board may at any time, and from time to time, amend, in whole or in
part, any or all of the provisions of the Plan, or suspend or terminate it
entirely, retroactively or otherwise; provided, however, that, unless otherwise
required by law or specifically provided herein, the rights of a Participant
with respect to Awards granted prior to such amendment, suspension or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the stockholders of the Company, if
and to the extent required by the applicable provisions of Rule 16b-3 or, if and
to the extent required, under the applicable provisions of Section 162(m) of the
Code, or with regard to Incentive Stock Options, Section 422 of the Code, no
amendment may be made which would (i) increase the aggregate number of shares of
Common Stock that may be issued under this Plan; (ii) increase the maximum
individual Participant limitations for a fiscal year under Section 4.1(b); (iii)
change the classification of employees, CONSULTANTS and non-employee directors
eligible to receive Awards under this Plan; (iv) decrease the minimum option
price of any Stock Option; (v) extend the maximum option period under Section
6.3; (vi) change any rights under the Plan with regard to non-employee
directors; or (vii) require stockholder approval in order for the Plan to
continue to comply with the applicable provisions, if any, of Rule 16b-3,
Section 162(m) of the Code or, with regard to Incentive Stock Options, Section
422 of the Code. In no event may the Plan be amended without the approval of the
stockholders of the Company in accordance with the applicable laws or other
requirements to increase the aggregate number of shares of Common Stock that may
be issued under the Plan, decrease the minimum option price of any Stock Option,
or to make any other amendment that would require stockholder approval under the
rules of any exchange or system on which the Company's securities are listed or
traded at the request of the Company.
Except with respect to the award of Stock Options to non-employee directors
under Article IX, the Committee may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Article IV above or as
otherwise specifically provided herein, no such amendment or other action by the
Committee shall impair the rights of any holder without the holder's consent.
ARTICLE XIII.
UNFUNDED PLAN
13.1. Unfunded Status of Plan. This Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments as to
which a Participant has a fixed and vested interest but which are not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
ARTICLE XIV.
GENERAL PROVISIONS
14.1. Legend. The Committee may require each person receiving shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on Transfer.
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<PAGE>
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
14.2. Other Plans. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
14.3. No Right to Employment/Consultancy/Directorship. Neither this Plan
nor the grant of any Award hereunder shall give any Participant or other
employee any right with respect to continuance of employment OR CONSULTANCY by
the Company or any Subsidiary, nor shall they be a limitation in any way on the
right of the Company or any Subsidiary by which an employee is employed OR A
CONSULTANT IS RETAINED to terminate his employment OR CONSULTANCY, AS
APPLICABLE, at any time. Neither this Plan nor the grant of any Award hereunder
shall impose any obligations on the Company to retain any Participant as a
director nor shall it impose on the part of any Participant any obligation to
remain as a director of the Company.
14.4. Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made to a Participant, or to otherwise require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Upon the vesting of Restricted Stock, or upon
making an election under Code Section 83(b), a Participant shall pay all
required withholding to the Company.
The Committee may permit, as it decides to approve in its sole discretion,
any such withholding obligation with regard to any Participant to be satisfied
by reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant.
14.5. Listing and Other Conditions.
(a) If the Common Stock becomes listed on a national securities
exchange or system sponsored by a national securities association, the issue of
any shares of Common Stock pursuant to an Award shall be conditioned upon such
shares being listed on such exchange or system. The Company shall have no
obligation to issue such shares unless and until such shares are so listed, and
the right to exercise any Option with respect to such shares shall be suspended
until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion that
any sale or delivery of shares of Common Stock pursuant to an Award is or may in
the circumstances be unlawful or result in the imposition of excise taxes on the
Company under the statutes, rules or regulations of any applicable jurisdiction,
the Company shall have no obligation to make such sale or delivery, or to make
any application or to effect or to maintain any qualification or registration
under the Securities Act of 1933, as amended, or otherwise with respect to
shares of Common Stock or Awards, and the right to exercise any Option shall be
suspended until, in the opinion of said counsel, such sale or delivery shall be
lawful or will not result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension under this Section
14.5, any Award affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Option.
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<PAGE>
14.6. Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
14.7. Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
14.8. Other Benefits. No Award payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.
14.9. Costs. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing Common Stock pursuant to any Awards
hereunder.
14.10. No Right to Same Benefits. The provisions of Awards need not be the
same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.
14.11. Death/Disability. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.
14.12. Section 16(b) of the Exchange Act. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock are intended to comply with any applicable condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.
14.13. Severability of Provisions. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
14.14. Headings and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.
ARTICLE XV.
TERM OF PLAN
No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the date the Plan is adopted or the date of
stockholder approval, but Awards granted prior to such tenth anniversary may
extend beyond that date.
ARTICLE XVI.
NAME OF PLAN
This Plan shall be known as the dELiA*s Inc. AMENDED AND RESTATED 1996
Stock Incentive Plan.
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<PAGE>
- ----------
| |
- ----------
The Board of Directors recommends a vote "FOR"
all nominees in Item 1 and "FOR" Item 2 and 3.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1. Election of Directors FOR all nominees [X] WITHHOLD AUTHORITY to vote [X] EXCEPTIONS [X]
listed below for all nominees listed below.
</TABLE>
Nominees: Sidney S. Kahn and Geraldine Karetsky
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
Exceptions
------------------------------------------------------------------
2. Approval of the dELiA*s Inc. 1998 Stock Incentive Plan, as amended and
restated as of June 11, 1998.'
FOR [X] AGAINST [X] ABSTAIN [X]
3. Appointment of independent auditors, Deloitte & Touche LLP.
FOR [X] AGAINST [X] ABSTAIN [X]
Change of Address and/ [X]
or Comments Mark Here
In their discretion to vote upon other matters
that may properly come before the meeting.
Please sign exactly as your name appears to
the left.
When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title. If shares are held
jointly, each holder whould sign.
Dated: ,1998
--------------------------
---------------------------------
Signature
----------------------------------
Signature
Votes must be indicated (x) in Black or Blue ink. [X]
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
- --------------------------------------------------------------------------------
dELiA*s INC.
ANNUAL MEETING OF STOCKHOLDERS
JULY 14, 1998
The undersigned hereby appoints Christopher C. Edgar, Evan Guillemin and
Stephen I. Kahn, and each of them, with full power to act without the other and
with full power of substitution, as proxies to represent and to vote, as
directed herein, all shares the undersigned is entitled to vote at the annual
meeting of the stockholders of dELiA*s Inc. to be held in the offices of
The Chase Manhattan Bank, 270 Park Avenue New York, New York on Tuesday,
July 14, 1998 at 1:30 P.M., and all adjournments therof, as follows:
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
Unless otherwise marked, the proxies are appointed with authority to vote
"FOR" all nominees for election and "FOR" the appointment of independent public
accountants.
(Continued and to be signed on the reverse side.)
dELiA*s INC.
P.O. BOX 11386
NEW YORK, N.Y. 10203-0386
