<PAGE> 1
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sect. 240.14a-11(c) or Sect. 240.14a-12
Dixon Ticonderoga Company
---------------------------------------------
(Name of Registrant as Specific in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee ((Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14-a6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
Dixon Ticonderoga Company
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4) Date Filed:
January 24, 1997
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<PAGE> 2
DIXON TICONDEROGA COMPANY
195 International Parkway
Heathrow, Florida 32746
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 28, 1997
To the Shareholders of
DIXON TICONDEROGA COMPANY
Notice is hereby given that the Annual Meeting of Shareholders of DIXON
TICONDEROGA COMPANY (hereinafter called the "Company"), a Delaware corporation,
will be held at 195 International Parkway, Heathrow, Florida, on February 28,
1997 at 11:00 a.m., for the following purposes:
(1) To elect three Directors for a three-year term.
(2) To consider and vote upon an amendment to the Dixon Ticonderoga
Employee Qualified Stock Purchase Plan increasing the number of
shares of the Company's common stock which may be issued
thereunder from 100,000 shares to 180,311 shares.
(3) To consider and vote upon the ratification of the Dixon Ticonderoga
Amended and Restated Stock Option Plan, to replace the Company's
1988 Executive Stock Plan.
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
In accordance with the By-Laws of the Company, the Board of Directors has
fixed the close of business on January 2, 1997 as the record date for the
determination of shareholders entitled to notice of, and to vote at such meeting
or any adjournment thereof.
By Order of the Board of Directors,
Laura Hemmings
Secretary
Heathrow, Florida
January 27, 1997
YOUR VOTE IS IMPORTANT
All shareholders are cordially invited to attend the meeting. Whether or not
you plan to attend in person, you are urged to mark, date and sign the enclosed
proxy and return it promptly in the envelope provided. This will assure your
representation at the meeting. If you do attend the meeting in person, you may
revoke your proxy by giving written notice of its revocation to the Secretary of
the meeting before the proxy is voted or by casting your vote in person.
<PAGE> 3
DIXON TICONDEROGA COMPANY
195 International Parkway, Heathrow, Florida 32746
PROXY STATEMENT
The enclosed proxy statement is solicited on behalf of the Board of
Directors of Dixon Ticonderoga Company (hereinafter the "Company") for use at
the Annual Meeting of Shareholders to be held at the time, place and for the
purposes set forth in the accompanying Notice of Annual Meeting or at any
adjournment thereof. If the enclosed proxy card is executed and returned by
a shareholder, it nevertheless may be revoked at any time before it has
been voted.
The shares represented at the meeting by the enclosed proxy will be voted
as marked on all matters to be acted upon at the meeting. Only shareholders of
record at the close of business on January 2, 1997 will be entitled to vote at
the meeting. The outstanding voting shares of the Company at the close of
business on January 2, 1997 consisted of 3,293,778 shares of the Common Stock
and each such share is entitled to one vote. Shareholders do not have
cumulative voting rights. On the record date there were 3,293,778 shares of
the Company's Common Stock outstanding and entitled to vote. A majority of
the shares entitled to vote, present in person or represented by proxy,
constitutes a quorum at the meeting.
The mailing of this Proxy Statement, together with the Company's Annual
Report on Form 10-K for fiscal year ended September 30, 1996, commenced on
January 27, 1997.
<PAGE> 4
MAJOR STOCKHOLDERS
The only stockholders known by the Company to own beneficially more than
5% of the shares outstanding as of November 30, 1996, are as follows:
Shares of Stock Percentage
Name & Address Nature of Beneficial Beneficially Outstanding
Beneficial Owner Ownership Owned Shares
- ---------------- -------------------- --------------- -----------
Gino N. Pala Sole Voting &
195 International Pkwy. Investment Power 508,920 15.3%
Heathrow, FL 32746 Sole Voting Power &
Shared Investment
Power 245,775 7.4%
Option 29,900 0.9%
Hollybank, Investments, L.P. Sole Voting &
One Financial Center Investment Power 371,700 11.3%
Suite 1600
Boston, MA 02111
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of November 30, 1996, the number of
shares of the Company's voting securities owned beneficially to the knowledge
of the Company by each director and by all officers and directors of the Company
as a group. All shares are subject to the person's sole voting and investment
power except where otherwise indicated.
Name of Amount and Nature of Percentage of
Beneficial Owner Beneficial Ownership Voting Securities
Gino N. Pala 784,595(1) 23.6%
Richard F. Joyce 27,810(2) *
Samuel B. Casey, Jr. 374 *
John E. Ramondo -0- *
Joseph R. Sadowski 8,550 *
Philip M. Shasteen 8,969 *
Bobby Brantley -0- *
Ben Berzin, Jr. 500 *
All Executive Officers and
Directors as a Group
(14 Persons) 896,533(3) 26.5%
- -------------------
* Indicates ownership is less than 1%.
(1) This includes 508,920 shares owned by him over which he has full voting
and investment power and 245,775 shares over which he has sole voting and shared
investment power only. In addition, this includes an option to purchase 29,900
shares that can be exercised within the next sixty days.
(2) This includes options to purchase 18,500 shares that can be exercised
within the next sixty days. This does not include an irrevocable trust having
97,420 shares for which Deborah Joyce (daughter of Gino N. Pala and spouse of
Richard F. Joyce) acts as Trustee.
(3) This includes options to purchase 95,470 shares that can be exercised
within the next sixty days.
<PAGE> 5
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that the members
of Dixon Ticonderoga Company Board of Directors shall be divided into three
classes, as nearly equal in number as possible, each of which is to serve for
three years, with one class being elected each year. The terms of the Directors
in Class II expire with this Annual Meeting. Currently eight members are seated
on the Board of Directors. Certain seats within the three classes remain
vacant. Directors are elected by plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
election of directors.
Unless authority with respect thereto is withheld in the proxy, it is the
intention of the persons named as proxies in the enclosed proxy card to vote for
the election as directors the nominees named below to serve as directors until
their respective terms expire and until their successors shall have been elected
and qualified. In the event that any nominee shall become unable or unwilling
to serve as a director, the proxies named in the enclosed proxy card intend to
vote for such other person as they deem proper. The Board of Directors knows of
no reason why any nominee will be unable or unwilling to serve as a director.
Shareholders may vote for, or withhold their vote from, the entire slate
of nominees by marking the appropriate box on the proxy card. Shareholders may
withhold their votes from any particular nominee by writing that nominee's name
in the place indicated on the proxy card.
At the 1996 Annual Meeting of Shareholders 91.0% of the Common Shares were
present in person or by proxy and the percentage of total shares cast for and
withheld from the vote for each nominee is shown in the following table:
Percentage
Withholding
Nominee Percentage For Authority
------------------ -------------- -----------
Joseph R. Sadowski 90.6% O.4%
Philip M. Shasteen 90.6% 0.4%
<PAGE> 6
DIRECTORS WHO ARE NOMINATED FOR ELECTION
<TABLE>
<CAPTION>
Year
First Class & Year
Became Principal Occupation or Employment During the Past Five In Which
Name Age Director Years and Directorships of Other Public Companies Term Expires
- ---- --- -------- ------------------------------------------------------- ------------
<S> <C> <C> <C> <C>
John E. Ramondo 68 1986 Senior Vice President of Construction, Simco Corp., Brownsville, Class II
TN; prior thereto Manager of Projects, Cogeneration Services, Inc. 1997
(a division of Kamine Development Corp.) Union, N.J. since 1990.
Kent Kramer 52 1997 Chief Executive Officer of Professional Sports Marketing, Inc., Class II
Dallas, TX, since November, 1996; prior thereto President of 1997
Professional Sports Marketing, Inc., since 1985.
Ben Berzin, Jr. 49 1994 Senior Vice President, PNC Capital Recovery Corp. (formerly Class II
Midlantic Bank, N.A.), East Brunswick, NJ, since 1990. 1997
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
Gino N. Pala 68 1978 Chairman of the Board of the Company since February, 1989; Class I
(Father-in-law of President Chief Executive Officer since July 1985; prior thereto 1998
Richard F. Joyce) President and Co-Chief Executive Officer since August, 1978.
Richard F. Joyce 41 1982 Vice Chairman of the Board since January, 1990; President and Class I
(Son-in-law of Chief Operating Officer, Consumer Group since March 1996; 1998
Gino N. Pala) Executive Vice President and Chief Legal Executive, since February
1991; prior thereto Corporate Counsel since July, 1990.
Bobby Brantley 47 1991 Governmental Consultant, Brantley & Associates, Tallahassee, FL, Class I
since September, 1995; prior thereto real estate sales, 1998
Telluride, CO, since June, 1992; prior thereto Executive Director
of the Florida Golf Council since January, 1991; prior thereto
Lieutenant Governor of the State of Florida and Secretary of
Florida Department of Commerce since January, 1986.
Joseph R. Sadowski 65 1986 Co-chairman, Atlas Energy Group, Inc., Coraopolis, PA, since Class III
December 1993. Founder and President, Atlas Energy Group, Inc. 1999
since 1971.
Philip M. Shasteen 47 1986 Attorney/Shareholder, Johnson, Blakely, Pope, Ruppel Class III
& Burns, P.A., Tampa, FL, since August, 1992; prior 1999
thereto Attorney, Philip M. Shasteen, P.A., Tampa, FL,
since 1986
</TABLE>
<PAGE> 7
MEETINGS AND COMMITTEES OF THE BOARD
For the fiscal year ending September 30, 1996, the Board of Directors of
the Company met seven times, including the annual meeting of directors following
the 1996 Annual Meeting of Shareholders. No director attended less than
seventy-five percent (75%) of (a) the Board meetings or (b) the meetings of all
committees on which he serves held during fiscal year. Committee appointments
are reviewed by the Board in March each year. The Company does not have a
Nominating Committee.
Audit Committee
The Board of Directors has an Audit Committee currently composed of the
following directors: Ben Berzin Jr. (Chairman) and Philip M. Shasteen(1). The
Audit Committee is primarily concerned with the effectiveness of the Company's
accounting policies and practices, financial reporting and internal controls.
Specifically, the Committee reviews and approves the scope of the annual audit
of the books and records of the Company and reviews the findings and
recommendations of the outside auditors on completion of the audit; considers
the organization, scope and adequacy of the Company's internal controls
function; monitors the extent to which the Company has implemented changes
recommended by the independent auditors or the Committee; and provides
oversight with respect to accounting principles employed in the Company's
financial reporting. The Committee, comprised entirely of non-employee
directors, met three times during the past fiscal year.
Compensation Committee
The Board of Directors has a Compensation Committee currently composed of
the following directors: John Ramondo (Chairman), Joseph R. Sadowski and Bobby
Brantley. The Compensation Committee is primarily concerned with the Company's
organization, salary and non-salary compensation and benefit programs. The
Committee also recommends to the Board of Directors annual salaries, bonus
programs and stock option plans covering the Chief Executive Officer. The
Committee, comprised entirely of non-employee directors, met once during the
past fiscal year. No Compensation Committee members are or have been officers
or employees of the Company and none had interlocking relationships with any
other entities, including any of the type that would be required to be
disclosed herein.
Under the guidelines established by the previously adopted Management
Incentive Program ("MIP"), the Committee evaluates Dixon Ticonderoga's
management employee performance. Factors which are considered under the
MIP guidelines include: corporate performance, business unit performance and
personal performance. The corporate performance rating is largely based upon
the Company's growth in earnings per share. The business unit ratings are
based primarily on profit performance, return on equity and budgetary success.
The personal performance can include such factors as meeting set strategic
planning goals and organizational and management development.
- -----------------------
(1) Fred Hawkins resigned from the Board of Directors and the Audit
Committee in fiscal 1996 due to personal reasons.
<PAGE> 8
Under the MIP, incentive awards are made annually to key management
employees as determined by top corporate management and approved by the
Committee and include both cash and stock incentives. The objectives of the
MIP are to motivate and reward the accomplishment of corporate and business
unit annual objectives, reinforce a strong performance orientation and provide
a fully competitive compensation package which will attract, reward and retain
individuals of the highest quality. As a pay-for-performance plan, year-end
cash bonus awards are paid only upon the achievement of performance objectives
established for the fiscal year. Appropriate performance objectives are
established for each fiscal year in support of the Company's annual strategic
plan and a weighting is established for each component based on the relative
importance of each to the individual. As discussed below, stock options may
also be granted to key employees as part of the Company's incentive program.
The Committee meets annually to evaluate the Chief Executive Officer's
performance and reports on that evaluation to the independent directors of the
Board. In 1996, the Committee rated highly the Chief Executive Officer's role
in raising corporate revenues and his leadership in developing the Company's
management structure and succession and further carrying out the Company's
financing and other strategic objectives. The annual compensation level of
$200,000 had not been increased in eight years. This year, the Compensation
Committee decided to increase the Chief Executive Officer's salary to $235,000
per annum. As discussed below, the Company entered into an employment agreement
with the Chief Executive Officer and one other corporate officer in 1995. The
Chief Executive Officer also received a bonus payment of $43,100 under the
Management Incentive Program discussed above.
The foregoing report is submitted by the members of the Compensation
Committee:
John E. Ramondo (Chairman)
Joseph R. Sadowski
Bobby Brantley.
COMPENSATION OF DIRECTORS
Each non-employee director receives a retainer of $7,500.00 a year plus
$400.00 for each meeting of the Board of Directors he attends, and $450.00 for
each Committee meeting he attends. Officers-directors receive $350.00 for each
Board meeting attended. The Company also reimburses its directors for travel,
lodging and related expenses incurred in attending Board and committee meetings
and provides each director with liability insurance.
<PAGE> 9
OFFICERS OF THE COMPANY
Name Age Title
---- --- -----
Gino N. Pala 68 Chairman of the Board since February, 1989;
President and Chief Executive Officer since
July, 1985; prior thereto President and Co-
Chief Executive Officer since August, 1978.
Richard F. Joyce 41 Vice Chairman of the Board since January,
1990; President and Chief Operating Officer,
Consumer Group since March, 1996; Executive
Vice President and Chief Legal Executive since
February, 1991; prior thereto Corporate
Counsel since July, 1990.
Richard A. Asta 40 Executive Vice President of Finance and Chief
Financial Officer since February, 1991; prior
thereto Senior Vice President-Finance and Chief
Financial Officer since March, 1990. In
February, 1995, Mr. Asta was named in an
indictment stemming from his prior employment
with the accounting firm of Laventhol & Horwath,
which principally relates to his involvement in
allegedly faulty audits of a client of that firm
in 1988. Mr. Asta has recently reached terms to
settle the matter by agreeing to plea to a
single lesser charge contained in the indictment
and to continue his cooperation in the
Government's investigation and legal proceedings
involving other named defendants.
Leonard D. Dahlberg, Jr. 45 Executive Vice President, Industrial Group,
since March, 1996; prior thereto Executive Vice
President of Manufacturing/ Consumer Products
Division since August, 1995; prior thereto
Senior Vice President of Manufacturing since
February, 1993; prior thereto Vice President of
Manufacturing since March, 1990.
Kenneth A. Baer 50 Vice President and Treasurer since January,
1991; prior thereto Treasurer since November,
1985.
John Adornetto 55 Vice President and Corporate Controller since
January, 1991; prior thereto Corporate
Controller since September, 1978.
Richard H. D'Antonio 48 Senior Vice President and Chief Information
Officer since March, 1996; prior thereto Vice
President of Information Services since October,
1993; prior thereto Principal of RHD Consulting
since May, 1990.
Laura Hemmings 45 Corporate Secretary since January, 1986; prior
(formerly Van Camp) thereto Secretary to President and Chief
Executive Officer since February, 1982.
<PAGE> 10
EXECUTIVE COMPENSATION
To meet the goal of providing the shareholders a concise, comprehensive
overview of compensation awarded, earned or paid in the reporting period, the
Summary Compensation Table is presented below. The Summary Compensation Table
includes individual compensation information on the Chief Executive Officer and
four other most highly paid officers, for services rendered in all capacities
during the fiscal years ended September 30, 1996, 1995 and 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Number of
Options
Name/Title Year Salary Bonus Other(1) Granted
<S> <C> <C> <C> <C> <C>
Gino N. Pala 1996 $ 204,375 $43,100 $30,821 -0-
President and 1995 $ 200,000 $ -0- $53,581 10,000
Chief Executive Officer 1994 $ 200,000 $79,000 $20,963 20,000
Richard F. Joyce, 1996 $ 141,700 $23,780 $32,554 -0-
President and Chief Operating 1995 $ 128,460 $ -0- $48,420 10,000
Officer, Consumer Group and 1994 $ 120,050 $37,440 $19,276 10,000
and Executive Vice President
and Chief Legal Executive
Richard A. Asta 1996 $ 141,110 $23,367 $21,353 -0-
Executive Vice President 1995 $ 134,706 $ -0- $20,359 10,000
of Finance and Chief 1994 $ 127,000 $39,624 $55,300 10,000
Financial Officer
Thomas Maskell 1996 $ 99,822 $27,769 $13,559 -0-
General Manager/New 1995 $ 93,206 $46,710 $13,671 -0-
Castle Refractories Division 1994 $ 86,346 $10,189 $ 6,742 2,000
Leonard D. Dahlberg, Jr. 1996 $ 97,665 $12,077 $19,826 -0-
Executive Vice President, 1995 $ 90,349 $ -0- $26,977 2,000
Industrial Group 1994 $ 85,117 $16,570 $90,497 2,000
</TABLE>
(1) The totals in this column reflect the aggregate value of the Company
contributions under a modified 401(k) Thrift Plan, gain from the exercise of
stock options and perquisites, including personal, non-plan benefits.
EMPLOYMENT AGREEMENTS
In March, 1995, the Company entered into employment agreements with the
Chief Executive Officer and the Executive Vice President and Chief Legal
Executive. The agreements provide for the continuation of salary and related
employee benefits for a period of 24 months following their termination of
employment under certain changes in control of the Company. In addition, all
options held by these officers would become immediately exercisable upon the
date of termination and remain exercisable for 90 days thereafter.
<PAGE> 11
OUTSTANDING STOCK OPTIONS
The following table sets forth cumulative information concerning
outstanding options to purchase shares of the Company's Common Stock granted,
exercised or expired as of November 30, 1996. The options were granted pursuant
to the 1988 Dixon Ticonderoga Company Executive Stock Plan, as amended, (the
"1988 Plan"). Outstanding options under the 1988 Plan vest 25% after one year;
25% after two years; and 50% after three years, and remain exercisable for a
period of three years from the date of vesting. All options expire three months
after termination of employment. At November 30, 1996, there were 287,192
options outstanding and 231,390 shares available for future grants under the
1988 Plan. The 1988 Plan provides for participation by officers or key
management employees of the Company or its subsidiaries. The following table
discloses (for the Chief Executive Officer and other named officers) the gain
or "spread" that would be realized if the options granted were exercised on
the expiration date when the Company's stock price had appreciated by the
percentage levels indicated annually from the market price on the date of
the grant.
<PAGE> 12
<TABLE>
OPTION GRANTS
<CAPTION>
% of Total
Options Exercise Final Assumed Stock Assumed Stock
Options Granted in Year of Base Expiration Apprecation Appreciation
Name and Title Granted (#) of Grant Price ($/Sh) Date 5% ($) 10% ($)
- -------------- ----------- --------------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gino N. Pala 21,400 <F1> 17.4% $4.75 2/97 $ 29,479 $ 66,073
President and Chief 7,000 <F2> 15.2% $7.75 12/98 $ 15,733 $ 35,263
Executive Officer 20,000 <F3> 20.0% $8.62 10/00 $ 49,996 $112,060
10,000 <F4> 10.6% $6.75 12/01 $ 19,575 $ 43,875
Richard F. Joyce 15,000 <F1> 12.2% $4.75 2/97 $ 20,663 $ 46,313
President and Chief 3,500 <F2> 7.6% $7.75 12/98 $ 7,866 $ 17,631
Operating Officer-Consumer 10,000 <F3> 10.0% $8.62 10/00 $ 24,998 $ 56,030
Group and Executive Vice 10,000 <F4> 10.6% $6.75 12/01 $ 19,575 $ 43,875
President and Chief Legal
Executive-Corporate
Richard A. Asta 15,000 <F1> 12.2% $4.75 2/97 $ 20,663 $ 46,313
Executive Vice President 3,500 <F2> 7.6% $7.75 12/98 $ 7,866 $ 17,631
of Finance and Chief 10,000 <F3> 10.0% $8.62 10/00 $ 24,998 $ 56,030
Financial Officer 10,000 <F4> 10.6% $6.75 12/0l $ 19,575 $ 43,875
Thomas Maskell 1,000 <F1> 0.8% $4.75 2/97 $ 1,378 $ 3,088
General Manager/ 1,000 <F2> 2.2% $7.75 12/98 $ 2,248 $ 5,038
New Castle Refractories 2,000 <F3> 2.0% $8.62 10/00 $ 5,000 $ 11,206
Leonard D. Dahlberg, Jr. 9,188 <F1> 7.5% $4.75 2/97 $ 12,656 $ 28,368
Executive Vice President- 2,000 <F2> 4.4% $7.75 12/98 $ 4,495 $ 10,075
Industrial Group 2,000 <F3> 2.0% $8.62 10/00 $ 5,000 $ 11,206
2,000 <F4> 2.1% $6.75 12/01 $ 3,915 $ 8,775
<F1> Granted February 22, 1991 under the 1988 Dixon Ticonderoga Company Executive Stock Option Plan to vest 25% after
one year, 25% after two years, and 50% after three years, to expire three years from the date of vesting.
<F2> Granted December 18, 1992 under the 1988 Dixon Ticonderoga Company Executive Stock Option Plan to vest 25% after
one year; 25% after two years; and 50% after three years, to expire three years from the date of vesting.
<F3> Granted October 21, 1994 under the 1988 Dixon Ticonderoga Company Executive Stock Option Plan to vest 25%
after one year; 25% after two years; and 50% after three years, to expire three years from the date of vesting.
<F4> Granted December 15, 1995 under the 1988 Dixon Ticonderoga Company Executive Stock Option Plan to vest 25% after
one year; 25% after two years; and 50% after three years, to expire three years from the date of vesting.
</TABLE>
<PAGE> 13
The following table presents individual grants of options that were made
and/or exercised or expired during the last three fiscal years to each of the
named executives. This table also is intended to allow shareholders to
ascertain the number and size of option grants made during the last three years,
as well as options exercisable, and their value as of September 30, 1996.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST THREE FISCAL YEARS AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Options at Value of Options at
Fiscal Year-End (#) Fiscal Year-End ($)<F1>
Shares Acquired Value ------------------------- -------------------------
Name and Title on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gino N. Pala 39,300 <F2> $70,740 -0-<F2> -0-<F2> $ -0- $ -0-
President and Chief 11,000 $32,580 10,400<F3> -0-<F3> $29,900 $ -0-
Executive Officer 7,000<F4> -0-<F4> $ -0- $ -0-
10,000<F5> 10,000<F5> $ -0- $ -0-
2,500<F6> 7,500<F6> $ 2,188 $ 6,563
Richard F. Joyce 7,500 $27,187 7,500<F3> -0-<F3> $21,563 $ -0-
President and Chief 3,500<F4> -0-<F4> $ -0- $ -0-
Operating Officer-Consumer 5,000<F5> 5,000<F5> $ -0- $ -0-
Group and Executive Vice 2,500<F6> 7,500<F6> $ 2,188 $ 6,563
President and Chief Legal
Officer-Corporate
Richard A. Asta 7,500 $39,375 7,500<F3> -0-<F3> $21,563 $ -0
Executive Vice President 3,500<F4> -0-<F4> $ -0- $ -0-
of Finance and Chief 5,000<F5> 5,000<F5> $ -0- $ -0-
Financial Officer 2,500<F6> 7,500<F6> $ 2,188 $ 6,563
Thomas Maskell 1,000 $ 6,125 -0-<F3> -0-<F3> $ -0- $ -0-
General Manager/ 1,000<F4> -0-<F4> $ -0- $ -0-
New Castle Refractories 1,000<F5> 1,000<F5> $ -0- $ -0-
Leonard D. Dahlberg 16,376 <F2> $66,977 -0-<F2> -0-<F2> $ -0- $ -0-
Executive Vice President- 2,500 <F3><F7> $15,000 4,594<F3> -0- $13,208 $ -0-
Industrial Group 2,000<F4> -0-<F4> $ -0- $ -0-
1,000<F5> 1,000<F5> $ -0- $ -0-
500<F6> 1,500<F6> $ 438 $ 1,313
<F1> Closing price at fiscal year end was $7.625 per share.
<F2> Granted at $4.20 per share on July 28, 1986 under the 1979 Dixon Ticonderoga Company Executive
Stock Option Plan to expire on July 27, 1996. Adjusted for stock split on July 22, 1988.
<F3> Granted February 22, 1991 under the 1988 Dixon Ticonderoga Company Executive Stock Option Plan to
vest 25% after one year, 25% after two years, and 50% after three years, to expire three years from the
date of vesting.
<F4> Granted December 18, 1992 under the 1988 Dixon Ticonderoga Company Executive Stock Option Plan to
vest 25% after one year; 25% after two years; and 50% after three years, to expire three years from the
date of vesting.
<F5> Granted October 21, 1994 under the 1988 Dixon Ticonderoga Company Executive Stock Option Plan to
vest 25% after one year; 25% after two years; and 50% after three years, to expire three years from the
date of vesting.
<F6> Granted December 15, 1995 under the 1988 Dixon Ticonderoga Company Executive Stock Option Plan to
vest 25% after one year; 25% after two years; and 50% after three years, to expire three years from the
date of vesting.
<F7> An additional 2,094 options were allowed to expire.
</TABLE>
<PAGE> 14
The following graph demonstrates a five-year comparison of cumulative
total returns based upon (1) the Company's fiscal year end and (2) an initial
investment of $100.00 in Company stock, as compared with the Russell 2000 Broad
Market Index and the Standard Industry Group of Listed Securities for Office
Equipment and Supplies.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
Dixon
Measurement Period Ticonderoga Industry Broad
(Fiscal Year Covered) Co. Index Market
------------------- ----------- -------- ------
1991 100 100 100
1992 125.00 105.11 108.94
1993 153.13 117.25 145.06
1994 243.75 127.34 148.94
1995 193.75 163.28 183.74
1996 190.63 120.39 208.08
EMPLOYEE 401(k) THRIFT PLAN
The Company adopted a 401(k) Thrift Plan effective January 1, 1985. The plan
permits domestic non-union employee contributions of up to 26% of salary; 16% of
which is tax deferred. The Company matches up to 50% of the first 8% providing
such match will be contributed from pre-federal income tax profit or accumulated
profits and the Company will contribute 3% of gross wages of all domestic non-
union employees regardless of profits or employee contributions. The Tax Reform
Act of 1986 has put further limitation on the tax deferral of matching and
employee contributions.
<PAGE> 15
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN AMENDMENT
Introduction
On December 13, 1996, subject to stockholder approval, the Board of
Directors adopted an amendment (the "Amendment") to the Dixon Ticonderoga
Company 1988 Employee Qualified Stock Purchase Plan (the "Purchase Plan")
increasing the number of shares of common stock which may be issued under the
Purchase Plan from 100,000 to 180,311. The Purchase Plan was created as an
incentive to encourage stock ownership by all eligible employees of the Company
and its Subsidiaries so that they may share in the fortunes of the Company by
acquiring or increasing their proprietary interest in the Company. The Purchase
Plan is designed to encourage eligible employees to remain in the employ of the
Company. As of November 30, 1996 a total of 80,311 shares of the Company common
stock had been issued under the Purchase Plan. The purpose of the Amendment is
to replenish the number of shares available under the Purchase Plan.
For all of the foregoing reasons, the Board of Directors recommends a vote
FOR the Purchase Plan Amendment. The affirmative vote of the majority of shares
entitled to vote, present in person or represented by proxy at the meeting is
required to approve the Purchase Plan Amendment.
Summary of the Provisions of the Purchase Plan
The following is a summary of the provisions of the Purchase Plan, the
form of which along with the form of the proposed Amendment to the Purchase
Plan is appended to this Proxy Statement. The following summary is qualified
in its entirety by the specific language of the Purchase Plan.
The Purchase Plan is administered by the Compensation Committee consisting
of three or more members of the Board of Directors who are non-employees (the
"Committee"). The Committee has full authority to interpret the Purchase Plan
and to make such rules and regulations and establish such procedures as it deems
appropriate for the administration of the Purchase Plan, taking into
consideration the recommendations of management.
All employees of the Company or its Subsidiaries are eligible to receive
options under the Purchase Plan. However, in no event may an employee be
granted an option if such employee, immediately after the option is granted,
owns stock possessing 5% or more of the total combined voting power or value of
all classes of stock of the Company.
If the Purchase Plan Amendment is adopted, the aggregate number of shares
which may be issued pursuant to the Purchase Plan will be 180,311, subject to
increase or decrease by reason of stock split-ups, reclassifications, stock
dividends, changes in par value, and the like.
An employee may enter the Purchase Plan by completing specified forms and
delivering them to the Company. An eligible employee may authorize payroll
deductions in any even dollar amount up to but not more than 10% of his base
pay, with a minimum deduction with respect to any month of $30.
<PAGE> 16
Once each year, on the first Business Day of the payment period (the 12-
month period from May 1 to April 30), the Company is deemed to have granted to
each eligible employee who is then a participant in the Purchase Plan an option
to purchase on the last day of the payment period at the option price specified
in the Purchase Plan such number of shares of common stock of the Company as his
accumulated payroll deductions on the last day of such payment period will pay
for at such option price provided that such employee remains eligible to
participate in the Purchase Plan throughout such payment period. The option
price for each payment period is the lesser of (i) 85% of the fair market value
of the Company's common stock on the first Business Day of the payment period,
or (ii) 85% of the fair market value of the Company's common stock on the last
Business Day of the payment period. For purposes of the Plan, the term "fair
market value" means the average of the high and low prices of the common stock
on the principal exchange on which the common stock is listed.
No employee may be granted an option which permits his rights to purchase
common stock under the Purchase Plan and any similar plans of the Company to
accrue at a rate which exceeds $25,000 of fair market value of such stock
(determined at the time such option is granted) for each calendar year in which
such option is outstanding at any time.
Each eligible employee who continues to be a participant in the Purchase
Plan on the last Business Day of the payment period is deemed to have exercised
his option on such date and is deemed to have purchased from the Company such
number of shares of common stock reserved for the purpose of the Purchase Plan
as his accumulated payroll deductions on such date will pay for at the option
price. If a participant is not an employee on the last Business Day of a
payment period, he is not entitled to exercise his option.
An employee is not permitted to transfer, pledge or otherwise dispose of
or encumber either the payroll deductions credited to his account or any rights
with regard to the exercise of an option or to receive shares under the Purchase
Plan other than by will or the laws of descent and distribution. An employee's
rights under the Purchase Plan terminate when he ceases to be an employee of the
Company or a Subsidiary.
The Purchase Plan may be terminated at any time by the Committee. The
Committee may also amend or modify the Plan at any time without notice, provided
that no employees' existing rights under any outstanding option may be adversely
affected by such amendment or modification and, provided further, that no such
amendment may, except for adjustments by reason of changes in capitalization,
increase the number of shares which may be issued pursuant to the Plan unless
shareholder approval is obtained.
Summary of Federal Income Tax Consequences of the Purchase Plan
The tax consequences of the Purchase Plan under current federal law are
summarized in the following discussion which deals with the general tax
principles applicable to the Purchase Plan and is intended for general
information only. Alternative minimum tax and state and local income taxes are
not discussed, and may vary depending on individual circumstances and from
locality to locality. As the tax consequences of participation in the Purchase
Plan are complex and subject to change, a taxpayer's particular situation may be
such that some variation of the described rules is applicable.
<PAGE> 17
For federal income tax purposes, the recipient of options granted under
the Purchase Plan will not have taxable income upon the grant of the option, nor
will the Company then be entitled to any deduction. As the option price under
the Purchase Plan is less than the fair market value of the shares of stock on
the date of grant, provided the holding periods described below are met, when
the shares of stock received pursuant to the Purchase Plan are sold or are
otherwise disposed of in a taxable transaction, the participant will realize
ordinary income in an amount equal to the lesser of (i) the excess of the
fair market value of the common stock at the time of such disposition over
the amount paid for the shares, or (ii) 15% of the stock's fair market value
on the first Business Day of the payment period. Such recognition of income
upon disposition has the effect of increasing the basis of the shares in the
participant's hands, by an amount equal to the amount of income recognized.
Any additional gain or loss resulting from the disposition (provided it is not
a disqualifying disposition), and the amount realized (less the amount
recognized as income as described above), will be recognized to the participant
as long-term capital gain or loss.
In order for a participant to receive the favorable tax treatment
described above, the Internal Revenue Code (the "Code") requires that the
participant make no disposition of the shares within two years after the date
the option was granted nor within one year after the date such option was
exercised and the shares were transferred to him.
If a participant disposes of the common stock before the expiration of the
holding period requirements described above, the participant will realize,
at the time of the disposition, ordinary income to the extent the fair
market value of the common stock on the date the shares were purchased exceeds
the purchase price. The difference between the fair market value of the
common stock at the date the shares were purchased and the amount realized upon
disposition is treated as a capital gain or loss. At the time of the
disposition, the Company is allowed a corresponding deduction to the extent
of the amount of the participant's ordinary income.
As of November 30, 1996, 80,311 shares of common stock have been purchased
pursuant to the Purchase Plan. Because only employees are eligible to
participate, no non-employee directors have been issued options under the
Purchase Plan. John Adornetto is the only executive officer who has
participated in the Purchase Plan. He is expected to contribute approximately
$1,440 in the next fiscal year toward purchases under the Purchase Plan.
<PAGE> 18
RATIFICATION OF AMENDED AND RESTATED STOCK OPTION PLAN
Introduction
On December 13, 1996, subject to stockholder ratification, the Board of
Directors adopted an Amended and Restated Stock Option Plan (the "New Plan")
which amends and restates the 1988 Dixon Ticonderoga Company Executive Stock
Plan (the "1988 Plan"), which will expire in 1998. The New Plan is a
successor plan to the 1988 Plan. The primary changes embodied in the New
Plan will be (1) various amendments, including an amendment of the definition
of the term "Committee" which will administer the New Plan, to ensure
continued compliance with Section 16 of the Securities Exchange Act of 1934
in light of new rules (particularly Rule 16b-3) adopted thereunder by the
Securities and Exchange Commission, (2) an amendment of the definition of
"Fair Market Value" to account for the listing of the Company's common stock
on the American Stock Exchange since the adoption of the 1988 Plan, (3) an
amendment expanding the definition of the term "Employees" to more accurately
reflect the identity of those persons who will be eligible to receive grants
of options under the New Plan, (4) an amendment providing that the aggregate
number of shares of common stock which may be issued pursuant to the exercise
of options granted under the New Plan may not exceed 401,390 shares plus the
aggregate number of shares of Company common stock (287,192) with respect to
which options have been granted and are outstanding under the 1988 Plan as of
the Effective Date of the New Plan, subject to adjustment for changes in
capitalization, (5) an amendment authorizing the Committee to amend the terms
of options outstanding on the effective date of the New Plan, (6) an
amendment clarifying instances in which the number and kind of shares subject
to outstanding options, the exercise price for such shares and the number and
kind of shares available for options subsequently granted under the New Plan
are to be adjusted in the event of certain changes in the capitalization of
the Company, (7) the elimination of a provision that options must be granted
within ten years, (8) an amendment permitting the payment of the exercise price
(and any withholding obligations) by the delivery or withholding of shares of
Company common stock and loans by the Company to assist employees in the payment
of such exercise price, (9) an amendment permitting the Committee, in the event
that payment of the exercise price is made with shares of common stock, to grant
replacement options, and (10) an amendment to permit the possibility of
transferability and assignment of options. The Board of Directors has
determined that the changes embodied in the New Plan are appropriate and in
the best interests of the Company's shareholders. With the exception of the
foregoing items, the New Plan will be substantially the same as the 1988 Plan.
The 1988 Plan was created as a means of advancing the interests of the
Company and its shareholders by affording certain key employees of the Company
an opportunity to acquire or increase their proprietary interest in the Company
by the grant to such employees of options. By encouraging such employees to
become owners of Company shares, the Company sought to motivate, retain and
attract those highly competent individuals upon whose judgment, initiative,
leadership and continued efforts the success of the Company in large measure
depends. The New Plan continues these goals.
For all of the foregoing reasons, the Board of Directors recommends a vote
FOR the ratification of the New Plan. The affirmative vote of the majority of
shares entitled to vote, present in person or represented by proxy at the
meeting is required to ratify the New Plan.
<PAGE> 19
Summary of the Provisions of the New Plan
The following is a summary of the provisions of the New Plan, the form of
which is appended to this Proxy Statement. The following summary is qualified
in its entirety by the specific language of the New Plan.
The New Plan is administered by the Compensation Committee (the
"Committee") appointed by the Board of Directors. The Committee has sole
discretion and authority to determine from among the employees those to whom and
the time and times at which such options may be granted and the number of shares
of common stock to be subject to each option. Subject to the express provisions
of the New Plan, the Committee also has complete authority to interpret the New
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the details and provisions of each stock option agreement granted
under the plan so long as such provisions are consistent with the New Plan
(including but not limited to vesting schedules and the acceleration thereof
in certain events, and payment provisions) and to make all other
determinations necessary or advisable in the administration of the New Plan.
Employees of the Company or of any subsidiary of the Company are eligible
to receive grants of options under the New Plan. A grant of an option under the
plan allows the recipient the right to purchase shares of Company common stock
at a specified price, but, in any event, not less than the fair market value of
the underlying shares of common stock on the date of grant. Options become
exercisable, in whole or in part, and expire, in whole or in part, on such dates
as are determined by the Committee at the date of the grant; however, option may
not be exercised unless and until the Optionee shall have been or remained
in the employ of the Company or a subsidiary for one year from and after the
date such option was granted, and unless certain securities law requirements
are met. The term of an option may in no event exceed ten years after the
date of grant.
Subject to adjustment in the event of certain capital changes, the
aggregate number of shares of common stock which may be issued pursuant to the
exercise of options granted after the effective date of the New Plan may not
exceed 401,390 shares. Such shares are in addition to the aggregate number of
shares of common stock which may be issued pursuant to the exercise of
outstanding options granted under the 1988 Plan to purchase 287,192 shares. If
options (including options granted under the 1988 Plan) terminate for any reason
without being wholly exercised, new options may be granted under the New Plan
covering the number of shares to which such option termination relates.
In the event of the dissolution or liquidation of the Company or any
merger or combination in which the Company is not the surviving entity, each
outstanding option granted under the New Plan (including options granted
under the 1988 Plan) terminates, but the Optionee has the right, immediately
prior to such dissolution, liquidation, merger or combination, to exercise
his option in whole or in part, to the extent that it shall not have been
theretofore exercised, without regard to any installment exercise or vesting
provisions.
<PAGE> 20
Option exercises must be accompanied by payment in full to the Company of
the amount of the purchase price for the number of shares of stock with respect
to which the option is then being exercised, which payment may be by any of the
following means or any combination thereof: (1) cash; (2) certified or
cashier's check payable to the Company; (3) the delivery of whole shares of
Company common stock owned by the option holder; or (4) by requesting that
the Company withhold whole shares of Company common stock then issuable upon
exercise of the option (for purposes of such a transaction the value of these
shares is deemed to be equal to the Fair Market Value of the shares on the
date of the exercise of the option) in which case the option with respect to
the shares withheld is deemed to be surrendered and canceled. In addition,
the Company is vested with authority under the New Plan to assist any
employee to whom an option is granted (including any director or officer of
the Company or any Subsidiary who is also an employee) in the payment of the
purchase price payable on exercise of such option, by lending the amount of
such purchase price to such employee on such terms and such rates of
interest and upon such security (or unsecured) as shall have been authorized
by or under authority of the Committee.
It is a condition to the obligation of the Company to issue or transfer
common stock upon exercise of an option that the Optionee pay to the Company,
on demand, such amount as may be requested by the Company for the purpose of
satisfying its liability to withhold federal, state, or local income or other
taxes incurred by reason of the exercise of such option. In the discretion of
the Committee, withholding obligations may be satisfied by an Optionee in any
of the methods which may be used to pay the purchase price as set forth in the
New Plan.
To the extent that the payment of the exercise price for shares purchased
pursuant to the exercise of an option is made with shares of Company common
stock, then at the discretion of the Committee, the Optionee may be granted a
replacement option under the New Plan to purchase a number of shares of Company
common stock equal to the number of shares tendered as permitted in the New
Plan, with an exercise price per share equal to the Fair Market Value on the
date of grant of such replacement option and with a term extending to the
expiration date of the original option.
The Committee determines whether options may be assigned or transferred
by the Optionee and, if an option is transferable, the Committee is authorized
to restrict transferability to certain persons or classes of persons. In the
event of the death of an Optionee, options are transferable by will or by the
laws of descent and distribution.
Material amendments to outstanding options require the approval of the
Committee and must be agreed upon by the Optionee.
If, prior to a date one year after the date an option is granted, the
Optionee's employment by the Company or a Subsidiary is terminated by the
Company or such Subsidiary with or without cause, or by the action of the
Optionee, the Optionee's right to exercise such option terminates and all
rights thereunder cease; provided, however, that if the Optionee dies, retires
or becomes permanently or totally disabled prior to a date one year after the
date an option shall have been granted, such option becomes exercisable in full
on the date of such death, retirement or disability and, in the case of
retirement or disability, such option remains exercisable for three months
after the date of such retirement or disability.
<PAGE> 21
If, on or after one year after the date an option is granted, an
Optionee's employment by the Company or a Subsidiary is terminated for any
reason other than death, the Optionee has the right, during the period ending
three months after such termination, to exercise such option to the extent
that it was exercisable at the end of such termination of employment and
is unexercised.
If an Optionee dies while in the employ the Company or a Subsidiary or
within three months after termination of such employment, the executor or
administrator of the estate of the decedent or the person or persons to whom an
option shall have been validly transferred by the executor or administrator
pursuant to will or the laws of descent and distribution has the right, during
the period ending one year after the date of the Optionee's death, to exercise
the Optionee's option to the extent that it was exercisable at the date of
termination of employment by death or otherwise and is unexercised.
The Committee may at any time terminate, and may at any time from time to
time and in any respect amend or modify the New Plan. However, no termination,
amendment or modification shall in any manner affect any option theretofore
granted without the consent of the Optionee or the transferee of the option.
Historic Award Information
As of November 30, 1996, outstanding and unexercised options granted under
the 1988 Plan to purchase 287,192 shares of common stock were held by 60
persons. As of November 30, 1996, approximately 75 employees of the Company
were eligible to participate in the New Plan, although options will be
granted only to select employees, the identity of whom will be determined by
the Committee. On November 30, 1996, the market price of the Company's common
stock was $7.125 per share.
The following table sets forth certain information regarding the ownership
of options by the Company's Chief Executive Officer, each of the Company's four
other most highly compensated executive officers, each of the nominees to the
Board of Directors, each of the Company's current Directors who are not
executive officers taken as a group, the Company's executive officers taken as
a group and the Company's employees taken as a group but excluding the
Company's executive officers as of November 30, 1996. See also "Major
Stockholders," "Security Ownership of Management," and "Outstanding Stock
Options." All such options were granted under the 1988 Plan prior to the
effective date of the New Plan.
<PAGE> 22
Shares of Common Stock
Beneficial Owner Underlying Options (#)
Gino N. Pala . . . . . . . . . . . . . . . . . . . . . . . . 47,400
Chairman of the Board, President
and Chief Executive Officer
Richard F. Joyce . . . . . . . . . . . . . . . . . . . . . . 31,000
Vice Chairman of the Board, President
and Chief Operating Officer, Consumer Group and
Executive Vice President and Chief Legal Executive . . . .
Richard A. Asta. . . . . . . . . . . . . . . . . . . . . . . 31,000
Executive Vice President of Finance and
Chief Financial Officer
Thomas Maskell . . . . . . . . . . . . . . . . . . . . . . . 3,000
General Manager/ New Castle Refractories
Leonard D. Dahlberg, Jr. . . . . . . . . . . . . . . . . . . 10,594
Executive Vice President, Industrial Group
John E. Ramondo. . . . . . . . . . . . . . . . . . . . . . . -0-
Kent Kramer. . . . . . . . . . . . . . . . . . . . . . . . . -0-
Ben Berzin, Jr.. . . . . . . . . . . . . . . . . . . . . . . -0-
All Directors, excluding executive officers, as a group. . . -0-
All executive officers as a group. . . . . . . . . . . . . . 150,220
All employees as a group . . . . . . . . . . . . . . . . . . 136,972
Summary of Federal Income Tax Consequences of the New Plan
The tax consequences of the New Plan under current federal law are
summarized in the following discussion which deals with the general tax
principles applicable to the New Plan, and is intended for general information
only. Alternative minimum tax and state and local income taxes are not
discussed, and may vary depending on individual circumstances and from locality
to locality. As the tax consequences of the grant and exercise of options under
the New Plan are complex and subject to change, a taxpayer's particular
situation may be such that some variety of the described rules is applicable.
For federal income tax purposes, the recipient of options granted under
the New Plan will not have taxable income upon the grant of the option, nor will
the Company then be entitled to any deduction. Generally, upon exercise of
options granted under the New Plan, the Optionee will realize ordinary income,
and the Company will be entitled to a deduction, in an amount equal to the
difference between the option exercise price and the fair market value of the
stock at the date of exercise. An Optionee's basis in the stock for purposes of
determining his gain or loss on his subsequent disposition of the shares
generally will be the fair market value of the stock on the date of exercise of
the option.
<PAGE> 23
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Company's stock, to file initial reports of ownership and reports
of changes in ownership with the Securities & Exchange Commission (SEC) and the
American Stock Exchange. Executive officers, directors and greater than ten
percent (10%) beneficial owners are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Executive Officers and Directors,
the Company believes that all Section 16(a) filing requirements applicable to
its Executive Officers, Directors and greater than ten percent (10%) beneficial
owners were complied with.
SHAREHOLDERS' RIGHTS PLAN
In March, 1995, the Company declared a dividend distribution of one
Preferred Stock Purchase Right on each share of Company common stock. Each
Right will entitle the holder to buy one-thousandth of a share of a new
series of preferred stock at a price of $30.00 per share. The Rights will
be exercisable only if a person or group (other than the Company's chairman,
Gino N. Pala, and his family members) acquires 20% or more of the outstanding
shares of common stock of the Company or announces a tender offer following
which it would hold 30% or more of such outstanding common stock. The Rights
entitle the holders other than the acquiring person to purchase Company common
stock having a market value of two times the exercise prices of the Right.
If, following the acquisition by a person or group of 20% or more of the
Company's outstanding shares of common stock, the Company were acquired in a
merger or other business combination, each Right would be exercisable for that
number of the acquiring company's shares of common stock having a market
value of two times the exercise prices of the Right.
The Company may redeem the Rights at one cent per Right at any time until
ten days following the occurrence of an event that causes the Rights to become
exercisable for common stock. The Rights expire in ten years.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Based on a recommendation from the Audit Committee, the Board of Directors
of the Company has selected Coopers & Lybrand L.L.P. to serve as the Company's
auditor for the next fiscal year.
Representatives of Coopers & Lybrand L.L.P. will be in attendance at the
Annual Meeting of Shareholders and will have an opportunity to make a statement
if they so desire. Such representatives are expected to be available to respond
to appropriate questions from the shareholders.
<PAGE> 24
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors is not at present aware of any other matters to be
brought before the meeting, except those incidental to the conduct of the
meeting. However, if any such matters should come before the meeting, the
persons appointed in the accompanying proxy intend to vote the shares
represented thereby in their discretion.
SHAREHOLDERS PROPOSALS
Any proposal that a shareholder may desire to have included in the
Company's proxy material for presentation at the next Annual Meeting must be
received at the Company's principal office on or prior to October 30, 1997.
SOLICITATION OF PROXIES AND EXPENSES THEREOF
It is presently contemplated that proxies will be solicited only by mail and,
possibly, by telephone, telegraph or personal calls by officers, directors or
regular employees of the Company. However, if the circumstances warrant, the
Company may retain the services of a proxy soliciting firm. Any expense
incurred in the solicitation of proxies, including the expenses of brokers and
other nominees in soliciting non-record owners and of any proxy soliciting firm
retained, will be borne by the Company.
By Order of the Board of Directors,
Laura Hemmings
Secretary
Heathrow, Florida
January 27, 1997
<PAGE> 25
APPENDIX 1
DIXON TICONDEROGA COMPANY
1988 EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
1. Purpose
This 1988 Employee Qualified Stock Purchase Plan (the "Plan") is intended
as an incentive and to encourage stock ownership by all eligible employees
of Dixon Ticonderoga Company (the "Company") and its participating
subsidiaries so that they may share in the fortunes of the Company by
acquiring or increasing their proprietary interest in the Company. The
Plan is designated to encourage eligible employees to remain in the employ
of the Company. It is intended that options issued pursuant to this Plan
shall constitute options issued pursuant to an "employee stock purchase
plan" within the meaning of Section 423 of the 1986 Internal Revenue Code,
as amended (the "Code").
2. Eligible Employees
All employees of the Company or any of its subsidiaries who have been
employed by the Company or any of its subsidiaries for at least six months
as of the first day of a Payment Period shall be eligible to receive
options under this Plan to purchase the Company's common stock, $1.00 par
value ("Common Stock"). Provided, however, in no event may an employee be
granted an option if such employee, immediately after the option is
granted, owns stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the employer corporation or of
its parent or subsidiary corporation as the terms "parent corporation" and
"subsidiary corporation" are defined in Section 425(e) and (f) of the
Code. For purposes of determining stock ownership under this paragraph,
the rules of Section 425(d) of the Code shall apply and stock which the
employee may purchase under outstanding options shall be treated as stock
owned by the employee.
3. Stock Subject to the Plan
The stock subject to the options shall be shares of the Company's
authorized but unissued Common Stock or shares of Common Stock reacquired
by the Company, including shares purchased in the open market. The
aggregate number of shares which may be issued pursuant to the plan is
100,000 subject to increase or decrease by reason of stock split-ups,
reclassifications, stock dividends, changes in par value, and the like.
In the event that shares of Common Stock issued pursuant to the Plan are
authorized but previously unissued shares of Common Stock, no adjustment
shall be made for dividends or other rights for which the record date is
prior to the time of issuance.
4. Authorization for Entering the Plan
(a) An employee may enter the plan by completing, signing, and
delivering to the office of the Corporate Secretary an
Authorization and Enrollment Agreement:
(i) stating the amount to be deducted regularly from his pay;
<PAGE> 26
(ii) authorizing the purchase of stock for him in each payment
period in accordance with the terms of the Plan; and
(iii) specifying the exact name in which stock purchased for
him is to be issued as provided under paragraph 8 hereof.
(b) Such Authorization and Enrollment Agreement must be received by
the Corporate Secretary's office at least 10 days before the
beginning date of such next succeeding Payment Period. Payroll
deductions shall commence immediately upon the commencement of
the Payment Period.
(c) Unless an employee files a new Authorization and Enrollment
Agreement or withdraws from the Plan, his deductions and
purchases under the Authorization and Enrollment Agreement
previously filed under the plan will continue as long as the
Plan remains in effect.
(d) The Company will accumulate and hold for the employee's account
the amounts deducted from his pay. No interest will be paid or
allowed on any money in such amounts.
(e) All funds received or held by the Company under the Plan need
not be segregated from other corporate funds and may be used
for any corporate purpose. Funds under the Plan will not be
invested, other than in the ordinary course of business
conducted by the Company.
5. Payroll Deductions
(a) Subject to the provisions of paragraph 6(e), an eligible
employee may authorize payroll deductions in any even dollar
amount up to, but not more than, 10% of his Base Pay, and the
minimum deduction in respect of any Payment Period shall be $30
per month. For purposes hereof, the term "Base Pay" shall mean
regular straight time earnings, plus bonuses and overtime
payments, payments for incentive compensation, and other
special payments, except to the extent that any such item is
specifically excluded from the definition of "Base Pay" by the
Committee.
(b) All payroll deductions made for an employee shall be credited
to his account under the Plan. An employee may not make any
separate cash payment into such account, nor any payment for
shares be made other than by payroll deductions.
(c) An employee may discontinue his participation in the Plan as
provided in paragraph 10, but no other change can be made
during a Payment Period and, specifically, an employee may not
alter the rate of his payroll deductions during that Payment
Period.
(d) Only full shares of Common Stock may be purchased pursuant to
the Plan. Any balance remaining in an employee's account after
a purchases, due to the prohibition against purchases of
fractional shares, will be reported to the employee and will be
carried forward to be applied against option exercises in the
next Payment Period; otherwise, any remaining balances will be
paid to the employee.
<PAGE> 27
6. Payment Periods and Stock Options
(a) The 12-month periods, May 1 to April 30, are Payment Periods
during which payroll deductions will be accumulated under the
Plan. Each Payment Period includes only regular pay days
falling within it. Provided, however, the Committee may change
the commencement and termination dates of the Payment Periods
in order for the Company to satisfy the requirements of
applicable federal and state securities laws relating to the
offer and sale of Common Stock to employees pursuant to this
Plan.
(b) Once each year, on the first Business Day of the Payment
Period, the Company shall be deemed to have granted to each
eligible employee who is then a participant in the Plan an
option to purchase on the last day of the Payment Period at the
Option Price hereinafter provided for such number of full
shares of the Common Stock of the Company reserved for the
purpose of the Plan as his accumulated payroll deductions on
the last day of such Payment Period will pay for at such Option
Price; provided and on condition that such employee remains
eligible to participate in the Plan throughout such Payment
Period. The Option Price for each Payment Period shall be the
lesser of (i) 85% of the Fair Market Value of the Company's
Common Stock on the first Business Day of the Payment Period;
or (ii) 85% of the Fair Market Value of the Company's Common
Stock on the last Business Day of the Payment Period. In the
event of an increase or decrease in the number of outstanding
shares of Common Stock of the Company through stock split-ups,
reclassifications, stock dividends, changes in par value, and
the like, an appropriate adjustment shall be made in the number
of shares and Option Price per share provided for under the
Plan, either by a proportionate increase in the number of
shares and a proportionate decease in the option Price, per
share, or by a proportionate decrease in the number of shares
and proportionate increase in the Option Price per share, as
may be required to enable an eligible employee who is then a
participant in the Plan as to whom an option is exercised on
the last day of any then current Payment Period to acquire such
number of full shares as his accumulated payroll deductions on
such date will pay for at the adjusted Option Price.
(c) For purposes of this Plan, "Fair Market Value" means, on a per
share basis, the average of the high and low prices of Common
Stock on the principal exchange on which the Common Stock is
listed. In any case, Fair Market Value shall be rounded up to
avoid fractions other than 1/4, 1/2, and 3/4.
(d) For purposes of this plan, the term" Business Day" as used
herein means a day on which there is trading on the New York
Stock Exchange.
<PAGE> 28
(e) No employee shall be granted an option which permits his rights
to purchase Common Stock under the Plan and any similar plans
of the Company or any parent or subsidiary corporations to
accrue at a rate which exceeds $25,000 of Fair Market Value of
such stock (determined at the time such option is granted) for
each calendar year in which such option is outstanding at any
time. The purpose of limitation in the preceding sentence is
to comply with Section 423(b)(8) of the Code.
7. Exercise of Option
Each eligible employee who continues to be a participant in the Plan on
the last Business Day of the Payment Period shall be deemed to have
exercised his option on such date and shall be deemed to have purchased
from the Company such number of full shares of Common Stock reserved for
the purpose of the Plan as his accumulated payroll deductions on such date
will pay for at such Option Price. If a participant is not an employee on
the last Business Day of a Payment Period, he shall be not entitled
exercise his option.
8. Issuance of Stock
(a) Certificates for stock issued to participants will be delivered
as soon as practicable after each Payment Period.
(b) Stock purchased under the Plan will be issued only in the name
of the employee, or if his Authorization and Enrollment
Agreement so specified, in the name of the employee and one
other person of legal age as joint tenants with rights of
survivorship, tenants in common, or as community property to
the extent and in the manner permitted by applicable law.
9. Application of Funds
The proceeds received by the Company from the sale of Common Stock
pursuant to options granted under the Plan shall be used for general
corporate purposes.
10. Withdrawal from the Plan
(a) An employee may withdraw from the Plan, in whole, but not in
part, at any time prior to the last Business Day of each
Payment Period by delivering a Withdrawal Notice to the
Corporate Secretary's office, in which event the Company will
promptly refund the entire balance of his deductions not
theretofore used to purchase stock under the Plan.
(b) An employee who withdraws from the Plan will be treated in the
same manner as an employee who has never entered the Plan. To
re-enter, he must file a new Authorization and Enrollment
Agreement at least 10 days before the beginning date of the
next Payment Period which shall not, however, become effective
before the beginning of the next Payment Period following his
withdrawal.
<PAGE> 29
11. No Transfer or Assignment of Employee's Rights
No employee shall be permitted to sell, assign, transfer, pledge, or
otherwise dispose of or incumber either the payroll deductions credited
to his account or any rights with regard to the exercise of an option or
to receive shares under the Plan other than by will or the laws of descent
and distribution, and such right and interest shall not be liable for, or
subject to, the debts, contracts, or liabilities of the employee.
12. Termination of Employee's Rights
(a) An employee's rights under the Plan will terminate when he
ceases to be an employee of the Company or any participating
subsidiary because of retirement, resignation, layoff,
discharge, death, change of status, or for any other reason. A
Withdrawal Notice will be considered as having been received
from the employee on the day his employment ceases and all
payroll deductions not theretofore used to purchase stock will
be paid to the employee or his estate.
(b) If an employee's payroll deductions are interrupted by any
legal process, a Withdrawal Notice will be considered as having
been received from him on the day the interruption occurs.
13. Termination and Amendments to Plan
(a) The Plan may be terminated at any time by the Committee. It
shall terminate in any case when all or substantially all of
the shares of stock reserved for the purposes of the Plan have
been purchased pursuant to the Plan. If at any time shares of
stock reserved for the purposes of the Plan remain available
for purchase but not in sufficient number to satisfy all then
unfilled purchase requirements, the available shares shall be
apportioned among participants in proportion to their options
and the Plan shall terminate. Upon such termination or any
other termination of the Plan, all payroll deductions not
theretofore used to purchase stock will be refunded.
(b) The Committee also reserves the right to amend or modify the
Plan at any time without notice, provided that no employee's
existing rights under any outstanding option may be adversely
affected thereby, and provided, further, that no such amendment
of the Plan shall, except as provided in paragraph 3, increase
above the amount set forth in paragraph 3 the total number of
shares of Common Stock to be offered unless shareholder
approval is obtained therefore.
<PAGE> 30
14. Limitations on Resale of Stock Purchased under the Plan
The Plan is intended to provide Common Stock for investment and not for
resale. The Company does not, however, intend to restrict or influence
any employee in the conduct of his own affairs. An employee may,
therefore, subject to compliance with any federal or state securities
laws, sell stock purchased under the Plan at any time he chooses;
provided, however, that because of certain federal tax requirements, each
employee will agree by entering the Plan, promptly to give the Company
notice of any such stock disposed of within two years after the date of
the last day of the Payment Period during which the stock was purchased
showing the number of such shares disposed of. THE EMPLOYEE ASSUMES THE
RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF SUCH STOCK.
15. Company Payment of Expenses Related to Plan
The Company will bear all costs of administering and carrying out the
Plan.
16. Administration of the Plan
The Plan shall be administered by the Compensation Committee consisting
of three or more members of the Board of Directors (the "Board") of the
Company who are not employees (the "Committee"). The Committee shall have
full authority to interpret the Plan and to make such rules and
regulations and establish such procedures a it deems appropriate for the
administration of the Plan, taking into consideration the recommendations
of management. The decisions of the Committee shall be binding and
conclusive for all purposes and upon all persons unless and except to the
extent that the Board shall have previously directed that all or specified
types of decisions of the Committee shall be subject to approval by the
Board.
17. Optionees Not Stockholders
Neither the granting of an option to an employee nor the deductions from
his pay shall constitute such employee a stockholder of the shares
covered by an option until such shares have been purchased by and issued
to him.
18. Government Regulation
The Company's obligation to sell and deliver shares of the Company's
Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization,
issuance, or sale of such Common Stock.
19. Withholding of Additional Federal Income Tax
The Company shall take such measures as it deems appropriate to ensure
that the Company's obligations to withhold any amount required under
federal, state, or other laws are satisfied with respect to the issuance
or exercise of options hereunder or the disposition of shares acquired
pursuant to the exercise of options hereunder. Such measure shall
include, but shall not be limited to, the withholding of shares purchased
pursuant to the Plan and the withholding of additional compensation
through payroll deduction.
<PAGE> 31
20. Approval of Stockholders
The Plan shall be effective and options may be granted hereunder upon the
adoption of the Plan by the Board; provided, however, neither the Plan,
nor any option granted under the Plan, shall be binding unless the Plan is
approved by the Company's stockholders within 12 months after the adoption
of the Plan by the Board.
21. Notice
Any election or other notice required to be given by an employee under
this Plan shall be in writing and shall be delivered personally or
by mail, postage prepaid, addressed to the Corporate Secretary of the
Company at the Company's corporate headquarters in Heathrow, Florida, or
at such other address as may be designated by the Company in writing.
<PAGE> 32
APPENDIX 2
AMENDMENT TO 1988 STOCK QUALIFIED STOCK PURCHASE PLAN
Paragraph 3 of the 1988 Qualified Stock Purchase Plan shall be amended
in its entirety to read as follows:
The stock subject to the options shall be shares of the Company's
authorized but unissued Common Stock or shares of Common Stock reacquired by the
Company, including shares purchased in the open market. The aggregate number of
shares which may be issued pursuant to the plan is 180,311 subject to increase
or decrease by reason of stock split-ups, reclassifications, stock dividends,
changes in par value, and the like. In the event that shares of Common Stock
issued pursuant to the Plan are authorized but previously unissued shares of
Common Stock, no adjustment shall be made for dividends or other rights for
which the record date is prior to the time of issuance.
<PAGE> 33
APPENDIX 3
DIXON TICONDEROGA COMPANY
AMENDED AND RESTATED STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set
forth unless the context clearly indicates to the contrary. Where applicable,
the masculine pronoun shall mean or include the feminine and the singular shall
include the plural:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the Compensation Committee appointed by the
Board, which shall consist of two or more non-employee directors, as such term
is defined in Rule 16b-3 promulgated by the Securities and Exchange Commission
or any successor rule or regulation.
(c) "Company" shall mean Dixon Ticonderoga Company.
(d) "Effective Date" shall mean the date the Plan is adopted by the
Board.
(e) "Employees" shall mean any person who is regularly employed on a
salary basis by the Company or of any Subsidiary, including an officer or
director of the Company or any Subsidiary who is also an employee of the Company
or any Subsidiary.
(f) "Fair Market Value" shall mean the last reported sale price per
share of the Stock as reported by the American Stock Exchange on the day an
option is granted hereunder, and if such date is not a trading day, then the
last reported sale price of the last trading day immediately preceding the day
and option is granted hereunder.
(g) "Option" shall mean a stock option granted pursuant to the Plan.
(h) "Optionee" shall mean an employee to whom an option has been granted
hereunder.
(i) "Plan" shall mean the Dixon Ticonderoga Company Amended and Restated
Stock Option Plan, the terms of which are set forth herein.
(j) "Stock" shall mean the common stock of the Company.
(k) "Stock Option Agreement" shall mean the agreement between the
Company and the Optionee under which the Optionee may purchase Stock hereunder.
<PAGE> 34
(l) "Subsidiary" shall mean any corporation, the majority of the
outstanding capital stock of which is owned, directly or indirectly, by the
Company.
ARTICLE II
THE PLAN
2.1 NAME. This Plan shall be known as the Dixon Ticonderoga Company
Amended and Restated Stock Option Plan.
2.2 COMPLIANCE. The Plan amends and restates and is a successor plan
to the 1988 Dixon Ticonderoga Company Executive Stock Plan to bring that plan
and all options heretofore granted or hereafter granted under this Plan into
full compliance with the conditions set forth in Rule 16b-3 (as amended
effective August 15, 1996) promulgated by the Securities and Exchange
Commission (the "Rule"). This Plan is intended to comply with all applicable
requirements of the Rule, as amended, insofar as participants subject to
Section 16 of the Securities Exchange Act of 1934 are concerned. To the extent
that any provision of the Plan does not so comply, the provision shall, to
the extent permissible by law and deemed advisable by the Committee, be
deemed null and void with respect to such participants.
2.3 OUTSTANDING OPTIONS. As of the Effective Date as provided for in
Section 2.5, options to purchase a total of 287,192 shares of Stock have been
granted and are outstanding hereunder. Such options shall remain outstanding
and effective after the Effective Date hereof and shall be subject to all terms
and conditions of this Plan as herein amended and restated. Provided, however,
if the terms of an agreement granting an option prior to the Effective Date
hereof are different from this Plan, the terms contained in such agreement
shall, to such extent, remain effective unless amended by the Committee with
the consent of such Optionee. The Committee is expressly authorized to
amend the terms of options issued before or after the Effective Date,
subject to the terms and conditions of this Plan. The Plan and the stock
option agreements entered into after the Effective Date hereof shall govern
all option grants hereunder.
2.4 PURPOSE. The purpose of the Plan is to advance the interests of the
Company and its shareholders by affording to certain selected key Employees of
the Company an opportunity to acquire or increase their proprietary interest in
the Company by the grant to such Employees of options under the terms set forth
herein. By thus encouraging such Employees to become owners of Company shares,
the Company seeks to motivate, retain and attract those highly competent
individuals upon whose judgment, initiative, leadership and continued efforts
the success of the Company in large measure depends.
2.5 EFFECTIVE DATE. The Plan shall become effective on its Effective
Date, subject to its ratification by the holders of a majority of the votes cast
in person or by proxy on a proposal to ratify the Plan. Upon ratification of
the Plan by the shareholders of the Company, all options granted under the
Plan and all amendments to outstanding options granted under the 1988 Dixon
Ticonderoga Company Executive Stock Plan on or after the Effective Date
shall be fully effective as if the shareholders of the Company had approved
the Plan on the Effective Date.
<PAGE> 35
ARTICLE III
PARTICIPANTS
Any Employee shall be eligible to participate in the Plan and the
Committee may grant options to certain key Employees in instances where the
Committee determines that the purpose of the Plan will be furthered.
ARTICLE IV
ADMINISTRATION
4.1 DUTIES AND POWERS OF COMMITTEE. The Plan shall be administered by
the Committee. The Committee shall have sole discretion and authority to
determine from among the Employees those to whom and the time or times at which
options may be granted and the number of shares of Stock to be subject to each
option. Subject to the express provisions of the Plan, the Committee shall also
have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the details and provisions of
each Stock Option Agreement so long as such provisions are consistent with the
Plan (including but not limited to vesting schedules and the acceleration
thereof in certain events, and payment provisions) and to make all other
determinations necessary or advisable in the administration of the Plan.
4.2 MAJORITY RULE. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority present at a meeting at
which a quorum is present or any action taken without a meeting evidenced by a
writing executed by a majority of the whole Committee shall constitute the
action of the Committee.
4.3 COMPANY ASSISTANCE. The Company shall supply full and timely
information to the Committee on all matters relating to eligible Employees,
their employment, death, retirement, disability or other termination of
employment, and such other pertinent facts as the Committee may require.
The Company shall furnish the Committee with such clerical and other
assistance as is necessary in the performance of its duties.
4.4 LIABILITY. No member of the Committee shall be liable for any
action or determination made by him.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 LIMITATIONS. The shares to be issued by the Company upon exercise
of options granted under the Plan are shares of Stock. Subject to adjustment
pursuant to the provisions of Section 5.3, the aggregate number of shares of
Stock which may be issued pursuant to the exercise of options granted after the
Effective Date hereof under this Plan shall not exceed 401,390 shares. Such
shares of Stock are in addition to the aggregate number of shares which may be
issued pursuant to the exercise of options to purchase 287,192 shares which were
outstanding on the Effective Date and which were granted under the 1988 Dixon
Ticonderoga Company Executive Stock Plan. Such shares may be either authorized
and unissued shares or shares issued and thereafter acquired by the Company.
<PAGE> 36
5.2 OPTIONS GRANTED UNDER PLAN. Shares of Stock issued upon the
exercise of an option granted hereunder shall not again be available for
issuance upon the exercise of an option granted hereunder. If options
granted hereunder (including options issued under the 1988 Dixon Ticonderoga
Company Executive Stock Plan prior to its amendment and restatement hereby)
shall terminate for any reason without being wholly exercised, new options
may be granted hereunder covering the number of shares to which such option
termination relates.
5.3 ADJUSTMENTS TO REFLECT CAPITAL CHANGES. The number and kind of
shares subject to outstanding options, the exercise price for such shares, and
the number and kind of shares available for options subsequently granted under
the Plan shall be appropriately adjusted to reflect any stock dividend, stock
split, spin-off, reverse stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan or the options outstanding under the Plan. The
Committee shall have the power to determine the amount of the adjustment to
be made in each case.
5.4 CORPORATE REORGANIZATIONS. In the event of the dissolution or
liquidation of the Company or any merger or combination in which the Company is
not the surviving entity, each outstanding option granted hereunder (including
options granted under the 1988 Dixon Ticonderoga Company Executive Stock Plan)
shall terminate, but the Optionee shall have the right, immediately prior to
such dissolution, liquidation, merger or combination, to exercise his option,
in whole or in part, to the extent that it shall not have been therefore
exercised, without regard to any installment exercise or vesting provisions.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined solely by the Committee, and any such adjustment
may provide for the elimination of fractional share interests.
ARTICLE VI
OPTIONS
6.1 OPTIONS GRANT AND AGREEMENT. Each option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Stock Option Agreement dated as of the date of grant and executed by
the Company and the Optionee, which Agreement shall set forth such terms and
conditions as may be determined by the Committee consistent with the Plan.
6.2 PURCHASE PRICE. The per share purchase price of the Stock subject
to each option shall be determined by the Committee, but the per share price
shall not be less than the Fair Market Value of the Stock on the date the option
is granted.
6.3 OPTION EXERCISE PERIOD. The period for the exercise of options
granted hereunder shall be determined by the Committee, but in no instance shall
such period exceed ten years after the date of grant of the option.
<PAGE> 37
6.4 OPTION EXERCISE; REPLACEMENT OPTIONS.
(a) Options granted hereunder may not be exercised (i) unless
and until the Optionee shall have been or remained in the employ of the Company
or a Subsidiary for one year from and after the date such option was granted,
and (ii) unless a registration statement under the Securities Act of 1933, as
amended, shall at the time of exercise of the option be in effect with respect
to the Stock underlying the option, the Company shall have received such
assurances as it may reasonably request that the Stock is being acquired in
accordance with the terms of an applicable exemption from the registration
requirements of such Act.
(b) Options may be exercised in whole at any time, or in part
from time to time with respect to whole shares only, within the period permitted
for the exercise thereof, and shall be exercise by delivery of written notice of
intent to exercise the option with respect to a specified number of shares
delivered to the Company at its principal office accompanied by payment in full
to the Company at said office of the amount of the purchase price for the number
of shares of Stock with respect to which the option is then being exercised,
which payment may be by any of the following means or any combination thereof:
(i) cash; (ii) certified or cashier's check payable to the Company; (iii) the
delivery of whole shares of Stock owned by the option holder, or (iv) by
requesting that the Company withhold whole shares of Stock then issuable upon
exercise of the option (for purposes of such a transaction the value of Shares
shall be deemed to be equal to the Fair Market Value of the shares on the date
of the exercise of the option) in which case the option with respect to the
shares withheld shall be deemed to be surrendered and canceled. The Company is
vested with authority under the Plan to assist any Employee to whom an option is
granted hereunder (including any director or officer of the Company or any
Subsidiary who is also an Employee) in the payment of the purchase price payable
on exercise of such option, by lending the amount of such purchase price to such
Employee on such terms and at such rates of interest and upon such security (or
unsecured) as shall have been authorized by the Committee.
(c) It shall be a condition to the obligation of the Company
to issue or transfer Stock upon exercise of an option by delivery of shares of
Stock that the Optionee pay to the Company, upon its demand, such amount as may
be requested by the Company for the purpose of satisfying its liability to
withhold federal, state, or local income or other taxes incurred by reason of
the exercise of such option or the transfer of stock thereupon. In the
discretion of the Committee, withholding obligations may be satisfied by an
Optionee in any of the methods which may be used to pay the purchase price as
set forth in Section 6.4(b).
(d) To the extent that the payment of the exercise price for
Stock purchased pursuant to the exercise of an option is made with shares of
Stock as provided for herein, then, at the discretion of the Committee, the
Optionee may be granted a replacement option under the Plan to purchase a number
of shares of Stock equal to the number of shares of Stock tendered as permitted
in this Section 6.4, with an exercise price per share equal to the Fair Market
Value on the date of grant of such replacement Option and with a term extending
to the expiration date of the original option.
<PAGE> 38
6.5 TRANSFERABILITY OF OPTION. The Committee shall determine whether
options granted under the Plan may be assigned or transferred by the Optionee
and, if an option is transferable, the Committee shall be authorized to restrict
transferability to certain persons or classes of persons. In the event of the
death of an Optionee, options shall be transferable by will or by the laws of
descent and distribution..
6.6 AMENDMENT TO OUTSTANDING OPTIONS. Material amendments to an
outstanding option (including an option granted under the 1988 Dixon Ticonderoga
Company Executive Stock Plan) shall require the approval of the Committee and
must be agreed upon by the Optionee.
6.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT.
(a) If, prior to a date one year after the date an option shall
have been granted, the Optionee's employment by the Company or a Subsidiary
shall be terminated by the Company or such Subsidiary with or without case, or
by the act of the Optionee, the Optionee's right to exercise such option shall
terminate and all rights thereunder shall cease; provided, however, that if the
Optionee shall die, retire or become permanently and totally disabled, as
determined in accordance with applicable Company or Subsidiary personnel
policies, prior to a date one year after the date an option shall have been
granted, such options shall become exercisable in full on the date of such
death, retirement or disability and, in the case of retirement or disability,
such option shall remain exercisable for three months after the date of such
retirement or disability.
(b) If, on or after one year after the date an option shall have
been granted, an Optionee's employment by the Company or a Subsidiary shall be
terminated for any reason other than death, the Optionee shall have the right,
during the period ending three months after such termination, to exercise such
option to the extent that it was exercisable at the date of such termination of
employment and shall not have been exercised.
(c) If an Optionee shall die while in the employ of the Company
or a Subsidiary or within three months after termination of such employment, the
executor or administrator of the estate of the decedent or the person or persons
to whom an option granted hereunder shall have been validly transferred by the
executor or the administrator pursuant to will or the laws of descent and
distribution shall have the right, during the period ending one year after the
date of the Optionee's death, to exercise the Optionee's option to the extent
that it was exercisable at the date of termination of employment by death or
otherwise and shall not have been therefore exercised.
(d) No transfer of any option by the Optionee by will or by laws
of descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of such option.
6.8 RIGHTS AS SHAREHOLDER. An Optionee or transferee of an option shall
have no rights as a shareholder with respect to any Stock subject to such option
prior to the purchase of Stock by exercise of such option provided herein. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the exercise of such option, except as provided in Section 5.3.
<PAGE> 39
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any option granted hereunder or
any portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any federal or state law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee shall in its sole discretion deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any federal
or applicable state governmental agency which the Committee in its sole
discretion determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the exercise
of the option as the Committee from time to time may establish for reasons of
administrative convenience.
ARTICLE VIII
TERMINATION, AMENDMENT, AND MODIFICATION OF PLAN
The Committee may at any time terminate, and may at any time and from time
to time and in any respect amend or modify the Plan. However, no termination,
amendment or modification of the Plan shall in any manner affect any option
theretofore granted under the Plan without the consent of the Optionee or
transferee of the option.
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYMENT. Nothing in the plan or any option granted hereunder or
in any Stock option Agreement relating thereto shall confer upon any Employee
the right to continue in the employ of the Company or any Subsidiary.
9.2 OTHER COMPENSATION PLANS. Except as provided for in Sections 2.2
and 2.3, the adoption of the Plan shall not affect any other incentive or other
compensation plans in effect for the Company or any Subsidiary, nor shall the
Plan preclude the Company from establishing any other forms of incentive or
other compensation for employees of the Company or any Subsidiary.
9.3 PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
successors and assigns of the Company.
9.4 RIGHT TO RECEIVE OPTIONS. Neither the adoption of the Plan nor any
action of the Committee shall be deemed to give any person any right to be
granted an option, or any other right hereunder, unless and until the Committee
shall have granted such person an option, and then his rights shall be only such
as are prescribed in the instrument evidencing such option.
<PAGE> 40
9.5 HEADINGS, ETC., NO PART OF PLAN. Headings of Articles and Sections
hereof are inserted for convenience and reference; they constitute no part of
the Plan.
