<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[X] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LITTLEFIELD, ADAMS & COMPANY
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
LITTLEFIELD, ADAMS & COMPANY
6262 Executive Boulevard
Huber Heights, Ohio 45424
Notice of Annual Meeting of Shareholders
June 3, 1997
April 30, 1997
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Littlefield, Adams & Company (the "Company") will be held at the Holiday Inn -
Dayton North, 2301 Wagner Ford Road, Dayton, Ohio 45414, on Tuesday, June
3,1997, at 9:00 A.M. (local time) for the following purposes:
1. To elect two directors to serve until the Annual Meeting of
Shareholders for 2000.
2. To consider and vote upon a proposal to amend the Littlefield,
Adams & Company Incentive Plan to increase by 500,000 shares the
number of shares of the Company's Common Stock available under
the Plan.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
April 8, 1997, has been fixed as the record date for the determination
of the shareholders entitled to notice of and to vote at such meeting or any
adjournment thereof, and only shareholders of record at the close of business
on that date are entitled to notice of and to vote at such meeting.
A copy of the Company's Annual Report on Form 10-K for 1996 is
enclosed herewith.
You are cordially invited to attend the meeting. Whether or not you
plan to attend the meeting, it is important that your shares be represented.
Accordingly, please complete, date and sign the enclosed proxy and return it
promptly.
By Order of the Board of Directors
David M. Simmonds
Chairman
________________________________________________________________________________
YOUR VOTE IS IMPORTANT
TO ENSURE A QUORUM, PLEASE COMPLETE AND RETURN THE PROXY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU UPON REQUEST TO THE
SECRETARY OF THE MEETING.
________________________________________________________________________________
<PAGE> 3
L I T T L E F I E L D, A D A M S & C O M P A N Y
6262 EXECUTIVE BOULEVARD
HUBER HEIGHTS, OHIO 45424
_______________
P R O X Y S T A T E M E N T
_______________
ANNUAL MEETING OF SHAREHOLDERS
JUNE 3, 1997
________________
This Proxy Statement and accompanying form of proxy are being furnished
in connection with the solicitation of proxies by the Board of Directors of
Littlefield, Adams & Company ("Littlefield, Adams" or the "Company"), for use
at the Annual Meeting of Shareholders to be held on Tuesday, June 3, 1997, at
9:00 A.M. (local time) at the Holiday Inn - Dayton North, 2301 Wagner Ford
Road, Dayton, Ohio, or any adjournment thereof (the "Meeting"). Copies of this
Proxy Statement, the attached Notice of Annual Meeting of Shareholders, and the
enclosed form of proxy were first mailed to shareholders on or about April 30,
1997. The principal executive office of Littlefield, Adams is located at 6262
Executive Boulevard, Huber Heights, Ohio 45424. The telephone number of
Littlefield, Adams' principal executive office is (937) 236-0660.
A proxy in the accompanying form, which is properly executed, duly
returned to the Board of Directors and not revoked, will be voted in accordance
with the instructions contained in the proxy. If no instructions are given
with respect to any matter specified in the Notice of Annual Meeting to be
acted upon at the Meeting, the proxy will vote the shares represented thereby
FOR the nominees for director set forth below, FOR the proposal to amend the
Littlefield, Adams & Company Incentive Plan and in accordance with his best
judgment on any other matters which may properly come before the Meeting. The
Board of Directors currently knows of no other business that will be presented
for consideration at the Meeting. Each shareholder who has executed a proxy
and returned it to the Board of Directors may revoke the proxy by notice in
writing to the Secretary of the Company, or by attending the Meeting in person
and requesting the return of the proxy, in either case at any time prior to the
voting of the proxy. Presence at the Meeting does not itself revoke the proxy.
The cost of the solicitation of proxies will be paid by the Company. In
addition to the solicitation of proxies by the use of the mails, management and
regularly engaged employees of the Company may, without additional compensation
therefor, solicit proxies on behalf of the Company by personal interviews,
telephone or other means, as appropriate. The Company will, upon request,
reimburse brokers and others who are only record holders of the Company's
Common Stock for their reasonable expenses in forwarding proxy material to, and
obtaining voting instructions from, the beneficial owners of such stock.
The close of business on April 8, 1997, has been fixed as the record
date (the "Record Date") for determining the shareholders entitled to notice of
and to vote at the Meeting. As of the Record Date, there were 2,277,981 shares
of Common Stock, par value $1.00 per share ("Common Stock"), issued and
outstanding and entitled to vote.
Under the rules of the American Stock Exchange, brokers who hold shares
in street name have the authority to vote on certain "routine" matters when
they have not received instructions from beneficial owners. The Company
believes that brokers that do not receive instructions will be entitled to vote
on the election of directors but may not be entitled to vote shares held for
customers on the proposal to amend the Littlefield, Adams & Company Incentive
Plan without specific instructions from such customers.
Each share of Common Stock entitles the holder thereof to one vote. A
majority of the shares of Common Stock issued and outstanding constitutes a
quorum. Abstentions and broker non-votes are counted as present in
<PAGE> 4
determining whether the quorum requirement is satisfied. With regard to the
election of directors, votes may be cast in favor of or withheld from the
nominee. The affirmative vote of a plurality of the votes cast at the Meeting
will be necessary for the election of directors. Votes that are withheld will
be excluded entirely from the vote for the election of directors and will have
no effect. The affirmative vote of a majority of the votes cast at the Meeting
on Proposal No. 2 will be required to approve the amendment to the Littlefield,
Adams & Company Incentive Plan. Under New Jersey law, abstentions and broker
non-votes are not "votes" for purposes of determining whether the requisite
proportion of affirmative votes has been cast, so they will have no effect on
the outcome of the vote.
None of the proposals to be voted upon by the Company's shareholders at
the Meeting entitle the shareholders to dissenters' rights under New Jersey
law.
To the best knowledge of the Company, none of the Company's executive
officers, directors or nominees for election as directors has any interest in
the matters to be acted upon at the Meeting, other than with respect to their
election as directors and with respect to grants which may be made to them
under the Littlefield, Adams & Company Incentive Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets, as of the Record Date, the beneficial
ownership of shares of Common Stock by (i) each person who is known by the
Company to own more than 5% of the outstanding shares of Common Stock, (ii)
each director of the Company and each executive officer of the Company listed
in the Summary Compensation Table and (iii) all of the Company's executive
officers and directors as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER OF COMMON STOCK(1) CLASS (2)
- ------------------- --------------- ----------
<S> <C> <C>
Paul S. Rosenblum 378,200 (3) 16.6%
R & L Equity Partners
P.O. Box 23568
Harahan, LA 70183
Ronald Weiner 313,350 (4) 13.8%
10460 W. Pico Boulevard
Los Angeles, CA 90064
Stanley I. Halbreich 322,064 (5) 13.0%
c/o Littlefield, Adams & Company
6262 Executive Boulevard
Huber Heights, Ohio 45424
David M. Simmonds 212,000 (6) 8.5%
c/o Littlefield, Adams & Company
6262 Executive Boulevard
Huber Heights, Ohio 45424
William E. Goettelman 14,500 (7) *
c/o Littlefield, Adams & Company
6262 Executive Boulevard
Huber Heights, Ohio 45424
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C> <C>
Warren L. Rawls 191,792 (8) 7.8%
c/o Littlefield, Adams & Company
6262 Executive Boulevard
Huber Heights, Ohio 45424
Michael B. Balber 165,000 (9) 6.8%
c/o Littlefield, Adams & Company
6262 Executive Boulevard
Huber Heights, Ohio 45424
Martin B. Shifrin 1,000 *
c/o Littlefield, Adams & Company
6262 Executive Boulevard
Huber Heights, Ohio 45424
ALL EXECUTIVE OFFICERS AND DIRECTORS
AS A GROUP (INCLUDES 4 PERSONS) 906,356 (10) 29.8%
</TABLE>
____________________________________________
* Less than 1%
(1) Unless otherwise indicated, each of the parties listed has sole voting and
investment power over the shares of Common Stock owned. The number of
shares of Common Stock indicated includes in each case the number of shares
of Common Stock issuable upon exercise of Options granted under the
Company's Incentive Plan to the extent that such Options are currently
exercisable. For purposes of this table and its footnotes, Options are
deemed to be "currently exercisable" if they may be exercised within 60
days following the date of this Proxy Statement. The number of shares
indicated also includes, where applicable, the number of shares of Common
Stock issued to certain directors and executive officers under the
Incentive Plan. Although in certain cases, as indicated in the following
footnotes, such shares are not fully vested, the full number of such shares
are included in the table since the holder has the right to vote both the
vested and unvested portion of such shares.
(2) Based on 2,277,981 shares of Common Stock issued and outstanding on the
Record Date (excluding 18,164 treasury shares). In addition, treated as
outstanding for the purpose of computing the percentage ownership of each
director or executive officer and of all executive officers and directors
as a group, as the case may be, are shares of Common Stock issuable to such
individual or group upon exercise of Options to the extent exercisable
within 60 days of the date of this Proxy Statement.
(3) Consists of 249,600 shares held by Mr. Rosenblum and 128,600 shares held by
R & L Equity Partners, a Louisiana general partnership of which Mr.
Rosenblum is the sole managing general partner.
(4) Consists of 183,050 shares held by Ronald Weiner as Trustee of the Weiner
Family Trust and 130,300 shares held in Mr. Weiner's IRA account.
(5) Consists of 122,064 shares held directly by Mr. Halbreich (including shares
held in Mr. Halbreich's IRA account) and 200,000 shares issuable upon the
exercise of Options. Mr. Halbreich disclaims beneficial ownership of the
shares issuable upon the exercise of Options. Under the terms of a
Settlement Agreement, Mr. Halbreich has agreed to relinquish back to the
Company rights that he has to 5,000 shares of Common Stock. See "Certain
Transactions - Charlotte E. Picard, Derivatively on Behalf of Littlefield,
Adams & Company v. Curtis A. Younts, Jr. et al."
(6) Consists of 6,500 shares held by Mr. Simmonds (including shares held in
Mr. Simmonds' IRA account), 500 shares held by Mr. Simmonds' wife (in
her IRA account) and 205,000 shares issuable upon the exercise of Options.
Mr. Simmonds disclaims beneficial ownership of the shares held by his wife
and the shares issuable upon exercise of Options.
3
<PAGE> 6
(7) Consists of 2,000 shares held by Mr. Goettelman, 2,500 shares held jointly
with his wife and 10,000 shares issuable upon the exercise of Options.
Mr. Goettelman disclaims beneficial ownership of the shares issuable upon
the exercise of Options.
(8) Consists of 6,792 shares held by Mr. Rawls and 185,000 shares issuable
upon the exercise of Options. Mr. Rawls disclaims beneficial ownership
of the shares issuable upon the exercise of Options.
(9) Consists of shares issuable upon the exercise of Options. Mr. Balber
disclaims beneficial ownership of the shares issuable upon the exercise of
Options.
(10) Includes 765,000 shares issuable upon the exercise of Options.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for the
Board of Directors to be divided into three classes, each class to contain as
nearly as possible one-third of the whole number of directors (Class I, Class
II and Class III). The term of office for each class of directors is three
years. The directors in Class I will serve until the Annual Meeting of
Stockholders for 1998; the directors in Class II will serve until the Annual
Meeting of Stockholders for 1999 and the directors in Class III will serve
until the Annual Meeting of Stockholders for 1997. Two directors for Class III
are to be elected at the Annual Meeting and, when elected, will serve until the
Annual Meeting of Stockholders for 2000 and until the election and
qualification of their respective successors. The Company's officers,
including the executive officers, all serve at the pleasure of the Board of
Directors.
It is the intention of the Board of Directors to nominate at the Annual
Meeting David M. Simmonds and Martin B. Shifrin (who was elected a director in
August 1996) for re-election to the Board of Directors for a three year term.
In the event that either Mr. Simmonds or Mr. Shifrin should become unavailable
for election for any reason, at present unknown, it is intended that votes will
be cast pursuant to the accompanying proxy for such substitute nominee or
nominees as the Board of Directors may designate.
The information set forth below, furnished to the Board of
Directors by the respective individuals, shows as to each executive officer and
director of the Company (i) his name and age; (ii) his principal position with
the Company; (iii) his principal occupation or employment, if different; (iv)
the month and year in which he began to serve as an officer or director; and
(v) the class of director to which he belongs.
CLASS I
(TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS FOR 1998)
NO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
<TABLE>
<CAPTION>
PRESENT POSITION PRINCIPAL OCCUPATION OR
NAME (AGE) WITH LITTLEFIELD, ADAMS EMPLOYMENT, IF DIFFERENT DIRECTOR SINCE
- ---------- ------------------------ ------------------------ --------------
<S> <C> <C> <C>
William E. Goettelman (48)(1) Director President and Chief August 1994
Executive Officer, Free
Lance Sales, Ltd.
</TABLE>
4
<PAGE> 7
CLASS II
(TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS FOR 1999)
NO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
<TABLE>
<CAPTION>
PRESENT POSITION PRINCIPAL OCCUPATION OR
NAME (AGE) WITH LITTLEFIELD, ADAMS EMPLOYMENT, IF DIFFERENT DIRECTOR SINCE
- ---------- ------------------------ ------------------------ --------------
<S> <C> <C> <C>
Stanley I. Halbreich (66) Treasurer and Chief January 1993
Financial Officer
Director
</TABLE>
CLASS III
TWO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
(TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS FOR 2000)
<TABLE>
<CAPTION>
PRESENT POSITION PRINCIPAL OCCUPATION OR
NAME (AGE) WITH LITTLEFIELD, ADAMS EMPLOYMENT, IF DIFFERENT DIRECTOR SINCE
- ---------- ------------------------ ------------------------ --------------
<S> <C> <C> <C>
David M. Simmonds (46) President, Chairman, August 1994
Chief Executive Officer
and General Counsel;
Director
Martin B. Shifrin (74)(1) Director President, Martin B. Shifrin August 1996
and Associates
</TABLE>
___________________________
(1) Member of the Audit Committee and the Incentive Compensation Committee.
BIOGRAPHICAL INFORMATION
William E. Goettelman has served as a director of Littlefield, Adams
since August 1994. Since 1988, Mr. Goettelman has been President and Chief
Executive Officer of Free Lance Sales, Ltd., a privately-held company which
produces point of purchase and special event banners, specialty point of
purchase signage, and imprinted sportswear. From 1989 until 1992, Mr.
Goettelman also served as Vice President and Treasurer of Pudgy Seagull
Restaurants, Inc. (family style restaurants).
Stanley I. Halbreich has served as a director of Littlefield, Adams
since March 1993 as Chief Financial Officer since June 1995 and as Treasurer
since July 1995. From 1985 through June 1995, Mr. Halbreich had been Chief
Executive Officer of Sports Imprints, Inc. d/b/a Fun Wear, a former subsidiary
of the Company, acquired in January 1993, that was merged into the Company in
June 1995. He also served as President of S.I.H. Sales Corporation from 1976
until May 1991. In July 1991 Sports Imprints, Inc. and S.I.H. Sales Corp.
entered into a plan of reorganization with its creditors and a bank pursuant to
Chapter 11 of the United States Bankruptcy Code. Mr. Halbreich was originally
nominated for election to the Board of Directors pursuant to the reorganization
5
<PAGE> 8
agreement whereby the Company acquired Sports Imprints, Inc., which obligated
Littlefield, Adams to nominate one person designated by Sports Imprints, Inc.
until at least the end of 1995.
David M. Simmonds, President, Chairman and Chief Executive Officer of
Littlefield, Adams, has been a director of the Company since August 1994. Mr.
Simmonds became Chief Executive Officer of the Company on April 12, 1996 and
President on June 4, 1996. He had previously served as Chairman and Co-Chief
Executive Officer from March 5, 1996 to April 12, 1996; as Interim Chairman,
President and Chief Executive Officer from July 12, 1995 to March 5, 1996; and
as President from May 30, 1995 to March 5, 1996. Prior to his election as an
officer of the Company, Mr. Simmonds had since 1976 been an attorney in private
practice. Mr. Simmonds continues to serve as general counsel to the Company.
Martin B. Shifrin was elected a director of Littlefield, Adams on August
28, 1996. Since 1986, Mr. Shifrin has been the president of Windbreaker
Licensing, Ltd., a privately held trademark licensing company. Since 1959, Mr.
Shifrin has been the president of Martin B. Shifrin and Associates, a privately
held apparel sales concern selling to discounters and department stores. From
1974 to 1994, Mr. Shifrin was also the chief financial officer of Khaki, Inc.,
a privately held retailer of men's and women's apparel, luggage and camping
goods.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held ten meetings during 1996.
All incumbent directors attended 75% or more of the total number of meetings of
the Board and of the committees of which they were members held during the
period they were directors or members of such committees, as the case may be,
either in person or by telephone conference.
The Board of Directors has established an Incentive Compensation
Committee and an Audit Committee. There is no formal nominating committee or
compensation committee; the Board of Directors performs the functions of these
committees (except with respect to the administration of the Incentive Plan,
which function is performed by the Incentive Compensation Committee).
The members of the Audit Committee are William E. Goettelman and
Martin B. Shifrin, neither of whom is an employee or officer of the Company or
any of its subsidiaries. The Audit Committee consults with the auditors of the
Company and such other persons as the members deem appropriate, reviews the
preparations for and scope of the audit of the Company's annual financial
statements, makes recommendations as to the engagement and fees of the
independent auditors, and performs such other duties relating to the financial
statements of the Company as the Board of Directors may assign from time to
time. The Audit Committee met twice during 1996.
The Incentive Compensation Committee has all of the powers of the
Board of Directors in respect of any matters relating to the administration of
the Littlefield, Adams & Company Incentive Plan. The members of the Incentive
Compensation Committee are William E. Goettelman and Martin B. Shifrin. The
Incentive Compensation Committee met four time during 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires officers
and directors of the Company and holders of more than 10% of the Common Stock
(collectively, "Reporting Persons") to file reports of ownership and changes in
ownership of the Common Stock with the Securities and Exchange Commission and
to furnish the Company with copies of all such reports. Based solely on its
review of the copies of such reports furnished to the Company by such Reporting
Persons, the Company believes that during the year ended December 31, 1996, all
of the Reporting Persons complied with their Section 16(a) filing requirements
with respect to their ownership of the Company's Common Stock, except as
follows. Martin B. Shifrin failed to file by its due date an Initial Statement
of Beneficial Ownership ("Form 3") reporting his election as a director of the
Company, which Form 3 was subsequently filed.
6
<PAGE> 9
DIRECTORS' FEES
The Company pays directors who are not employees of the Company a fee
of $10,000 per year, plus $2,000 per year for each committee served on. In
addition, non-employee directors are reimbursed for their out-of-pocket
expenses incurred in connection with service as a director, including travel
expenses. Prior to the Company's 1996 Annual Meeting of Shareholders,
non-employee directors were paid a fee of $5,000 per year and in addition
received under the Littlefield, Adams & Company Incentive Plan an initial grant
of 5,000 shares of the Company's Common Stock, vesting one-third as of the date
of grant and an additional one-third on the first and second anniversary of the
date of the grant, and an annual grant of options covering 5,000 shares of
Common Stock with an exercise price equal to the fair market value of a share
of Common Stock as of the date of grant.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chairman, President and Chief Executive Officer, the individual who
served as the Company's President and Co-Chief Executive Officer from March 5,
1996 to April 5, 1996, and the Company's other most highly compensated
executive officer whose annual cash compensation was $100,000 or more
(collectively, the "Named Officers"), based on salary and bonus earned during
1996.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ------------------- ------------
OTHER
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK LTIP COMPEN-
NAME AND PRINCIPAL SATION AWARD(S) OPTIONS/ PAYOUTS SATION
POSITION YEAR SALARY ($) BONUS ($) ($)(1) ($) SARS(#) ($) ($)(1)
- ----------------------- ---- ---------- --------- ------ --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David M. Simmonds (2) 1996 $195,257 -0- -0- -0- 150,000 -0- -0-
President, Chairman and 1995 $109,848 -0- -0- -0- 5,000 -0- -0-
Chief Executive Officer -0-
Jerrold Luloff (3) 1996 $ 63,846 -0- -0- -0- -0- -0- -0-
Former President and Co- 1995 $150,000 $48,095 -0- -0- -0- -0- -0-
Chief Executive Officer 1994 $100,000 $49,200 -0- -0- -0- -0- -0-
Stanley I. Halbreich 1996 $143,654 -0- -0- -0- 150,000 -0- -0-
Chief Financial Officer and 1995 $100,000 $49,013 -0- -0- -0- -0- -0-
Treasurer 1994 $100,000 $49,200 -0- -0- -0- -0- -0-
</TABLE>
___________________________
(1) The dollar value of perquisites and other personal benefits for each of
the Named Officers was less than established reporting thresholds.
(2) Mr. Simmonds became an officer of the Company on May 30, 1995 and an
employee of the Company on June 15, 1995. Salary amount for 1995 excludes
$82,500 paid to Mr. Simmonds for legal services rendered in 1995 prior to
Mr. Simmonds becoming an employee of the Company.
(3) Mr. Luloff served as President and Co-Chief Executive Officer from March
5, 1996 until April 5, 1996, at which date he ceased to be an officer and
employee of the Company. Mr. Luloff had previously served as President of
Sports Imprints, Inc. and of the Apparel Group of Littlefield, Adams &
Company.
7
<PAGE> 10
OPTION/SAR GRANTS DURING 1996
The following table sets forth, for each of the Named Officers,
information regarding individual grants of options made in the last fiscal
year, and their potential realizable values.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
---------------------------------------------------------------------------------------------- ----------------------------
% OF TOTAL
GRANTED TO OPTIONS
OPTION EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
---- -------- ------------ ---------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
David M. Simmonds 75,000 11.6% $1.25 5/28/06 $ 58,957 $149,415
75,000 11.6% $1.00 8/05/06 $ 47,168 119,528
------- ----- -------- --------
150,000 23.2% $106,125 $268,943
Stanley I. Halbreich 75,000 11.6% $1.25 5/28/06 $ 58,957 $149,415
75,000 11.6% $1.00 8/05/06 $ 47,168 119,528
------- ----- -------- --------
150,000 23.2% $106,125 $268,943
</TABLE>
AGGREGATED OPTION/SAR EXERCISES DURING 1996 AND FISCAL YEAR END OPTION/SAR
VALUES
The following table provides information related to Options exercised
by the Named Officers during 1996 and the number and value of unexercised
Options held by the Named Officers at year-end. Littlefield, Adams does not
have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
----------------------------- ---------------------------
SHARES ACQUIRED
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David M. Simmonds -0- -0- 155,000 -0- $262,500 N/A
Stanley I. Halbreich -0- -0- 150,000 -0- $262,500 N/A
</TABLE>
DESCRIPTION OF INCENTIVE PLAN
Administration
The Incentive Plan is administered by the Incentive Compensation
Committee, which is currently comprised entirely of directors who are "outside
directors" as defined in the laws and regulations under Section 162(m) of the
Code. The Incentive Compensation Committee has discretion to select the
persons to be granted awards (except that non-employee directors are not
eligible for awards under the Incentive Plan), to determine the type and size
of awards, to determine when awards will be granted, to grant any kind of award
in combination with other kinds of awards, and to prescribe and amend the terms
of the agreements governing the awards.
Stock Options
Options that may be awarded under the Incentive Plan are incentive
stock options ("ISOs") meeting the requirements of Section 422 of the Code and
nonqualified stock options ("NQSOs") that do not meet those requirements.
Options are rights to purchase a specified number of shares of Common Stock at
a price fixed when the option is granted. ISOs must have an exercise price of
at least the fair market value of the shares on the date of grant, while NQSOs
may have any exercise price that is equal to or greater than 50% of fair market
value of
8
<PAGE> 11
the applicable shares on the date of grant. Options are exercisable when and
on the terms set by the Committee, but may not be exercised more than ten years
after the date of grant. Payment of the exercise price may be made in cash,
with other shares of Common Stock, or a combination of both. Pyramiding of
stock option exercises may be permitted, which could allow a participant to
exercise the options without paying any significant amount of cash.
Stock Appreciation Rights
SARs are rights to receive a payment, in cash or shares of Common Stock
or both, based on the value of Common Stock. SARs not granted in connection
with another award under the Incentive Plan must have an exercise price based
on the fair market value of a share of Common Stock on the date of grant. SARs
granted in connection with another award generally will have the same exercise
price and other terms as the related award. However, exercise of the tandem
SAR will terminate the related award, and exercise of the related award will
similarly terminate the tandem SAR.
Other Awards
The Incentive Plan also permits stock awards and cash awards. A stock
award is an award of shares of Common Stock or that is denominated in shares of
Common Stock. The award may be subject to restrictions against transfer,
satisfaction of specified conditions, repurchase options exercisable by the
Company, or other limitations or may be made without any limitations. The
participant may be given the right to vote the shares and receive dividends on
the shares subject to the award, whether before or after such shares have been
earned. No more than 50% of the total shares reserved for issuance under the
Incentive Plan may be issued pursuant to restricted stock, stock bonus, or
similar stock awards (this limitation does not apply to restricted stock or
other stock issued upon exercise of an option or SAR or in payment of
performance-based compensation awards). No participant may be awarded more
than 100,000 shares of Common Stock in any year. Cash awards are generally
based on the extent to which pre-established performance goals are achieved
over a pre-established period, but may also include individual bonuses paid for
previous performance.
The Committee may select any performance measure or combination of
measures as conditions for cash or stock payments under the Incentive Plan,
except that the performance measure(s) for executive officers must be chosen
from among the following choices: (a) total stockholder return (stock price
appreciation plus dividends); (b) net income; (c) earnings per share; (d)
return on sales; (e) return on equity; (f) return on assets; (g) increase in
the market price of Common Stock or other securities; (h) the performance of
the Company in any of the items mentioned in clause (a) through (g) in
comparison to the average performance of the companies included in the S&P
Textiles Index; and (i) the Company's performance in any of the items mentioned
in clause (a) through (g) in comparison to the average performance of the
companies used in a peer group established by the Committee before the
beginning of the performance period. Nevertheless, the Committee may choose
different performance measures for executive officers if the stockholders
approve otherwise, if tax laws or regulations change so as not to require
stockholder approval of different measures in order to deduct the related cash
or stock payment for federal income tax purposes, or if the Committee
determines that it is in the Company's best interest to grant awards not
satisfying the requirements of Section 162(m) of the Code or any successor law.
Automatic Grants to Non-employee Directors
The Incentive Plan previously provided that each non-employee director
of Littlefield, Adams serving as a director immediately following approval of
the Incentive Plan by the shareholders, and each non-employee director
subsequently becoming a director following such approval, will be automatically
granted 5,000 shares of Common Stock, of which one-third will be immediately
vested and an additional one-third will vest on each of the first and second
anniversaries of the date of grant. Commencing with the annual meeting of
shareholders to be held in 1995, each non-employee director was granted
nonqualified stock options for 5,000 shares effective on the date of the annual
meeting of shareholders. The exercise price of such options was the fair
market value of the Common Stock on the date of grant. The Incentive Plan was
amended by the Board of Directors in August 1996 to eliminate the automatic
grant of options to non-employee directors. Therefore, non- employee directors
are not eligible for grants of awards under the Incentive Plan.
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<PAGE> 12
Deferral and Substitution of Awards
The Incentive Compensation Committee may permit a participant to defer
receipt of the payment of cash or the delivery of shares that the participant
would otherwise be due under any award pursuant to the Incentive Plan.
Tax Withholding
The Incentive Plan allows for the satisfaction of a participant's tax
withholding with respect to an award by the withholding of shares of Common
Stock issuable pursuant to the award or the delivery of previously owned shares
of Common Stock, in either case based upon the fair market value of the
applicable shares and subject to any limitations or conditions the Committee
adopts.
EMPLOYMENT AGREEMENTS WITH STANLEY I. HALBREICH AND JERROLD LULOFF
Sports Imprints, Inc., formerly a wholly-owned subsidiary of the
Company that has since been merged into the Company, entered into Employment
Agreements with each of Stanley I. Halbreich, formerly Chairman and Chief
Executive Officer of Sports Imprints, Inc. and currently Treasurer and Chief
Financial Officer of the Company, and Jerrold Luloff, formerly President of
Sports Imprints, Inc. and of the Company's Apparel Group. The foregoing
Employment Agreements were for initial terms ending December 31, 1995,
automatically renewing thereafter on a year to year basis unless either party
to an Employment Agreement elects not to renew. The Company may also terminate
the Employment Agreement for "cause" (as defined) or upon the discontinuance of
its business. The Employment Agreements terminate automatically in the event
of death or permanent disability. Each of the Employment Agreements provided
for the payment of an annual base salary of $100,000, plus an annual bonus
equal to 9% of the first $500,000 of Sports Imprints, Inc.'s calendar year
pre-tax earnings, subject to non-refundable monthly draws in anticipation
thereof of $4,100. By mutual agreement, Mr. Luloff's Employment Agreement was
terminated on March 5, 1996, and Mr. Luloff ceased to be an employee of the
Company on April 5, 1996.
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of Littlefield, Adams does not have a
compensation committee. Decisions regarding 1996 compensation of the Company's
executives were made by the Board of Directors, except that decisions regarding
grants of awards under the Littlefield, Adams & Company Incentive Plan were
made by the Incentive Compensation Committee of the Board of Directors.
Pursuant to rules adopted by the Securities and Exchange Commission,
set forth below is a report submitted by the Company's Board of Directors
addressing the Company's compensation policies for 1996 as they affected the
Company's executive officers generally and, in particular, as they affected
David M. Simmonds, the Company's President and Chief Executive Officer.
COMPENSATION POLICIES REGARDING EXECUTIVE OFFICERS
The Company's executive compensation policies during 1996 were intended
to provide competitive levels of compensation in order to attract and retain
qualified executives, and to recognize individual contributions to the
successful achievement of the Company's business objectives. Compensation paid
the Company's executive officers for 1996 consisted primarily of base annual
salary, bonuses (determined in accordance with the provisions of the Sports
Imprints Agreement) and the grant of stock options. In determining such
compensation, the prevailing levels of compensation paid by the Company's
competitors, as well as the individual contributions to the Company which each
of the executives has made and would be expected to make in the future are
considered on an informal basis.
As discussed above under "Management Compensation -- Description of
Incentive Plan," it is intended that the Incentive Plan be utilized to provide
long-term incentives to executive officers by enabling them to share in the
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<PAGE> 13
future growth of the Company's business. The Board believes that stock-based
performance compensation arrangements are beneficial in aligning managements'
and shareholders' interests in the enhancement of shareholder value over the
long-term. Options granted pursuant to the Incentive Plan will generally have
exercise prices equal to the market price of the Company's Common Stock on the
date the Options are granted, and with limited exceptions will be exercisable
only during an executive officer's tenure with the Company and for three months
thereafter. Thus, values which may be realized by an executive officer upon
exercise of options will generally result directly from appreciation in the
Company's stock price following the grant of the option. The Committee
believes that by making infrequent option grants potentially exercisable for a
significant number of shares, an optionee will be motivated to generate
potential gains by working to steadily increase the Common Stock's price over
the long term, to a greater extent than if the same number of options were
granted over the same period in smaller annual installments, because the
exercise prices of the annual grants would increase in tandem with increases in
the Company's stock price.
1996 COMPENSATION OF CHIEF EXECUTIVE OFFICER
Regulations of the Securities and Exchange Commission require
disclosure of the bases for compensation reported for Mr. Simmonds, who serves
as President, Chief Executive Officer and Chairman of the Board and General
Counsel.
During 1996, Mr. Simmonds earned $195,257 as compensation for serving
as the Company's President, Chief Executive Officer and General Counsel. Mr.
Simmonds' compensation, which was unchanged (on an annualized basis) from 1995,
was based on a determination by the Company's Board of Directors that this
level of compensation was fair and reasonable in light of the duties and
responsibilities Mr. Simmonds was being asked to perform and assume as the
Company's President and Chief Executive Officer. The Board also considered the
complexity of the problems facing the Company, the estimated savings to the
Company of Mr. Simmonds' service as General Counsel and the net recovery and
benefit to the Company from the expeditious resolution of litigation, together
with Mr. Simmonds' role in securing new license agreements, directing the
development of new product lines, and his overall leadership of the Company.
SUBMITTED BY THE BOARD OF DIRECTORS:
William E. Goettelman
Stanley I. Halbreich
David M. Simmonds
Martin B. Shifrin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors does not currently have a compensation
committee; however, the Board of Directors has established an Incentive
Compensation Committee. All executive compensation decisions, other than with
respect to the granting of awards under (and administering) the Incentive Plan,
were made by the Board of Directors. David M. Simmonds, President, Chairman
and Chief Executive Officer of the Company, and Stanley I. Halbreich, Chief
Financial Officer of the Company, are directors of the Company and participated
in the Board's deliberations of executive compensation. Messrs. Simmonds and
Halbreich did not participate in the deliberations of the Incentive
Compensation Committee.
None of the executive officers of the Company serves as a compensation
committee or board member of any other entity, one of whose executive officers
served on the Board of Directors of the Company.
11
<PAGE> 14
CERTAIN TRANSACTIONS
SECURITIES CLASS ACTION
The Company and certain of its current and past officers and directors,
and others, were named as defendants in three actions brought by individual
plaintiffs, purportedly representing persons who purchased securities of the
Company during a total period running from July 1, 1991 through May 17, 1994.
These three actions were filed by the plaintiffs on July 22, 1993, August 13,
1993 and March 16, 1994. These actions were consolidated for discovery and
pretrial purposes in the United States District Court for the Western District
of Texas and are captioned In re Littlefield, Adams & Co. Securities
Litigation, Civil Action No. SA 93 CA 0561 ("Consolidated Action"). The
plaintiffs alleged that the Company and certain of its current and past
officers and directors, and others, violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10(b)-5 promulgated thereunder, as a
result of alleged misrepresentations and omissions in connection with the
annual report for 1992, the 1993 quarterly reports, and certain press releases.
The complaint also alleged a claim for treble-damages under the Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. Sec. 1964. On February 21,
1995, the Company reached an agreement with the plaintiffs to settle these
claims, as well as certain related claims involving other parties. The
settlement has been approved by the Court and a final order of dismissal was
entered on January 27, 1997. As no appeal was filed during the requisite
period, that order is now final and non-appealable. Under the terms of the
settlement, the Company will issue $1,400,000 in value of Common Stock (485,000
shares) and pay $210,000 in cash to the members of the class to settle the
claims brought by the plaintiffs. In return for the cash paid and the stock to
be issued, the Company received releases from the plaintiffs and the other
defendants. The number of shares to be issued is to be based on the average
closing price of the Company's stock for the 20 trading days immediately
preceding the end of the appeal period following entry by the Court of the
final order of dismissal. The issuance of these shares will result in an
increase of approximately 22% in the number of the Company's shares
outstanding. The Company also received $210,000 in cash from a third party in
connection with the settlement of a related matter, which amount was paid into
a court monitored escrow established for the benefit of the class action
plaintiffs.
CHARLOTTE E. PICARD, DERIVATIVELY ON BEHALF OF LITTLEFIELD, ADAMS & COMPANY, V.
CURTIS A. YOUNTS, JR. ET AL.
This action was filed in the United States District Court, Western
District of Texas on June 29, 1994. The Company was named as a nominal
defendant. The complaint alleged that certain current and former officers and
directors of the Company, some of the Company's former lawyers and the
Company's former auditors "damaged LFA by causing or permitting LFA to commit
securities fraud and by damaging or destroying the Company's reputation," and
otherwise. The parties to this action, with the exception of certain of the
Company's former lawyers, settled this action. The settlement agreement has
been approved by the Court and a final order of dismissal was entered on
January 27, 1997. As no appeal was filed during the requisite period, that
order is now final and non-appealable. Under the terms of the settlement
agreement, the Company's former auditors will pay $130,000 to the Company (of
which the Company expects to receive approximately $70,000, net of attorneys'
fees and expenses) and the Company will issue $50,000 (17,076 shares) of Common
Stock to those former auditors in settlement of claims for fees. In addition,
(1) John K. Stuth, the Company's former Chairman, President and Chief Executive
Officer, will relinquish back to the Company rights that he has to 5,000 shares
of Common Stock and rights that he had as of February 21, 1995 under options to
acquire 50,000 shares of Common Stock (which options expired unexercised on
July 12, 1996); (2) Director Stanley Halbreich currently the Company's
Treasurer and Chief Financial Officer, will relinquish back to the Company
rights that he has to 5,000 shares of Common Stock; and (3) former President
Wade Hudman will return 1,000 shares of Common Stock to the Company.
LITTLEFIELD, ADAMS & COMPANY V. YOUNTS, ET AL.
This action was filed on June 15, 1994, in the Texas District Court in
the 57th Judicial District, Bexar County, Texas, by the Company against its
former Chairman, Curtis A. Younts, Jr., his wife, and various of their
affiliated entities seeking the immediate repayment of $912,000 and other
alleged amounts to have been
12
<PAGE> 15
misappropriated by the defendants. Younts filed a counterclaim against the
Company seeking compensation for an unstated amount for services and expense
funds he claims to have provided the Company. The Company denied that it owes
any amount to Younts. As a result of Younts agreeing to contribute $330,000 to
settle the class action litigation described above, all of the parties have
agreed to dismiss their claims and provide mutual releases of liability. The
Company expects this case to be dismissed during the 1997 second quarter.
CURTIS A. YOUNTS, JR. V. LITTLEFIELD, ADAMS & COMPANY
This action was filed on June 16, 1994, in the Texas District Court,
169th Judicial District, Bell County, Texas, against the Company and one of its
officers by its former Chairman, Curtis A. Younts, Jr. Mr. Younts sought an
unspecified amount for the reasonable value of his services, allegedly rendered
on behalf of the Company since 1991. The Company denied that it owed any
amount to Younts. As a result of Younts agreeing to contribute $330,000 to
settle the class action litigation described above, all of the parties have
agreed to dismiss their claims and provide mutual releases of liability.
Notwithstanding the foregoing, this case was dismissed by the Court, on its own
initiative, in August 1996 for want of prosecution.
ATKISSON V. LITTLEFIELD, ADAMS & COMPANY AND CURTIS A. YOUNTS, JR.
The Company and Curtis A. Younts, Jr., a former chief executive officer
of the Company, have been named as defendants in an action filed on October 15,
1995 by A. Carroll Atkisson in the United States District Court for the Western
District of Virginia, Cause No. 95-1107-R. Atkisson was the owner of a company
known as Personal Screening, Inc. In approximately 1991, Atkisson transferred
all of his stock in Personal Screening, Inc. to Littlefield, Adams, in exchange
for shares of Littlefield Adams. Subsequently, Personal Screening, Inc. was
merged into Collegiate Pacific. Thereafter, Atkisson served, for a period of
time, as a director of Littlefield, Adams and officer of Collegiate Pacific.
Atkisson alleges that the Company has wrongly deprived him of a total
of 52,500 (post-split) shares of Littlefield, Adams stock, to which he claims
he is entitled in compensation for services rendered as a director, pursuant to
an alleged stock option agreement, and otherwise. He alleges that he is
entitled to damages, in lieu of the referenced stock, of approximately
$370,000. He also alleges that he is entitled to damages of $16,000, which he
claims to be owed by virtue of the Company's breach of an employment agreement
under which the Company allegedly promised to pay him $4,000 per month salary
for four months in 1993, but failed to do so. In an apparently separate claim,
he alleges what appears to be a claim for compensatory damages of not less than
$600,000. Atkisson's complaint seeks judgment of $1,000,000.
The Company answered and filed a counterclaim on December 22, 1995.
The Company denies Atkisson's allegations against it, denies that it is
indebted to Atkisson in any amount and contends that it is entitled to recovery
against Atkisson on its counterclaims. In its counterclaim, the Company
asserts causes of action for breach of fiduciary duty, negligence, fraud,
conspiracy and violation of the Texas Deceptive Trade Practices Act.
In April 1997 the parties entered into an agreement whereunder this
case will be dismissed in exchange for a mutual release of claims and
liability. The Company expects the case to be dismissed during the 1997 second
quarter.
JERROLD LULOFF V. LITTLEFIELD, ADAMS & COMPANY, ET AL.
On May 9, 1996, Jerrold Luloff, a former President, Co-Chief Executive
Officer and director of Littlefield, Adams & Company, filed a lawsuit against
the company and certain of its current officers and directors in the Court of
Common Pleas of Franklin County, Ohio. Mr. Luloff sought combined damages of
approximately $284,000, plus punitive damages and attorney's fees, based on an
alleged breach by the Company of a purported severance agreement related to the
plaintiff's termination/resignation as an officer, employee and director of the
Company. The Company answered and filed a counterclaim on June 28, 1996. In
its counterclaim, the Company asserted causes of action for breach of fiduciary
duty, mismanagement and waste, conversion and defalcation, and for judgment
declaring that an alleged agreement under which Mr. Luloff claimed rights and
benefits created no such
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<PAGE> 16
rights and entitled him to no such benefits. The Company denied the
plaintiff's allegations against it and contended that it was entitled to
recover against Mr. Luloff on its counterclaim.
In September 1996, a settlement was reached, whereunder the Company
agreed to pay Mr. Luloff a total of $36,000 over two years, without interest,
and Mr. Luloff released his rights to 23,044 shares of stock which he had
earned under the agreement pursuant to which the Company acquired Sports
Imprints, Inc., in 1993.
OTHER TRANSACTIONS
The Company's former President and Chief Executive Officer, John K.
Stuth, was permanently disabled after suffering a heart attack in May 1995.
Mr. Stuth ceased to be an officer and employee of the Company in July 1995.
During 1996, the Company paid Mr. Stuth $50,000 in sick pay.
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<PAGE> 17
STOCK PERFORMANCE CHART
The line graph set forth below compares the cumulative total
shareholder return on Littlefield, Adams Common Stock with that of the Standard
& Poor's Composite Index ("S&P 500") and Standard & Poor's Textile Apparel
Manufacturers Index ("S&P Textile-Apparel Mfr") for the five years ended
December 31, 1996. The comparison assumes $100 was invested on December 31,
1991 in Littlefield, Adams Common Stock and in each of the foregoing indices
and that all dividends paid by companies included in each index were
reinvested. Littlefield, Adams Common Stock was suspended from trading on the
American Stock Exchange from March 31, 1994, until May 4, 1994.
[LINE GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------
12/91 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Littlefield Adams & Co LFA 100 134 262 77 20 38
S & P 500 1500 100 108 118 120 165 203
S & P TEXTILES (APPAREL) ITXA 100 106 80 79 89 101
</TABLE>
15
<PAGE> 18
PROPOSAL NO. 2
PROPOSAL TO APPROVE AN AMENDMENT TO THE
LITTLEFIELD, ADAMS & COMPANY INCENTIVE PLAN
GENERAL
The Littlefield, Adams & Company Incentive Plan was adopted by the
Incentive Compensation Committee of the Board of Directors in August 1994 and
approved by the Company's shareholders in October 1994. The purpose of the
Incentive Plan is to provide an incentive for selected employees, directors,
and certain consultants and advisors of the Company or its subsidiaries to
remain in the service of the Company or its subsidiaries, to extend to them the
opportunity to acquire a proprietary interest in the Company so that they will
apply their best efforts for the benefit of the Company, and to aid the Company
in attracting able persons to enter the service of the Company and its
subsidiaries. Pursuant to the Incentive Plan as currently in effect, the
Company may grant such persons awards, in the form of stock options, stock
appreciation rights, stock and cash. The maximum number of shares of Common
Stock that may be issued pursuant to awards granted under the Incentive Plan is
1,000,000 (subject to adjustment for stock splits, stock dividends,
recapitalizations and other changes in the Company's capitalization or in the
event of mergers or other similar transactions involving the Company).
The Board of Directors of the Company has adopted a proposal to amend
the Incentive Plan to increase by 500,000 shares the number of shares of the
Company's Common Stock available under the Incentive Plan. A copy of the
Incentive Plan, as amended by the Board of Directors, is attached hereto as
Appendix A.
The material features of the Option Plan as currently in effect are
described above under "Management Compensation -- Description of Incentive
Plan."
REASONS FOR AND PRINCIPAL EFFECTS OF THE PROPOSAL
Increase in Number of Shares. As of April 28, 1997, there were
outstanding under the Incentive Plan stock options covering 914,000 shares of
Common Stock, 35,644 shares of Common Stock granted as awards under the
Incentive Plan, and only 50,356 shares of Common Stock available for future
awards under the Incentive Plan. As the Incentive Compensation Committee
believes that the Company's stock-based performance compensation arrangements
are beneficial in aligning management's interests with those of the Company's
shareholders over the long term, the Board has adopted, and recommends that the
shareholders approve the adoption of, the amendment to the Incentive Plan
providing for the increase in the number of shares of Common Stock which may be
issued upon exercise of options granted thereunder from 1,000,000 shares to
1,500,000 shares. If the amendment is approved, the employees (including
officers), directors, consultants and other persons who are eligible to
participate in the Incentive Plan could receive, in the aggregate, an
additional 500,000 shares of Common Stock.
VOTE REQUIRED FOR APPROVAL
Approval of the amendment to the Incentive Plan requires the
affirmative vote of a majority of the voting power present in person or
represented by proxy at the Annual Meeting and entitled to vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Company's Board of Directors recommends a vote FOR Proposal No. 2.
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<PAGE> 19
AUDITORS
The Board of Directors has selected Arthur Andersen LLP, independent
public accountants, to audit the financial statements of the Company for the
year ending December 31, 1996. Representatives of Arthur Andersen LLP are
expected to be available at the Meeting via a telephonic connection and will
have the opportunity to make a statement if they desire. They will also be
available to respond to appropriate questions.
DEADLINE FOR SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the next annual
meeting of shareholders, to be held in 1998, must be received by the Company at
6262 Executive Boulevard, Huber Heights, Ohio 45424 by December 31, 1997 (as
determined in accordance with SEC Rules 14a-5 and 14a- 8(a)(3)(i)) to be
included in the proxy statement and form of proxy relating to that meeting.
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K, as filed with the Securities
and Exchange Commission, is available to shareholders on request and may be
obtained by writing to: Littlefield, Adams & Company, 6262 Executive
Boulevard, Huber Heights, Ohio 45424, Attention: Corporate Secretary.
OTHER BUSINESS
The Board of Directors does not know of any matter to be brought before
the Meeting other than the matters specified in the Notice of Annual Meeting
accompanying this Proxy Statement. The persons named in the form of proxy by
the Board of Directors will vote all proxies which have been properly executed.
If any matters set forth in the Notice of Annual Meeting are properly brought
before the Meeting, such persons will vote thereon in accordance with their
best judgment.
By Order of the Board of Directors
David M. Simmonds
Chairman
17
<PAGE> 20
Appendix A
LITTLEFIELD, ADAMS & COMPANY
INCENTIVE PLAN
SCOPE AND PURPOSE OF PLAN
Littlefield, Adams & Company, a New Jersey corporation (the
"Corporation"), has adopted this Incentive Plan (the "Plan") to provide for the
granting to certain Eligible Individuals (hereafter defined) of:
(a) Incentive Options (hereafter defined);
(b) Nonstatutory Options (hereafter defined);
(c) Performance Units (hereafter defined);
(d) Restricted Stock Awards (hereafter defined);
(e) Stock Appreciation Rights (hereafter defined); and
(f) Cash and Stock Bonus Awards.
The purpose of the Plan is to provide an incentive for Key
Employees, directors, and certain consultants and advisors of the Corporation
or its Subsidiaries (hereafter defined) to remain in the service of the
Corporation or its Subsidiaries, to extend to them the opportunity to acquire a
proprietary interest in the Corporation so that they will apply their best
efforts for the benefit of the Corporation, and to aid the Corporation in
attracting able persons to enter the service of the Corporation and its
Subsidiaries.
SECTION 1. DEFINITIONS
1.1 "Acquiring Person" means any Person other than the
Corporation, any of the Corporation's Subsidiaries, any employee benefit plan
of the Corporation or of a Subsidiary of the Corporation or of a corporation
owned directly or indirectly by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation, any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or of a Subsidiary of the Corporation
or of a corporation owned directly or indirectly by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock
of the Corporation.
1.2 "Award" means the grant of any form of Option,
Performance Unit, Reload Option, Restricted Stock Award, or Stock Appreciation
Right under the Plan, whether granted singly, in combination, or in tandem, to
a Holder pursuant to the terms, conditions, and limitations that the Committee
may establish in order to fulfill the objectives of the Plan.
1.3 "Award Agreement" means the written agreement between
the Corporation and a Holder evidencing the terms, conditions, and limitations
of the Award granted to that Holder.
1.4 "Board of Directors" means the board of directors of
the Corporation.
1.5 "Business Day" means any day other than a Saturday,
a Sunday, or a day on which banking institutions in the State of Texas are
authorized or obligated by law or executive order to close.
<PAGE> 21
1.6 "Change in Control" means the event that is deemed to
have occurred if:
(a) any Acquiring Person is or becomes the "beneficial
owner" (as defined in Rule l3d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing thirty percent or
more of the combined voting power of the then outstanding Voting Securities of
the Corporation; or
(b) over a period of twenty-four months or less, members
of the Incumbent Board cease for any reason to constitute at least a majority
of the Board of Directors; or
(c) a public announcement is made of a tender or exchange
offer by any Acquiring Person for fifty percent or more of the outstanding
Voting Securities of the Corporation, and the Board of Directors approves or
fails to oppose that tender or exchange offer in its statements in Schedule
14D-9 under the Exchange Act; or
(d) the stockholders of the Corporation approve a merger
or consolidation of the Corporation with any other corporation or partnership
(or, if no such approval is required, the consummation of such a merger or
consolidation of the Corporation), other than a merger or consolidation that
would result in the Voting Securities of the Corporation outstanding
immediately before the consummation thereof continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity or of a parent of the surviving entity) a majority of the
combined voting power of the Voting Securities of the surviving entity (or its
parent) outstanding immediately after that merger or consolidation; or
(e) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the Corporation's
assets (or, if no such approval is required, the consummation of such a
liquidation, sale, or disposition in one transaction or series of related
transactions) other than a liquidation, sale or disposition of all or
substantially all the Corporation's assets in one transaction or a series of
related transactions to a corporation owned directly or indirectly by the
stockholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended.
1.8 "Committee" means the committee appointed pursuant to
Section 3 by the Board of Directors to administer this Plan.
1.9 "Corporation" means Littlefield, Adams & Company, a
New Jersey corporation.
1.10 "Date of Grant" has the meaning given it in Paragraph
4.3.
1.11 "Disability" has the meaning given it in Paragraph
12.5.
1.12 "Disinterested Person" has the meaning given it in
Rule 16b-3.
1.13 "Effective Date" means the date on which the Plan is
approved by the stockholders of the Corporation.
1.14 "Eligible Individuals" means (a) Key Employees, (b)
Non-employee Directors only for purposes of Awards pursuant to Section 5, and
(c) any other Person that the Committee designates as eligible for an Award
(other than for Incentive Options) because the Person performs bona fide
consulting or advisory services for the Corporation or any of its Subsidiaries
(other than services in connection with the offer or sale of securities in a
capital-raising transaction) and the Committee determines that the Person has a
direct and significant effect on the financial development of the Corporation
or any of its Subsidiaries. Notwithstanding the foregoing provisions of this
Paragraph 1.14, to ensure that the requirements of the fourth sentence of
Paragraph 3.1 are satisfied, the
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Committee may from time to time specify individuals who shall not be eligible
for the grant of Awards or options or stock appreciation rights or allocations
of stock under any plan of the Corporation or its affiliates (as those terms
are used in subsection (d)(3) of Rule 16b-3). Nevertheless, the Committee may
at any time determine that an individual who has been so excluded from
eligibility shall become eligible for grants of Awards and grants of such other
options or stock appreciation rights or allocations of stock under any plans of
the Corporation or its affiliates so long as that eligibility will not impair
the Plan's satisfaction of the conditions of Rule 16b-3.
1.15 "Employee" means any employee of the Corporation or
of any of its Subsidiaries, including officers and directors of the Corporation
who are also employees of the Corporation or of any of its Subsidiaries.
1.16 "Exchange Act" means the Securities Exchange Act of
1934, as amended.
1.17 "Executive Officer" means an Eligible Individual who,
as of the earlier of the date an Award is vested, the date restrictions with
respect to an Award lapse, or a payment is made pursuant to the terms of the
Award Agreement, is one of the "covered employees" defined in regulations
promulgated under section 162(m) of the Code or any successor provision of law.
1.18 "Exercise Notice" has the meaning given it in
Paragraph 6.5.
1.19 "Exercise Price" has the meaning given it in
Paragraph 6.4.
1.20 "Fair Market Value" means, for a particular day:
(a) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges on any national or regional securities
exchange at the date of determining the Fair Market Value, then the last
reported sale price, regular way, on the composite tape of that exchange on the
last Business Day before the date in question or, if no such sale takes place
on that Business Day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to unlisted
trading privileges on that securities exchange; or
(b) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in subparagraph 1.20(a)
and if sales prices for shares of Stock of the same class in the
over-the-counter market are reported by the Nasdaq Stock Market at the date of
determining the Fair Market Value, then the last reported sales price so
reported on the last Business Day before the date in question or, if no such
sale takes place on that Business Day, the average of the high bid and low
asked prices so reported; or
(c) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in subparagraph 1.20(a)
and sales prices for shares of Stock of the same class are not reported by the
Nasdaq Stock Market as provided in subparagraph 1.20(b), and if bid and asked
prices for shares of Stock of the same class in the over-the-counter market are
reported by NASDAQ (or, if not so reported, by the National Quotation Bureau
Incorporated) at the date of determining the Fair Market Value, then the
average of the high bid and low asked prices on the last Business Day before
the date in question; or
(d) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in subparagraph 1.20(a)
and sales prices or bid and asked prices therefor are not reported by NASDAQ
(or the National Quotation Bureau Incorporated) as provided in subparagraph
1.20(b) or subparagraph 1.20(c) at the date of determining the Fair Market
Value, then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes; or
(e) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges as provided in subparagraph 1.20(a) or
sales prices or bid and asked prices therefor are reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in subparagraph 1.20(b) or
subparagraph 1.20(c) at the
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date of determining the Fair Market Value, but the volume of trading is so low
that the Committee determines in good faith that such prices are not indicative
of the fair value of the Stock, then the value determined in good faith by the
Committee, which determination shall be conclusive for all purposes
notwithstanding the provisions of subparagraphs 1.20(a), (b), or (c).
For purposes of valuing Incentive Options, the Fair Market
Value of Stock shall be determined without regard to any restriction other than
one that, by its terms, will never lapse. For purposes of the redemption
provided for in clause 11.3(d)(v), Fair Market Value shall have the meaning and
shall be determined as provided above; provided, however, that the Committee,
with respect to any such redemption, shall have the right to determine that the
Fair Market Value for purposes of the redemption should be an amount measured
by the value of the shares of stock, other securities, cash or property
otherwise being received by holders of shares of Stock in connection with the
Restructure, and upon that determination the Committee shall have the power and
authority to determine Fair Market Value for purposes of the redemption based
upon the value of such shares of stock, other securities, cash or property.
Any such determination by the Committee shall be conclusive for all purposes.
1.21 "Holder" means an Eligible Individual to whom an
Award has been granted.
1.22 "Incentive Option" means an incentive stock option as
defined under Section 422 of the Code and regulations thereunder.
1.23 "Incumbent Board" means the individuals who, as of
the Effective Date, constitute the Board of Directors and any other individual
who becomes a director of the Corporation after that date and whose election or
appointment by the Board of Directors or nomination for election by the
Corporation's stockholders was approved by a vote of at least two-thirds of the
directors then comprising the Incumbent Board.
1.24 "Key Employee" means any Employee whom the Committee
identifies as having a direct and significant effect on the performance of the
Corporation or any of its Subsidiaries.
1.25 "Non-employee Director" means a director of the
Corporation who while a director is not (and who in the year before becoming a
director has not been) an Employee.
1.26 [reserved]
1.27 "Nonstatutory Option" means a stock option that does
not satisfy the requirements of Section 422 of the Code or that is designated
at the Date of Grant or in the applicable Option Agreement to be an option
other than an Incentive Option.
1.28 "Non-Surviving Event" means an event of Restructure
as described in either subparagraph (b) or (c) of Paragraph 1.38.
1.29 "Normal Retirement" means the separation of the
Holder from employment with the Corporation and its Subsidiaries on account of
retirement at any time on or after the date on which the Holder reaches age
sixty.
1.30 "Option Agreement" means an Award Agreement for an
Incentive Option or a Nonstatutory Option.
1.31 "Option" means either an Incentive Option or a
Nonstatutory Option, or both.
1.32 "Performance Period" means a period of one or more
fiscal years of the Corporation, beginning with the fiscal year in which
Performance Units are granted and over which performance is measured, for the
purpose of determining the payment value of Performance Units. A Performance
Period shall not exceed ten years.
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1.33 "Performance Unit" means a unit representing a
contingent right to receive a specified amount of cash or shares of Stock at
the end of a Performance Period.
1.34 "Person" means any person or entity of any nature
whatsoever, specifically including (but not limited to) an individual, a firm,
a company, a corporation, a partnership, a trust or other entity.
A Person, together with that Person's affiliates and
associates (as those terms are defined in Rule 12b-2 under the Exchange Act for
purposes of this definition only), and any Persons acting as a partnership,
limited partnership, joint venture, association, syndicate or other group
(whether or not formally organized), or otherwise acting jointly or in concert
or in a coordinated or consciously parallel manner (whether or not pursuant to
any express agreement), for the purpose of acquiring, holding, voting or
disposing of securities of the Corporation with that Person, shall be deemed a
single "Person."
1.35 "Plan" means the Littlefield, Adams & Company
Incentive Plan, as it may be amended from time to time.
1.36 "Reload Option" has the meaning given it in Paragraph
6.10.
1.37 "Restricted Stock Award" means the grant or purchase,
on the terms and conditions that the Committee determines or on the terms and
conditions of Section 8, of Stock that is nontransferable and subject to
substantial risk of forfeiture until specific conditions are met.
1.38 "Restructure" means the occurrence of any one or more
of the following:
(a) The merger or consolidation of the Corporation with
any Person, whether effected as a single transaction or a series of related
transactions, with the Corporation remaining the continuing or surviving entity
of that merger or consolidation and the Stock remaining outstanding and not
changed into or exchanged for stock or other securities of any other Person or
of the Corporation, cash, or other property;
(b) The merger or consolidation of the Corporation with
any Person, whether effected as a single transaction or a series of related
transactions, with (i) the Corporation not being the continuing or surviving
entity of that merger or consolidation or (ii) the Corporation remaining the
continuing or surviving entity of that merger or consolidation but all or a
part of the outstanding shares of Stock are changed into or exchanged for stock
or other securities of any other Person or the Corporation, cash, or other
property; or
(c) The transfer, directly or indirectly, of all or
substantially all of the assets of the Corporation (whether by sale, merger,
consolidation, liquidation or otherwise) to any Person whether effected as a
single transaction or a series of related transactions.
1.39 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of
the Exchange Act, or any successor rule, as it may be amended from time to
time.
1.40 "Securities Act" means the Securities Act of 1933, as
amended.
1.41 "Stock" means the Corporation's authorized common
stock, par value $ 1.00 per share, as described in the Corporation's
Certificate of Incorporation, or any other securities that are substituted for
the Stock as provided in Section 11.
1.42 "Stock Appreciation Right" means the right to receive
an amount equal to the excess of the Fair Market Value of a share of Stock (as
determined on the date of exercise) over, as appropriate, the Exercise Price of
a related Option or the Fair Market Value of the Stock on the Date of Grant of
the Stock Appreciation Right.
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1.43 "Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by that Person.
1.44 "Total Shares" has the meaning given it in Paragraph
11.2.
1.45 "Voting Securities" means any securities that are
entitled to vote generally in the election of directors, in the admission of
general partners, or in the selection of any other similar governing body.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
2.1 Maximum Amount of Shares. Subject to the provisions
of Section 11 of the Plan, the aggregate number of shares of Stock that may be
issued, transferred or exercised pursuant to Awards under the Plan shall be
1,500,000 shares of Stock.
2.2 Reduction in Available Shares. In computing the
total number of shares available at a particular time for Awards under the
Plan, there shall be counted against the limitations stated in Paragraph 2.1
the number of shares of Stock subject to issuance upon exercise or settlement
of Awards, the number of shares of Stock that equal the value of Performance
Units determined in each case as of the Date of Grant of each Award (other than
Awards designated to be paid only in cash), and the number of shares of Stock
that have been issued upon exercise or settlement of Awards (except as
otherwise provided in Paragraph 2.3).
2.3 Restoration of Unused and Surrendered Shares. If
Stock subject to any Award is not issued or transferred, or ceases to be
issuable or transferable for any reason, including (but not exclusively)
because an Award is forfeited, terminated, expires unexercised, is settled in
cash in lieu of Stock, or is exchanged for other Awards, the shares of Stock
that were subject to that Award shall no longer be charged against the number
of available shares provided for in Paragraph 2.1 and shall again be available
for issue, transfer, or exercise pursuant to Awards under the Plan to the
extent of such forfeiture, termination, expiration, or other cessation of its
subjection to an Award.
2.4 Description of Shares. The shares to be delivered
under the Plan shall be made available from (a) authorized but unissued shares
of Stock, (b) Stock held in the treasury of the Corporation, or (c) previously
issued shares of Stock reacquired by the Corporation, including shares
purchased on the open market, in each situation as the Board of Directors or
the Committee may determine from time to time at its sole option.
2.5 Registration and Listing of Shares. From time to
time, the Board of Directors and appropriate officers of the Corporation shall
and are authorized to take whatever actions are necessary to file required
documents with governmental authorities, stock exchanges, and other appropriate
Persons to make shares of Stock available for issuance pursuant to Awards.
2.6 Reduction in Outstanding Shares of Stock. Nothing in
this Section 2 shall impair the right of the Corporation to reduce the number
of outstanding shares of Stock pursuant to repurchases, redemptions, or
otherwise; provided, however, that no reduction in the number of outstanding
shares of Stock shall (a) impair the validity of any outstanding Award, whether
or not that Award is fully exercisable or fully vested or (b) impair the status
of any shares of Stock previously issued pursuant to an Award or thereafter
issued pursuant to a then-outstanding Award as duly authorized, validly issued,
fully paid, and nonassessable shares.
2.7 Limitation on Certain Stock Awards. No more than
fifty percent of the aggregate shares of Stock which may be issued under the
Plan may be issued pursuant to Restricted Stock Awards, Stock Bonus Awards or
similar awards which grant Stock; provided, however, that the limitation
expressed in this Section 2.7 shall not apply with respect to shares of Stock
issued in connection with the exercise of an Option Award, Stock Appreciation
Right Award or Performance Unit.
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SECTION 3. ADMINISTRATION OF THE PLAN
3.1 Committee. The Committee shall administer the Plan,
but shall not have the power to appoint members of the Committee or to
terminate, modify, or amend the Plan. The Committee shall be constituted so
that, as long as Stock is registered under Section 12 of the Exchange Act, each
member of the Committee shall be a Disinterested Person who is a member of the
Board of Directors and so that the Plan in all other applicable respects will
qualify transactions related to the Plan for the exemptions from Section 16(b)
of the Exchange Act provided by Rule 16b-3, to the extent exemptions thereunder
may be available. No discretion regarding Awards to Eligible Individuals who
are subject to Section 16(b) of the Exchange Act shall be afforded to a person
who is not a Disinterested Person. The number of persons that shall constitute
the Committee shall be determined from time to time by a majority of all the
members of the Board of Directors, and, unless that majority of the Board of
Directors determines otherwise, shall be no less than two persons. Persons
elected to serve on the Committee as Disinterested Persons shall not be
eligible to receive Awards or equity securities under any plan of the
Corporation or its affiliates (as those terms are used in Rule 16b-3) while
they are serving as members of the Committee; shall not have been eligible to
receive Awards or such equity securities under any plan of the Corporation or
its affiliates within one year before their appointment to the Committee
becomes effective; and shall not be eligible to receive Awards or such equity
securities under any plan of the Corporation or its affiliates for such period
following service on the Committee as may be required by Rule 16b-3 for that
person to remain a Disinterested Person, in each case except for Awards of
equity securities pursuant to paragraphs (c)(2)(i)(A), (B), (C) or (D) of Rule
16b-3.
3.2 Duration, Removal, Etc. The members of the Committee
shall serve at the pleasure of the Board of Directors, which shall have the
power, at any time and from time to time, to remove members from or add members
to the Committee. Removal from the Committee may be with or without cause.
Any individual serving as a member of the Committee shall have the right to
resign from membership in the Committee by at least three day's written notice
to the Board of Directors. The Board of Directors, and not the remaining
members of the Committee, shall have the power and authority to fill vacancies
on the Committee, however caused. The Board of Directors shall promptly fill
any vacancy that causes the number of members of the Committee to be below two
or any other number that Rule 16b-3 may require from time to time.
3.3 Meetings and Actions of Committee. The Board of
Directors shall designate which of the Committee members shall be the chairman
of the Committee. If the Board of Directors fails to designate a Committee
chairman, the members of the Committee shall elect one of the Committee members
as chairman, who shall act as chairman until he ceases to be a member of the
Committee or until the Board of Directors elects a new chairman. The Committee
shall hold its meetings at those times and places as the chairman of the
Committee may determine. At all meetings of the Committee, a quorum for the
transaction of business shall be required, and a quorum shall be deemed present
if at least a majority of the members of the Committee are present. At any
meeting of the Committee, each member shall have one vote. All decisions and
determinations of the Committee shall be made by the majority vote or majority
decision of all of its members present at a meeting at which a quorum is
present; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting that was duly called and held.
The Committee may make any rules and regulations for the conduct of its
business that are not inconsistent with the provisions of the Plan, the
Certificate of Incorporation, the by-laws of the Corporation, and Rule 16b-3 so
long as it is applicable, as the Committee may deem advisable.
3.4 Committee's Powers. Subject to the express
provisions of the Plan and Rule 16b-3, the Committee shall have the authority,
in its sole and absolute discretion, (a) to adopt, amend, and rescind
administrative and interpretive rules and regulations relating to the Plan; (b)
to determine the Eligible Individuals to whom, and the time or times at which,
Awards shall be granted; (c) to determine the number of shares of Stock that
shall be the subject of each Award; (d) to determine the terms and provisions
of each Award Agreement (which need not be identical), including provisions
defining or otherwise relating to (i) the term and the period or periods and
extent of exercisability of the Options, (ii) the extent to which the
transferability of shares of Stock issued or transferred pursuant to any Award
is restricted, (iii) the effect of termination of employment on the Award, and
(iv) the effect of approved leaves of absence (consistent with any applicable
regulations of the Internal Revenue Service);
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(e) to accelerate, pursuant to Section 6, the time of exercisability of any
Option that has been granted; (f) to construe the respective Award Agreements
and the Plan; (g) to make determinations of the Fair Market Value of the Stock
pursuant to the Plan; (h) to delegate its duties under the Plan to such agents
as it may appoint from time to time, provided that the Committee may not
delegate its duties with respect to making Awards to Executive Officers and
other Eligible Individuals who are subject to Section 16(b) of the Exchange
Act; and (i) to make all other determinations, perform all other acts, and
exercise all other powers and authority necessary or advisable for
administering the Plan, including the delegation of those ministerial acts and
responsibilities as the Committee deems appropriate. Subject to Rule 16b-3,
the Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan, in any Award, or in any Award Agreement in the
manner and to the extent it deems necessary or desirable to carry the Plan into
effect, and the Committee shall be the sole and final judge of that necessity
or desirability. The determinations of the Committee on the matters referred
to in this Paragraph 3.4 shall be final and conclusive.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligible Individuals. Awards may be granted pursuant
to the Plan only to persons who are Eligible Individuals at the time of the
grant thereof.
4.2 Grant of Awards. Subject to the express provisions
of the Plan, the Committee shall determine which Eligible Individuals shall be
granted Awards from time to time. In making grants, the Committee shall take
into consideration the contribution the potential Holder has made or may make
to the success of the Corporation or its Subsidiaries and such other
considerations as the Committee may from time to time specify. The Committee
shall also determine the number of shares or cash amounts subject to each of
the Awards and shall authorize and cause the Corporation to grant Awards in
accordance with those determinations.
4.3 Date of Grant. The date on which the Committee
completes all action constituting an offer of an Award to an individual,
including the specification of the number of shares of Stock and the amount of
cash to be subject to the Award, shall be the date on which the Award covered
by an Award Agreement is granted (the "Date of Grant"), even though certain
terms of the Award Agreement may not be determined at that time and even though
the Award Agreement may not be executed until a later time. In no event shall
a Holder gain any rights in addition to those specified by the Committee in its
grant, regardless of the time that may pass between the grant of the Award and
the actual execution of the Award Agreement by the Corporation and the Holder.
4.4 Award Agreements. Each Award granted under the Plan
shall be evidenced by an Award Agreement that is executed by the Corporation
and the Eligible Individual to whom the Award is granted and incorporating
those terms that the Committee shall deem necessary or desirable. More than
one Award may be granted under the Plan to the same Eligible Individual and be
outstanding concurrently. In the event an Eligible Individual is granted both
one or more Incentive Options and one or more Nonstatutory Options, those
grants shall be evidenced by separate Award Agreements, one for each of the
Incentive Option grants and one for each of the Nonstatutory Option grants.
4.5 Limitation for Incentive Options. Notwithstanding
any provision contained herein to the contrary, (a) a person shall not be
eligible to receive an Incentive Option unless he is an Employee of the
Corporation or a corporate Subsidiary (but not a partnership Subsidiary), and
(b) a person shall not be eligible to receive an Incentive Option if,
immediately before the time the Option is granted, that person owns (within the
meaning of Sections 422 and 424 of the Code) stock possessing more than ten
percent of the total combined voting power or value of all classes of stock of
the Corporation or a Subsidiary. Nevertheless, this subparagraph 4.5(b) shall
not apply if, at the time the Incentive Option is granted, the Exercise Price
of the Incentive Option is at least one hundred and ten percent of Fair Market
Value and the Incentive Option is not, by its terms, exercisable after the
expiration of five years from the Date of Grant.
4.6 No Right to Award. The adoption of the Plan shall
not be deemed to give any person a right to be granted an Award except pursuant
to Section 5.
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4.7 Limitation on Individual Awards. The individual
serving as Chief Executive Officer of the Corporation shall not be eligible to
receive Awards during any three year period to which more than 500,000 shares
of Stock are subject. No other Eligible Individual shall, in one calendar
year, receive Awards to which more than 200,000 shares of Stock are subject.
SECTION 5. AWARDS TO NON-EMPLOYEE DIRECTORS
5.1 Ineligibility for Other Awards. Non-employee
Directors shall not be eligible to receive any Awards under the Plan other than
the deferral Awards specified in this Section 5.
5.2 [reserved]
5.3 [reserved]
5.4 [reserved]
5.5 Non-Employee Director Deferral Awards. A
Non-employee Director may elect to receive a Nonstatutory Option in lieu of all
or a portion of his or her fee, if any, for services as a Non-employee Director
of the Corporation. The number of shares subject to such Option shall be
determined by dividing the amount of the fee which the Non-employee Director
has elected not to receive by the value of an option for one share of Common
Stock on the Date of Grant having the terms set forth herein; provided that
such value shall be calculated pursuant to the Black-Scholes Model based on the
applicable assumptions used in calculating option values in the most recent
annual meeting proxy statement of the Corporation or, if the Black-Scholes
Model was not used in calculating option values in the most recent annual
meeting proxy statement, based on such reasonable assumptions as the Committee
shall determine. The Date of Grant of such an Option shall be the date on
which such fee otherwise would have been paid. The exercise price with respect
to a share of Stock subject to such Option shall be the Fair Market Value of a
share of Stock on the Option's Date of Grant. An Option issued pursuant to
this Section 5.5 shall be immediately vested and exercisable, and shall
terminate on the earliest of (A) ten years from the Date of Grant, (B) the
Holder ceasing to be a director, if the Board demands or requests the Holder's
resignation from the Board, (C) 90 days after the Holder ceases to be a
director for reasons other than the reasons specified in (B) above or (D)
below, or (D) one year after the death or Disability of the Holder.
5.6 Tax Withholding. The Corporation shall have the
right to require a Non-employee Director to pay to the Corporation the amount
necessary to satisfy the Corporation's current or future obligation to withhold
federal, state or local income or other taxes that the Non-employee Director
incurs by vesting of an Option Award. Tax withholding obligations in respect
of Option Awards to Non-employee Directors may not be satisfied by the
Corporation's withholding of Stock subject to the Award or by the Non-employee
Director's transfer of Stock to the Corporation.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
All Options granted under the Plan shall comply with, and the
related Option Agreements shall be deemed to include and be subject to, the
terms and conditions set forth in this Section 6 (to the extent each term and
condition applies to the form of Option) and also to the terms and conditions
set forth in Section 11 and Section 12; provided, however, that the Committee
may authorize an Option Agreement that expressly contains terms and provisions
that differ from the terms and provisions set forth in Paragraphs 11.2, 11.3,
and 11.4 and any of the terms and provisions of Section 12 (other than
Paragraph 12.11).
6.1 Number of Shares. Each Option Agreement shall state
the total number of shares of Stock to which it relates.
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6.2 Vesting. Each Option Agreement shall state the time
or periods, if any, in which the right to exercise the Option or a portion
thereof shall vest and the number of shares of Stock for which the right to
exercise the Option shall vest at each such time or period.
6.3 Expiration of Options. Nonstatutory Options and
Incentive Options may be exercised during the term determined by the Committee
and set forth in the Option Agreement; provided that no Option shall be
exercised after the expiration of a period of ten years commencing on the Date
of Grant of the Incentive Option.
6.4 Exercise Price. Each Option Agreement shall state
the exercise price per share of Stock (the "Exercise Price"). The exercise
price per share of Stock subject to an Incentive Option shall not be less than
the greater of (a) the par value per share of the Stock or (b) 100% of the Fair
Market Value per share of the Stock on the Date of Grant of the Option. The
exercise price per share of Stock subject to a Nonstatutory Option shall not be
less than the greater of (a) the par value per share of the Stock or (b) fifty
percent of the Fair Market Value per share of the Stock on the Date of Grant of
the Option.
6.5 Method of Exercise. The Option shall be exercisable
only by written notice of exercise (the "Exercise Notice") delivered to the
Corporation during the term of the Option, which notice shall (a) state the
number of shares of Stock with respect to which the Option is being exercised,
(b) be signed by the Holder of the Option or, if the Holder is dead, by the
person authorized to exercise the Option pursuant to Paragraph 12.3, (c) be
accompanied by the Exercise Price for all shares of Stock for which the Option
is exercised, and (d) include such other information, instruments, and
documents as may be required to satisfy any other condition to exercise
contained in the Option Agreement. The Option shall not be deemed to have been
exercised unless all of the requirements of the preceding provisions of this
Paragraph 6.5 have been satisfied.
6.6 Incentive Option Exercises. Each Incentive Option
granted under this Plan shall by its terms be non-transferable by the Holder
except by will or the laws of descent and distribution, and shall by its terms
be exercisable during the Holder's lifetime only by him.
6.7 Medium and Time of Payment. The Exercise Price of an
Option shall be payable in full upon the exercise of the Option (a) in cash or
by an equivalent means acceptable to the Committee, (b) with the Committee's
prior consent, with shares of Stock owned by the Holder (including shares
received upon exercise of the Option or restricted shares already held by the
Holder) and having a Fair Market Value at least equal to the aggregate Exercise
Price payable in connection with such exercise, or (c) by any combination of
clauses (a) and (b). If the Committee elects to accept shares of Stock in
payment of all or any portion of the Exercise Price, then (for purposes of
payment of the Exercise Price) those shares of Stock shall be deemed to have a
cash value equal to their aggregate Fair Market Value determined as of the date
of the delivery of the Exercise Notice. If the Committee elects to accept
shares of restricted Stock in payment of all or any portion of the Exercise
Price, then an equal number of shares issued pursuant to the exercise shall be
restricted on the same terms and for the restriction period remaining on the
shares used for payment.
6.8 Payment with Sale Proceeds. In addition, at the
request of the Holder and to the extent permitted by applicable law, the
Committee may (but shall not be required to) approve arrangements with a
brokerage firm under which that brokerage firm, on behalf of the Holder, shall
pay to the Corporation the Exercise Price of the Option being exercised, and
the Corporation shall promptly deliver the exercised shares to the brokerage
firm. To accomplish this transaction, the Holder must deliver to the
Corporation an Exercise Notice containing irrevocable instructions from the
Holder to the Corporation to deliver the stock certificates directly to the
broker. Upon receiving a copy of the Exercise Notice acknowledged by the
Corporation, the broker shall sell that number of shares of Stock or loan the
Holder an amount sufficient to pay the Exercise Price and any withholding
obligations due. The broker shall then deliver to the Corporation that portion
of the sale or loan proceeds necessary to cover the Exercise Price and any
withholding obligations due. The Committee shall not approve any transaction
of this nature if the Committee believes that the transaction would give rise
to the Holder's liability for short-swing profits under Section 16(b) of the
Exchange Act.
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6.9 Payment of Taxes. The Committee may, in its
discretion, require a Holder to pay to the Corporation (or the Corporation's
Subsidiary if the Holder is an employee of a Subsidiary of the Corporation), at
the time of the exercise of an Option, the amount that the Committee deems
necessary to satisfy the Corporation's or its Subsidiary's current or future
obligation to withhold federal, state or local income or other taxes that the
Holder incurs by exercising an Option. Upon the exercise of an Option
requiring tax withholding, a Holder may (a) direct the Corporation to withhold
from the shares of Stock to be issued to the Holder the number of shares
necessary to satisfy the Corporation's obligation to withhold taxes, that
determination to be based on the shares' Fair Market Value as of the date on
which tax withholding is to be made; (b) deliver to the Corporation sufficient
shares of Stock (based upon the Fair Market Value at date of withholding) to
satisfy the Corporation's tax withholding obligations, based on the shares'
Fair Market Value as of the date of exercise; or (c) deliver sufficient cash to
the Corporation to satisfy its tax withholding obligations. Holders who elect
to use such a stock withholding feature must make the election at the time and
in the manner that the Committee prescribes. The Committee may, at its sole
option, deny any Holder's request to satisfy withholding obligations through
Stock instead of cash. In the event the Committee subsequently determines that
the aggregate Fair Market Value (as determined above) of any shares of Stock
withheld as payment of any tax withholding obligation is insufficient to
discharge that tax withholding obligation, then the Holder shall pay to the
Corporation, immediately upon the Committee's request, the amount of that
deficiency.
6.10 Reload Provisions. Options may contain a provision
pursuant to which a Holder who pays all or a portion of the Exercise Price of
an Option or the tax required to be withheld pursuant to the exercise of an
Option by surrendering shares of Stock shall automatically be granted an Option
for the purchase of the number of shares of Stock equal to the number of shares
surrendered (a "Reload Option"). The Date of Grant of the Reload Option shall
be the date on which the Holder surrenders the shares of Stock in respect of
which the Reload Option is granted. The Reload Option shall have an Exercise
Price equal to the price determined in accordance with Paragraph 6.4 and shall
have a term that is no longer than the original term of the underlying Option.
6.11 Limitation on Aggregate Value of Shares That May
Become First Exercisable During Any Calendar Year Under an Incentive Option.
Except as is otherwise provided in Paragraph 11.2(b), with
respect to any Incentive Option granted under this Plan, the aggregate Fair
Market Value of shares of Stock subject to an Incentive Option and the
aggregate Fair Market Value of shares of Stock or stock of any Subsidiary (or a
predecessor of the Corporation or a Subsidiary) subject to any other incentive
stock option (within the meaning of Section 422 of the Code) of the Corporation
or its Subsidiaries (or a predecessor corporation of any such corporation) that
first become purchasable by a Holder in any calendar year may not (with respect
to that Holder) exceed $100,000, or such other amount as may be prescribed
under Section 422 of the Code or applicable regulations or rulings from time to
time. As used in the previous sentence, Fair Market Value shall be determined
as of the date the Incentive Option is granted. For purposes of this Paragraph
6.12 "predecessor corporation" means (a) a corporation that was a party to a
transaction described in Section 424(a) of the Code (or which would be so
described if a substitution or assumption under that Section had been effected)
with the Corporation, (b) a corporation which, at the time the new incentive
stock option (within the meaning of Section 422 of the Code) is granted, is a
Subsidiary of the Corporation or a predecessor corporation of any such
corporations, or (c) a predecessor corporation of any such corporations.
Failure to comply with this provision shall not impair the enforceability or
exercisability of any Option, but shall cause the excess amount of shares to be
reclassified in accordance with the Code.
6.12 No Fractional Shares. The Corporation shall not in
any case be required to sell, issue, or deliver a fractional share with respect
to any Option. In lieu of the issuance of any fractional share of Stock, the
Corporation shall pay to the Holder an amount in cash equal to the same
fraction (as the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
6.13 Modification, Extension and Renewal of Options.
Subject to the terms and conditions of and within the limitations of the Plan,
Rule 16b-3, and any consent required by the last sentence of this Paragraph
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6.13, the Committee may (a) modify, extend or renew outstanding Options granted
under the Plan, (b) accept the surrender of Options outstanding hereunder (to
the extent not previously exercised) and authorize the granting of new Options
in substitution for outstanding Options (to the extent not previously
exercised), and (c) amend the terms of an Incentive Option at any time to
include provisions that have the effect of changing the Incentive Option to a
Nonstatutory Option. Nevertheless, without the consent of the Holder, the
Committee may not modify any outstanding Options so as to specify a higher or
lower Exercise Price or accept the surrender of outstanding Incentive Options
and authorize the granting of new Options in substitution therefor specifying a
higher or lower Exercise Price. In addition, no modification of an Option
granted hereunder shall, without the consent of the Holder, alter or impair any
rights or obligations under any Option theretofore granted hereunder to such
Holder under the Plan except, with respect to Incentive Options, as may be
necessary to satisfy the requirements of Section 422 of the Code or as
permitted in clause (c) of this Paragraph 6.13.
6.14 Other Agreement Provisions. The Option Agreements
authorized under the Plan shall contain such provisions in addition to those
required by the Plan (including, without limitation, restrictions or the
removal of restrictions upon the exercise of the Option and the retention or
transfer of shares thereby acquired) as the Committee may deem advisable. Each
Option Agreement shall identify the Option evidenced thereby as an Incentive
Option or Nonstatutory Option, as the case may be, and no Option Agreement
shall cover both an Incentive Option and a Nonstatutory Option.
Each Agreement relating to an Incentive Option granted
hereunder shall contain such limitations and restrictions upon the exercise of
the Incentive Option to which it relates as shall be necessary for the
Incentive Option to which such Agreement relates to constitute an incentive
stock option, as defined in Section 422 of the Code.
SECTION 7. STOCK APPRECIATION RIGHTS
All Stock Appreciation Rights granted under the Plan shall
comply with, and the related Award Agreements shall be deemed to include and be
subject to, the terms and conditions set forth in this Section 7 (to the extent
each term and condition applies to the form of Stock Appreciation Right) and
also the terms and conditions set forth in Section 11 and Section 12; provided,
however, that the Committee may authorize an Award Agreement related to a Stock
Appreciation Right that expressly contains terms and provisions that differ
from the terms and provisions set forth in Paragraphs 11.2, 11.3, and 11.4 and
any of the terms and provisions of Section 12 (other than Paragraph 12.11).
7.1 Form of Right. A Stock Appreciation Right may be
granted to an Eligible Individual (a) in connection with an Option, either at
the time of grant or at any time during the term of the Option, or (b) without
relation to an Option.
7.2 Rights Related to Options. A Stock Appreciation
Right granted in connection with an Option shall entitle the Holder, upon
exercise, to surrender that Option or any portion thereof, to the extent
unexercised, and to receive payment of an amount computed pursuant to
subparagraph 7.2(b). That Option shall then cease to be exercisable to the
extent surrendered. Stock Appreciation Rights granted in connection with an
Option shall be subject to the terms of the Award Agreement governing the
Option, which shall comply with the following provisions in addition to those
applicable to Options:
(a) Exercise and Transfer. Subject to Paragraph 11.2, a
Stock Appreciation Right granted in connection with an Option shall be
exercisable only at such time or times and only to the extent that the related
Option is exercised and shall not be transferable except to the extent that the
related Option is transferable. To the extent that an Option has been
exercised the Stock Appreciation Rights granted in connection with such Option
shall terminate.
(b) Value of Right. Upon the exercise of a Stock
Appreciation Right related to an Option, the Holder shall be entitled to
receive payment from the Corporation of an amount determined by multiplying:
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(i) The difference obtained by subtracting the Exercise
Price of a share of Stock specified in the related Option from the Fair Market
Value of a share of Stock on the date of exercise of the Stock Appreciation
Right, by
(ii) The number of shares as to which that Stock
Appreciation Right has been exercised.
7.3 Right Without Option. A Stock Appreciation Right
granted without relationship to an Option shall be exercisable as determined by
the Committee and set forth in the Award Agreement governing the Stock
Appreciation Right, which Award Agreement shall comply with the following
provisions:
(a) Number of Shares. Each Award Agreement shall state
the total number of shares of Stock to which the Stock Appreciation Right
relates.
(b) Vesting. Each Award Agreement shall state the time
or periods in which the right to exercise the Stock Appreciation Right or a
portion thereof shall vest and the number of shares of Stock for which the
right to exercise the Stock Appreciation Right shall vest at each such time or
period.
(c) Expiration of Rights. Each Award Agreement shall
state the date at which the Stock Appreciation Rights shall expire if not
previously exercised.
(d) Value of Right. A Stock Appreciation Right granted
without relationship to an Option shall entitle the Holder, upon exercise of
the Stock Appreciation Right, to receive payment of an amount determined by
multiplying:
(i) The difference obtained by subtracting the Fair
Market Value of a share of Stock on the date the Stock Appreciation Right is
granted from the Fair Market Value of a share of Stock on the date of exercise
of that Stock Appreciation Right, by
(ii) The number of rights as to which the Stock
Appreciation Right has been exercised.
7.4 Limitations on Rights. Notwithstanding subparagraph
7.2(b) and subparagraph 7.3(d), the Committee may limit the amount payable upon
exercise of a Stock Appreciation Right. Any such limitation must be determined
as of the Date of Grant and be noted on the instrument evidencing the Holder's
Stock Appreciation Right.
7.5 Payment of Rights. Payment of the amount determined
under subparagraph 7.2(b) or subparagraph 7.3(d) and Paragraph 7.4 may be made
solely in whole shares of Stock valued at Fair Market Value on the date of
exercise of the Stock Appreciation Right or, in the sole discretion of the
Committee, solely in cash or a combination of cash and Stock. If the Committee
decides to make full payment in shares of Stock and the amount payable results
in a fractional share, payment for the fractional share shall be made in cash.
7.6 Payment of Taxes. The Committee may, in its
discretion, require a Holder to pay to the Corporation (or the Corporation's
Subsidiary if the Holder is an employee of a Subsidiary of the Corporation), at
the time of the exercise of a Stock Appreciation Right, the amount that the
Committee deems necessary to satisfy the Corporation's or its Subsidiary's
current or future obligation to withhold federal, state or local income or
other taxes that the Holder incurs by exercising a Stock Appreciation Right.
Upon the exercise of a Stock Appreciation Right requiring tax withholding, a
Holder may (a) direct the Corporation to withhold from the shares of Stock to
be issued to the Holder the number of shares necessary to satisfy the
Corporation's obligation to withhold taxes, that determination to be based on
the shares' Fair Market Value as of the date on which tax withholding is to be
made; (b) deliver to the Corporation sufficient shares of Stock (based upon the
Fair Market Value at date of withholding) to satisfy the Corporation's tax
withholding obligations, based on the shares' Fair Market Value as of the date
of exercise; or (c) deliver sufficient cash to the Corporation to satisfy its
tax withholding obligations. Holders who elect to use such a stock withholding
feature must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's
request to satisfy
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withholding obligations through Stock instead of cash. In the event the
Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld as payment of any tax
withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
7.7 Other Agreement Provisions. The Award Agreements
authorized relating to Stock Appreciation Rights shall contain such provisions
in addition to those required by the Plan (including, without limitation,
restrictions or the removal of restrictions upon the exercise of the Stock
Appreciation Right and the retention or transfer of shares thereby acquired) as
the Committee may deem advisable.
SECTION 8. RESTRICTED STOCK AWARDS
All Restricted Stock Awards granted under the Plan (other than
the automatic Awards to Non-employee Directors pursuant to Section 5) shall
comply with, and the related Award Agreements shall be deemed to include, and
be subject to the terms and conditions set forth in this Section 8 and also to
the terms and conditions set forth in Section 10 and Section 11; provided,
however, that the Committee may authorize an Award Agreement related to a
Restricted Stock Award that expressly contains terms and provisions that differ
from the terms and provisions set forth in Paragraphs 11.2, 11.3, and 11.4 and
the terms and provisions set forth in Section 12 (other than Paragraph 12.11).
8.1 Restrictions. All shares of Restricted Stock Awards
granted or sold pursuant to the Plan shall be subject to the following
conditions:
(a) Transferability. The shares may not be sold,
transferred or otherwise alienated or hypothecated until the restrictions are
removed or expire.
(b) Conditions to Removal of Restrictions. Conditions to
removal or expiration of the restrictions may include, but are not required to
be limited to, continuing employment or service as a director, officer,
consultant, or advisor or achievement of performance objectives described in
the Award Agreement.
(c) Legend. Each certificate representing Restricted
Stock Awards granted pursuant to the Plan shall bear a legend making
appropriate reference to the restrictions imposed.
(d) Possession. The Committee may require the
Corporation to retain physical custody of the certificates representing
Restricted Stock Awards during the restriction period and may require the
Holder of the Award to execute stock powers in blank for those certificates and
deliver those stock powers to the Corporation, or the Committee may require the
Holder to enter into an escrow agreement providing that the certificates
representing Restricted Stock Awards granted or sold pursuant to the Plan shall
remain in the physical custody of an escrow holder until all restrictions are
removed or expire.
The Corporation may issue shares subject to stop-transfer
restrictions or may issue such shares subject only to the restrictive legend
described in subparagraph 8.1(c).
(e) Other Conditions. The Committee may impose other
conditions on any shares granted or sold as Restricted Stock Awards pursuant to
the Plan as it may deem advisable, including, without limitation, (i)
restrictions under the Securities Act or Exchange Act, (ii) the requirements of
any securities exchange upon which the shares or shares of the same class are
then listed, and (iii) any state securities law applicable to the shares.
8.2 Expiration of Restrictions. The restrictions imposed
in Paragraph 8.1 on Restricted Stock Awards shall lapse as determined by the
Committee and set forth in the applicable Award Agreement, and the Corporation
shall promptly deliver to the Holder of the Restricted Stock Award a
certificate representing the number of shares for which restrictions have
lapsed, free of any restrictive legend relating to the lapsed restrictions.
Each
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Restricted Stock Award may have a different restriction period, in the
discretion of the Committee. The Committee may, in its discretion,
prospectively reduce the restriction period applicable to a particular
Restricted Stock Award. The foregoing notwithstanding, no restriction shall
remain in effect for more than ten years after the date of the Awards.
8.3 Rights as Stockholder. Subject to the provisions of
Paragraphs 8.1 and 12.11, the Committee may, in its discretion, determine what
rights, if any, the Holder shall have with respect to the Restricted Stock
Awards granted or sold, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto.
8.4 Payment of Taxes. The Committee may, in its
discretion, require a Holder to pay to the Corporation (or the Corporation's
Subsidiary if the Holder is an employee of a Subsidiary of the Corporation) the
amount that the Committee deems necessary to satisfy the Corporation's or its
Subsidiary's current or future obligation to withhold federal, state or local
income or other taxes that the Holder incurs by reason of the Restricted Stock
Award. The Holder may (a) direct the Corporation to withhold from the shares
of Stock to be issued to the Holder the number of shares necessary to satisfy
the Corporation's obligation to withhold taxes, that determination to be based
on the shares' Fair Market Value as of the date on which tax withholding is to
be made; (b) deliver to the Corporation sufficient shares of Stock (based upon
the Fair Market Value at date of withholding) to satisfy the Corporation's tax
withholding obligations, based on the shares' Fair Market Value as of the date
of exercise; or (c) deliver sufficient cash to the Corporation to satisfy its
tax withholding obligations. Holders who elect to use such a stock withholding
feature must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's
request to satisfy withholding obligations through Stock instead of cash. In
the event the Committee subsequently determines that the aggregate Fair Market
Value (as determined above) of any shares of Stock withheld as payment of any
tax withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
8.5 Other Agreement Provisions. The Award Agreements
relating to Restricted Stock Awards shall contain such provisions in addition
to those required by the Plan as the Committee may deem advisable.
8.6 Limitations on Awards of Restricted Stock. No more
than 100,000 shares of Stock may be awarded to any Holder in any year.
SECTION 9. CASH AND STOCK BONUS AWARDS
9.1 Cash Bonus. The Committee, in its sole discretion,
may award a cash bonus to an Eligible Individual. The basis for such Award
may, but need not, be recognition of previous performance by such Eligible
Individual.
9.2 Bonus Stock. The Committee, in its sole discretion,
may award an Eligible Individual shares of stock. Unless the Committee
specifically provides otherwise, shares of Stock awarded pursuant to this
Section 9.2 shall not be subject to vesting or other restrictions hereunder.
The basis for such Award may, but need not, be recognition of previous
performance by such Eligible Individual.
9.3 Payment of Taxes. The Committee may, in its
discretion, require a Holder to pay to the Corporation (or the Corporation's
Subsidiary if the Holder is an employee of a Subsidiary of the Corporation), at
the time of the payment of cash or stock in connection with a bonus under this
section 9 the amount that the Committee deems necessary to satisfy the
Corporation's or its Subsidiary's current or future obligation to withhold
federal, state or local income or other taxes that the Holder incurs with
respect to such payment.
Upon receiving notice that the Holder is required to satisfy
tax withholding, a Holder may (a) if the payment is to be made in Stock, direct
the Corporation to withhold from the shares of Stock to be issued to the Holder
the number of shares necessary to satisfy the Corporation's obligation to
withhold taxes, that determination
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to be based on the shares' Fair Market Value as of the date on which tax
withholding is to be made; (b) deliver to the Corporation sufficient shares of
Stock (based upon the Fair Market Value at date of withholding) to satisfy the
Corporation's tax withholding obligations, based on the shares' Fair Market
Value as of the date of exercise; (c) if the payment is to be made in cash,
direct the Corporation to withhold from such payment the amount of cash
required to satisfy the Corporation's obligation to withhold taxes; or (d)
deliver sufficient cash to the Corporation to satisfy its tax withholding
obligations. Holders who elect to use such a stock withholding feature must
make the election at the time and in the manner that the Committee prescribes.
The Committee may, at its sole option, deny any Holder's request to satisfy
withholding obligations through Stock instead of cash. In the event the
Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld as payment of any tax
withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
SECTION 10. PERFORMANCE UNITS
10.1 Multiple Grants. The Committee may make grants of
Performance Units in such a manner that more than one Performance Period is in
progress simultaneously. At or before the beginning of each Performance
Period, the Committee will establish the contingent value of each Performance
Unit for that Performance Period, which may vary depending on the degree to
which performance objectives established by the Committee are met.
10.2 Performance Standards. (a) In General. At or
before the beginning of each Performance Period, the Committee will (i)
establish the beginning and ending dates of the Performance Period, (ii)
establish for that Performance Period specific performance objectives as the
Committee believes are relevant to the Corporation's overall business
objectives, (iii) determine the minimum and maximum value of a Performance Unit
and the value of a Performance Unit based on the degree to which performance
objectives are achieved, exceeded or not achieved, (iv) determine a minimum
performance level below which Performance Units will be assigned a value of
zero, and a maximum performance level above which the value of Performance
Units will not increase, and (v) notify each Holder of a Performance Unit for
that Performance Period in writing of the established performance objectives
and minimum, target, and maximum Performance Unit value for that Performance
Period. At the Discretion of the Committee, the performance standards with
respect to a Performance Unit Award may include one or more objectives relating
to total shareholder return, net income of the Corporation, return on sales,
equity or assets, performance of a division or other defined unit of the
Corporation and individual performance.
(b) Special Rules for Executive Officers. Unless the
Committee determines that an Award of Performance Units to an Executive Officer
is not intended to qualify for the exemption for performance-based compensation
under section 162(m) of the Code, (i) the maximum payment to the Executive
Officer for Performance Units granted in one fiscal year shall be $1,000,000 in
cash or in value of Stock, (ii) a Performance Unit Award which will be settled
in Stock shall have a base value equal to the Fair Market Value of a share of
Stock on the Date of Grant of such Performance Unit, and (iii) the period over
which the performance standards must be satisfied shall not be less than six
months.
In addition, unless the stockholders approve otherwise or such
approval is not required to obtain a deduction under section 162(m) of the
Code, or the Committee determines that satisfaction of the deduction
requirements of section 162(m) of the Code with respect to a Performance Unit
Award is not in the Corporation's best interests, the performance standards
applicable to a Performance Unit Award to an Executive Officer shall be based
on one or more of the following choices: (i) total stockholder return (Stock
price appreciation plus dividends); (ii) net income; (iii) earnings per share;
(iv) return on sales; (v) return on equity; (vi) return on assets; (vii)
increase in the market price of Stock or other securities of the Corporation;
(viii) the performance of the Corporation in any of the items mentioned in
clause (i) through (vii) in comparison to the average performance of the
companies included in the S&P Textiles Index; and (ix) the performance of the
Corporation in any of the items mentioned in clause (i) through (vii) in
comparison to the average performance of the companies used in a
self-constructed peer group established before the beginning of the performance
period.
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In determining the amount of any Award payable to a Holder
with respect to a performance period, the Committee shall certify in writing as
promptly as practicable following the end of such performance period, whether
and the extent to which the terms of Awards have been satisfied, including the
extent to which performance standards applicable to a Performance Unit Award
have been achieved and other material terms of Awards have been satisfied. For
this purpose, approved minutes of the Committee at which such determinations
were made shall be deemed a written certification of such determinations. The
Committee shall have no discretion to increase the amounts payable with respect
to an Award held by an Executive Officer, unless the Committee determines that
satisfaction of the deduction requirements of Section 162(m) of the Code is not
in the Corporation's best interests.
10.3 Modification of Standards. If the Committee
determines in its sole discretion that the established performance measures or
objectives are no longer suitable to Corporation objectives because of a change
in the Corporation's business, operations, corporate structure, capital
structure, or other conditions the Committee deems to be material, the
Committee may modify the performance measures and objectives as it considers
appropriate and equitable, including those applicable to Executive Officers if
the Committee determines that satisfaction of the deduction requirements of
Section 162(m) of the Code is not in the Corporation's best interests.
10.4 Payment. The basis for payment of Performance Units
for a given Performance Period will be the achievement of those financial
performance objectives determined by the Committee at the beginning of the
Performance Period. If minimum performance is not achieved or exceeded for a
Performance Period, no payment will be made and all contingent rights will
cease. If minimum performance is achieved or exceeded, the value of a
Performance Unit will be based on the degree to which actual performance
exceeded the pre-established minimum performance standards. The amount of
payment will be determined by multiplying the number of Performance Units
granted at the beginning of the Performance Period by the final Performance
Unit value. Payments will be made in cash or Stock as soon as administratively
possible following the close of the applicable Performance Period.
10.5 Payment of Taxes. The Committee may, in its
discretion, require a Holder to pay to the Corporation (or the Corporation's
Subsidiary if the Holder is an employee of a Subsidiary of the Corporation), at
the time of the payment of cash or Stock in connection with a Performance Unit,
the amount that the Committee deems necessary to satisfy the Corporation's or
its Subsidiary's current or future obligation to withhold federal, state or
local income or other taxes that the Holder incurs with respect to such
payment. Upon receiving notice that the Holder is required to satisfy tax
withholding, a Holder may (a) if the payment is to be made in Stock, direct the
Corporation to withhold from the shares of Stock to be issued to the Holder the
number of shares necessary to satisfy the Corporation's obligation to withhold
taxes, that determination to be based on the shares' Fair Market Value as of
the date on which tax withholding is to be made; (b) deliver to the Corporation
sufficient shares of Stock (based upon the Fair Market Value at date of
withholding) to satisfy the Corporation's tax withholding obligations, based on
the shares' Fair Market Value as of the date of exercise; (c) if the payment is
to be made in cash, direct the Corporation to withhold from such payment the
amount of cash required to satisfy the Corporation's obligation to withhold
taxes; or (d) deliver sufficient cash to the Corporation to satisfy its tax
withholding obligations. Holders who elect to use such a stock withholding
feature must make the election at the time and in the manner that the Committee
prescribes. The Committee may, at its sole option, deny any Holder's request
to satisfy withholding obligations through Stock instead of cash. In the event
the Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld as payment of any tax
withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
10.6 Other Agreement Provisions. The Award Agreements,
if any, authorized relating to Performance Units shall contain such provisions
in addition to those required by the Plan (including, without limitation,
restrictions or the removal of restrictions upon the transfer of shares thereby
acquired) as the Committee may deem advisable.
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SECTION 11. ADJUSTMENT PROVISIONS
11.1 Adjustment of Awards and Authorized Stock. The
terms of an Award and the number of shares of Stock authorized pursuant to
Paragraph 2.1 for issuance under the Plan shall be subject to adjustment, from
time to time, in accordance with the following provisions:
(a) If at any time or from time to time, the Corporation
shall subdivide as a whole (by reclassification, by a Stock split, by the
issuance of a distribution on Stock payable in Stock or otherwise) the number
of shares of Stock then outstanding into a greater number of shares of Stock,
then (i) the maximum number of shares of Stock available for the Plan as
provided in Paragraph 2.1 shall be increased proportionately, and the kind of
shares or other securities available for the Plan shall be appropriately
adjusted, (ii) the number of shares of Stock (or other kind of shares or
securities) that may be acquired under any Award shall be increased
proportionately, and (iii) the price (including Exercise Price) for each share
of Stock (or other kind of shares or unit of other securities) subject to then
outstanding Awards shall be reduced proportionately, without changing the
aggregate purchase price or value as to which outstanding Awards remain
exercisable or subject to restrictions.
(b) If at any time or from time to time, the Corporation
shall consolidate as a whole (by reclassification, reverse Stock split, or
otherwise) the number of shares of Stock then outstanding into a lesser number
of shares of Stock, (i) the maximum number of shares of Stock available for the
Plan as provided in Paragraph 2.1 shall be decreased proportionately, and the
kind of shares or other securities available for the Plan shall be
appropriately adjusted, (ii) the number of shares of Stock (or other kind of
shares or securities) that may be acquired under any Award shall be decreased
proportionately, and (iii) the price (including Exercise Price) for each share
of Stock (or other kind of shares or unit of other securities) subject to then
outstanding Awards shall be increased proportionately, without changing the
aggregate purchase price or value as to which outstanding Awards remain
exercisable or subject to restrictions.
(c) Whenever the number of shares of Stock subject to
outstanding Awards and the price for each share of Stock subject to outstanding
Awards are required to be adjusted as provided in this Paragraph 11.1, the
Committee shall promptly prepare and provide to each Holder a notice setting
forth, in reasonable detail, the event requiring adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the change
in price and the number of shares of Stock, other securities, cash or property
purchasable subject to each Award after giving effect to the adjustments.
(d) Adjustments under subparagraph 11.1(a) and (b) shall
be made by the Committee, and its determination as to what adjustments shall be
made and the extent thereof shall be final, binding and conclusive.
No fractional interest shall be issued under the Plan on
account of any such adjustments.
11.2 Changes in Control. Any Award Agreement may provide
that, upon the occurrence of a Change in Control, (a) each Holder of an Option
shall immediately be granted corresponding Stock Appreciation Rights; (b) all
outstanding Stock Appreciation Rights and Options shall immediately become
fully vested and exercisable in full, including that portion of any Stock
Appreciation Award or Option that pursuant to the terms and provisions of the
applicable Award Agreement had not yet become exercisable (the total number of
shares of Stock as to which a Stock Appreciation Right or Option is exercisable
upon the occurrence of a Change in Control is referred to herein as the "Total
Shares"); (c) the restriction period of any Restricted Stock Award shall
immediately be accelerated and the restrictions shall expire; and (d) the
maximum value of any Performance Unit which has been outstanding for at least
six months as of the effective date of the Change in Control will be deemed to
be earned for all Performance Periods ending on or before such date, and a pro
rata cash distribution shall be made within 30 days following such date. If a
Change in Control involves a Restructure or occurs in connection with a series
of related transactions involving a Restructure and if such Restructure is in
the form of a Non-Surviving Event and as a part of such Restructure shares of
stock, other securities, cash or property shall be issuable or deliverable in
exchange for Stock, then the Holder of an Award shall be entitled to purchase
or receive (in lieu of the Total Shares
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that the Holder would otherwise be entitled to purchase or receive), as
appropriate for the form of Award, the number of shares of stock, other
securities, cash or property to which that number of Total Shares would have
been entitled in connection with such Restructure (and, for Options, at an
aggregate exercise price equal to the Exercise Price that would have been
payable if that number of Total Shares had been purchased on the exercise of
the Option immediately before the consummation of the Restructure). Nothing in
this Paragraph 11.2 shall impose on a Holder the obligation to exercise any
Award immediately before or upon the Change of Control, nor shall the Holder
forfeit the right to exercise the Award during the remainder of the original
term of the Award because of a Change in Control or because the Holder's
employment is terminated for any reason following a Change in Control.
11.3 Restructure and No Change in Control. In the event
a Restructure should occur at any time while there is any outstanding Award
hereunder and that Restructure does not occur in connection with a Change in
Control or in connection with a series of related transactions involving a
Change in Control, then:
(a) no Holder of an Option shall automatically be granted
corresponding Stock Appreciation Rights;
(b) neither any outstanding Stock Appreciation Rights nor
any outstanding Options shall immediately become fully vested and exercisable
in full merely because of the occurrence of the Restructure;
(c) the restriction period of any Restricted Stock Award
shall not immediately be accelerated and the restrictions expire merely because
of the occurrence of the Restructure; and
(d) at the option of the Committee, the Corporation may
(but shall not be required to) take any one or more of the following actions:
(i) grant each Holder of an Option corresponding Stock
Appreciation Rights;
(ii) accelerate in whole or in part the time of the
vesting and exercisability of any one or more of the outstanding Stock
Appreciation Rights and Options so as to provide that those Stock Appreciation
Rights and Options shall be exercisable before, upon, or after the consummation
of the Restructure;
(iii) accelerate in whole or in part the expiration of some
or all of the restrictions on any Restricted Stock Award so that the Stock
subject to that Awards shall be owned by the Holder without restriction or risk
of forfeiture;
(iv) if the Restructure is in the form of a Non-Surviving
Event, cause the surviving entity to assume in whole or in part any one or more
of the outstanding Awards upon such terms and provisions as the Committee deems
desirable; or
(v) redeem in whole or in part any one or more of the
outstanding Awards (whether or not then exercisable) in consideration of a cash
payment, as such payment may be reduced for tax withholding obligations as
contemplated in the Section governing the particular form of Award, in an
amount equal to:
(A) for Options and Stock Appreciation Rights granted in
connection with Options, the excess of (1) the Fair Market Value, determined as
of a date immediately preceding the consummation of the Restructure, of the
aggregate number of shares of Stock subject to the Award and as to which the
Award is being redeemed over (2) the Exercise Price for that number of shares
of Stock;
(B) for Stock Appreciation Rights not granted in connection
with an Option, the excess of (1) the Fair Market Value, determined as of a
date immediately preceding the consummation of the Restructure, of the
aggregate number of shares of Stock subject to the Award and as to which the
Award is being redeemed over (2) the Fair Market Value of the number of shares
of Stock on the Date of Grant;
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(C) for Restricted Stock Awards, the Fair Market Value,
determined as of a date immediately preceding the consummation of the
Restructure, of the aggregate number of shares of Stock subject to the Award
and as to which the Award is being redeemed; and
(D) for Performance Units, the amount per Performance Unit as
the Committee in its sole discretion may determine (which may be zero dollars).
The Corporation shall promptly notify each Holder of any
election or action taken by the Corporation under this Paragraph 11.3. In the
event of any election or action taken by the Corporation pursuant to this
Paragraph 11.3 that requires the amendment or cancellation of any Award
Agreement as may be specified in any notice to the Holder thereof, that Holder
shall promptly deliver that Award Agreement to the Corporation in order for
that amendment or cancellation to be implemented by the Corporation and the
Committee. The failure of the Holder to deliver any such Award Agreement to the
Corporation as provided in the preceding sentence shall not in any manner
effect the validity or enforceability of any action taken by the Corporation
and the Committee under this Paragraph 11.3, including, without limitation, any
redemption of an Award as of the consummation of a Restructure. Any cash
payment to be made by the Corporation pursuant to this Paragraph 11.3 in
connection with the redemption of any outstanding Awards shall be paid to the
Holder thereof currently with the delivery to the Corporation of the Award
Agreement evidencing that Award; provided, however, that any such redemption
shall be effective upon the consummation of the Restructure notwithstanding
that the payment of the redemption price may occur subsequent to the
consummation. If all or any portion of an outstanding Award is to be exercised
or accelerated to upon or after the consummation of a Restructure that is in
the form of a Non-Surviving Event and as a part of that Restructure shares of
stock, other securities, cash or property shall be issuable or deliverable in
exchange for Stock, then the Holder of the Award shall thereafter be entitled
to purchase or receive (in lieu of the number of shares of Stock that the
Holder would otherwise be entitled to purchase or receive) the number of shares
of stock, other securities, cash or property to which such number of shares of
Stock would have been entitled in connection with the Restructure (and, for
Options, at an aggregate exercise price equal to the Exercise Price that would
have been payable if that number of Total Shares had been purchased on the
exercise of the Option immediately before the consummation of the Restructure).
11.4 Notice of Change in Control or Restructure. The
Corporation shall attempt to keep all Holders informed with respect to any
Change in Control or Restructure or of any potential Change in Control or
Restructure to the same extent that the Corporation's stockholders are informed
by the Corporation of any such event or potential event.
SECTION 12. ADDITIONAL PROVISIONS
12.1 Termination of Employment. Subject to the last
sentence of Paragraph 11.2, if a Holder is an Eligible Individual because the
Holder is an Employee and if that employment relationship is terminated for any
reason other than Normal Retirement or that Holder's death or Disability
(hereafter defined), then, unless specified otherwise in the Award Agreement,
the following provisions shall apply to all Awards held by that Holder that
were granted because that Holder was an Employee:
(a) If the termination is by the Holder's employer, then
Performance Unit Awards which have not become payable at the time of
termination shall be null and void and that portion, if any, of any and all
Awards covering Options, Stock Appreciation Rights or Restricted Stock held by
that Holder that are not yet exercisable (or for which restrictions have not
lapsed) and the portion of any Option which is exercisable but has not been
exercised as of the date of the termination shall become null and void as of
the date of the termination.
(b) If such termination is by the Holder, then
Performance Unit Awards which have not become payable at the time of
termination shall be null and void and Awards covering Options, Stock
Appreciation Rights or Restricted Stock held by that Holder shall become
immediately exercisable (and all restrictions thereon shall lapse) to the
extent that such exercisability or lapse is approved by the Committee, and any
Option or Stock Appreciation Right, to the extent exercisable, shall survive
the termination of employment for a period of the lesser of (i) the remainder
of the term of the Award or (ii) (A) one month in the case of a Nonstatutory
Option or Stock
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Appreciation Right which is granted in tandem with a Nonstatutory Option or was
not granted in tandem with an Option, and (B) three months in the case of an
Incentive Option and a Stock Appreciation Right granted in tandem with an
Incentive Option.
12.2 Other Loss of Eligibility. If a Holder is an
Eligible Individual because the Holder is serving in a capacity other than as
an Employee and if that capacity is terminated for any reason other than the
Holder's death, then, unless specified otherwise in the Award Agreement, that
portion, if any, of any and all Awards held by the Holder that were granted
because of that capacity which are not yet exercisable (or for which
restrictions have not lapsed) as of the date of the termination shall become
null and void as of the date of the termination; provided, however, that the
portion, if any, of any and all of the Awards held by the Holder that are
exercisable (or for which restrictions have lapsed) as of the date of the
termination shall survive the termination.
12.3 Death. Upon the death of a Holder, then, unless
specified otherwise in the Award Agreement, any and all Awards covering
Options, Stock Appreciation Rights or Restricted Stock held by the Holder shall
become immediately exercisable (and all restrictions shall lapse) and any
Option or Stock Appreciation Right shall be exercisable by that Holder's legal
representatives, legatees or distributees for a period of the lesser of (a) the
remainder of the term of the Award or (b) 12 months following the date of the
Holder's death. Any portion of an Award not exercised upon the expiration of
the periods specified in (a) or (b) shall be null and void. Except as
expressly provided in this Section 12.3, all Awards held by a Holder shall not
be exercisable after the death of that Holder. With respect to any Performance
Unit Award for which the Performance Period has not expired at the time of the
Holder's death, there shall be a payment calculated by the Committee, in its
sole discretion, to reflect the pro rata portion of the Performance Unit Award
value earned as of the date of death considering the achievement of the
applicable performance standards as of such date. Such payment will be made as
soon as practicable after the date of the Holder's death.
12.4 Retirement. If a Holder is an Eligible Individual
because the Holder is an Employee and if that employment relationship is
terminated by reason of the Holder's Normal Retirement, then, unless specified
otherwise in the Award Agreement, (a) the portion, if any, of any and all
Awards covering Options, Stock Appreciation Rights or Restricted Stock held by
the Holder that are not yet exercisable (or for which restrictions have not
lapsed) as of the date of that retirement shall become null and void as of the
date of retirement except to the extent that the Committee, in its sole
discretion, determines otherwise; provided, however, that the portion, if any,
of any and all Awards held by the Holder that are exercisable as of the date of
that retirement shall survive the retirement for a period of the lesser of (i)
the remainder of the term of the Award or (ii) (A) thirty-six months in the
case of a Nonstatutory Option or a Stock Appreciation Right which is not
granted in tandem with an Incentive Option, and (B) three months in the case of
an Incentive Option and any Stock Appreciation Right granted in tandem with an
Incentive Option, and (b) any Performance Unit Award for which the Performance
Period has not expired at the time of the Holder's retirement shall be payable,
at the end of the original Performance Period, in an amount calculated by the
Committee, in its sole discretion, to reflect the pro rata portion of the
Performance Unit value earned as of the date of retirement considering the
achievement of the applicable performance standards as of such date.
12.5 Disability. If a Holder is an Eligible Individual
because the Holder is an Employee and if that employment relationship is
terminated by reason of the Holder's Disability, then, unless specified
otherwise in the Award Agreement, the portion, if any, of any and all Awards
covering Options, Stock Appreciation Rights or Restricted Stock held by the
Holder shall become exercisable (and all restrictions shall lapse) and any
Option or Stock Appreciation Right shall be exercisable by the Holder, his
guardian, or his legal representative for a period of the lesser of (a) the
remainder of the term of the Award or (b)(i) thirty-six months in the case of a
Nonstatutory Option or a Stock Appreciation Right which is not granted in
tandem with an Incentive Option, and (ii) twelve months in the case of an
Incentive Option or a Stock Appreciation Right granted in tandem with an
Incentive Option. With respect to any Performance Unit Award for which the
Performance Period has not expired at the time of the Holder's Disability,
there shall be a payment calculated by the Committee, in its sole discretion,
to reflect the pro rata portion of the Performance Unit Award value earned as
of the date of Disability.
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Such payment shall be made as soon as practicable after the
date of Disability. "Disability" shall have the meaning given it in the
employment agreement of the Holder; provided, however, that if that Holder has
no employment agreement, "Disability" shall mean a physical or mental
impairment of sufficient severity that, in the opinion of the Corporation,
either the Holder is unable to continue performing the duties he performed
before such impairment or the Holder's condition entitles him to disability
benefits under any insurance or employee benefit plan of the Corporation or its
Subsidiaries and that impairment or condition is cited by the Corporation as
the reason for termination of the Holder's employment.
12.6 Leave of Absence. With respect to an Award, the
Committee may, in its sole discretion, determine that any Holder who is on
leave of absence for any reason will be considered to still be in the employ of
the Corporation, provided that rights to that Award during a leave of absence
will be limited to the extent to which those rights were earned or vested when
the leave of absence began.
12.7 Transferability of Awards. In addition to such
other terms and conditions as may be included in a particular Award Agreement,
an Award requiring exercise shall be exercisable during a Holder's lifetime
only by that Holder or by that Holder's guardian or legal representative. An
Award requiring exercise shall not be transferrable other than by will or the
laws of descent and distribution.
12.8 Forfeiture and Restrictions on Transfer. Each Award
Agreement may contain or otherwise provide for conditions giving rise to the
forfeiture of the Stock acquired pursuant to an Award or otherwise and may also
provide for those restrictions on the transferability of shares of the Stock
acquired pursuant to an Award or otherwise that the Committee in its sole and
absolute discretion may deem proper or advisable. The conditions giving rise
to forfeiture may include, but need not be limited to, the requirement that the
Holder render substantial services to the Corporation or its Subsidiaries for a
specified period of time. The restrictions on transferability may include, but
need not be limited to, options and rights of first refusal in favor of the
Corporation and stockholders of the Corporation other than the Holder of such
shares of Stock who is a party to the particular Award Agreement or a
subsequent holder of the shares of Stock who is bound by that Award Agreement.
12.9 Delivery of Certificates of Stock. Subject to
Paragraph 12.10, the Corporation shall promptly issue and deliver a certificate
representing the number of shares of Stock as to which (a) an Option has been
exercised after the Corporation receives an Exercise Notice and upon receipt by
the Corporation of the Exercise Price and any tax withholding as may be
requested; (b) a Stock Appreciation Right has been exercised and upon receipt
by the Corporation of any tax withholding as may be requested; (c) restrictions
have lapsed with respect to a Restricted Stock Award and upon receipt by the
Corporation of any tax withholding as may be requested; and (d) performance
objectives have been achieved during a Performance Period relating to a
Performance Unit for Stock. The value of the shares of Stock, cash or notes
transferable because of an Award under the Plan shall not bear any interest
owing to the passage of time, except as may be otherwise provided in an
Agreement. If a Holder is entitled to receive certificates representing Stock
received for more than one form of Award under the plan separate Stock
certificates shall be issued with respect to each such Award and for Incentive
Options and Nonstatutory Stock Options separately.
12.10 Conditions to Delivery of Stock. Nothing herein or
in any Award granted hereunder or any Award Agreement shall require the
Corporation to issue any shares with respect to any Award if that issuance
would, in the opinion of counsel for the Corporation, constitute a violation of
the Securities Act or any similar or superseding statute or statutes, any other
applicable statute or regulation, or the rules of any applicable securities
exchange or securities association, as then in effect. At the time of any
exercise of an Option or Stock Appreciation Right, or at the time of any grant
of a Restricted Stock Award or Performance Unit, the Corporation may, as a
condition precedent to the exercise of such Option or Stock Appreciation Right
or vesting of any Restricted Stock Award or Performance Unit, require from the
Holder of the Award (or in the event of his death, his legal representatives,
heirs, legatees, or distributees) such written representations, if any,
concerning the Holder's intentions with regard to the retention or disposition
of the shares of Stock being acquired pursuant to the Award and such written
covenants and agreements, if any, as to the manner of disposal of such shares
as, in the opinion of counsel to the Corporation, may be necessary to ensure
that any disposition by that Holder (or in the event of
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the Holder's death, his legal representatives, heirs, legatees, or
distributees), will not involve a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable state or
federal statute or regulation, or any rule of any applicable securities
exchange or securities association, as then in effect.
12.11 Certain Directors and Officers. With respect to
Holders who are directors or officers of the Corporation or any Subsidiary and
who are subject to Section 16(b) of the Exchange Act, and if Rule 16b-3
requires the following conditions at the time of the Award, Awards and all
rights under the Plan, contingent or otherwise, shall be exercisable during the
Holder's lifetime only by the Holder or the Holder's guardian or legal
representative, but not for at least six months after grant, unless death or
Disability of the Holder occurs before the expiration of the six-month period.
In addition, no such officer or director shall exercise any stock appreciation
right or use shares to pay tax withholding obligations within the first six
months of the term of the Award. No share of stock acquired by such an officer
or director pursuant to a Restricted Stock Award or a Performance Unit may be
sold for at least six months after the Date of Grant, except in the case of
death or Disability. Any election by any such officer or director to have tax
withholding obligations satisfied by the withholding of shares of Stock shall
be irrevocable and shall be communicated to the Committee during the period
beginning on the third day following the date of release of quarterly or annual
summary statements of sales and earnings and ending on the twelfth business day
following such date (the "Window Period") or within any other periods that the
Committee shall specify from time to time. Any election by such an officer or
director to receive cash in full or partial settlement of a Stock Appreciation
Right, as well as any exercise by such person of a Stock Appreciation Right for
such cash, shall be made during the Window Period or within any other periods
that the Committee shall specify from time to time.
12.12 Securities Act Legend. Certificates for shares of
Stock, when issued, may have the following legend, or statements of other
applicable restrictions, endorsed thereon, and may not be immediately
transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE
SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE
AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE,
PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR
STATE LAWS.
This legend shall not be required for shares of Stock issued
pursuant to an effective registration statement under the Securities Act.
12.13 Legend for Restrictions on Transfer. Each
certificate representing shares issued to a Holder pursuant to an Award granted
under the Plan shall, if such shares are subject to any transfer restriction,
including a right of first refusal, provided for under this Plan or an
Agreement, bear a legend that complies with applicable law with respect to the
restrictions on transferability contained in this Paragraph 12.12, such as:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT
ENTITLED "LITTLEFIELD ADAMS & COMPANY INCENTIVE PLAN" AS ADOPTED BY
LITTLEFIELD, ADAMS & COMPANY (THE "CORPORATION") ON , 1994, AND AN
AGREEMENT THEREUNDER BETWEEN THE CORPORATION AND (HOLDER) DATED
, 199 , AND MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE
DISPOSED OF EXCEPT AS THEREIN PROVIDED. THE CORPORATION WILL FURNISH A COPY OF
SUCH INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT
CHARGE ON REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR
REGISTERED OFFICE.
12.14 Rights as a Stockholder. A Holder shall have no
right as a stockholder with respect to any shares covered by his Award until a
certificate representing those shares is issued in his name.
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No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash or other property) or distributions or other
rights for which the record date is before the date that certificate is issued,
except as contemplated by Section 11. Nevertheless, dividends and dividend
equivalent rights may be extended to and made part of any Award denominated in
Stock or units of Stock, subject to such terms, conditions, and restrictions as
the Committee may establish. The Committee may also establish rules and
procedures for the crediting of interest on deferred cash payments and dividend
equivalents for deferred payment denominated in Stock or units of Stock.
12.15 Furnish Information. Each Holder shall furnish to
the Corporation all information requested by the Corporation to enable it to
comply with any reporting or other requirement imposed upon the Corporation by
or under any applicable statute or regulation.
12.16 Obligation to Exercise. The granting of an Award
hereunder shall impose no obligation upon the Holder to exercise the same or
any part thereof.
12.17 Adjustments to Awards. Subject to the general
limitations set forth in Sections 6, 7 and 11, the Committee may make any
adjustment in the exercise price of, the number of shares subject to or the
terms of a Nonstatutory Option or Stock Appreciation Right by cancelling an
outstanding Nonstatutory Option or Stock Appreciation Right and regranting a
Nonstatutory Option or Stock Appreciation Right. Such adjustment shall be made
by amending, substituting or regranting an outstanding Nonstatutory Option or
Stock Appreciation Right. Such amendment, substitution or regrant may result
in terms and conditions that differ from the terms and conditions of the
original Nonstatutory Option or Stock Appreciation Right. The Committee may
not, however, impair the rights of any Holder to previously granted
Nonstatutory Options or Stock Appreciation Rights without that Holder's
consent. If such action is effected by amendment, the effective date of such
amendment shall be the date of the original grant.
12.18 Remedies. The Corporation shall be entitled to
recover from a Holder reasonable attorneys' fees incurred in connection with
the enforcement of the terms and provisions of the Plan and any Award Agreement
whether by an action to enforce specific performance or for damages for its
breach or otherwise.
12.19 Information Confidential. As partial consideration
for the granting of each Award hereunder, the Holder shall agree with the
Corporation that he will keep confidential all information and knowledge that
he has relating to the manner and amount of his participation in the Plan;
provided, however, that such information may be disclosed as required by law
and may be given in confidence to the Holder's spouse, tax and financial
advisors, or to a financial institution to the extent that such information is
necessary to secure a loan. In the event any breach of this promise comes to
the attention of the Committee, it shall take into consideration that breach in
determining whether to recommend the grant of any future Award to that Holder,
as a factor militating against the advisability of granting any such future
Award to that individual.
12.20 Consideration. No Option or Stock Appreciation Right
shall be exercisable, no restriction on any Restricted Stock Award shall lapse,
and no Performance Unit shall be settled in Stock with respect to a Holder
unless and until the Holder shall have paid cash or property to, or performed
services for, the Corporation or any of its Subsidiaries that the Committee
believes is equal to or greater in value that the par value of the Stock
subject to such Award.
12.21 Deferral of Payment. (a) Deferral Opportunity. The
Committee, in its sole discretion, may permit a Holder to defer receipt of all
or part of a payment of a cash or Stock in connection with an Award. Such
Deferral must satisfy all conditions prescribed by the Committee, including but
not limited to the period during which the Holder must request such deferral.
(b) Measurement of Deferred Payments. Payments deferred
shall be recorded in a bookkeeping account maintained by the Corporation.
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The value of such payments shall be adjusted to reflect the
performance of any measurement standard (including the price of Stock)
prescribed by the Committee or, in the discretion of the Committee, elected by
the Participant.
(c) Payment of Deferred Payments. The value of payments
deferred under this Paragraph 12.21 shall be paid to the Holder or his or her
beneficiary in one or more payments made or commencing on the date specified by
the Holder with the consent of the Committee; provided, however, that all such
payments shall be subject to the following conditions:
(i) All payments unpaid at the time of a Holder's death
or Disability shall be paid in a single sum as soon as practicable after the
Committee's receipt of notice of such death or Disability;
(ii) Payments must commence no later than 90 days after
the termination of the Holders' services for the Corporation; and
(iii) Installment payments shall be made no less frequently
than annually and over a period which does not exceed 10 years.
(d) Plan Remains Unfunded. Notwithstanding any deferral
under this Paragraph 12.21, the Plan shall remain unfunded, as described in
Paragraph 14.7.
SECTION 13. DURATION AND AMENDMENT OF PLAN
13.1 Duration. No Awards may be granted hereunder after
the date that is ten (10) years from the earlier of (a) the date the Plan is
adopted by the Committee or (b) the Effective Date.
13.2 Amendment. The Board of Directors may, insofar as
permitted by law, suspend or discontinue the Plan or revise or amend it in any
respect whatsoever, and may amend any provision of the Plan or any Award
Agreement to make the Plan or the Award Agreement, or both, comply with Section
16(b) of the Exchange Act and the exemptions from that Section in the
regulations thereunder, the Code, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or the regulations promulgated under the Code or
ERISA.
The Board of Directors may also amend, modify, suspend or
terminate the Plan for the purpose of meeting or addressing any changes in
other legal requirements applicable to the Corporation or the Plan or for any
other purpose permitted by law. The Plan may not be amended without the
consent of the holders of a majority of the shares of Stock voting to (a)
increase the aggregate number of shares of Stock that may be issued under the
Plan (except for adjustments pursuant to Section 11 of the Plan), (b) increase
the benefits accruing to Eligible Individuals under the Plan, or (c) modify the
requirements about eligibility for participation in the Plan or eligibility for
the grant of Incentive Options; provided, however, that such amendments may be
made without the consent of stockholders of the Corporation if changes occur in
law or other legal requirements (including 16b-3) that would permit otherwise.
The provisions in Section 5 shall not be amended more than once every six
months other than to comport with changes in the Code, ERISA or the rules under
the Code or ERISA.
SECTION 14. GENERAL
14.1 Application of Funds. The proceeds received by the
Corporation from the sale of shares pursuant to Awards shall be used for
general corporate purposes.
14.2 Right of the Corporation and Subsidiaries to
Terminate Employment. Nothing contained in the Plan, or in any Award
Agreement, shall confer upon any Holder the right to continue in the employ of
the Corporation or any Subsidiary, or interfere in any way with the rights of
the Corporation or any Subsidiary to terminate his employment any time.
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14.3 No Liability for Good Faith Determinations. Neither
the members of the Board of Directors nor any member of the Committee shall be
liable for any act, omission, or determination taken or made in good faith with
respect to the Plan or any Award granted under it, and members of the Board of
Directors and the Committee shall be entitled to indemnification and
reimbursement by the Corporation in respect of any claim, loss, damage, or
expense (including attorneys' fees, the costs of settling any suit, provided
such settlement is approved by independent legal counsel selected by the
Corporation, and amounts paid in satisfaction of a judgment, except a judgment
based on a finding of bad faith) arising therefrom to the full extent permitted
by law and under any directors and officers liability or similar insurance
coverage that may from time to time be in effect. This right to
indemnification shall be in addition to, and not a limitation on, any other
indemnification rights any member of the Board of Directors or the Committee
may have.
14.4 Other Benefits. Participation in the Plan shall not
preclude the Holder from eligibility in any other stock or stock option plan of
the Corporation or any Subsidiary or any old age benefit, insurance, pension,
profit sharing retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees. Neither the approval of the Plan by the Board of
Directors nor the submission of the Plan to the stockholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
14.5 Exclusion From Pension and Profit-Sharing
Compensation. By acceptance of an Award (whether in Stock or cash), as
applicable, each Holder shall be deemed to have agreed that the Award is
special incentive compensation that will not be taken into account in any
manner as salary, compensation or bonus in determining the amount of any
payment under any pension, retirement or other employee benefit plan of the
Corporation or any Subsidiary, unless ERISA or such plan specifically provides
otherwise. In addition, each beneficiary of a deceased Holder shall be deemed
to have agreed that the Award will not affect the amount of any life insurance
coverage, if any, provided by the Corporation or a Subsidiary on the life of
the Holder that is payable to the beneficiary under any life insurance plan
covering employees of the Corporation or any Subsidiary.
14.6 Execution of Receipts and Releases. Any payment of
cash or any issuance or transfer of shares of Stock to the Holder, or to his
legal representative, heir, legatee, or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such persons hereunder. The Committee may require any Holder, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
14.7 Unfunded Plan. Insofar as it provides for Awards of
cash and Stock, the Plan shall be unfunded. Although bookkeeping accounts may
be established with respect to Holders who are entitled to cash, Stock or
rights thereto under the Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Corporation shall not be required to segregate
any assets that may at any time be represented by cash, Stock or rights
thereto, nor shall the Plan be construed as providing for such segregation, nor
shall the Corporation nor the Board of Directors nor the Committee be deemed to
be a trustee of any cash, Stock or rights thereto to be granted under the Plan.
Any liability of the Corporation to any Holder with respect to a grant of cash,
Stock or rights thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan and any Award
Agreement; no such obligation of the Corporation shall be deemed to be secured
by any pledge or other encumbrance on any property of the Corporation. Neither
the Corporation nor the Board of Directors nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by the Plan.
14.8 No Guarantee of Interests. Neither the Committee
nor the Corporation guarantees the Stock of the Corporation from loss or
depreciation.
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<PAGE> 46
14.9 Payment of Expenses. All expenses incident to the
administration, termination, or protection of the Plan, including, but not
limited to, legal and accounting fees, shall be paid by the Corporation or its
Subsidiaries; provided, however, the Corporation or a Subsidiary may recover
any and all damages, fees, expenses, and costs arising out of any actions taken
by the Corporation to enforce its right to purchase Stock under this Plan.
14.10 Corporation Records. Records of the Corporation or
its Subsidiaries regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by
the Committee to be incorrect.
14.11 Information. The Corporation and its Subsidiaries
shall, upon request or as may be specifically required hereunder, furnish or
cause to be furnished, all of the information or documentation which is
necessary or required by the Committee to perform its duties and functions
under the Plan.
14.12 No Liability of Corporation. The Corporation assumes
no obligation or responsibility to the Holder or his legal representatives,
heirs, legatees, or distributees for any act of, or failure to act on the part
of, the Committee.
14.13 Corporation Action. Any action required of the
Corporation shall be by resolution of its Board of Directors or by a person
authorized to act by resolution of the Board of Directors.
14.14 Severability. If any provision of this Plan is held
to be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions hereof, but such provision shall be fully
severable and the Plan shall be construed and enforced as if the illegal or
invalid provision had never been included herein. If any of the terms or
provisions of this Plan conflict with the requirements of Rule 16b-3 (as those
terms or provisions are applied to Eligible Individuals who are subject to
Section 16(b) of the Exchange Act) or Section 422 of the Code (with respect to
Incentive Options), then those conflicting terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Rule 16b-3
or Section 422 of the Code. If any of the terms and provisions of this Plan
applicable to Awards intended to qualify for the exemption for
performance-based compensation under Section 162(m) of the Code conflict with
the requirements of Section 162(m) of the Code, then those conflicting terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of Section 162(m) of the Code. With respect to Incentive Options,
if this Plan does not contain any provision required to be included herein
under Section 422 of the Code, that provision shall be deemed to be
incorporated herein with the same force and effect as if that provision had
been set out at length herein; provided, further, that, to the extent any
Option that is intended to qualify as an Incentive Option cannot so qualify,
that Option (to that extent) shall be deemed a Nonstatutory Option for all
purposes of the Plan.
14.15 Notices. Whenever any notice is required or
permitted hereunder, such notice must be in writing and personally delivered or
sent by mail. Any notice required or permitted to be delivered hereunder shall
be deemed to be delivered on the date on which it is personally delivered, or,
whether actually received or not, on the third Business Day after it is
deposited in the United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address which such person
has theretofore specified by written notice delivered in accordance herewith.
The Corporation or a Holder may change, at any time and from time to time, by
written notice to the other, the address which it or he had previously
specified for receiving notices. Until changed in accordance herewith, the
Corporation and each Holder shall specify as its and his address for receiving
notices the address set forth in the Agreement pertaining to the shares to
which such notice relates.
14.16 Waiver of Notice. Any person entitled to notice
hereunder may waive such notice.
14.17 Successors. The Plan shall be binding upon the
Holder, his legal representatives, heirs, legatees, and distributees, upon the
Corporation, its successors, and assigns, and upon the Committee, and its
successors.
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<PAGE> 47
14.18 Headings. The titles and headings of Sections and
Paragraphs are included for convenience of reference only and are not to be
considered in construction of the provisions hereof.
14.19 Governing Law. All questions arising with respect to
the provisions of the Plan shall be determined by application of the laws of
the State of New York except to the extent New York law is preempted by federal
law. Questions arising with respect to the provisions of an Agreement that are
matters of contract law shall be governed by the laws of the state specified in
the Agreement, except to the extent New Jersey corporate law (or the corporate
law of the jurisdiction in which the Corporation is then incorporated)
conflicts with the contract law of such state, in which event New Jersey
corporate law (or the corporate law of the jurisdiction in which the
Corporation is then incorporated) shall govern. The obligation of the
Corporation to sell and deliver Stock hereunder is subject to applicable laws
and to the approval of any governmental authority required in connection with
the authorization, issuance, sale, or delivery of such Stock.
14.20 Word Usage. Words used in the masculine shall apply
to the feminine where applicable, and wherever the context of this Plan
dictates, the plural shall be read as the singular and the singular as the
plural.
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<PAGE> 48
LITTLEFIELD, ADAMS & COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS--JUNE 3, 1997
The undersigned shareholder of LITTLEFIELD, ADAMS & COMPANY, a New Jersey
corporation (the "Company"), hereby appoints DAVID M. SIMMONDS and STANLEY I.
HALBREICH, and each of them voting singly in the absence of the other, with
full power of substitution to each, as the proxies and attorneys of the
undersigned to vote, as designated on the reverse side, all shares of common
Stock which the undersigned would be entitled to vote if personally present at
the Annual Meeting of Shareholders of Littlefield, Adams & Company to be held
at the Holiday Inn -- Dayton North, 2301 Wagner Ford Road, Dayton, Ohio, at
9:00 a.m. (local time) on June 3, 1997, in accordance with the following
instructions:
TO BE VALID, THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE. IF NO
INSTRUCTIONS ARE GIVEN WITH RESPECT TO ANY MATTER SPECIFIED IN THE NOTICE OF
ANNUAL MEETING TO BE ACTED UPON AT THE MEETING, THE PROXY WILL VOTE THE SHARES
REPRESENTED HEREBY FOR THE NOMINEES FOR DIRECTOR SET FORTH BELOW, FOR THE
PROPOSAL TO AMEND THE LITTLEFIELD, ADAMS & COMPANY INCENTIVE PLAN, AND IN
ACCORDANCE WITH HIS BEST JUDGMENT ON ANY OTHER MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING.
(Continued on reverse side)
Please mark /X/
your votes as in
this example
The Board of Directors recommends a vote FOR Items 1 and 2.
Item 1--Election of Directors. FOR WITHHELD
Nominee:
David M. Simmonds / / / /
Martin B. Shifrin / / / /
FOR, except vote WITHHELD from the following nominee:
______________________________________________________
FOR AGAINST ABSTAIN
Item 2--To amend the Littlefield, Adams & / / / / / /
Company Incentive Plan.
Item 3--In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting or
any adjournment thereof.
Please check box if you plan to attend the meeting. / /
SIGNATURE(S)__________________________________________ DATE_________________1997
If acting as executor, administrator, trustee, guardian, etc.
you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by a duly authorized officer.
If shares are held jointly, each stockholder named should sign.
