<PAGE> 1
SCHEDULE 14A INFORMATION
(RULE 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.... [ ] Confidential, for Use of
the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.1a-11(C) or ss.240.1a-12
BEAUTICONTROL COSMETICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BEAUTICONTROL COSMETICS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I) 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:*
-------------------------------------------------------------------
(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
<PAGE> 2
(1) Amount previously paid:
------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------
Notes:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
2
<PAGE> 3
BEAUTICONTROL COSMETICS, INC.
2121 MIDWAY ROAD
CARROLLTON, TX 75006
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 7, 1998
To the Holders of Common Stock of
BEAUTICONTROL COSMETICS, INC.:
Notice is hereby given that the 1998 Annual Meeting of Stockholders of
BeautiControl Cosmetics, Inc., a Delaware corporation (the "Company"), will be
held at the Company's executive offices, 2121 Midway Road, Carrollton, Texas, on
Tuesday, April 7, 1998 at 10:00 A.M., Dallas, Texas time, for the following
purposes:
(1) To elect three persons to serve as directors until the Annual
Meeting of Stockholders in the year 2001 or until their successors are duly
elected and qualified;
(2) To consider and act upon a proposal to adopt the Company's 1998
Special Stock Option Plan; and
(3) To transact any other proper business brought before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed February 9, 1998, at the close of
business, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting and any adjournment or postponement
thereof. Only holders of record of the Company's Common Stock on that date are
entitled to vote on matters coming before the meeting and any adjournment or
postponement thereof. A complete list of stockholders entitled to vote at the
meeting will be maintained at the Company's offices at 2121 Midway Road,
Carrollton, Texas, for ten days prior to the meeting.
Please advise the Company's transfer agent, Harris Trust and Savings Bank,
311 West Monroe Street, 11th Floor, Chicago, Illinois 60606, of any change in
your address.
Your vote is important. Whether or not you plan to attend the meeting in
person, please mark, sign, date, and return the enclosed proxy in the envelope
provided, which requires no postage if mailed within the United States. With
regard to the election of directors, votes may be cast in favor or withheld;
votes that are withheld will be excluded entirely from the vote and will have no
effect.
A broker is entitled to vote on the election of directors if such broker
holds shares in street name for a customer who does not deliver voting
instructions. Under applicable Delaware law, a broker non-vote resulting from
the failure to deliver voting instructions to a broker will have no effect on
the outcome of the election of directors.
By Order of the Board of Directors,
/s/ M. DOUGLAS TUCKER
M. DOUGLAS TUCKER
Senior Vice President -- Finance
and Secretary
Carrollton, Texas
February 28, 1998
<PAGE> 4
BEAUTICONTROL COSMETICS, INC.
2121 MIDWAY ROAD
CARROLLTON, TEXAS 75006
---------------------------------------------
PROXY STATEMENT
---------------------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 7, 1998
The accompanying proxy, mailed together with this Proxy Statement to
stockholders on or about February 28, 1998, is solicited by BeautiControl
Cosmetics, Inc. (the "Company") in connection with the Annual Meeting of
Stockholders to be held on April 7, 1998. The proxy may be revoked by the
stockholder at any time prior to its exercise by executing and returning a proxy
bearing a later date, by giving written notice of revocation to the Secretary of
the Company, or by attending the meeting and voting in person.
As stated in the Notice to which this Proxy Statement is attached, matters
to be voted upon at the meeting are: (1) the election of three directors to the
Board of Directors to serve as directors until the Annual Meeting of
Stockholders in the year 2001 or until their successors are duly elected and
qualified; and (2) consideration of a proposal to adopt the Company's 1998
Special Stock Option Plan.
All properly executed, unrevoked proxies received before the meeting will
be voted in accordance with the directions contained therein. When no direction
has been given by a stockholder returning a proxy, the proxy will be voted FOR
the election as directors of the nominees named in this Proxy Statement, and FOR
the adoption of the 1998 Special Stock Option Plan.
The close of business on February 9, 1998, has been set as the record date
for determination of stockholders entitled to vote at the meeting. Holders of
the Company's Common Stock on the record date will be entitled to one vote per
share on all business at the meeting.
On the record date, there were outstanding and entitled to vote 5,928,398
shares of Common Stock. The presence, in person or by proxy, of a majority of
the outstanding shares of Common Stock entitled to vote at the meeting will
constitute a quorum.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth, as of February 6, 1998, the number and
percentage of outstanding shares of Common Stock beneficially owned by all
persons known by the Company to own more than 5% of the Company's Common Stock,
by each director of the Company, by each nominee for director, by each named
executive officer, and by all officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------- ------------ --------
<S> <C> <C>
Jinger L. Heath............................................. 1,503,887(2) 22.4%
2121 Midway Rd.
Carrollton, Texas 75006
Richard W. Heath............................................ 1,503,887(2) 22.4%
2121 Midway Rd.
Carrollton, Texas 75006
J. Robert Ward-Burns........................................ 95,000(3) 1.4%
2121 Midway Rd.
Carrollton, Texas 75006
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------- ------------ --------
<S> <C> <C>
Charles M. Diker............................................ 346,625(4) 5.1%
One New York Plaza -- 31st Floor
New York, New York 10004
Robert S. Folsom............................................ 251,500(5) 3.8%
16475 Dallas Parkway
Dallas, Texas 75248
Joseph M. Haggar, III....................................... 3,500(6) *
6311 Lemmon Avenue
Dallas, Texas 75209
Denise I. Lites............................................. 5,500(7) *
3729 Maplewood Avenue
Dallas, Texas 75205
Clifton R. Sanders.......................................... 22,570(8) *
2121 Midway Rd.
Carrollton, Texas 75006
A. Starke Taylor, Jr........................................ 36,750(9) *
16800 Dallas Parkway
Dallas, Texas 75248
M. Douglas Tucker........................................... 59,000(10) *
2121 Midway Rd.
Carrollton, Texas 75006
Joel T. Williams, Jr........................................ 72,750(11) 1%
P.O. Box 12150
Dallas, Texas 75225
FMR (Fidelity Management & Research Company) Corp........... 364,000 5.4%
82 Devonshire Street
Boston, Massachusetts 02109
All officers and directors as a group (20 persons).......... 3,966,464(12) 59.1%
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise noted, each of the listed individuals has sole voting and
dispositive power for the shares beneficially owned.
(2) Includes options to purchase 150,000 shares of Common Stock exercisable
within 60 days.
(3) Includes options to purchase 95,000 shares of Common Stock exercisable
within 60 days.
(4) Includes options to purchase 93,000 shares of Common Stock exercisable
within 60 days. Includes 12,125 shares of Common Stock which are indirectly
owned by Mr. Diker and for which Mr. Diker shares voting and investment
power. Does not include 11,250 shares of Common Stock owned by the wife of
Mr. Diker and 15,750 shares owned by clients of Mr. Diker, for which Mr.
Diker disclaims beneficial ownership.
(5) Includes options to purchase 25,500 shares of Common Stock exercisable
within 60 days. Does not include 3,000 shares of Common Stock owned by the
wife of Mr. Folsom, for which Mr. Folsom disclaims beneficial ownership.
(6) Includes options to purchase 3,500 shares of Common Stock exercisable
within 60 days.
(7) Includes options to purchase 5,500 shares of Common Stock exercisable
within 60 days.
(8) Includes options to purchase 22,570 shares of Common Stock exercisable
within 60 days.
(9) Includes options to purchase 36,750 shares of Common Stock exercisable
within 60 days. Does not include 52,205 shares of Common Stock owned by the
wife of Mr. Taylor, for which Mr. Taylor disclaims beneficial ownership.
(10) Includes options to purchase 10,000 shares of Common Stock exercisable
within 60 days.
(11) Includes options to purchase 70,500 shares of Common Stock exercisable
within 60 days.
(12) Includes options to purchase 780,815 shares of Common Stock exercisable
within 60 days.
2
<PAGE> 6
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation divides the Board of Directors
into three classes. The term of office of one class of directors expires at this
Annual Meeting of Stockholders. A second class of directors will serve until the
1999 Annual Meeting of Stockholders, and a third class of directors will serve
until the 2000 Annual Meeting of Stockholders. Jinger L. Heath, Joseph M.
Haggar, III and J. Robert Ward-Burns will stand for election at this Annual
Meeting for a three-year term of office expiring at the Annual Meeting of
Stockholders in the year 2001 or until their successors are duly elected and
qualified. Proxies cannot be voted for the election of more than three persons
to the Board.
The Company is informed that Ms. Heath, Mr. Haggar, III and Mr. Ward-Burns
are willing to serve as directors. However, if Ms. Heath, Mr. Haggar, III or Mr.
Ward-Burns should decline or become unable to serve as a director for any
reason, votes will be cast instead for a substitute nominee designated by the
Board of Directors or, if none is so designated, will be cast according to the
judgment of the person or persons voting the proxy.
The following table sets forth certain information as to the directors of
the Company as of January 1, 1998.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES DIRECTOR
NAME AND AGE WITH THE COMPANY SINCE
------------ --------------------- --------
<S> <C> <C>
NOMINEES
-------------------------------------------------
Present Term Expiring in 1998
Jinger L. Heath, 45 Chairman of the Board of Directors 1981
Joseph M. Haggar, III, 46 Director 1996
J. Robert Ward-Burns, 53 Director, Executive Vice President and Chief
Operating Officer 1993
DIRECTORS CONTINUING IN OFFICE
-------------------------------------------------
Present Term Expiring in 1999
Richard W. Heath, 55 Director, President, and Chief Executive Officer 1981
Charles M. Diker, 63 Director 1987
Joel T. Williams, Jr., 77 Director 1986
Present Term Expiring in 2000
Robert S. Folsom, 70 Director 1985
A. Starke Taylor, Jr., 75 Director 1985
Denise I. Lites, 42 Director 1995
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
Jinger L. Heath is a founder of the Company and has been Chairman of the
Board of Directors of the Company since its inception in January 1981. Ms. Heath
conceived the concept of free color and image analysis supported by color-coded
cosmetics and image improvement products to be marketed through a sales force of
career-oriented women. She identifies the Company's product needs and manages
the development and quality of the Company's skin care, cosmetics and health and
beauty supplements. Ms. Heath is also Chairman of the Board of the Company's
division, BeautiControl Research Institute.
Richard W. Heath is a founder of the Company and has been President, Chief
Executive Officer, and a director of the Company since its inception in January
1981. Mr. Heath has over 30 years of experience in the direct sales industry.
Mr. Heath currently serves as a director of Haggar Clothing Co., a public
company.
J. Robert Ward-Burns has been Executive Vice President, Chief Operating
Officer and a director of the Company since July 1993. Prior to joining the
Company, Mr. Ward-Burns was with Stanhome Direct Selling Group for 13 years
where he served as President from 1988 to 1993.
3
<PAGE> 7
Robert L. Esson, 53, has been Senior Vice President Manufacturing and
Distribution of the Company since November 1995 and was Vice President
Manufacturing prior to that and since April 1994 and assumed responsibility for
the Distribution Department in August 1994. Prior to joining the Company, Mr.
Esson was with Lockwood Greene Engineers from September 1991 as a management
consultant.
Gary Galindo, 50, has been Vice President Sales of the Company since March,
1997. Prior to that, Mr. Galindo was General Manager of House of Fuller, a
direct selling skin care and cosmetics division of Sara Lee Corporation from
March 1995 to February 1997 and Senior Vice President and Chief Operating
Officer of Chambre International from August 1993 to February 1995. Prior to
that, Mr. Galindo was Senior Vice President of Sales/Marketing Development for
the Company from August 1990 to September 1993.
Robert S. Heath, 35, has been Senior Vice President Sales of the Company
since January 1996 and was Vice President Sales Development prior to that and
since May 1992. Prior to that time, Mr. Heath was Director of Sales Promotion
from November 1991 to May 1992, Director of Distribution from January 1990 to
November 1991, and Operations Manager from November 1988 to January 1990.
Jo-Anne C. Jaeger, 54, has been Senior Vice President Merchandising and
International Development of the Company since December 1995. Ms. Jaeger was Sr.
Vice President Marketing Strategies from January 1992 to December 1995. Ms.
Jaeger joined the Company in April 1990 as Vice President Product Marketing.
Prior to joining the Company, Ms. Jaeger was employed by Avon Products, Inc. for
15 years, most recently as Vice President Sales Planning.
James L. Montgomery, 50, Vice President Purchasing joined the Company in
November 1997. Prior to that, Mr. Montgomery was employed at the Gillette Co.
for 20 years and was responsible for International Purchasing and worldwide
sourcing at Gillette and a subsidiary, Jafra Cosmetics International.
J. Timmons Parker, 52, has been Vice President Sales of the Company since
July 1996. Prior to that time and since January 1995, Mr. Parker was Managing
Director Leadership Development. Mr. Parker joined the Company as Director Sales
Development in November 1992. Prior to joining the Company, Mr. Parker was Vice
President General Manager for Neiman Marcus where he worked for sixteen years.
Linda K. Pottenger, 48, has been Vice President Sales of the Company since
July 1996 and was Vice President Field and Information Services prior to that
and since December 1993. Prior to that time and since March 1992, she was Vice
President Information Technology, Strategic and Quality Planning. Prior to that
time, Ms. Pottenger was Consulting Services Manager for Hewlett-Packard from
1982 to 1992.
Clifton R. Sanders, 52, has been Senior Vice President Research and
Development of the Company since November 1991. Prior to that time and since
December 1990, Mr. Sanders was Vice President Research and Development of the
Company. He joined the Company as Managing Director Research and Development in
October 1989. Prior to joining the Company, Mr. Sanders was Vice President
Product Development at Mary Kay Cosmetics for ten years. Mr. Sanders is also
President of the Company's division, BeautiControl Research Institute.
Amelia G. Spolec, 40, has been Vice President Information Services since
July 1996. Prior to that time and since January 1995, Ms. Spolec was Managing
Director Information Services. In February 1992, Ms. Spolec joined the Company
as Director Information Services. Prior to joining the Company, Ms. Spolec was
Senior Manager with Grant Thornton LLP for seven years.
M. Douglas Tucker, 54, has been Senior Vice President Finance and Chief
Financial Officer since April 1995 and Secretary of the Company since August
1995. Mr. Tucker also held the position of Treasurer of the Company from August
1995 to October 1997. Prior to that time and from April 1993, Mr. Tucker was a
business and financial consultant. From July 1990 to April 1993, Mr. Tucker was
Vice President-Finance at The BOC Group Americas. Prior to July 1990, Mr. Tucker
was with Tambrands, Inc. one year as International Director of Finance and with
General Foods Corporation twenty-one years in financial management.
Jan P. Wold, 38, has been Vice President Creative Services since October
1997. Prior to that and since July 1995, Ms. Wold was Director and Managing
Director of Creative Services. In September 1990,
4
<PAGE> 8
Ms. Wold joined the Company as Production Manager, Creative Services. Prior to
joining the Company, Ms. Wold held various production positions with MBRK
Advertising and Jones, Pointer, Winn Advertising for six years.
Charles M. Diker has been a director of the Company since May 1987. Since
1986, Mr. Diker has been Chairman of the Board of Directors of Cantel Industries
Inc. Mr. Diker currently serves as a director of Chyron Corporation,
International Specialty Products, Inc., Data Broadcasting Corporation and AMF
Bowling, Inc.
Robert S. Folsom has been a director of the Company since June 1985. Mr.
Folsom is Chairman of the Board of Directors of Folsom Properties, Inc., a real
estate development firm. Mr. Folsom served as Mayor of the City of Dallas from
1976 to 1981. Mr. Folsom currently serves as a director of DSC Communications
Corporation.
Joseph M. Haggar, III, has been a director of the Company since August
1996. Mr. Haggar has been Chairman of the Board of Haggar Clothing Co., a
marketer of men's dress and casual clothing since 1994 and Chief Executive
Officer since 1990. Mr. Haggar also serves as a director of Chase Bank of Texas.
Denise I. Lites has been a director of the Company since October 1995. Ms.
Lites is President of Olympia Development LLP, a real estate development and
entertainment company. Ms. Lites serves as a director of CompUSA, the Federal
Reserve Board of Chicago, Detroit Branch, and Little Caesar Enterprises, Inc.
where Ms. Lites was Vice Chairman since April 1997 and served as Senior
Executive Vice President from 1987 to 1993.
A. Starke Taylor, Jr. has been a director of the Company since June 1985.
From 1978 until 1987, Mr. Taylor was Chairman of the Board of Directors of
Graylor Investments, a private investment firm. Mr. Taylor served as Mayor of
the City of Dallas from 1983 to 1987. Mr. Taylor currently serves as President
of Taylor Investments, a private investment firm.
Joel T. Williams, Jr. has been a director of the Company since January
1986. From 1985 to 1989, Mr. Williams was an advisory director of Bright Banc
Savings Association. From 1969 to 1985, Mr. Williams was Chairman of the Board
and Chief Executive Officer of Texas Federal Savings and Loan Association.
Richard W. Heath and Jinger L. Heath are husband and wife. Robert S. Heath
is the son of Richard W. Heath. There are no other family relationships between
other directors or executive officers of the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
GENERAL
The Board of Directors has established a Compensation Committee, an Audit
Committee, and a Nominating Committee. The Company's Bylaws provide that the
Compensation Committee and the Audit Committee are required to be comprised of
directors who are not employees of the Company.
The Compensation Committee, composed of Messrs. Folsom, Taylor and
Ms.Lites, met two times during the fiscal year ended November 30, 1997. This
committee reviews and approves salaries and bonuses of executive officers and
administers the Company's Incentive Stock Option Plan, Non-Qualified Stock
Option Plan, and Special Stock Option Plan. Additionally the committee took
action by unanimous written consent on one occasion during fiscal 1997.
The Audit Committee, composed of Messrs. Williams, Haggar and Diker, met
two times during the fiscal year ended November 30, 1997. This committee
recommends to the Board of Directors the appointment of independent auditors,
reviews the plan and scope of audits, reviews the Company's significant
accounting policies and internal controls, and has general responsibility for
related matters.
The Nominating Committee, currently composed of Messrs. Folsom and Taylor,
held no meetings in fiscal 1996 but took action by unanimous written consent on
one occasion during fiscal 1997. This committee nominates persons for election
to the Board of Directors.
5
<PAGE> 9
The Board of Directors held six meetings during the fiscal year ended
November 30, 1996. None of the directors attended fewer than 75% of the meetings
of the Board of Directors and its committees on which they served.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not officers or employees of the
Company receive an annual fee of $12,000 together with $1,500 for each
directors' meeting they attend and $750 for each committee meeting they attend.
Directors are reimbursed for expenses relating to attendance at meetings.
SPECIAL STOCK OPTION PLAN
The Company's Special Stock Option Plan provides for the granting of
options to purchase a maximum of 412,500 shares of Common Stock to non-employee
directors of the Company. Under the terms of the Special Plan, a non-employee
director receives an automatic grant of options for 2,500 shares of Common Stock
when such person first becomes a director of the Company. Additional options to
purchase 1,000 shares of Common Stock are automatically granted to non-employee
directors annually if the Company's net income is equal to or greater than 105%
of net income for the previous year. All grants of options under the Special
Stock Option Plan are made automatically and without any discretion on the part
of the Compensation Committee with respect to the grantee, the number of options
granted and the exercise price of the options. The Special Stock Option Plan
requires that the exercise price for each option be equal to 100% of the fair
market value of the Common Stock on the date of the grant. Each option will
expire ten years from the date of grant and no option is exercisable until one
year from the date of grant. Notwithstanding any other restriction in the
Special Stock Option Plan, options will become immediately exercisable upon a
reorganization, merger or consolidation of the Company or a change in control of
the Company.
This plan expired on February 15, 1998.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by
the Company for services rendered during the fiscal years ended November 30,
1997, 1996 and 1995 to the Company's Chief Executive Officer and the four other
most highly compensated executive officers whose total cash compensation for the
year ended November 30, 1997 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ----------------------
------------------------------------------------ LONG-TERM
NAME AND OTHER ANNUAL OPTION INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS(#) PAYOUTS($) COMPENSATIONS($)
------------------ ---- --------- -------- ------------------ --------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard W. Heath 1997 497,068 10,340 51,725 0 N/A 0
President and Chief 1996 365,000 272,128 0 0 N/A
Executive Officer 1995 358,740 220,946 0 0 N/A
Jinger L. Heath 1997 497,068 10,340 96,288(2) 0 N/A 0
Chairman of the Board 1996 365,000 272,128 0 0 N/A
of Directors 1995 358,740 220,946 0 0 N/A
J. Robert Ward-Burns 1997 327,500 7,033 0 0 N/A 6,500(4)
Executive Vice President 1996 300,000 176,003 0 25,000(3) N/A
and Chief Operating Officer 1995 293,748 159,421 0 25,000 N/A
M. Douglas Tucker 1997 183,583 11,500 0 0 N/A 4,000(6)
Senior Vice President 1996 182,513 35,000 0 35,000(5) N/A
Finance and Chief 1995* 119,866 31,000 0 15,000 N/A
Financial Officer
Clifton R. Sanders 1997 220,000 10,000 0 0 N/A 4,000(6)
Senior Vice President 1996 165,000 45,000 0 25,400(7) N/A
Research and Development 1995 162,666 15,000 0 10,000 N/A
</TABLE>
- ---------------
* Hired April 19, 1995.
(1) Exceeding the lesser of $50,000 or 10% of salary and bonus.
(2) Includes $50,000 for wardrobe for numerous video productions, stage and
television appearances.
(3) Options granted in 1995, exchanged for repriced options in January 1996.
(4) Premium for term life insurance and Company match for 401(k) plan.
(5) Includes 15,000 options granted in 1995, exchanged for repriced options in
January 1996.
(6) Company match for 401(k) plan.
(7) Options granted in previous years, exchanged for repriced options in January
1996.
7
<PAGE> 11
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options during fiscal 1997 to the individuals named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ---------------------------------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION FOR A
GRANTED TO PERIOD OF TEN
EMPLOYEES YEARS($)(3)
OPTIONS IN FISCAL EXERCISE EXPIRATION --------------------
NAME GRANTED(#) YEAR PRICE($/SH) DATE 5% 10%
---- ---------- ---------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Richard W. Heath.................... N/A $ 0 $ 0
Jinger L. Heath..................... N/A 0 0
J. Robert Ward-Burns................ N/A 0 0
M. Douglas Tucker................... N/A 0 0
Clifton R. Sanders.................. N/A 0 0
</TABLE>
- ---------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT FISCAL YEAR
END
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during the last fiscal
year and unexercised options held as of November 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR-END AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard W. Heath................ N/A N/A 150,000 0 23,475 0
Jinger L. Heath................. N/A N/A 150,000 0 23,475 0
J. Robert Ward-Burns............ N/A N/A 90,000 35,000 25,040 6,260
M. Douglas Tucker............... N/A N/A 10,000 25,000 252 1,008
Clifton R. Sanders.............. 3,600 $35,550 19,340 9,060 313 313
</TABLE>
- ---------------
(1) Based on the closing price of $8.063 the Common Stock on November 30, 1997,
the Company's fiscal year end.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During fiscal 1997 the Compensation Committee consisted of Messrs. Folsom,
Taylor and Ms. Lites. None of the members of the Compensation Committee has ever
been an officer or employee of the Company. Mr. Heath is on the Compensation
Committee of Haggar Clothing Co. and Mr. Haggar is a director of the Company.
REPORT OF THE COMPENSATION COMMITTEE ON ANNUAL COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for overseeing all stock option plans, setting the compensation for
the Chief Executive Officer ("CEO") and the Chairman of the Board ("Chairman"),
and providing guidelines to the CEO for determining the annual compensation of
other officers.
Executive Officer Compensation Other than CEO and Chairman
The Committee believes that total compensation for the Company's officers
must be in amounts sufficient to attract, retain and motivate key employees,
while at the same time maintaining reasonable linkage between executive
compensation and Company performance.
The Committee sets guidelines for officer pay based upon industry levels.
As in prior years, 1997 base salaries were set at mid-range pay levels when
compared to similar companies in the industry, with potential
8
<PAGE> 12
additional compensation to be made through cash bonuses. In 1997, cash bonuses
for all officers other than the Chief Operating Officer, CEO and Chairman, were
based on a combination of individual performance and Company performance. Fifty
percent of the bonus amount was tied to individual performance against stated
objectives and the remaining fifty percent was dependent upon the Company
reaching stated pre-tax profit objectives. For 1997, no bonus amounts were paid
for the portion tied to Company objectives. However, bonus amounts were paid for
1997 tied to individual performance against stated objectives with some
discretionary bonuses. The annual bonus amount for the Chief Operating Officer
is set at 2% of the Company's pre-tax profits and therefore fluctuates directly
with the Company's annual earnings.
Stock options are granted to executive officers by the Committee at the
time the officers are hired and thereafter based on individual contributions.
Stock options are granted at the fair market value of the Common Stock on the
date of grant, with an exercise period ranging from five to seven years.
CEO and Chairman Compensation
The compensation for both the CEO and the Chairman is determined by the
Committee based upon a combination of base pay and cash bonus, with the total
cash compensation being strongly affected by Company performance. The base pay
for both the CEO and Chairman was $497,068 as noted in the summary compensation
table. Annual cash bonus payments for the CEO and the Chairman are each set at
3% of the Company's pre-tax profits for the fiscal year. As a result, bonus
payments to the CEO and the Chairman fluctuate based upon the Company's pre-tax
profits. The Committee may grant additional discretionary cash bonuses to the
CEO and the Chairman based on the Committee's evaluation of individual
performance. No additional discretionary bonuses were granted to the CEO and the
Chairman for fiscal 1997.
The Committee grants stock options to the CEO and the Chairman based upon a
subjective evaluation of many factors including performance, leadership,
motivational effect, and extraordinary contributions to the Company.
This report is submitted by the members of the Compensation Committee:
Robert S. Folsom
Denise Ilitch Lites
A. Starke Taylor, Jr.
9
<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return for the Company's Common Stock from December 1, 1992
through November 30, 1997 with the cumulative total return for the NASDAQ Market
Index and the Peer Group(1). The comparison assumes $100 was invested in the
Company's Common Stock on December 1, 1992 and in each of the foregoing indices
and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
Measurement Period BeautiControl NASDAQ Market
(Fiscal Year Covered) Cosmetics Peer Group Index
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 112.68 88.89 119.03
1994 144.76 110.32 128.19
1995 94.09 131.14 162.53
1996 146.71 197.33 201.65
1997 88.81 207.96 250.48
</TABLE>
- ---------------
(1) The Peer Group includes Aloette Cosmetics, Inc., Avon Products, Inc.,
Nature's Sunshine Products Inc., and Stanhome Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's Common Stock, to file with the Securities and Exchange Commission (the
"SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Such persons are
required by SEC regulations to furnish the Company with copies of all Section
16(a) reports they file. To the Company's knowledge, based on its review of the
copies of such reports and written representations that no other reports were
required, during the fiscal year ended November 30, 1997, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, except for delinquent Form 3 filings by
Mr. James Montgomery and Ms. Jan P. Wold, officers of the Company. The Company
is not aware of any failure to file a required report.
10
<PAGE> 14
PROPOSED ADOPTION OF THE
1998 SPECIAL STOCK OPTION PLAN
PROPOSED ADOPTION OF SPECIAL STOCK OPTION PLAN
General. Effective as of February 18, 1998, the Board of Directors of the
Company adopted the BeautiControl Cosmetics, Inc. 1998 Special Stock Option Plan
(the "Special Plan") for non-employee directors of the Company. The statements
herein concerning the terms and provisions of the Special Plan are summaries and
are qualified in their entirety by reference to the full text of the Special
Plan, a copy of which is attached hereto as Exhibit A.
The purpose of the Special Plan is to attract and retain persons of ability
as directors through the grant of stock options, and to furnish an incentive to
non-employee directors to continue their services to the Company and to reward
them for their services in a manner that will suitably recognize the value of
their judgment, counsel, and expertise. The Board of Directors has reserved
59,000 shares of Common Stock for issuance under the Special Plan.
The Special Plan is administered by the Compensation Committee. Options are
granted under the Special Plan as follows:
(i) When a person first becomes a director of the Company, such
director will at that time be granted options to purchase 2,500 shares of
Common Stock; and
(ii) In addition, if the Company's net income in a particular fiscal
year is equal to or greater than 105% of the Company's net income for the
previous year, then shortly after the end of the Company's fiscal year each
non-employee director will be granted options to purchase 1,000 shares of
Common Stock.
All grants of options under the Special Plan are made automatically and
without any discretion on the part of the Compensation Committee with respect to
the grantee, the number of options to be granted, and the exercise price of the
option. The exercise price for any options granted under the Special Plan will
be equal to 100% of the fair market value of the Common Stock on the date of the
grant of the option. Each option will expire ten years from the date of grant
and no option is exercisable until after the expiration of one year from the
date of grant.
An option granted under the Special Plan will terminate if the option
holder ceases to serve as a director of the Company, except that if the holder
ceases to be a director of the Company for any reason other than death, the
holder may exercise his options for a period of three months thereafter, but
only to the extent that the options were exercisable on the date such holder
ceased to be a director of the Company. If an option holder dies prior to the
termination of his right to exercise an option, the option may be exercised by
the holder's heirs or estate, but only to the extent the option could have been
exercised by the holder on the date of his death.
No cash consideration is paid by a director upon the grant of an option to
him. To exercise an option, a director must pay the full exercise price in cash,
Common Stock, a promissory note, or any combination of the foregoing.
Notwithstanding any other restriction in the Special Plan, options will
become immediately exercisable upon a reorganization, merger or consolidation of
the Company, or a change in control of the Company.
The Special Plan may be amended or terminated by the Board of Directors at
any time without stockholder approval.
Certain Federal Income Tax Aspects. Stock options granted under the Special
Plan are not entitled to the treatment for federal income tax purposes provided
by Section 422 of the Code. The grantee will have no taxable income, and the
Company will not be entitled to a deduction, at the time or as a result of the
grant of an option.
11
<PAGE> 15
Other Information. At February 26, 1998, the Company had 6 non-employee
directors who were eligible to participate in the Special Plan. If the Special
Plan had been in effect during fiscal 1997, 6,000 options would have been
granted under the Special Plan. The closing price of the Common Stock as
reported on the NASDAQ National Market on February 26, 1998 was $8.125.
AUDITORS
Representatives of Ernst & Young LLP, the Company's independent auditors
for 1997, are expected to be present at the meeting with the opportunity to make
a statement if they desire to do so and to be available to respond to
appropriate questions.
BOARD OF DIRECTORS'
RECOMMENDATIONS; VOTE REQUIRED
The Board of Directors unanimously recommends a vote FOR the election as
director of each of the nominees named in the proxy and FOR the adoption of the
1998 Special Stock Option Plan.
Nominees for director receiving a plurality of the votes cast will be
elected as directors. The affirmative vote of holders of a majority of the
outstanding shares of Common Stock present at the meeting or represented by
proxy is required to approve the adoption of the 1998 Special Stock Option Plan.
STOCKHOLDER PROPOSALS
In order for stockholder proposals to receive consideration for inclusion
in the Company's Proxy Statement for next year, such proposals must be received
at the Company's offices at 2121 Midway, Carrollton, Texas 75006, Attention:
Secretary, by November 6, 1998.
The Company's By-Laws contain a provision which requires that a stockholder
may nominate a person for election as a director only if written notice of such
stockholder's intent to make such nomination has been given to the Secretary of
the Company not later than 60 days prior to an annual meeting. This provision
also requires that the notice set forth, among other things, a description of
all arrangements or understandings between the nominating stockholder and the
nominee pursuant to which the nomination is to be made or the nominee is to be
elected, and such notice must also contain such other information regarding the
nominee as would be required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission had the nominee
been nominated by the Board of Directors of the Company. This provision is
intended to give the Company the opportunity to obtain all relevant information
regarding persons nominated for director. The Board of Directors may disqualify
any nominee who fails to provide the Company with complete and accurate
information as required by this provision. No stockholder has nominated a
candidate for election to the Board of Directors at the 1998 Annual Meeting.
SOLICITATION OF PROXIES
The Company will pay the expenses of this proxy solicitation. In addition
to solicitation by mail, some of the officers and regular employees of the
Company may solicit proxies personally or by telephone, if deemed necessary. The
Company will request brokers and other fiduciaries to forward proxy soliciting
material to the beneficial owners of shares which are held of record by the
brokers and fiduciaries, and the Company may reimburse them for reasonable
out-of-pocket expenses incurred by them in connection therewith.
12
<PAGE> 16
OTHER BUSINESS
The Board of Directors is not aware of any matter, other than the matters
described above, to be presented for action at the meeting. However, if any
other proper items of business should come before the meeting, it is the
intention of the person or persons acting under the enclosed form of proxy to
vote in accordance with their best judgment on such matters.
By Order of the Board of Directors,
/s/ M. DOUGLAS TUCKER
M. DOUGLAS TUCKER
Senior Vice President -- Finance
and Secretary
Carrollton, Texas
February 28, 1998
13
<PAGE> 17
EXHIBIT A
BEAUTICONTROL COSMETICS, INC.
1998 SPECIAL STOCK OPTION PLAN
1. Purpose. The purpose of the Plan is to provide non-employee directors of
BeautiControl Cosmetics, Inc. (the "Corporation") with a proprietary interest in
the Corporation through the granting of options which will:
(a) provide a means through which the Corporation may attract able
persons to serve as non-employee directors of the Corporation;
(b) increase the interest of non-employee directors in the
Corporation's welfare; and
(c) furnish an incentive to the non-employee directors to continue
their services for the Corporation and to reward them for their services in
a manner that will suitably recognize the value of their judgment, counsel
and expertise.
2. Administration. The Plan shall be administered by the Board of Directors
of the Corporation ("Board"), or a committee thereof; provided, however, that
the Board in its discretion may appoint a Stock Option Committee ("Committee")
consisting of not less than two non-employee members of the Board, for the
purpose of administering the Plan. Except as otherwise provided by the Board in
written directions to the Committee, the Committee shall have all of the powers
with respect to the Plan. Any member of the Committee (or all members in the
event the Board elects to assume direct responsibility for administration of the
Plan) may be removed at any time, with or without cause, by resolution of the
Board. Any vacancy occurring in the membership of the Committee may be filled by
appointment by the Board.
The Committee shall select one of its members to act as its Chairman, and
shall make such rules and regulations for its operation as it deems appropriate.
A majority of the Committee shall constitute a quorum and the act of a majority
of the members of the Committee present at a meeting at which a quorum is
present shall be the act of the Committee.
3. Participants. Only directors who are not employees of the Corporation
shall be eligible to participate in the Plan.
4. Shares Subject to Plan. The Board may not grant options under the Plan,
in the aggregate, for more than 59,000 shares of Common Stock of the Corporation
(subject to adjustment in accordance with Section 10). Shares to be optioned and
sold may be made available from either authorized but unissued Common Stock or
Common Stock held by the Corporation in its treasury. Shares that by reason of
the expiration of an option or otherwise are no longer subject to purchase
pursuant to an option granted under the Plan may be reoffered under the Plan.
5. Grants of Options. All options under this Plan shall be granted by the
Board. The grant of an option shall be evidenced by a stock option agreement
containing such terms and provisions as are approved by the Board, but not
inconsistent with this Plan. The Corporation shall execute stock option
agreements upon instructions from the Board.
Each participant in the Plan shall be granted options in the following
manner:
(a) When a person is first elected or appointed as a director of the
Corporation, the Board shall grant such person, at the meeting of the Board
in which such person has been appointed, or at the first meeting of the
Board following his or her election, options to purchase 2,500 shares of
Common Stock; and
(b) In addition to the foregoing, throughout the term of this Plan, on
the fourteenth (14th) business day (the "Determination Date") after the
last day of the Corporation's fiscal year, the Committee shall
A-1
<PAGE> 18
grant to each non-employee director options to purchase 1,000 shares of
Common Stock if the Corporation's net income for the fiscal year
immediately preceding the Determination Date is equal to or greater than
105% of the Corporation's net income for such previous fiscal year.
6. Exercise Price. The exercise price of options granted hereunder shall be
100% of the fair market value of the Common Stock on the date of grant of such
option. For the purposes hereof, the fair market value of the Common Stock shall
be the closing price of the Common Stock on such date on the principal national
securities exchange on which the Common Stock is listed, or if not so listed,
the closing price of the Common Stock on such date on the NASDAQ National
Market, or if not so quoted, the average of the bid and asked prices of the
Common Stock on such date in such other market in which shares of Common Stock
are regularly quoted, or if not so quoted, as established by the Board on such
date.
7. Term of Options. Each option and all rights thereunder shall expire ten
(10) years from the date on which the option is granted. No option shall be
exercised by any participant until after the expiration of a period of one (1)
year from the date of grant.
8. Termination of Service as Director. An option shall terminate and no
rights thereunder may be exercised if the person to whom it is granted ceases to
serve as a director of the Corporation, except that:
(a) If the holder of an option ceases to serve as a director of the
Corporation for any reason other than death, the holder of an option may,
at any time within not more than three (3) months after such holder's
service to the Corporation as a director ceases, exercise an option to the
extent, and only to the extent, that the option or portion thereof had
become exercisable on the date of such holder's service to the Corporation
as a director ceased; and
(b) If a holder of an option dies prior to the termination of his
right to exercise an option in accordance with the provisions of his stock
option agreement without having totally exercised the option, the option
may be exercised, to the extent of the shares with respect to which the
option could have been exercised by the holder on the date of the holder's
death, by the holder's estate or by the person who acquired the right to
exercise the option by bequest or inheritance or by reason of the death of
the holder. Any option exercised after the death of a holder must be
exercised prior to the date of its expiration according to its terms or one
year from the date of the holder's death, whichever first occurs.
9. Exercise Of Options. An option granted under the Plan shall be
exercisable as follows:
(a) Method of Exercise of Options. Each exercise of an option granted
hereunder, whether in whole or in part, shall be by written notice to the
Secretary of the Corporation, designating the number of shares of Common
Stock as to which the option is exercised, and shall be accompanied by
payment in full for the number of shares of Common Stock so designated,
together with any written statements required by any applicable securities
laws. Unless further restricted by the Board in the option agreement
granting the option, payment for options to be exercised shall be made (i)
in cash, (ii) by certified or cashier's check, (iii) with shares of Common
Stock, (iv) at the sole discretion of the Board, with a promissory note
bearing a reasonable rate of interest, (v) by delivery to the Corporation
of irrevocable instructions from the option holder to a broker or dealer,
reasonably acceptable to the Corporation, to sell certain of the shares of
Common Stock purchased upon exercise of the option or to pledge such shares
as collateral for a loan and promptly deliver to the Corporation the amount
of sale or loan proceeds necessary to pay such purchase price, or (vi) by a
combination of any of the foregoing. If paid in whole or in part with
shares of Common Stock, the value of the shares of Common Stock surrendered
shall be their market value as determined by the Board in a uniform and
non- discriminatory manner. Nothing herein shall prohibit the Corporation,
in its sole discretion, from lending to the option holder, guaranteeing a
loan to the option holder, or otherwise assisting the option holder to
obtain the cash necessary to exercise all or a portion of an option granted
hereunder. Fractional shares may not be purchased under an option. An
option shall be deemed to be exercised when such notice and payment have
been received.
(b) Limitations on Exercise of Options. Except as otherwise provided
in this Plan, each option granted under the Plan shall be exercisable,
whether in whole or in part, no earlier than one (1) year from
A-2
<PAGE> 19
the date of grant of the option, and only in such installments as may be
specified in the agreement granting the option. In no event may an option
be exercised or shares of Common Stock issued pursuant to an option if any
necessary listing of the shares of Common Stock on a stock exchange or any
necessary registration under state or federal securities laws has not been
accomplished.
10. Capital Adjustments. The aggregate number of shares of Common Stock
which may be purchased pursuant to options to be granted under the Plan, the
number of shares of Common Stock covered by each outstanding option granted
under the Plan, and the option price for outstanding options, shall be
proportionately adjusted to reflect any stock dividend, stock split, share
combination, exchange of shares, recapitalization, merger, consolidation,
reorganization, liquidation, or the like, of or by the Corporation. Any
fractional shares resulting from any such adjustment shall be eliminated for the
purposes of such adjustment.
11. Reorganization; Merger. Subject to any required action by the
stockholders, if the Corporation shall be the surviving or resulting corporation
in any merger or consolidation, any option granted hereunder shall pertain to
and apply to the securities or rights (including cash, property or assets) to
which a holder of the number of shares of Common Stock subject to the option
would have been entitled. In the event of any merger or consolidation pursuant
to which the Corporation is not the surviving or resulting corporation, there
shall be substituted for the shares of Common Stock an appropriate number of
shares of each class of stock or other securities or the amount of cash,
property or assets of the surviving or consolidated corporation in respect of
such shares exercisable for such stock, securities, cash or property in
accordance with their terms. Notwithstanding the foregoing however, all such
options may be canceled by the Corporation as of the effective date of any such
reorganization, merger or consolidation or of any dissolution or liquidation of
the Corporation by giving notice to each holder thereof (or to his personal
representative) of its intention to do so and by permitting the purchase during
the thirty (30) day period next preceding such effective date of all of the
shares subject to such outstanding options, without regard to the installment
provisions of any option agreement.
12. Liquidation; Dissolution. In case the Corporation shall at any time
while any option under this Plan shall be in force and remain unexpired, sell
all or substantially all its property or dissolve, liquidate or wind up its
affairs, each participant may thereafter receive upon exercise thereof in lieu
of each share of Common Stock of the Corporation which such participant would
have been entitled to receive, the same kind and amount of any securities or
assets as may be issuable, distributable or payable upon any such sale,
dissolution, liquidation or winding up with respect to each share of Common
Stock of the Corporation. In the event that the Corporation shall at any time
prior to the expiration of any option make any partial distribution of its
assets, in the nature of a partial liquidation, whether payable in cash or in
kind (but excluding the distribution of a cash dividend payable out of earned
surplus and designated as such), then in such event the exercise prices then in
effect with respect to each option shall be reduced, on the payment date of such
distribution, in proportion to the percentage reduction in the tangible book
value of the shares of the Corporation's Common Stock (determined in accordance
with generally accepted accounting principles) resulting by reason of such
distribution.
13. Acceleration.
(a) A "Change in Control" for purposes of this Plan shall mean (i)
without prior approval of the Board a single person or entity or group of
affiliated persons or entitles acquires more than 50% of the Common Stock
issued and outstanding immediately prior to such acquisition; (ii)
stockholders approve the consummation of any merger of the Corporation or
any sale or other disposition of all or substantially all of its assets, if
the stockholders of the Corporation immediately before such transaction
own, immediately after consummation of such transaction, equity securities
(other than options and other rights to acquire equity securities)
possessing less than 50% of the voting power of the surviving or acquiring
corporation; or (iii) a change in the majority of the Board during any
24-month period without the approval of a majority of directors in office
at the beginning of such period.
(b) If a Change in Control has occurred, all outstanding options shall
be immediately exercisable by the holder of the option for the total
remaining number of shares of Common Stock covered by the
A-3
<PAGE> 20
option. Such option may then be exercised by its holder at any time within
a period of thirty (30) days following the date on which the Change of
Control occurred, unless otherwise limited by the applicable stock option
agreement.
(c) Any options subject to acceleration under this Section that are
not exercised during the period of thirty (30) days provided in subsection
(b) above shall be treated as if no Change in Control had occurred and
shall be governed by their original terms.
14. Assignability. Unless the Board provides otherwise, options granted
under this Plan may be transferred by a participant to (i) the spouse, children
or grandchildren of the participant ("Immediate Family Members"); (ii) a trust
or trusts for the exclusive benefit of such Immediate Family Members; (iii) a
partnership in which such Immediate Family Members are the only partners; (iv)
an entity exempt from federal income tax pursuant to Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended (the "Code") or any successor
provision; or (v) a split interest trust or pooled income fund described in
Section 25229(c)(2) of the Code or any successor provision, provided that (x)
there shall be no consideration for any such transfer, and (y) subsequent
transfers of a transferred stock option shall be prohibited except those by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended. Following transfer, any such stock
option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, and that for the purposes of this Plan
the terms "participant," "holder," and "option holder" shall be deemed to
include the transferee. After any such transfer, the events described under the
heading "Termination of Service as Director" (set forth in Section 8) shall
continue to be applied with respect to the original participant, and the options
shall be exercisable by the transferee only to the extent described in Section
8. The Board and the Corporation shall have no obligation to inform any
transferee of any expiration, termination, lapse or acceleration of such option.
The Corporation shall have no obligation to register with any federal or state
securities commission or agency any Common Stock issuable or issued under this
Plan that has been transferred by a participant under this Section 14.
15. Interpretation. The Board shall interpret this Plan and shall prescribe
such rules in connection with the operation of the Plan as it determines to be
advisable for the administration of the Plan. The Board may rescind and amend
its rules.
16. Amendment and Termination of the Plan. This Plan may be amended or
terminated by the Board at any time without the approval of the stockholders of
the Corporation.
17. Effect of the Plan. Neither the adoption of this Plan nor any action of
the Board shall be deemed to give any option holder any right to continue to
serve as a director of the Corporation or any other rights except as may be
evidenced by a stock option agreement, or any amendment thereto, duly authorized
by the Board and executed on behalf of the Corporation and then only to the
extent and upon the terms and conditions expressly set forth therein.
18. Investment Intent. The Corporation may require that there be presented
to and filed with it by any participant under the Plan such evidence as it may
deem necessary to establish that the options granted or shares of Common Stock
granted or the shares of Common Stock to be purchased are being acquired for
investment and not with a view to their distribution.
19. Term. Unless sooner terminated by action of the Board, this Plan will
terminate on February 18, 2008. The Board may not grant options under this Plan
after that date, but options granted before that date will continue to be
effective in accordance with their terms and conditions.
20. Definitions. For the purpose of this Plan, unless the context requires
otherwise, the following terms shall have the meanings indicated:
(a) "Plan" means this 1998 Special Stock Option Plan, as amended from
time to time.
(b) "Corporation" means BeautiControl Cosmetics, Inc., a Delaware
corporation.
A-4
<PAGE> 21
(c) "Board" means the Board of Directors of the Corporation and, to
the extent applicable, or such members thereof as are delegated powers
under Section 2 of this Plan.
(d) "Common Stock" means the Common Stock which the Corporation is
currently authorized to issue or may in the future be authorized to issue.
A-5
<PAGE> 22
PROXY
BEAUTICONTROL COSMETICS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Richard W. Heath and M. Douglas Tucker,
or either of them, with full power of substitution, proxies of the undersigned,
with all the powers that the undersigned would possess if personally present to
cast all votes that the undersigned would be entitled to vote at the Annual
Meeting of Stockholders of BeautiControl Cosmetics, Inc. (the "Company") to be
held on Tuesday, April 7, 1998, at the Company's executive offices, 2121 Midway
Road, Carrollton, Texas, at 10:00 A.M., Dallas, Texas time, and any and all
adjournment or postponements thereof (the "Annual Meeting"), including (without
limiting the generality of the foregoing) to vote and act as follows:
1) Election of Directors, Nominees:
Jinger L. Heath, Joseph M. Haggar, III and J. Robert Ward-Burns
2) Proposal to adopt the Company's 1998 Special Stock Option Plan.
Please complete, date, sign and mail this Proxy
promptly in the enclosed envelope.
No postage is required for mailing in the United States.
[SEE REVERSE
SIDE]
<PAGE> 23
BEAUTICONTROL COSMETICS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ ]
FOR WITHHELD FOR ALL FOR AGAINST ABSTAIN
1. Election of Directors, Nominees: ALL ALL EXCEPT 2. Proposal to adopt the
Jinger L. Heath, Joseph M. Haggar, III [ ] [ ] [ ] Company's 1998 Special [ ] [ ] [ ]
and J. Robert Ward-Burns Stock Option Plan.
-----------------------------------------
Nominee Exception
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting.
This Proxy will be voted at the Annual Meeting or any adjournment or postponement thereof as specified. If no specifications are
made, this Proxy will be voted FOR the election as directors of the three nominees named to the term described in the
accompanying Proxy Statement. This Proxy hereby revokes all prior proxies given with respect to the shares of the undersigned.
SIGNATURE(S) DATE
------------------------------- -----------
SIGNATURE(S) DATE
------------------------------- -----------
IMPORTANT: Please date this Proxy and sign exactly as your name appears to the left. If shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or guardian, please give title as such. If a corporation,
please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by
authorized person.
</TABLE>
